EC publishes report on protection and enforcement of intellectual property rights in “third countries”

On 21 February 2018, the European Commission published a report on the “protection and enforcement of intellectual property rights in third countries”. The main objective of the report “is to identify third countries in which the state of IPR protection and enforcement gives rise to the greatest level of concern and thereby to establish an updated list of so called “priority countries” (Source: European Commission, Report on the protection and enforcement of intellectual property rights in third countries, February 2018). This Third Country mirrors the US Special 301 process of targeting countries which are deemed not to provide adequate and effective protection of intellectual property rights.

The Commission report established 3 categories of countries:

Priority 1: China
Priority 2: Argentina, India, Indonesia, Russia, Turkey and Ukraine
Priority 3: Brazil, Ecuador, Malaysia, Mexico, Philippines, Thailand and the United States

The Third Country Report notes that the “Commission also identified a separate category of countries, where IP enforcement gives rise to concern and where developments need to be closely monitored. This category of countries includes Israel, Kuwait, Paraguay, South Africa, United Arab Emirates and Uruguay” (Source: Ibid).

The EU highlighted the following concerns:

  • unduly restrictive patentability criteria
  • counterfeit pharmaceuticals

With respect to patentability criteria, the Third Country Report stated,

Indonesia, India, Russia and Argentina, apply unduly restrictive patentability criteria, undermining innovation and research and preventing investment in these economies, while in Brazil, the interference of health authorities in the granting of patents in the pharmaceutical sector remains problematic. (Source:
Ibid)

In relation to counterfeit pharmaceuticals, the Commission cited an OECD-European Intellectual Property Office study (Mapping the economic impact of trade in counterfeit and pirated goods, 2016) noting that,

India and China are the biggest producers of counterfeit pharmaceuticals and due to the boom of e-commerce these fake products are shipped all around the world, including Europe, also in small consignments. (Source: Ibid)

The Third Country Report identified Argentina, China, India, Indonesia and Mexico as not providing adequate or effective regulatory data protection for pharmaceuticals and plant variety protection, and singled out China and India for inefficient protection of trade secrets and know how and Russia for burdensome regulations in relation to the protection of undisclosed information.

In relation to India, the Commission had the following concerns relating compulsory licensing and patentability criteria.

Several constraints on patent protection remain detrimental to EU companies. Restrictive patentability criteria combined with difficulties to enforce patents granted, as well as very broad criteria being applied for granting compulsory licenses or for revoking patents, make effective patent protection in India very difficult, notably for pharmaceuticals and chemicals but also for other sectors where local innovation is being promoted. (Source: Ibid)

In relation to Brazil, the Commission noted,

In 2017 the National Sanitary Regulatory Agency (ANVISA) and INPI concluded an agreement in order to speed up the examination of medicinal patent applications and to change the role ANVISA plays in the process, which has been a key concern for EU right holders for a number of years. It remains to be seen how the new role of ANVISA will influence the examination of patent applications…Another continued grave concern for the EU stakeholders is the scrutiny of ANVISA in pharmaceutical patent applications before they have been examined by INPI, although steps have been taken to supposedly realign the procedures with international standards (Source: Ibid).

In relation to Indonesia, the Third Country Report stated,

    The new Patent Law introduced a “local working” requirement. This creates unpredictability for businesses in sectors heavily relying on patent protection and impedes the dissemination of technical information, which is indispensable for the development of new products including pharmaceuticals. The contested provisions set out that the patent holder is obliged to manufacture the patented product or use the patented process in Indonesia, and that noncompliance with the requirement triggers the possibility to issue a compulsory license. Moreover, the absence of local manufacturing of the patented product or of the use of the patented process may lead to the abolishment of the patent. These rules clearly discriminate imported patented products against domestically produced goods under patent protection.
    Certain patentability requirements in Indonesia do not seem to meet international standards. Notably the requirement to prove the “enhanced efficacy” of the pharmaceutical product when applying for secondary patent protection, limits unduly the patentable subject matter as the information on “enhanced efficacy” is generated in the course of the clinical trials which are usually ran only after the patent is granted.
    EU stakeholders consider that the Patent Law creates significant uncertainty for pharmaceutical innovators by discouraging voluntary licensing and promoting compulsory licensing on grounds that need to be more precise and consistent with Indonesia’s international obligations. (Source: Ibid)

With respect to Ecuador, the Third Country Report flagged a local working requirement which stakeholders feared could trigger compulsory licensing.

With respect to the United States,

The Commission notes the lack of progress in implementing the WTO panel decision on Irish Music. Section 110(5)(B) of the US Copyright Act was found to be incompatible with the TRIPS Agreement and constitutes a copyright infringement. Disrespecting WTO dispute settlement decisions on IPR establishes a negative precedent and undermines the credibility of WTO members such as the EU and the US who share a common interest in promoting effective IPR protection and enforcement, notably in emerging economies. (Source: Ibid)