Every year, the United States Trade Representative (USTR) releases a Special 301 report on the adequacy and effectiveness of Intellectual Property (IP) rights in countries trading with the US. The agency conducts this review in accordance with Section 182 of the 1974 Trade Act in the United States, as amended by the Uruguay Round Agreements Act and the 1988 Omnibus Trade and Competitiveness Act.
Countries with trade barriers to American companies are placed on either USTR’s Watch List or on its Priority Watch List based on their current state of IP rights enforcement. As one of the prime trading partners of the USA, India gets a USTR review annually.
The following sections detail the 2023 Special 301 report on India, its concerns and the future scope of IP laws.
USTR 2023 Report and Its Focus on India
Just like last year, India remains on the Priority Watch List in the 2023 USTR Special 301 report. According to USTR, India is still one of the most challenging nations for IP enforcement and protection, which continues to be limited in scope. The following sections will detail the overall observations made by the USTR report.
Concerns
Here are the top concerns raised by stakeholders in the USTR report:
● Patent Issues
Just like last year, patentability issues continue to be a vital issue in India. . These include narrow patentability criteria for companies across various industrial sectors, lack of patent validity presumption, threats of patent revocations and more.
Patent filers face hurdles like long waiting periods for grants and excessive reporting requirements. Additionally, pre- and post-grant oppositions have remained time-consuming and costly, contributing to their woes.
● Section 3(d)
The patent eligibility part of Section 3 (d) of the Indian Patents Act, 1970, and its impact on the US pharmaceutical sector are still under scrutiny by stakeholders. Companies in this segment express concern over whether there is a proper mechanism to timely resolve patentability disputes. These include market approval for follow-on drugs, restricting transparency when it comes to issuing manufacturing licences, etc.
Furthermore, USTR officials report the lack of adequate guidelines to prevent obtaining marketing approval, undisclosed testing, unauthorised disclosure and unfair commercial use.
● Online Piracy
Online piracy has become a paramount issue in India in recent years. In August 2021, the Department of Industrial Policy and Promotion (DPIIT) issued a notice for the extension of statutory licensing under Section 31D of the Indian Copyright Act. It was done under the recommendation of a Parliamentary committee and allowed internet or digital broadcasters to obtain proprietary licensing for music, literature and broadcasting sound recordings.
This move will have severe implications for patent holders who publish their content online. In 2019, the Bombay High Court found the DPIIT's 2016 interpretation of Section 31D covering 'internet broadcasting' contrary to the legislation. However, to date, this law has not yet been superseded or withdrawn. The Bombay High Court’s Division Bench is yet to announce a decision in this regard.
Additionally, the Ministry of Information and Broadcasting passed a Cinematograph (Amendment) Bill in June 2021. This aims to increase financial and criminal penalties for unauthorised recordings in movie theatres. However, this motion is still awaiting parliamentary approval.
● Trademark Counterfeiting
Trademark counterfeiting remains a major concern among US brand owners in India. Their complaints usually include severe delays in trademark opposition lawsuits and a lack of quality procedures for trademark examination.
It also remains unclear whether trademark owners need permission from the respective authorities to apply for "well-known" trademark status. Hence, to mitigate such problems, the USA still urges India to join the Singapore Treaty on the Law of Trademarks.
● Lack of Laws for Protecting Trade Secrets
Both USA and Indian organisations often complain about the sheer dearth of trade secrets protection laws in the Indian legal ecosystem. Thus, in July 2021, the Department Related Parliamentary Standing Committee on Commerce (DRPSCC) issued a report called “Review of the Intellectual Property Rights Regime in India”. It aimed to create a separate legal framework for protecting trade secrets and examining the relevant and best practices in this regard.
However, as per the latest reports in 2023, no criminal or civil laws have been passed for addressing these issues. Additionally, there are no criminal penalties available for misappropriating trade secrets. Apart from this, civil remedies are difficult to obtain and rarely have a deterrent effect.
● Inadequate IP Enforcement Initiative
As of this year's USTR report, India's overall progress in IP law enforcement remains inadequate. Although the country has taken strict actions against websites for using pirated content, there is still an utter lack of action from the police as well as the courts.
The agency has observed a lack of familiarity with IP case investigation techniques among the concerned authorities. There is little coordination between state and national-level enforcement agencies to reinforce IP-related laws.
India remains a source economy and a market for several pirated and counterfeit goods. There were mentions of this issue in the 2022 Review of Notorious Markets for Counterfeiting and Piracy. Now, some Indian state authorities do have standalone crime enforcement units for such cases. However, as per observation by the USA, a national-level enforcement task force is essential for targeting IP crimes.
Developments from Last Year
India also made some improvements regarding IP protection and enforcement which have been highlighted in the 2023 Special 301 USTR Report. Here are some important developments in IP protection from 2022:
● Promotion of IP Protection and Enforcement
India has made significant progress when it comes to improving its intellectual rights protection scenario. The country has shown willingness in improving its issues in patent pre-grant opposition proceedings, trademark infringement investigations, etc.
It is also taking steps to implement the copyright provisions that it is liable to follow under the WIPO Treaties. Moreover, the USA appreciates India's initiative to clear all trademark opposition backlogs following the Delhi High Court’s orders.
● Improvements in Personal Data Protection
In 2019, the Personal Data Protection Bill was passed which could have given rise to serious IP protection issues. Thus, an improved draft was released by the Ministry of Electronics and Information Technology (MeitY) in November 2022.
It addresses the previously mentioned issues and is currently awaiting enactment. The USA is looking forward to its outcome and is thus closely monitoring its progress.
Comparison with USTR 2022 Report
Here are the highlights of the 2022 USTR Special 301 Report to track India’s progress in 2023’s assessment:
Concerns
The concerns of USTR officials in the 2022 report are as follows:
● Inconsistent progress in taking measures for IP protection and enforcement.
● Deficient efforts by the police and the courts like the absence of a national IP enforcement agency, failure to coordinate actions at both state and central levels, lack of familiarity with IP case investigation techniques, etc.
● The constant threat of patent revocations and a dearth of patent validity presumption.
● Narrow patentability criteria in the Indian Patents Act for companies across various industrial sectors.
● Vagueness in the Act’s interpretation and restrictions on patent eligibility in Section 3(d).
● High costs of patent applications, along with time-consuming pre- and post-grant opposition processes.
● Excessive reporting requirements and long patent grant waiting periods.
● Complaints of agricultural chemical products and pharmaceutical sector organisations of the absence of an effective ecosystem for protection against unfair commercial use, undisclosed testing, unauthorised disclosure, etc.
● Presence of several markets in India that promote piracy and counterfeiting as per the 2021 Notorious Markets List.
● A high number of piracy complaints by online content copyright holders.
● Problematic levels of trademark counterfeiting.
● Insufficient legal framework for protecting trade secrets.
● Uncertainties in copyright royalty rate setting and IP case adjudication due to India’s decision in April 2021 to abolish the Intellectual Property Appellate Board (IPAB) and empower courts to handle its matters.
Developments from Last Year
Here are the notable developments in the state of IP rights protection and enforcement in India from 2021 based on the 2022 USTR report:
● Improvements in India’s efforts to comply with international IP rights protection treaties.
● Recommendations by a Joint Parliamentary Committee to bring about changes in the Personal Data Protection Bill, 2019, which had elements which could’ve undermined IP protection in India.
● Addressing stakeholder concerns for reducing burdens of patent filing requirements.
● Creation of an IP Division by the Delhi High Court in July 2021 and releasing its final draft for comment in December 2021.
Additionally, one of the major achievements of India following the 2022 USTR report is its 169th Report on the ‘Action Taken by Government on the recommendations/observations of the Committee contained in its 161st Report on the Review of the Intellectual Property Rights Regime in India’.
It was presented on 6th June 2022 by the Department Related Parliamentary Standing Committee (DRPSC) in front of both Houses of Parliament. This report gave due emphasis to all important pointers related to the financing and commercialisation of IP assets within India.
The committee accepted the need for taking aggressive actions in cases regarding counterfeiting and piracy. Moreover, it stressed active coordination between administrative and enforcement agencies to mitigate such issues.
Conclusion
As per the 2023 USTR Special 301 Report, India may still be on the Priority Watch List. However, over the years, there has been continuous development in India’s IP law protection and enforcement landscape.
These include the rise of digital IP laws, increasing focus on patent production, addressing trademark pendency, etc. Hence, there is a high chance of the USTR removing India from its Priority Watch List in coming years. Companies and inventors can thus look forward to a better future, where they can keep innovating without any fear of IP rights violation.