Updated February 7, 2022
Intellectual Property Rights (IPR) and International Trade
Protection and enforcement of intellectual property rights
billions of dollars per year worldwide. Innovation can be
(IPR) are longstanding key components of U.S. trade
costly and time-consuming, but IPR infringement often may
policy. Congress has a constitutional responsibility to
see relatively low risk of penalties and high profits. The
legislate on and oversee IPR matters in U.S. trade policy,
digital environment heightens enforcement challenges. In
which have evolved over time. The growing importance of
FY2020, U.S. Customs and Border Protection (CBP)
emerging markets has introduced new views on IPR and
reported making 26,503 seizures of IPR-infringing goods
challenges to enforcement. New technologies present
valued at $1.3 billion, with China as the largest source.
distinct challenges to combating counterfeiting and piracy.
Figure 1. IPR Trade for Selected Countries, 2020
Most recently, the Coronavirus Disease 2019 (COVID-19)
pandemic is renewing debates about the role of IPR
protections in providing global access to medicines.
Background
IP is defined as a creation of the mind embodied in physical
and digital objects. Governments grant time-limited legal
rights to creators to prevent others from making, copying,
selling, or otherwise using their creations. Known as IPR,
these rights can take different forms, such as patents,
copyrights, trademarks, undisclosed data (trade secrets),

and geographical indications (GIs). IPR generally aim to
Source: WTO, 2020 data in World Trade Statistical Review 2021.
encourage innovation and creative output by allowing
Note: Charges for the use of IP include the use of proprietary rights
inventors to recoup expenses and benefit from their
and for licenses to reproduce or distribute IP; licensee payments can
creations exclusively for a period of time and/or negotiating
take various forms, such as royalties and fees. EU=Extra-EU trade.
payment in return for others using them (e.g., royalties,
U.S. Trading Partners’ IPR Protection. While many U.S.
licensing fees). IPR also aim to encourage broader benefits
trading partners have strengthened IPR laws and
by allowing inventors, artists, and society at large to build
enforcement, some aspects of their regimes continue to
on innovations after their IPR expire.
pose trade and investment barriers for U.S. firms. The
IP and Economic Impact. IP is considered important to
Office of the U.S. Trade Representative (USTR) has cited
U.S. innovation, economic growth, and comparative
as among key concerns: lax border and criminal
advantage internationally. A range of U.S. industries rely
enforcement against counterfeits, including in the digital
on IPR protection. Yet, lawful limitations to IPR, such as
environment; high levels of digital piracy, including
“fair use” copyright exceptions for media, research, and
cybertheft of trade secrets; and gaps in trade secret
teaching, can also further innovation and add value. Many
protection and enforcement. China and India, for instance,
traded goods and services are IP-based. Licensing and fees
present significant challenges in their forced technology
generated from the use of IP are part of services trade.
transfer and other industrial policies, which may
disadvantage U.S. IP holders in these markets. Among
Developed countries traditionally have been the primary
developed economies, the European Union (EU) approach
source of IP, but emerging markets also are becoming
to GIs, for example, may limit market access for U.S.
major providers. Globally, by country, the United States is
exporters of products that are common food names.
the largest exporter of IP, while the European Union (EU)
bloc is the largest importer (see Figure 1). Historically, the
Trade Policy Tools for IPR
United States has been the top filer of patents under the
The use of trade policy to advance IPR internationally
Patent Cooperation Treaty (PCT) system, administered by
emerged prominently with the 1994 North American Free
the World Intellectual Property Organization (WIPO). In
Trade Agreement (NAFTA) and World Trade Organization
2019, China overtook the United States for the first time in
(WTO) 1995 Agreement on Trade-Related Aspects of
international filings; China remained ahead of the United
Intellectual Property Rights (TRIPS). As IPR took on a
States in 2020, respectively, with 68,720 and 59,230 filings
greater role in trade, differences in countries’ IPR regimes
(total global filings of 275,900). Some analysts have
led to frictions in global commerce. The establishment of
questioned the quality of China’s patent filings and whether
common rules on IPR in the international trading system
its filing numbers accurately indicate innovation levels.
aimed to bring more certainty and to address IPR-related
disputes more systematically.
IPR Infringement. Quantifying IPR infringement is
difficult, given its illicit nature, although some estimates of
Multilateral IP Rules. The TRIPS Agreement established
trade in counterfeit and pirated goods are in the hundreds of
minimum standards of protection that most WTO members
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Intellectual Property Rights (IPR) and International Trade
must provide to patents, copyrights, trademarks, GIs,
Indonesia, Russia, Saudi Arabia, Ukraine, and Venezuela), and
undisclosed data, and other IP. These standards incorporate
23 “watch list” countries of concern. USTR reviews online and
core WTO non-discrimination principles. TRIPS also set
physical “notorious” markets involved in IPR infringement in
out civil, administrative, and criminal enforcement
a separate annual report. It can also investigate and enforce
U.S. IPR through Section 301 of the Trade Act of 1974 (as
procedures and remedies, as well as border measures.
USTR did with China in 2018).
TRIPS obligations are subject to enforcement under the
ï‚· Section 337 of the amended Tariff Act of 1930 authorizes
WTO dispute settlement mechanism. TRIPS has certain
the International Trade Commission (ITC) to prohibit U.S.
exceptions and flexibilities. It allows compulsory licensing
imports that infringe on U.S. IPR. If the ITC finds a violation,
for patents in specific circumstances, and exempts least-
it may issue an exclusion order or cease and desist order.
developed countries from most obligations until July 1,
Section 337 cases have been largely patent-focused, though
2034, and pharmaceutical-related obligations until January
the number of trade secrets-related cases have been growing.
1, 2033. In the 2001 WTO “Doha Declaration,” WTO
ï‚· CBP enforces IPR at U.S. borders by seizing goods that
members agreed to interpret TRIPS to support WTO
infringe on U.S. copyrights and trademarks, and enforcing
members’ right to protect public health, particularly to
Section 337 exclusion orders. Interested parties may report
promote access to medicines.
suspected violations through CBP’s e-Allegations program.
ï‚·
Other IPR treaties, dating back to the 1800s and which
Under the U.S. Generalized System of Preferences (GSP), a
developing country’s IPR policies and practices may be an
TRIPS builds on, are administered by WIPO, a specialized
eligibility criteria for duty-free benefits of U.S. imports from
U.N. agency. Newer treaties also have been concluded
such country. Some bills to renew GSP, which expired at the
under WIPO, notably the “Internet Treaties,” that address
end of 2020, are pending in the 117th Congress.
digital IPR issues that are not in TRIPS.
Issues for Congress
TRIPS has elicited debate among some stakeholders about
Trade Policy Priorities. Congress may use potential TPA
how it seeks to balance innovation and other public policy
renewal to reaffirm or modify U.S. trade negotiating
objectives. A major, ongoing WTO debate centers on how
objectives on IPR. U.S. trade policy generally has promoted
best to provide global access to COVID-19 vaccines and
expansion of IPR, but some stakeholders have debated this
therapeutics, and whether to “waive” or offer greater
approach. IPR provisions in USMCA sparked debate on the
flexibilities for TRIPS obligations. The Biden
role of patents and data exclusivity in incentivizing
Administration has voiced support for the concept of a
innovation and supporting access to medicines. The growth
limited IPR waiver for COVID-19 vaccines—a position
of digital trade also poses issues for online intermediary
which divides Members of Congress.
liability of infringing content, cross-border data flows, data
U.S. IPR Trade Objectives. Since 1988, Congress has
protection, and cyber theft of trade secrets.
included IPR protection as a principal negotiating objective
Remedies for U.S. IP Holders. Congress may evaluate the
in trade promotion authority (TPA). The 2015 TPA (P.L.
timeliness of U.S. IPR trade remedies. The ITC may take
114-26), which expired on July 1, 2021, directed the
up to 18 months to reach a final determination in Section
executive branch to ensure that U.S. free trade agreements
337 investigations. CBP may face particular challenges
(FTAs) “reflect a standard of protection similar to that
found in U.S. law” (“TRIPS
assessing risk, given high volumes of low-value shipments,
-plus”), and apply existing IPR
protection to digital media through the WIPO “Internet
which constitute a large share of IPR seizures.
Treaties.” It added new objectives to address cyber theft,
Trading Partners’ IPR Commitments. Congress may
protect trade secrets and proprietary information, and
consider which measures may be most effective in
“foster innovation and access to medicines.”
strengthening global IPR protections. Options include to:
ï‚·
IPR in U.S. Trade Agreements. Since NAFTA, U.S.
enhance U.S. trade monitoring and enforcement, such as
through “Special 301,” and with trading partners under
FTAs have included IPR obligations, often TRIPS-plus.
existing trade agreements, as well as work with allies in these
The United States-Mexico-Canada Agreement (USMCA)
efforts, where effective;
contains the most recent set of IPR commitments in a U.S.
ï‚· direct the Administration to pursue new trade agreement
FTA. Some USMCA commitments are new or updated,
negotiations that prioritize IPR issues; and
compared to other U.S. FTAs, including on criminal
ï‚· examine whether current U.S. trade policy tools to advance
penalties for trade secret theft, IPR enforcement in the
IPR require changes to increase their effectiveness and how to
digital environment, and enhanced disciplines for GIs.
best balance such efforts with other public policy objectives.
Other trade agreements also feature IPR commitments. In
Multilateral Issues. Congress may continue to oversee and
the U.S.-China “phase one” agreement in January 2020,
shape the executive’s engagement on IPR issues in the
China committed not to require technology transfer and to
WTO and WIPO. Issues of interest may include TRIPS and
strengthen IP enforcement, but most U.S. concerns about
COVID-19 responses, and enforcement of IPR obligations
technology transfer and IP theft remain unresolved.
in WTO dispute settlement. Congress also may examine the
Other Trade Policy Tools. The U.S. government also has
implications of IPR actions for future broader U.S. trade
other IPR-related trade authorities:
policy and priorities. See CRS Report RL34292,
ï‚· USTR identifies countries with inadequate IPR regimes in its
Intellectual Property Rights and International Trade.
annual “Special 301” report, pursuant to the Trade Act of
1974, as amended. In 2021, USTR identified nine “priority
Shayerah I. Akhtar, Specialist in International Trade and
watch list” countries (Argentina, Chile, China, India,
Finance
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Intellectual Property Rights (IPR) and International Trade

IF10033
Liana Wong, Analyst in International Trade and Finance


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https://crsreports.congress.gov | IF10033 · VERSION 16 · UPDATED

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