Intellectual Property Rights and International Trade

Summary

Theft of trade secrets generally takes one of two forms as a federal crime. Industrial espionage refers to the stealing of trade secret information that relates to a product in interstate or foreign commerce, to the economic benefit of third parties and to the injury of the trade secret owner (18 U.S.C. 1832). Economic espionage refers to the stealing of a trade secret when the intent to benefit a foreign power (18 U.S.C. 1831).⁵ Trade secret theft can occur through cyber means (see below).⁶

Criminal activity, including IP theft, increasingly occurs in cyberspace—which can be thought of as a "virtual environment of information and interactions between people."⁷ Internet-related crimes are often referred to as cybercrime, though no one definition appears to exist for it within the U.S. government.⁸ One of type of cybercrime is cybertheft, which broadly may be defined as crimes in which a computer is used to steal money or other things of value and can include "embezzlement, fraud, theft of intellectual property, and theft of personal and financial data."⁹ Other terms that may encompass Internet-related IPR theft include cyber intrusions and cyberattacks.

Source: CRS, based on data from World Intellectual Property Organization (WIPO), Patent Cooperation Treaty Yearly Review: 2015.

Note: Data for 2014 are estimates.

Intellectual property generally is viewed as a longstanding strategic driver of U.S. productivity, economic growth, employment, higher wages, and exports. It also is considered a key source of U.S. comparative advantage, such as in innovation and high-technology products. Nearly every industry depends on it for its businesses. Among the industries that are dependent on patent protection are the aerospace, automotive, computer, consumer electronics, pharmaceutical, and semiconductor industries. Copyright-based industries include the software, data processing, motion picture, publishing, and recording industries. Other industries that indirectly benefit from IPR protection include retailers, traders, and transportation businesses, which support the distribution of goods and services derived from intellectual property.¹³

IP-intensive industries are considered to play a major role in the U.S. economy and international trade. What follows are some findings from a 2012 study by the U.S. Department of Commerce.¹⁴

(Billions of U.S. Dollars)

Source: BEA, U.S. International Services data.

Industry-specific figures may further demonstrate the role of IP in the U.S. economy. For example:

Some advocates of civil liberties assert that empirical analysis on the role of IPR in the U.S. economy may not fully evaluate the economic and commercial benefits of lawful exceptions and limitations to exclusive rights—referred to broadly as "fair use." The "fair use" doctrine provides limitations and exceptions to the exclusive rights afforded by copyright law. It permits limited use of copyrighted works without requiring permission from the right holder in certain cases, examples of which may include news reporting, research, teaching, and library use.²² For example, by one estimate, in 2009, businesses that rely on "fair use" exceptions to U.S. copyright law generated total revenue of $4.5 trillion on average and $2.4 trillion on average of value-added (17% of total U.S. current dollar GDP).²³ Additionally, employment associated with "fair use" totaled around 17 million of U.S. employment in 2009, and U.S. exports associated with "fair use" totaled $266 billion in 2009.²⁴

Advances in information and technology and declining costs of transportation and communication, spurred by globalization, have fundamentally changed information and trade flows. Such changes have created new markets for U.S. exporters, but at the same time, have been associated with the proliferation of counterfeiting and piracy on a global scale.

Several factors contribute to the growing problem of IPR infringement. While the costs and time for research and development are high, IPR infringement occurs with relatively low costs and risks and a high profit margin. According to PhRMA, it takes a pharmaceutical company over 10 years of R&D on average to create a new drug, with the average cost to develop a drug about $2.6 billion during the 2000s to early 2010s. In 2014, PhRMA member companies collectively spent an estimated $51 billion for research and development (domestic and abroad).²⁵ In contrast, drug counterfeiters can lower production costs by using inexpensive, and perhaps dangerous or ineffective, ingredient substitutes.

The development of technologies and products that can be easily duplicated, such as recorded or digital media, also has led to an increase in counterfeiting and piracy. Increasing Internet usage has contributed to the distribution of counterfeit and pirated products. Additionally, civil and criminal penalties often are not sufficient deterrents for piracy and counterfeiting. The United States is especially concerned with foreign IPR infringement of U.S. intellectual property. Compared to foreign countries, IPR infringements levels in the United States are considered to be relatively low.²⁶

Quantification of the economic losses associated with IPR infringement has been a longstanding focus in the academic, policy, and industry literature. Many experts agree that it is difficult to quantify the magnitude of IPR theft with any precision. Reasons may include

Category

2008

2015

285-360

770-960

140-215

370-570

Digitally pirated products

30-75

80-240

Total

455-650

1,220-1,770

Notes: BASCAP economic loss estimates are restricted to the G-20 economies.

(Estimated MSRP, millions of U.S. dollars)

(Estimated MSRP, millions of U.S. dollars)

Source: CRS analysis of data from Department of Homeland Security, "Intellectual Property Rights Seizure Statistics Fiscal Year 2014."

Notes: Based on manufacturer's suggested retail price (MSRP) of goods had they been genuine. "Other" includes footwear, computers/accessories, optical media, labels/tags, and toys.

U.S. industries that rely on IPR protection claim to lose billions of dollars in revenue annually due to piracy and counterfeiting. Beyond these direct losses, the United States may face additional "downstream" losses from counterfeiting and piracy. IPR infringement could result in the loss of jobs that would have been created if the infringement did not occur, which could translate into lost earnings by U.S. workers and, in turn, lost tax revenues for federal, state, and local governments.³⁷ Attempts have been made in specific economic sectors to quantify the IPR infringement levels and related losses to legitimate U.S. businesses.

A private Commission on the Theft of American Intellectual Property estimates the total level of U.S. economic losses to international theft of U.S. IP to be hundreds of billions dollars per year. The Commission says the level of losses is "at least in the range of total [U.S.] exports to Asia in 2012 (valued at $320 billion)."³⁸ Efforts also have been made to quantify U.S. economic losses from IPR infringement in terms of specific countries (see text box).

Given the importance of intellectual property to the U.S. economy and the economic losses associated with counterfeiting and piracy, the United States is a leading advocate of strong global IPR rules. Since the mid-1980s, the United States has integrated IPR policy in its international trade policy activities, pursuing enhanced IPR laws and enforcement through multilateral, regional and bilateral trade agreements, and national trade laws.

At the center of the present multilateral trading system is the World Trade Organization (WTO), an international organization established in 1995 as the successor to the General Agreements on Tariffs and Trade (GATT).⁴⁰ The WTO was established as the result of the Uruguay Round of trade negotiations (1986-1994), which led to agreements to liberalize and establish or enhance rules on trade in goods, services, agriculture, and other non-tariff barriers to trade. One of the Uruguay Round agreements was the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), which sets minimum standards on IPR protection and enforcement with which all WTO member states must comply. The United States, the European countries, and the IPR business community were instrumental in including IPR on the Uruguay Round agenda. Many developing countries were wary of including IPR in trade negotiations, preferring to discuss them under the World Intellectual Property Organization (WIPO) (see below) instead. However, developing countries agreed, after being granted delayed compliance periods, and after achieving negotiating goals on other issues such as the end of quotas on textiles and clothing.

While previous international treaties on IPR continue to exist, the TRIPS Agreement was the first time that intellectual property rules were incorporated into the multilateral trading system. Two basic tenets of the TRIPS Agreement are national treatment (signatories must treat parties of other WTO members no less favorably in terms of IPR protection than the party's own nationals) and most-favored-nation treatment (any advantage in IPR protection granted to the party of another WTO member shall be granted to nationals of all other WTO member states).

The United States has not filed any other WTO complaints concerning IPR since then. Nor has the United States brought any disputes under IPR provisions of U.S. FTAs.

On June 29, 2015, President Obama signed the Bipartisan Congressional Trade Priorities and Accountability Act of 2015, also known as Trade Promotion Authority (TPA). Previously "fast-track," TPA is the time-limited authority that Congress uses to set trade negotiating objectives, to establish notification and consultation requirements, and to have implementing bills for certain reciprocal trade agreements considered under expedited procedures, provided certain statutory requirements are met.⁶³ In recent grants of TPA, IPR issues have become important negotiating objectives.

The IPR negotiating objectives in the 2002 TPA were highly significant to the future contours of U.S. FTA negotiations. The objective to negotiate trade agreements in terms of IPR that "reflect a standard of protection similar to that found in U.S. law" led to the negotiation of provisions that go beyond the level of protection provided in the WTO TRIPS Agreement. Often referred to as "TRIPS-plus" provisions, they include expanding coverage to new sectors; establishing more extensive standards of protection; and reducing the flexibility options available in TRIPS, such as with respect to compulsory licensing. Some of the new measures also address technological innovations that have come about since the TRIPS Agreement.

The objective to apply existing IPR protections to digital media reflected the changing nature of global commerce. The language sought to extend provisions for IPR protection to new and emerging technologies and methods of transmission and dissemination. The language also called for standards of enforcement to keep pace with technological change and allow right holders legal and technological protections for their works over the Internet and other new media.

The May 10, 2007 Bipartisan Trade Agreement ("May 10^th Agreement")—related to the then-pending FTAs with Colombia, Panama, Peru, and South Korea—established certain flexibilities for patent protections to promote further access to medicines in developing countries while maintaining a strong overall level of IPR protection.⁶⁴ After the transfer of control of the House following the 2006 elections, Members of the new Democratic majority sought certain changes in the aforementioned pending U.S. FTAs. With respect to IPR, the congressional leadership sought to ensure that pending FTAs allowed developing country trading partners enough flexibility both to meet their IPR obligations and to promote access to life-saving medicines. A Bipartisan Trade Agreement between the Bush Administration and the House leadership, building on the 2002 TPA negotiating objectives, was reached on May 10, 2007.⁶⁵ Following the May 10^th Agreement, IPR language previously negotiated in the FTAs with Peru, Panama, and Colombia was modified to reflect its principles. The U.S.-South Korea FTA (KORUS) was not modified because South Korea is considered a developed country.

Congress passed the Bipartisan Comprehensive Trade Promotion and Accountability Act (P.L. 114-26) (TPA-2015) in June 2015, and President Obama signed the legislation on June 29. The IPR negotiating objectives include and expand upon the 2002 objectives. The 2015 objectives recognize the importance of digital trade to the economy and seek provisions to prohibit cybertheft and trade secret theft in the economy. The IPR objectives are considered principal negotiating objectives, meaning that a procedural disapproval resolution could be introduced to strip FTA implementing legislation of expedited legislation procedures if the legislation fails "to make progress on the policies, priorities, and objectives of the Act."⁶⁶ The objectives include

• Furthering adequate and effective protection of IPR through accelerated full implementation of the TRIPS Agreement and by ensuring FTAs negotiated by the United States "reflect a standard of protection similar to that found in U.S. law";
• Protecting IPR related to new technologies and new methods of transmission and distribution in a manner that "facilitates legitimate trade";
• Eliminating discriminatory treatment in the use and enforcement of IPR;
• Ensuring adequate rights holder protection through digital rights management practices;
• Providing strong enforcement of IPR;
• Negotiating the prevention and elimination of government involvement in violations of IPR such as cybertheft or piracy (a related protection of trade secrets and proprietary information collected by governments in the furtherance of regulations was contained in the negotiating objective on regulatory coherence); and
• Reaffirming the Doha Declaration on the TRIPS Agreement and Public Health, with additional language to "ensure that trade agreements foster innovation and access to medicine"—an objective that did not specifically refer to the patent protection provisions found in the May 10, 2007, Bipartisan Trade Agreement (discussed above), and where the added language seemingly could have been used to justify including or excluding those provisions in future FTAs.

In recent years, the United States increasingly has focused on free trade agreements (FTAs) as an instrument to promote stronger IPR regimes by foreign trading partners. In general, the United States has viewed the TRIPS Agreement and WIPO-administered treaties as a minimum standard and has pursued higher IPR protection and enforcement levels through regional and bilateral FTAs. To date, the United States has entered into 14 FTAs with 20 countries.

The Obama Administration also is conducting negotiations with the European Union (EU) on a comprehensive and high-standard FTA, referred to as the proposed Transatlantic Trade and Investment Partnership (T-TIP).⁶⁹ The United States and EU both maintain strong IPR standards and generally prioritize IPR protection and enforcement as a key trade negotiating objective. However, a final report by the U.S.-EU High Level Working Group on Jobs and Growth, which recommended the launch of the transatlantic FTA negotiations, suggested that it may be difficult to reconcile differences on the IPR obligations that each side typically includes in its FTAs.⁷⁰ For example, protection and enforcement of geographical indications could be controversial in the negotiations. The EU seeks strong GI protection because of their commercial value to EU producers (e.g., Parmesan cheese, Parma ham, Feta cheese, and Champagne). The United States tends to protect GIs through trademark law, and expresses concern that the EU approach to GIs is "over-broad" and negatively affects protection of trademark and market access for U.S. products that use generic names.⁷¹

Stakeholders on both sides could raise issues about how to balance IPR protection and enforcement with other public policy goals, such as access to medicines in poor or developing countries and the free flow of information. At the same time, T-TIP could lead to rules on trade secrets, an area of U.S. and EU concern in light of increased instances of trade secret theft internationally, including through cybercrime.⁷²

The Anti-Counterfeiting Trade Agreement (ACTA), which was negotiated outside of the WTO by the United States and nearly 40 other primarily developed countries, is intended to build on the TRIPS Agreement, such as by addressing new IPR issues in the digital environment. Concluded in 2010, the ACTA has not entered into force. The agreement's prospects are in question, following the European Parliament's rejection of it in 2012, amid widespread protests by advocates of Internet free speech. The ACTA needs instruments of ratification, acceptance, or approval from six signatories in order to enter into force. To date, Japan is the only party that has submitted a formal instrument of approval. IPR issues considered in the ACTA negotiations have reemerged in in the TPP and T-TIP negotiations, making the ACTA of continued congressional interest.

Patent protection is arguably one of the most contentious areas of U.S. FTA negotiations on IPR issues. In the context of pharmaceuticals, one view, espoused by the United States and other developed countries, is that patents provide incentives for innovation by enabling right holders to generate profits to recoup R&D and regulatory costs and invest in future innovations. Another view put forth by developing countries is that patents may raise the costs of drugs and delay the entry of generic competitors into the market, leading to concerns about impacts on affordable access to medicines.

Many FTAs in force include TRIPS-plus patent provisions, the most prominent of which are patent term length extensions, linkages between regulatory authority and patent status, data protection, compulsory licensing and parallel importation. The U.S. FTAs with Peru, Panama, and Colombia respond to the concerns of some Members of Congress over provisions that could restrict access to medicines in these countries and contain less ambitious standards for pharmaceutical patents, compared to previously negotiated FTAs. With respect to these issues in the TPP, the overall stated position of the U.S. Trade Representative (USTR) is to seek:

[p]harmaceutical IP provisions that promote innovation and the development of new, lifesaving medicines, create opportunities for robust generic drug competition, and ensure affordable access to medicines, taking into account levels of development among the TPP countries and their existing laws and international commitments[.]⁷⁴

Some key patent issues are discussed below.⁷⁵

Patent Term Extensions

Patent term extensions beyond the 20-year protection for a patent may be provided in cases of "unreasonable delays" in issuing patents due to regulatory review or administrative process. Such extensions increase the length of time right holders have no generic competition, enhancing their ability to recoup R&D costs through the revenue that they generate from patented drugs and may make up time used in obtaining marketing approval. At the same time, this increased revenue also represents increased costs to consumers, such as by delaying the market entry of presumably lower-cost generic drugs.

TRIPS requires patent protection terms of 20 years from the filing date. It does not require patent term extensions in cases of "unreasonable" delays, but does obligate members to ensure procedures, subject to conditions, for granting or registering patent rights within a reasonable period of time.⁷⁶ Many FTAs include provisions for mandatory patent term length extensions beyond the TRIPS obligation of patent protection terms of twenty years from the filing date. These FTAs provide for extensions in cases of "unreasonable" delays in the issuance of patents due to regulatory review or administrative process, which lessen the effective 20-year term of patent protection. The U.S.-South Korea FTA( KORUS), for instance, defines "unreasonable delays" to " ... at least include a delay in the issuance of the patent of more than four years from the date of filing of the application in the territory of the Party, or three years after a request for examination of the application, whichever is later."⁷⁷ Reflecting the May 10^th Agreement, U.S. FTAs with Colombia, Panama, and Peru state that patent term restorations in cases of "unreasonable delays" for pharmaceutical products are optional. At the same time, these FTAs require the countries to make "best efforts to process patent applications and marketing approval applications expeditiously with a view to avoiding unreasonable delays."⁷⁸

Patent Linkages

Under patent linkage, if a patent currently is valid in a country, the regulatory body of that country (the counterpart of the U.S. Food and Drug Administration, FDA) may not grant marketing approval for a generic version of that drug without the permission of the patent holder. Patent linkage arguably strengthens patent protection, but lengthens the time it takes for generic drugs to enter a market once the patent expires.

TRIPS does not contain patent linkage obligations. Generic drug manufacturers are able to apply for marketing approval without the patent owner's permission and prior to the expiration of the patent. In contrast, patent linkage is a common requirement in many U.S. FTAs, including KORUS.⁷⁹ With patent linkage, national regulatory authorities cannot provide marketing approval for a generic version of a patented drug without permission from the right holder, as well as notification to the right holder if marketing is permitted. In contrast, the U.S. FTAs signed with Peru, Panama, and Colombia do not tie marketing approval for a generic drug with the patent status of its brand name drug.

Data Protection

Data exclusivity provides a period of protection for test data⁸⁰ that prevents a generic company from relying on an innovator company's test data in order to gain marketing approval for a generic version of the brand name drug. During the data exclusivity period, the generic company would have to submit its own safety and efficacy data with new drug trials to get regulatory approval. Since clinical trials and other testing data submitted for marketing approval can be costly and take years to develop, test data protection provides an incentive for innovations. At the same time, such provisions may raise the cost of manufacturing generic versions of patented drugs, as well as delay access to generic forms of drugs.

In cases in which the patent holders must submit undisclosed data regarding the safety or efficacy of new pharmaceutical or agricultural products (such as data from clinical trials) in order to market them, TRIPS requires members to take measures to protect such data from disclosure and unfair commercial use, but does not prescribe any time period for this protection. Many U.S. FTAs take the test data protection standards beyond TRIPS. For new chemical products, these FTAs, including KORUS, generally provide a minimum five-year period of data exclusivity, which typically begins from the date of marketing approval in the country. In addition, for previously approved chemical products, KORUS requires a minimum three-year period of data exclusivity, which typically begins from the date of marketing approval in the country.⁸¹

The Colombia, Panama, and Peru FTAs maintain five years of data exclusivity for test data related to new chemical products. However, they also include other provisions that may reduce the data exclusivity term by a minimum of six months in practice. If the FTA country relies on marketing approval granted by the FDA and grants approval within six months of an application for marketing approval by a person that produced the data, then the five-year period begins in the FTA country when the drug was first approved in the United States (oftentimes called the "concurrent period"). As such, the data exclusivity period in the FTA country could run as long as the U.S. data exclusivity period, but no longer. The three-year data exclusivity period for previously approved chemical entities is optional.⁸² Data exclusivity for biologics is an evolving area of debate in trade policy (see text box).

Compulsory Licensing

A compulsory license is an authorization by a government for third parties (such as a company or the government itself) for the manufacture or use of a product under patent without the permission of the rights-holder. TRIPS permits signatories to issue compulsory licenses for patented devices and provide compensation to the owner of the patent and does not limit the situations in which such licenses may be issued. The third party must have attempted to obtain permission from the patent holder, although this requirement is waived in times of national emergency or other extenuating circumstances. U.S. FTAs with Australia and Singapore limit attaining compulsory licenses only for domestic use and to situations of remedying antitrust violations or in situations of public non-commercial use, national emergency, or other cases of extreme need. Also under these FTAs, the patent holder is under no obligation to provide test data, technical know-how or other undisclosed information for the patent subject to compulsory license. KORUS does not place any specific limitations on compulsory licensing. The compulsory license provisions have not been included in FTAs with developing countries.

Parallel Importation

Parallel imports, also known as grey-market goods, refer to goods imported into a country without permission of the rights-holder after those goods were legitimately sold elsewhere. Parallel importation relates to the concept of territorial exhaustion of IPR, which governs the extent of IPR after the first sale. Under a national system of exhaustion practiced in the United States, IPR are exhausted domestically after the first sale, but not abroad, thus prohibiting trade in those goods without permission of the rights-holder. Under an international system, IPR are exhausted at the first sale for any destination, and such goods can be exported freely. Some developing countries contend that parallel importation is an alternative method for governments to increase access to medicines in the absence of a compulsory license.⁸⁸ Pharmaceutical companies have voiced concerns that this practice threatens their ability to engage in price differentiation between different markets.

In the area of copyright protection, the United States has pursued certain TRIPS-plus measures in FTAs, such as extending copyright terms; including anti-circumvention provisions; and protecting rights-management information in its FTAs. The TRIPS Agreement does not mention any obligations regarding rights-management information, which is "electronic information that identifies a protected work, its author, and terms and conditions of use,"⁸⁹ perhaps due to the fact these technologies were not available at the time. In contrast, U.S.-negotiated trade agreements prohibit the removal or alteration of such information.

While patent protection has experienced policy shifts in the FTAs with Peru, Panama, and Colombia, copyright protection provisions have remained fairly consistent through the FTAs. In general, FTA signatories are obligated to provide an additional twenty years of copyright protection. This brings the minimum copyright term to seventy years from the death of the author or authorized publication, compared to fifty under the TRIPS Agreement. Responding to technological innovations not discussed in the TRIPS Agreement, many of the FTAs require trading partners to outlaw circumvention of technological measures protecting access to copyrighted works. These provisions build on the U.S. Digital Millennium Copyright Act (DMCA) of 1998.⁹⁰ Also based on the DMCA, many FTAs contain provisions that regulate the liability of Internet service providers (ISPs) for copyright infringement that occurs within their networks. Under the FTAs, ISPs are provided limited immunity from copyright liability in certain kinds of infringing activities if they comply with regulations. For instance, ISPs must block access to or remove infringing materials as soon as they are aware of the infringement. Copyright holders argue that it is necessary for ISPs to assist in enforcing copyright for copyright laws to be effective. However, critics claim that these provisions impose excessive burdens on ISPs, reduce the rights of Internet users, and limit the policy flexibility of FTA signatories in determining their own IPR regimes.

A company's ability to protect its commercially valuable proprietary information may affect its competitiveness or even its survival. Such proprietary information can include blueprints, production processes, marketing strategies, or sales information. Based on a 2010 survey of Australian, European, and U.S. companies about their data security practices, trade secrets constitute an average of two-thirds of the value of firms' information portfolios.⁹¹

In its 2015 Special 301 Report (discussed below), USTR described the international protection of U.S. trade secrets as a growing challenge threatening the economic security of the United States. The report highlights concern about inadequate protection and enforcement of trade secret law in certain countries, including as a way to further "indigenous innovation" policies. Companies are reportedly increasingly victimized by outright theft of their trade secrets, and have decried the often lax remedies available to combat such theft. Trade secret theft has taken on new and increased complexities in the digital environment, and the United States is increasingly concerned about trade secret theft through cybercrime. Penalties for trade secret theft vary widely among countries; some countries have no penalties at all while others have civil remedies or criminalize trade secret theft that results from computer hacking. In the United States, remedies for trade secret theft primarily are found in state law.⁹²

While the U.S. aim in the intellectual property chapters of the TPP seeks to establish criminal penalties for the theft of trade secrets, it may pursue aspects of this agenda through other trade negotiations or means of economic statecraft. Such an agenda may involve prohibiting countries from: (1) conditioning market access on technology transfer; (2) seeking concessional terms for acquiring or licensing IPR by state-owned enterprises (SOEs); (3) requiring the use of locally owned or developed IPR; (4) promoting the development of local standards to unfairly advantage local firms; and (5) requiring the unnecessary disclosure of confidential business information, or failing to protect such information. The Obama Administration's strategy on mitigating the theft of U.S. trade secrets, released in February 2013, underscores U.S. interest in seeking, in U.S. trade negotiations, new criminal remedy provisions for trade secret theft—similar to remedies provided in U.S. law.⁹³

U.S. trade policy also increasingly is focused on addressing new and evolving issues in international IPR protection and enforcement. The IPR landscape is changing, both due to the growing role of emerging markets in the global marketplace and the increased level of international trade taking place in the digital environment. Some of these issues are discussed below.

Indigenous Innovation

In the 2015 Special 301 Report, USTR states that the United States "continues to have serious concerns about the lack of clarity and the impact of the heightened utility requirements for patents that the Canadian courts have applied recently... These recent decisions, which have affected products that have been in the market and benefitting patients for years, have led to uncertainty for patent holders and applicants, including with respect to how to effectively meet this standard. This unpredictability also undermines incentives for investments in the pharmaceutical sector."

The Government of Canada responded to the accusations on June 30, 2014, claiming that its patent system is consistent with NAFTA and TRIPS; that those agreements do not dictate specific domestic application; that it provided minimum standards of treatment through extensive opportunity for domestic litigation; that invalidating a patent is not an expropriation subject to NAFTA Chapter 11; and that that "NAFTA tribunals are not courts of appeal for disappointed domestic litigants."¹⁰⁵ Other observers have maintained that there is no uniform standard for utility among countries, and no one standard enshrined in NAFTA.¹⁰⁶ The tribunal has not yet issued an award on jurisdiction or on the merits in the dispute.

Biodiversity and Traditional Knowledge

International trade negotiations increasingly have focused on the protection of plant and animal inventions, new plant varieties, traditional knowledge, and folklore. Some indigenous communities in developing countries and international non-governmental organizations have expressed concern about the use of patents to provide private rights for traditional knowledge and genetic material; the commercial use of such resources by entities other than the indigenous communities or countries from which such resources are derived; and the distribution of benefits from commercial use. The United States, other advanced countries, and business groups favor treating traditional knowledge and genetic material as intellectual property and protecting these resources through an IPR framework.

Article 27.3(b) of the TRIPS Agreement permits Member states to exempt "plants and animals other than micro-organisms, and essentially biological processes" from patentability. TRIPS requires Members to protect plant varieties through patent protection, some other system ("sui generis"), or a combination of the two. Paragraph 19 of the Doha Declaration added another dimension to the issue by requiring the TRIPS Council to probe the relationship between TRIPS, the UN Convention on Biological Diversity (CBD), and traditional knowledge and folklore. These issues also are being discussed in WIPO's Intergovernmental Committee on Intellectual Property and Genetic Resources, Trade Knowledge, and Folklore.

India, Brazil, and Peru, among other countries, contend that patent applicants should be required to disclose the source of genetic materials, including plant life and traditional knowledge, before obtaining patents. The United States and the European Union have advocated for national systems in which companies are granted permission to research genetic materials and are obligated to share benefits from patents derived from those genetic products.

Some earlier U.S. FTAs have required signatories to provide protection for plants, animals, and plant varieties. The recent FTAs with Peru, Panama, and Colombia do not mandate patentability for plants and animals, but state that the countries should take efforts to expand patent coverage to these areas and to maintain this protection once it is offered. Side-letters in these FTAs recognize the importance of biodiversity and traditional knowledge and pledge the countries to work together to address these issues through the IGC.

The Special 301 statute provides the overall guideline for identifying countries for the various lists. However, placement on one of the lists is country-specific and takes into consideration a host of factors, including the level and scope of the country's IPR infringement and their impact on the U.S. economy, the strength of the country's IPR laws and enforcement of IPR laws, progress made by the country in improving IPR protection and enforcement in the past year, and the sincerity of the country's commitment to multilateral and bilateral trade agreements. There is no "weighting criteria" for the factors or a formula to determine the placement of a country on the watch list. Furthermore, no particular threshold exists for determining when a country should be upgraded or downgraded on the list. In making determinations, the USTR gathers information based on its annual trade barriers reports, as well as consultations with a wide variety of sources, including industry groups, other private sector representative, Congress, and foreign governments.

Section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), as amended, prohibits unfair methods of competition or other unfair acts in the importation of products into the United States. It also prohibits the importation of articles that infringe valid U.S. patents, copyrights, processes, trademarks, semiconductor products produced by infringing a protected mask work (e.g., integrated circuit designs), or protected design rights. While the statute has been utilized to counter imports of products judged to be produced by unfair competition, monopolistic, or anti-competitive practices, it has become increasingly used for its IPR enforcement functions in recent years. Under the statute, the import or sale of an infringing product is illegal only if a U.S. industry is producing an article covered by the relevant IPR or is in the process of being established. However, unlike other trade remedies such as antidumping or countervailing duty actions, no showing of injury due to the import is required.

(Percent of Cases)

Source: ITC, FY2014 At a Glance: Intellectual Property Import Investigations.

Notes: The ITC reported 100 total active section 337 investigations and related (ancillary) proceedings. ITC cites, as examples of "consumer electronic products," head phones, TVs, ear buds, acoustic-magnetic surveillance equipment. ITC cites, as examples of "small consumer items," toys, cell phone cases, and robotic toys. ITC cites as examples of other goods, chemical compounds, toner cartridges, rubber resins, lighting products, windshield wipers, automobile tires, outdoor grills, and crawler cranes.

As noted above, Congress passed a new grant of Trade Promotion Authority in June 2015. With its passage, attention turns to the current agreements being negotiated with the TPP countries and with the European Union in the T-TIP. Congress may wish to consider how negotiators have carried out IPR negotiating objectives in these potential agreements. In a potential TPP, for example, Congress may choose to consider how negotiators interpreted the mandate to 'ensure that trade agreements foster innovation and access to medicine," and whether or not the result is consistent with the patent protection provisions found in the May 10, 2007 Bipartisan Trade Agreement. In addition, through the debate over a possible TPP, Congress may wish to examine the negotiating results for new negotiating objectives relating to IPR, such as those concerning indigenous innovation, "forced" localization barriers to trade in the digital environment, and cybercrime.

The extent to which U.S. FTA partners and WTO members are upholding their IPR commitments is of congressional concern. To date, the United States has concluded 14 FTAs with 20 countries. Some argue that negotiating high standard FTAs is not enough, and that "FTA commitments are meaningless if they are not consistently implemented an effectively enforced over time."¹¹⁷

Questions include whether existing U.S. trade policy tools, such as the "Special 301" process, bilateral consultations, and WTO and FTA dispute settlement mechanisms, are effective in bringing countries into IPR compliance. Aspects of these processes are subject to debate. For example, one question is whether "Special 301" designations are balanced in assessing countries' IPR regimes. Supporters contend that the Special 301 country designations—determined on a case-by-case basis and relying on interagency deliberations and consultations with Congress, foreign governments, and other stakeholders—accurately reflect countries' inadequacies in their IPR regimes. Others argue that the Special 301 is overly industry-driven and that country designations are not given systematically.

Some call for greater use of WTO/FTA dispute settlement mechanisms. The United States has been a complainant in over one-half (17 of 34) of WTO disputes concerning the TRIPS Agreement, and has been a respondent in 4 more. However, only one U.S. case has been filed since the year 2000—against China in 2007 (described above). No disputes have been brought under IPR provisions of U.S. FTAs. Congress may wish to consider the criteria by which USTR initiates cases, or evaluate the resources that may be necessary to investigate and bring additional cases.

Some policymakers have voiced concern over the effectiveness of current U.S. trade policy in addressing IPR trade challenges associated with emerging economies, such as China, India, and Brazil—countries with which there are no existing U.S. FTAs and with which the United States is currently not negotiating any FTAs. Congress could examine how existing trade policy tools are operating with respect to emerging economies. Beyond this, Congress could explore other options for advancing U.S. IPR trade policy objectives in emerging economies, including in the following areas:

Intellectual Property Forms

General TRIPS-Plus Provisions in FTAs

Scale-down of TRIPS-Plus Standards

Patents

Patent term extensions

No provisions

Mandatory extensions in cases of unreasonable delays in patent grants/regulatory approval

Jordan (Article 4.23.a),

Chile (Article 17.9.6; 17.9.2a), Singapore (Article 16.7.7; 18.8.4a), Australia (Article 17.9.8; 17.10.4), Morocco (Article 15.9.7; 15.10.3), CAFTA-DR (Article 15.9.6; 15.10.2), Bahrain (Article 14.8.6),Oman (Article 15.8.6), Korea (Article 18.8.6)

Optional extensions in cases of unreasonable delays in patent grants/regulatory approval

NAFTA (Article 1709.12)

Peru (Article 16.9.6), Panama (Article 16.9.6), Colombia (Article 16.9.6)

Market approval linked to patent status

No provisions

NAFTA (no mention),

Jordan (no linkage, but patent owner must be notified if another entity is seeking marketing approval for generic version of patented product, Article 4.23.b)

National regulatory authorities cannot provide marketing approval for a generic version of a patented drug without permission from rights-holder; also requires notification of rights-holder if marketing permitted

Chile (Article 17.10.2b), Singapore (16.8.4c), Australia (Article 17.10.4), Morocco (Article 15.10.4), CAFTA-DR (Article 15.10.2), Bahrain (Article 14.9.4), Oman (15.9.4), Korea (Article 18.9.5)

Eliminates mandate that regulatory authorities cannot approve a generic drug for marketing if patent for drug in place

Peru (Article 16.10.4), Panama (Article 15.10.4), Colombia (Article 16.10.4)

Protection for undisclosed test or other data

Members must protect data from unfair commercial use (Article 39.3)

Jordan (Article 4.22)

Provides for at least five years of data exclusivity from date of approval in country for pharmaceuticals that contain new chemical products

NAFTA (Article 1711.6), Bahrain (Article 14.9.1), Oman (Article 15.9(1-2), CAFTA-DR (Article 15.10.1), Singapore (Article 16.8(1-3)), Australia (Article 17.10.1), Morocco (Article 15.10.1), Chile (Article 17.10.1), Korea (Article 18.9(1-2))

Provides for at least five years of marketing exclusivity from date of approval in country of first filing if new drug is granted marketing approval within six months in country of second filing

Peru (Article 16.10.2), Panama (Article 15.10.4), Colombia (Article 16.10.2)

Issuance of compulsory licenses

Some restrictions in issuance of compulsory licenses; circumstances under which licenses can be issued not limited (Article 13)

NAFTA (Article 1709.10),

Limits issuance of compulsory license to specific cases: Correcting anti-competitive practices, public non-commercial contexts, national emergencies, and other extremely urgent situations

Jordan (Article 4.20), Singapore (Article 16.7.6), Australia (Article 17.9.7)

Not discussed

Chile (no mention), Morocco (no mention), CAFTA-DR (no mention), Bahrain (no mention), Oman (no mention)

Peru (no mention), Panama (no mention), Colombia (no mention), (no mention)

Parallel importing of patented products

TRIPS will not be used to discuss IPR exhaustion (Article 6)

Jordan (no mention), Chile (no mention), CAFTA-DR (no mention), Bahrain (no mention), Oman (no mention)

Parallel importation can be restricted or prohibited

NAFTA (Article 1709.5, 1709.9), Singapore (Article 16.7.2), Morocco (Article 15.9.4), Australia (Article 17.9.4)

Not discussed

Peru (no mention), Panama (no mention), Colombia (no mention), Korea (no mention)

Biodiversity and traditional knowledge

Members may exclude plants and animals from patentability (micro-organisms and non-biological and micro-biological processes must be eligible for patents); must provide protection of plant varieties (Article 27.3(b))

NAFTA (Article 1709.3), Bahrain (Article 14.8.(1-2)), Oman (Article 15.8.2, plants not discussed),

Jordan, (no mention), Singapore (no mention), Australia (no mention), Korea (no mention)

Countries shall make patents available for plants and animals

Morocco (Article 15.9.2, plants and animals mentioned, plant varieties are not mentioned)

Members may exclude plants and animals from patentability, but shall take reasonable effort to provide patent protection for plants or animals and maintain protection once offered

Chile (Article 17.9.2, mentions plants but not animals), CAFTA-DR (Article 15.9.2), Peru (Article 16.9.2), Panama (Article 15.9.2), Colombia (Article 16.9.2)

Copyrights

Rights-management information

Not discussed

NAFTA (no mention), Jordan (no mention)

Outlaws removal or alternation of information

Chile (Article 17.5.6), Australia (Article 17.4.8), Singapore (Article 16.4.8), Morocco (Article 15.5.9), CAFTA-DR (Article 15.5.8), Bahrain (Article 14.4.8), Oman (Article 15.4.8), Peru (Article 16.7.5), Panama (Article 15.5.8), Colombia (Article 16.7.5), Korea (Article 18.4.8)

Term of protection

No less than 50 years from authorized publication (Article 12)

NAFTA (Article 1705.4), Jordan (no mention)

No less than 70 years from death of author or authorized publication

Chile (Article 17.5.4), Singapore (Article 16.4.4), Australia (Article 17.4.4), Morocco (Article 15.5.5), CAFTA-DR (Article 15.5.4), Bahrain (Article 14.4.4), Oman (Article 15.4.4), Peru (Article 16.5.5), Panama (Article 15.5.4), Colombia (Article 16.5.5), Korea (Article 18.4.4)

Circumvention of copyrighted work

Not discussed

NAFTA (no mention)

Signatories must agree to prohibit circumvention

Jordan (Article 4.6), Chile (Article 17.5.5), Singapore (Article 16.4.7), Australia (Article 17.4.7), Morocco (Article 15.5.8), CAFTA-DR (Article 15.5.7), Bahrain (Article 14.4.7), Oman (Article 15.4.7), Peru (Article 16.7.4), Panama (Article 15.5.7), Colombia (Article 16.7.4), Korea (Article 18.4.7)

ISP Liability

Not discussed

NAFTA (no mention), Jordan (no mention)

ISPs are provided with limited liability in certain situations of copyright infringement on their servers if they comply with regulations

Chile (Article 17.11.23), Singapore (Article 16.9.22), Australia (Article 17.11.29), Morocco, CAFTA-DR (Article 15.11.27), Bahrain, Oman (Article 15.10.29), Peru (Article 16.11.29), Panama (Article 15.11.27), Colombia (Article 16.11.29), Korea (Article 18.10.30)

What follows is a discussion of key U.S. government agencies and coordinating bodies involved in U.S. efforts to protect and enforce IPR.

Office of the United States Trade Representative (USTR)

Private Sector Advisory Committee System

The USTR manages a private sector advisory committee system for trade policy, intended to provide information and advisory on U.S. negotiating objectives and bargaining positions before the United States enters into trade agreements, the operation of existing U.S. trade agreements, and other U.S. trade policy matters.¹³⁶ Statutorily established under section 135 of the Trade Act of 1974(P.L. 93-618), the private sector advisory system includes 16 Industry Trade Advisory Committees (ITACs), which are jointly administered by the USTR and Department of Commerce. ITAC membership draws from industry and labor. The ITACs reflect a range of U.S. economic sectors and policy issues, and one of the ITACs focuses on IPR.¹³⁷

Author Contact Information

Footnotes

U.S. Constitution, Article 1, Section 8.

In some cases, the effective duration of patent protection can be shorter, for example, because of regulatory delays in the approval of the patent or delays in obtaining marketing approval for the patented invention.

Uniform Trade Secret Act, §1(4).

Counterfeit goods should be distinguished from generic goods, i.e., in the case of generic forms of pharmaceutical medicines.

See CRS Report R42681, Stealing Trade Secrets and Economic Espionage: An Overview of 18 U.S.C. 1831 and 1832, by [author name scrubbed]. For more information, see CRS Report R43714, Protection of Trade Secrets: Overview of Current Law and Legislation, by [author name scrubbed].

USTR, 2015 Special 301 Report, April 2015, p. 20.

National Security Agency, Statement for the Record, Lieutenant General Keith Alexander, Commander, Joint Functional Component Command for Network Warfare, Before the House Armed Services Committee, Terrorism, Unconventional Threats, and Capabilities Subcommittee, May 5, 2009.

CRS Report R42547, Cybercrime: Conceptual Issues for Congress and U.S. Law Enforcement, by [author name scrubbed] and [author name scrubbed].

Office of Justice Programs, Bureau of Justice Statistics, "Cybercrime."

National Science Board (NSB), Science and Engineering Indicators 2015, pp. 6-39 – 6-49.

"Patenting is an intermediate step toward innovation, and patent data provide indirect and partial indicators of innovation. Not all inventions are patented, and the propensity to patent differs by industry and technology. Not all patents are of equal value, and not all foster innovation—patents may be obtained to block rivals, negotiate with competitors help in infringement lawsuits." W. Cohen, R. Nelson, and J. Walsh, "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," National Bureau of Economic Research (NBER), Working Paper No. 7552, 2000; cited in NSB, Science and Engineering Indicators 2015, p. 6-40.

WIPO, "Telecom Firms Lead WIPO International Patent Filings," press release, March 19, 2015.

Stephen E. Siwek, "Engines of Growth: Economic Contributions of the US Intellectual Property Industries," commissioned by NBC Universal, 2005, p. 2.

Department of Commerce, Intellectual Property and the U.S. Economy: Industries in Focus, March 2012, http://www.uspto.gov/news/publications/IP_Report_March_2012.pdf.

It is important to note that trade statistics may not capture the full importance of IP-intensive products to the U.S. economy, as many IP-intensive products are manufactured abroad as part of the global supply chain, and the full value added of these products is not accounted for in trade statistics. In addition, services statistics are limited.

CRS Report R43291, U.S. Trade in Services: Trends and Policy Issues, by [author name scrubbed].

Stephen E. Siwek, Copyright Industries in the U.S. Economy: The 2014 Report, Economists Incorporated, Prepared for the International Intellectual Property Alliance (IIPA).

PhRMA, 2015 Biopharmaceutical Research Industry Profile, Washington, DC, April 2015.

Ibid.

Nam D. Pham, IP-Intensive Manufacturing Industries: Driving U.S. Economic Growth, NDP Analytics, March 2015, p. 8.

Ibid.

Thomas Rogers and Andrew Zamosszegi, Fair Use in the U.S. Economy: Economic Contribution of Industries Relying on Fair Use: 2011, Prepared for the Computer & Communications Industry Association (CCIA), 2011. See also CRS Report RL33631, Copyright Licensing in Music Distribution, Reproduction, and Public Performance, by [author name scrubbed].

Thomas Rogers and Andrew Zamosszegi, Fair Use in the U.S. Economy: Economic Contribution of Industries Relying on Fair Use: 2011, Prepared for CCIA, 2011, p. 6.

Ibid., p. 7.

PhRMA, 2015 Biopharmaceutical Research Industry Profile.

For example, see Global Intellectual Property Center (GIPC), U.S. Chamber of Commerce, Measuring Momentum: GIPC International IP Index, First Edition, December 2012.

National Intellectual Property Rights Coordination Center (IPR Center), Intellectual Property Rights Violations: A Report on Threats to United States Interests at Home and Abroad, November 2011.

Robert G. Picard, "A Note on Economic Losses Due to Theft, Infringement, and Piracy of Protected Works," Journal of Media Economics, 17(3), 207-217, 2004.

Envisional, Technical Report: An Estimate of Infringing Use of the Internet, January 2011.

U.S. Government Accountability Office (GAO), Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods, GAO-10-423, April 2010; and Commission on the Theft of American Intellectual Property, The IP Commission Report.

IPR Center, Intellectual Property Rights Violations: A Report on Threats to United States Interests at Home and Abroad, November 2011.

OECD, The Economic Impact of Counterfeiting and Piracy, June 2008.

OECD, Magnitude of Counterfeiting and Piracy of Tangible Products: An Update, November 2009.

Frontier Economics, Estimating the Global Economic and Social Impacts of Counterfeiting and Piracy, A Report Commissioned by Business Action to Stop Counterfeiting and Piracy (BASCAP), February 2011.

Ibid.

Manufacturer's suggested retail price (MSRP) is the price of goods had they been legal. U.S. Department of Homeland Security, Intellectual Property Rights Seizure Statistics: Fiscal Year 2014.

There may be limitations on data estimating the impact of counterfeiting and piracy on the U.S. economy. Some critics point out that many of the estimates for losses associated with IPR infringement are generated by industry groups that may have self-interested motivations.

U.S. Commission on the Theft of American Intellectual Property, The IP Commission Report, May 2013. This Commission describes itself as an "independent and bipartisan initiative of leading Americans from the private sector, public service in national security and foreign affairs, academe, and politics."

McAfee, Unsecured Economies: Protecting Vital Information, 2009; cited in U.S. Chamber of Commerce, The Case for Enhanced Protection of Trade Secrets in the Trans-Pacific Partnership Agreement.

The GATT was originally established in 1947.

USTR, "United States Files WTO Cases Against China Over Deficiencies in China's Intellectual Property Rights Laws and Market Access Barriers to Copyright-Based Industries," press release, April 9, 2007, http://www.ustr.gov. See also CRS Report RL33536, China-U.S. Trade Issues, by [author name scrubbed].

WTO, "WTO issues panel report on U.S.-China dispute over intellectual property rights," press release, January 26, 2009. USTR, "United States Wins WTO Dispute Over Deficiencies in China's Intellectual Property Rights Law," press release, January 26, 2009. Daniel Pruzin, "WTO Publishes Final Ruling in U.S. Complaint Against Chinese IPR Enforcement Measures," International Trade Daily, January 27, 2009.

See CRS Report RL33536, China-U.S. Trade Issues, by [author name scrubbed]

Pascal Lamy, "Trade-Related Aspects of Intellectual Property Rights - Ten Years Later," Journal of World Trade, October 2004, p. 925.

"Extension of the Transition Period under Article 66.1 of the TRIPS Agreement for Least-Developed Country Members for Certain Obligations with Respect to Pharmaceutical Products," WTO Document IP/C/25, July 1, 2002.

WTO TRIPS Council, "Extension of the Transition Period Under Article 66.1 for Least Developed Country Members," June 12, 2013.

TRIPS Article 3 provides for national treatment, and TRIPS Article 4 provides for most-favored-nation treatment. TRIPS Article 5 states that obligations under Article 3 and 4 do not apply to procedures provided under WIPO agreements related to the acquisition or maintenance of IPRs.

Declaration on the TRIPS Agreement and Public Health, (WT/MIN(01)/DEC/2), November 14, 2001, available at http://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm.

Compulsory licenses are issued by governments to authorize the use of or production of a patented item by a domestic party other than a patent holder.

OECD, The Impact of Trade-Related Intellectual Property Rights on Trade and Foreign Direct Investment in Developing Countries, May 28, 2003, p. 21, http://www.oecd.org.

Keith E. Maskus, Intellectual Property Rights in the Global Economy, Institute for International Economics (IIE), Washington, D.C., August 2000.

Commission on Intellectual Property Rights (CIPR), Integrating Intellectual Property Rights and Development Policy, September 2002.

"Implementation of Paragraph 6 of the Doha Declaration on the TRIPS Agreement and Public Health," IP/C/W/405, August 30, 2003, and accompanying Chairman's statement, available at http://www.wto.org/english/news_e/pres03_e/pr350_e.htm.

WTO, "Intellectual property meeting mulls Irish tobacco plan, drug tariffs, sport, non-violation, press release, October 10 and 11, 2013.

The European Union (EU) signed an Instrument of Acceptance for EU members.

"Members accepting amendment of the TRIPS Agreement," http://www.wto.org/english/tratop_e/trips_e/amendment_e.htm.

WTO, "TRIPS and public health: dedicated webpage for notifications," https://www.wto.org/english/tratop_e/trips_e/public_health_e.htm.

These WCT and WPPT frequently are referred to as the WIPO Internet Treaties.

David J. Kappos, "Patent Law Harmonization: The Time is Now," Landslide, vol. 3, no. 6 (July/August 2011).

Monika Ermert, "G8 Governments Want ACTA Finalised This Year, SPLT Talks Accelerated," Intellectual Property Watch, July 9, 2008.

U.S. Patent and Trademark Office, "Harmonization," http://www.uspto.gov/learning-and-resources/ip-policy/harmonization.

See CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, by [author name scrubbed].

The May 10, 2007, Bipartisan Agreement on Trade Policy is available at https://ustr.gov/archive/assets/Document_Library/Fact_Sheets/2007/asset_upload_file127_11319.pdf.

CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, by [author name scrubbed]; and CRS Report R43491, Trade Promotion Authority (TPA): Frequently Asked Questions, by [author name scrubbed] and [author name scrubbed].

Ibid.

See CRS Report R42694, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, coordinated by [author name scrubbed].

"New TPP Leak Confirms Shift Toward Time-Based Transition on Drug IP," Inside U.S. Trade, August 7, 2015.

See CRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations, by [author name scrubbed], [author name scrubbed], and [author name scrubbed].

U.S.-EU High Level Working Group on Jobs and Growth, Final Report of the U.S.-EU High Level Working Group on Jobs and Growth, February 11, 2013, http://www.ustr.gov/about-us/press-office/reports-and-publications/2013/final-report-us-eu-hlwg.

USTR, 2012 National Trade Estimate Report on Foreign Trade Barriers, March 2015, p. 136, https://ustr.gov/sites/default/files/2015%20NTE%20Combined.pdf.

Executive Office of the President, Administration's Strategy on Mitigating the Theft of U.S. Trade Secrets, February 2013, http://www.whitehouse.gov//sites/default/files/omb/IPEC/admin_strategy_on_mitigating_the_theft_of_u.s._trade_secrets.pdf.

For more discussion of the differences between the TRIPS Agreement and regional FTAs that are in force, see CRS Report RL33205, Intellectual Property and the Free Trade Agreements: Innovation Policy Issues, by [author name scrubbed].

USTR, "The Trans-Pacific Partnership: Summary of U.S. Objectives."

For a discussion of pharmaceutical patent provisions in U.S. law, see for instance, CRS Report R41114, The Hatch-Waxman Act: Over a Quarter Century Later, by [author name scrubbed] and [author name scrubbed]; and CRS Report R41483, Follow-On Biologics: The Law and Intellectual Property Issues, by [author name scrubbed].

TRIPS Agreement, Article 62.2.

KORUS FTA, Article 18.8.6.

Colombia FTA, Article 16.9.6; Panama FTA, Article 15.9.6; and Peru FTA, Article 16.9.6, with quoted language from Peru FTA.

KORUS FTA, Article 18.9.5.

Test data is information generated on the safety or effectiveness of new pharmaceutical products, for example, through clinical trials, by pharmaceutical companies that are submitted to regulatory authorities, such as the FDA.

KORUS FTA, Article 18.9.1 and Article.18.9.2.

Colombia FTA, Article 16.10.2; Panama FTA, Article 15.10.2; and Peru FTA, Article 16.10.2.

CRS Report R42890, The Role of Patents and Regulatory Exclusivities in Pharmaceutical Innovation, by [author name scrubbed].

World Health Organization (WHO), WTO, and WIPO, Promoting Access to Medical Technologies and Innovation: Intersections Between Public Health, Intellectual Property, and Trade, 2012, p. 52.

USTR, "Stakeholder Input Sharpens, Focuses Work on Pharmaceutical IPR in the TPP," blog post, November 2013.

Sec. 7002(a)(7) of P.L. 111-148 (42 U.S.C. §262(k)(7)).

For example, see Office of Management and Budget, The Budget for Fiscal Year 2016, "Investing in America's Future," p. 63.

U.S. Government Accountability Office, U.S. Trade Policy Guidance on WTO Declaration on Access to Medicines May Need Clarification, GAO-97-1198, September 2007, p. 19.

CRS Report RL33205, Intellectual Property and the Free Trade Agreements: Innovation Policy Issues, by [author name scrubbed].

The DMCA (P.L. 105-304) prohibits disabling technological protection measures designed to protect copyright works through activities such as descrambling or decrypting copyrighted works.

Forrester Consulting, The Value of Corporate Secrets, Though Leadership Paper Commissioned by Microsoft and RSA, The Security Division of EMC, March 2010, https://www.nsi.org/pdf/reports/The%20Value%20of%20Corporate%20Secrets.pdf; cited in U.S. Chamber of Commerce, The Case for Enhanced Protection of Trade Secrets in the Trans-Pacific Partnership Agreement, p. 3.

Executive Office of the President, Administration Strategy on Mitigating the Theft of U.S. Trade Secrets, February 2013, p. 4.

The term "indigenous innovation" can be tied to China's Medium- to Long-term Plan for the Development of Science and Technology, released in January 26, which calls for China to become an "innovation-oriented society" and a global leader in science and technology.

U.S. International Trade Commission, China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy, Investigation No. 332-519, USITC Publication 4226, May 2011.

For more information, see CRS Report RL33536, China-U.S. Trade Issues, by [author name scrubbed].

USTR, 2015 Special 301 Report, p. 23.

USTR, 2015 National Trade Estimate Report on Foreign Trade Barriers, March 2015, pp. 2-3.

As defined by USTR, "local content" requirements are requirements to purchase domestically manufactured goods or domestically supplied services.

USTR, 2015 Special 301 Report, p. 49.

"Bayer fails to block generic cancer drug in India's top court," Reuters, December 12, 2014.

Under NAFTA, patents shall be granted "provided that such inventions are new, result from an inventive step, and are capable of industrial application." NAFTA provides that "inventive step," and "capable of industrial application," are synonymous with "non-obvious," and "useful," which underpins the concept of utility. Article 1709(1).

"Canada's Internationally Inconsistent "Promise Doctrine" for Patents," Eli Lilly background document.

"Canada: Eli Lilly Files Notice of Arbitration in $500 million NAFTA Dispute Against Canada," Bereskin and Parr, LLP, September 24, 2013.

Government of Canada, Statement of Defence (Case UNCT/14/2), June 30, 2014, http://www.international.gc.ca/trade-agreements-accords-commerciaux/assets/pdfs/disp-diff/eli-07.pdf.

"The 'Promise of the Patent' in Canadian Patent Law," Heenan Blaikie, LLP, Flash Bulletin, December 2013.

For the Special 301 provisions, see 19 U.S.C. §2242; Trade Act of 1974, as amended, (P.L. 93-618, §182).

S. Rep. No. 93-1298, 93d Cong. 2d Sess. 199 (1974).

ITC, Budget Justification Fiscal Year 2016, p. 7.

Ibid., p. 19; Department of Commerce, Intellectual Property and the U.S. Economy, Industries in Focus, March 2012.

For example, see S. 2029 and H.R. 3782, the Online Protection and Enforcement of Digital Trade Act introduced in the 112^th Congress.

U.S. Government Accountability Office, Intellectual Property: Federal Enforcement Has Generally Increased but Assessing Performance Could Strengthen Law Enforcement Efforts, GAO-08-157, March 2008.

The White House, "Fact Sheet – Executive Actions: Answering the President's Call to Strengthen Our Patent System and Foster Innovation," press release, February 20, 2014.

See CRS Report RL33663, Generalized System of Preferences: Overview and Issues for Congress, by [author name scrubbed].

91 U.S.C. §2462(b)(2).

USTR, "Active GSP Country Practices Reviews," updated November 2014.

U.S. Chamber of Commerce, Implementation of IP Obligations in U.S. Trade Agreements: An Assessment of U.S. Agreements with Australia, Canada, Chile, and Korea, November 2014, p. 17. This study sought to provide an "initial assessment of whether U.S. FTA partners are abiding by their IP commitments." It focused on Australia, Canada, Chile, and Korea, countries that it characterized as "regionally and economically diverse." Examining implementation of certain IPR commitments, the study found "positive implementation developments and challenges across all four countries." According to the study, Australia has most successfully implemented its FTA obligations, with South Korea a "close second" (noting that since KORUS is the newest U.S. FTA to enter into force, "it is too early to tell whether Korea is faithfully implementing all of its obligations." It found that Chile and Canada "lag significantly" behind Australia and Korea in terms of implementation of IPR commitments. See Executive Summary.

See CRS Report R43052, U.S. International Investment Agreements: Issues for Congress, by [author name scrubbed] and [author name scrubbed]. U.S. BITs provide investment protections through provisions such as requirements for non-discriminatory treatment, protections against expropriation, and the right to neutral, binding arbitration to resolve disputes investors and host countries.

See CRS Report R42694, The Trans-Pacific Partnership (TPP) Negotiations and Issues for Congress, coordinated by [author name scrubbed], and CRS Report R43291, U.S. Trade in Services: Trends and Policy Issues, by [author name scrubbed].

General information about the Department of Commerce is available at http://www.doc.gov.

IPR Center, Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection, January 2008, p. 21.

IPR Center, Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection, January 2008, p. 21.

IPEC, 2013 Joint Strategic Plan on Intellectual Property Enforcement, June 2013, p. 71.

Certain customs-related IPR policy-making resides within the Treasury.

IPR Center, Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection, January 2008, pp. 15-16. Additional information about CBP is available at http://www.cbp.gov.

Conversation with FDA official, November 26, 2007. Additional information is available on the FDA website, http://www.fda.gov.

IPR Center, Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection, January 2008, p. 18. Also see Copyright Office website, http://www.copyright.gov.

Ibid., pp. 17-18. Additional information about the State Department is available at http://www.state.gov.

Trade Capacity Database and general AID information is accessible at http://www.usaid.gov.

ITC website, http://www.usitc.gov.

In creating the IPEC, P.L. 110-403 repealed the authorities creating the National Intellectual Property Law Enforcement Coordination Council (NIPLECC). Established by Congress in 1999, NIPLECC coordinated U.S. activities to protect and enforce IPR domestically and abroad, drawing together the major federal agencies the help to enforce IPR. The Copyright Office participated in the Council in an advisory role. The U.S. Coordinator for International Intellectual Property Enforcement headed NIPLECC's interagency coordination efforts. NIPLECC, Report to the President and Congress on Coordination of Intellectual Property Enforcement and Protection, January 2008, pp. 3-4.

USTR, "ITEC Frequently Asked Questions."

The White House, Office of the Press Secretary, "Executive Order—Establishment of the Interagency Trade Enforcement Center," February 28, 2012; USTR, "Organization: Overview of the Functional Responsibilities of our Offices," https://ustr.gov/about-us/organization

World Trade Online, "Trade Enforcement Unit Will Not Dilute U.S. Standard for Bringing WTO Cases," March 1, 2012.

USTR, "Advisory Committees," http://www.ustr.gov/about-us/intergovernmental-affairs/advisory-committee.s

USTR, "Industry Trade Advisory Committees (ITAC)," http://www.ustr.gov/about-us/advisory-committees/industry-trade-advisory-committees-itac.