2015 USTR Report: Old Wine in New Bottle

Every year, the Office of the United States Trade Representative (USTR) undertakes an elaborate exercise to castigate countries' domestic intellectual property (IP) law and policy. The criticisms and recommendations are presented in a document called the Special 301 Report. This year's edition puts India on the Priority Watch List for the twenty-sixth time in a row. Below, I rebut the report's prejudicial claims and demands, and argue that the report puts free speech, innovation and public interest in jeopardy.


Keeping in tradition , the 2015 report yet again exposes US' hypocrisy by  faithfully serving Hollywood and Big Pharma.  In the past, countries such as Israel and Canada have publicly rejected the USTR's findings and derided the US for unwarranted interference with domestic law and policy. Last year, India too had refused to cooperate with a USTR initiated unilateral investigation (Out of Cycle review) of its IP regime because the investigation violated international law.

The Electronic Frontier Foundation has released a hard-hitting response to the report. It draws case studies of countries where overbroad IP law has affected public interest, free speech and innovation. For instance, it mentions how Colombia's 'reformed' copyright law has become a travesty. Colombia introduced extreme enforcement and harsh criminal sanctions for unauthorised sharing of works at the behest of the US. Last year, news surfaced that a Colombian biodiversity researcher faced upto eight years in prison for sharing an academic article on Scribd. Any balanced IP regime (including India) permits such use of copyrighted works under the fair use principle, however, Colombia's narrow fair use provision has led to a situation where citizens now face prison for ordinary use of academic works.

This year the Special 301 Report in its section on India approves the Prime Minister's statements to align IP law with international standards, which is a cause for concern. Firstly, what are these “international standards” that both US and India refer to exactly? The most comprehensive international agreement on IP that binds 160 member nations is the WTO Agreement on Trade related aspects of Intellectual Property (TRIPS Agreement). Ergo, this agreement would qualify as the most accepted “international standard”, which India already complies with. Secondly, the TRIPS Agreement sets down certain global minimum standards for protecting and enforcing IP, simultaneously providing countries a certain degree of flexibility. However, the US has consistently pushed India to enact tougher provisions known as TRIPS Plus provisions. This is reflected in the report as well. Legally speaking, under international law India is not obligated to accede to such demands, and it should not if it wants a balanced IP regime to protect and serve the interests both of rights holders and its citizens.

The report shamelessly aligns its concerns with the financial interests of foreign rights holders and American companies. It erroneously projects IP as a tool to only maximise revenues, agnostic to public interest. While IP rights are temporary monopolies, they also are a tool to ensure innovation, social, scientific and cultural progress and further access to knowledge. It is well established that flexible IP laws enable access to knowledge and promote innovation. Such a flexible regime is critical to developing countries like India. The USTR conveniently forgets that lax IP law and enforcement for a large part of the 19th century helped the US to accelerate into an economic powerhouse and a front-runner in innovation. It also brazenly threatens to impose unilateral sanctions against a country designated as a Priority Foreign Country on the list. This treatment is usually reserved for the worst offender on the list. Such unilateral threats and sanctions are again a direct violation of international law.

Unsurprisingly, the report is critical of India's under-enforcement of copyright laws and the impact of patent law on pharmaceuticals. It demands a specific legislation to counter camcording and video piracy. The prospective legislation is unnecessary because all movie theatres in India prohibit camcorders and the prevailing Copyright Act, 1957 contains penalties to punish offenders. Instead of creating new offences, we should re-evaluate the need of existing offences. For instance, copyright infringement on non-commercial scales should not be a criminal offence at all. Instead, the law should provide convenient and affordable access to such works to counter petty infringement.

India is home to the world's largest apothecary. The Indian pharmaceutical and medical device industry provides affordable healthcare to the citizens, and also exports drugs to countries in need. In fact, the compulsory licensing mechanism has ensured affordable access to life saving liver and kidney drugs in India. The report comments on the undesirability of section 3(d) and the compulsory licensing mechanism in Indian patent law. With respect to section 3(d), the US wishes India to to change its patent law to enable large pharma companies to patent new forms of known substances that aren't even better. This alarmist outlook smacks of hypocrisy because the US, in fact, has a higher rate of patent invalidation and compulsory license grants! It also demands data exclusivity – which would extend proprietary rights to patentees over government mandated drug data, and would be detrimental to the local pharma industry. Further, the report states that the Indian system is biased against enforcement of foreign patent rights holders - which is mere speculation. There is no evidence to draw such a conclusion. The claims relating to localisation trends in pharma are half- baked and speculative again.

The report observes that at the UNFCCC negotiations, India recognised patents as an obstacle to dissemination of climate change technologies. It wishes India understood the critical role of patent protection and competitiveness to ensure innovation, which is a flawed co-relation. While strong IP rights may protect inventors against infringement and provide return on investment, however, stronger IP rights also raise the cost of innovation by raising the price of technological inputs into innovation and lower the frequency of innovation.

As far as the issue of counterfeit medicines is concerned, a better remedy lies in health safety laws and consumer laws, than the trademark law. The report also approves of state legislatures' version of the Goondas Act. These Acts provide for detainment of criminals and lumpen elements in society, and with recent amendments have expanded to include video pirates and digital offenders. Karnataka's Goonda Act enabling preventive detention violates constitutional rights. While the Sixth Amendment to the United States Bill of rights protects offenders against preventive detention, the US has no qualms about approving such unconstitutional procedures in India.

The arguments above underscore the irrelevance of the report. The Prime Minister may have made appeasing statements to the USA, however, in a welcome development Commerce and Industry Minister Nirmala Sithraman in response to the report stated “India is fully aligned with international intellectual property rights standards and "there is no need for anyone to question us."” Our IP regime with its inherent flexibilities should be preserved and not sacrificed at the altar of US' business interests. Using compulsory licensing across sectors would indeed accelerate technology transfer and diminish initial capex for manufacturers, a move promoted by the National Manufacturing Policy. The ambitious Make in India and Digital India campaigns are set to suffer if India incorporates TRIPS plus standards into its IP regime. The government supports openness and has implemented policies mandating use of open standards and open source software as a part of the Digital India campaign. India should not let foreign hands dictate its IPR Policy, and proceed to develop a policy which is informed by broader principles of fairness and equity, balancing intellectual property protections with limitations and exceptions/user rights such as those for research, education and access to medicines.