Column: The US intellectual property rights hypocrisy

May 02 2014, 14:32 IST
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SummaryThe USTR Special 301 report on IP violations singles out India for naming and shaming

The much awaited ‘Special 301’ report from the Office of the United States Trade Representative (USTR), detailing the results of the annual review of the state of intellectual property rights (IPR) protection and enforcement in the trading partners of the US, identifies India as a “priority watch” country. These reviews began in 1989 after the enactment of the Omnibus Foreign Trade and Competitiveness Act of 1988. Special 301 provisions of this Act authorises the USTR to identify annually the countries whose failure to protect intellectual property is the most onerous and has the greatest adverse impact on US products and those that are not making significant progress in providing adequate and effective protection of intellectual property rights (IPRs). The USTR has the rights to retaliate against any country if it “refused to reform its practices satisfactorily”.

Justifying the inclusion of India as a PWC, the USTR report observes that serious difficulties in attaining constructive engagement on issues of concern to the US and other stakeholders have contributed to India’s challenging environment for IPR protection and enforcement. Similar concerns have been expressed in respect of 9 other countries, including China, Brazil, Russia and Thailand, but India has been singled out for out-of-cycle review. This review will be initiated in the fall of 2014 and implies that the USTR intends to put further pressure on India to change its intellectual property laws to suit the interests of the US business.

The report states that protection and enforcement challenges involving various forms of intellectual property are growing in India and these include piracy of copyrighted material and counterfeiting of trademarks. However, the most serious of the problems, according to the USTR, had arisen in the area of patents, where India has restricted the enjoyment of their rights by the patent-holders.

It is instructive to consider the cases where India has “restricted” the rights of the patent-holders. The first of these arose in 2012 when the Comptroller General of Patents granted a compulsory licence to an Indian firm, Natco to produce an anti-cancer drug (Nexavar) in India, the patent for which was owned by the German firm, Bayer. Natco was granted the licence as the patent-owner was charging an abnormally high price (R2.8 lakh for a month’s dose). Under the terms of the licence, Natco was directed to provide a month’s supply of

Nexavar for R8,800 and to pay Bayer a royalty of 7% on the sales

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