On April 27, 2022, The Office of the United States Trade representatives (USTR) released its Special 301 Report, an annual review which identifies trade barriers to American companies, with respect to the IP laws and legislations of other countries.
The Special 301 Report is an annual publication dedicated to the global state of IP protection and enforcement and identifies a wide range of concerns, including:
  • Challenges with respect to border and criminal enforcement against counterfeits, including the digital environment;
  • Levels of increasing online and broadcast piracy, including illicit streaming through devices;
  • The inadequacies in trade secret protection and its enforcement worldwide;
  • Troubles concerning "indigenous innovation"
  • Other ongoing issues regarding IP protection and enforcement in many trading partners around the world.
Countries of concern are labelled as ‘Priority Watch List’ or ‘Watch List’ in the report. In this year’s report, 27 countries received a designation as a priority watch list. The designation does not impose any additional penalties or enforcement; however, the designated countries are a subject of intense bilateral engagement during the coming year.
USTR Special 301 Report of 2022
It is again a setback for the Indian pharmaceutical industry as the Special 301 report, has continued to place India on the 'Priority Watch List' quoting India as "one of the world's most challenging major economies with respect to protection and enforcement of IP". Along with India six other nations were included in the Priority Watch for lacking the requisite IPR protection and enforcement viz. Russia, China, Indonesia, Argentina, Chile and Venezuela.
Stance on India
The report highlighted the problems with regards to India's patent law, which does not allow for provision of patents for incremental innovation. The report stated that 'in the pharmaceutical sector, the United States continues to monitor the restriction on patent-eligible subject matter in Section 3(d) of the Patents Act, 1970 and its impacts’.
The report also stated that the issues with respect to the following:
  • narrow patentability criteria was impacting companies of different industries, patent revocations, lack of presumption of patent validity;
  • filing of a patent application was not cost effective and consumed a lot of time in terms of pre- and post-grant oppositions, long waiting periods to receive patent grants, and excessive reporting requirements;
  • maintaining high custom duties directed to IP-intensive products like medical devices, pharmaceuticals etc.;
  • concerns related to the unfair commercial use and unauthorized discloser of any data for which the patent has not been granted or when it is just on the filing stage were also expressed by certain stakeholders. Counterfeit products
  • The report stated that India is one of the top five source economies for Counterfeit and Pirated Goods.
  • That India houses several markets which promote counterfeiting and piracy, as identified in the 2021 Notorious Markets List. Trademark Counterfeiting
  • The report states that the US brand owners have reported excessive delays and latches in trademark opposition proceedings. For example, it was unclear as to whether trademark owners could apply directly for "well-known" trademark recognition without having to rely on previous Indian court or trademark office decisions;
Trade Secrets
The report highlighted the uncertainty faced by companies in India due to insufficient legal means to protect trade secrets. It stated that despite 'India's 2016 National Intellectual Property Rights Policy, which is past-due for its 5-year review, identified trade secrets as an important area of study for future policy development, as of 2022, no civil or criminal laws in India specifically address the protection of trade secrets. Even criminal penalties were not expressly available for trade secret misappropriation in India, and civil remedies reportedly are difficult to obtain and do not have a deterrent-level effect'.
Copyright and Piracy
  • The Report stated that copyright holders continue to report high levels of piracy;
  • With respect to Section 31D, the Report stated that amending Section 31D of the Copyright Act 1957, to permit statutory licensing of interactive transmissions could have severe implications for right holders who make their content available online, and that the United States urges India to ensure consistency and compliance with the international standards;
  • That pending cases and as well as the Central Govt. have raised concerns about the absence of copyright for a broad range of published works; However, it is unfortunate that the USTR have conveniently overlooked the substantial and consistent progress made by India with regards to IP environment. In the Report, the USTR itself has admitted that India has made some remarkable progress on the IP front namely:
  1. The activities of Cell for IPR Promotion and Management (CIPAM - a professional body under the aegis of Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India.) for promoting IPR awareness have been applauded in the Report which stated that CIPAM maintained an active social media presence.
  2. India notified Design (Amendment) Rules 2021 that reduce fees for startups seeking design protection.
  3. The Report also stated that during the last year, India has taken some strict actions against websites with pirated content and has also urged the general public to not consume content from such pirated sites;
The 2022 Edition of the report should not have overlooked the substantial and consistent progress made by India with regards to IP this year. It should have considered that the Indian patent law and its application does not deny adequate and effective protection of IPR; nor does it deny fair and equitable market access to the US pharmaceutical industry which relies on IP protection. Further the establishment of a special Bench in the Delhi High Court for handling only IP cases was a commendable move and it is expected that in the coming years the IP processes and handling will change for the better. It is also noteworthy to mention here about the Report of the Parliamentary Committee on Review of IPR regime in India which has made several observations and recommendations on the IP laws and regulations in India in order to build a robust IP Policy in India.


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