Updated September 15, 2023
Intellectual Property Rights (IPR) and International Trade
Intellectual property rights (IPR) protection and
(PCT) system, administered by the World Intellectual
enforcement are key components of U.S. trade policy, and
Property Organization (WIPO). China and the United States
the United States plays a leading role in global IPR trade
comprised, respectively, 25.2% and 21.2% of total PCT
(Figure 1). Congress has a constitutional responsibility to
application filings (278,100) in 2022. Some analysts have
legislate and oversee IPR matters in U.S. trade policy. Since
noted that patent filings are one of several indicators of
1988, Congress has included IPR protection as a principal
innovation levels and that patents may vary in quality.
objective in U.S. free trade agreement (FTA) negotiations
IPR Infringement. Given its illicit nature, IPR
(P.L. 100-418). Debates over IPR issues have intensified
infringement can be difficult to quantify. Innovation can be
with China and other emerging markets’ growing role in the
costly and time-consuming, but IPR infringement may incur
global economy, the emergence of new technologies and
relatively few penalties and high profits. The digital
digital trade, and issues posed by the COVID-19 pandemic
environment heightens enforcement challenges, given the
about global access to medicines.
growth of online piracy and other factors. Globally, trade in
Figure 1. IPR Trade for Selected Countries, 2022
counterfeit and pirated goods reached an estimated $464
billion, or 2.5% of global trade in 2019 (Organization for
Economic Cooperation and Development/European Union
[EU]). In FY2022, U.S. Customs and Border Protection
(CBP) reported seizing 20,812 shipments of IPR-infringing
goods, with an estimated value of nearly $3 billion. China,
which historically has been home to a robust counterfeit
goods trade, remained the largest source of such seizures.

U.S. Trading Partners’ IPR Regimes. While many U.S.
Source: WTO, World Trade Statistical Review 2023. Figure, CRS.
trading partners have strengthened IPR laws and
Note: Preliminary estimates for 2022. Charges for the use of IP
enforcement, some aspects of their regimes continue to
include the use of proprietary rights and for licenses to reproduce or
pose trade and investment barriers for U.S. firms. The
distribute IP; licensee payments can take various forms, such as
Office of the U.S. Trade Representative (USTR) has cited
royalties and fees. EU = Extra-EU trade.
as key concerns some trading partners’ lax border and
Background
criminal enforcement against counterfeits, including in the
IPR are time-limited legal rights granted by governments to
digital environment; high levels of digital piracy; and gaps
creators to prevent others from making, copying, selling, or
in trade secret protection and enforcement. For instance,
otherwise using their creations. IPR include patents,
China’s technology transfer and other industrial policies
copyrights, trademarks, undisclosed data (trade secrets),
may disadvantage U.S. IP holders in these markets. Among
and geographical indications (GIs). IPR generally aim to
developed economies, the EU approach to GIs, for
foster innovation and creative output by permitting IPR
example, may limit market access for U.S. exporters of
holders to benefit from the creations exclusively for some
products that are common food names, and EU approaches
time and/or negotiate payment for the use of intellectual
to regulation of the digital economy and artificial
property (IP) by others (e.g., royalties), allowing holders to
intelligence affect U.S. IP (e.g., addressing illegal sharing
recoup expenses (e.g., R&D). After the IPR expire, others
of copyrighted content, transparency obligations for online
can build on the innovations. The exclusivity granted to IPR
platforms with respect to content moderation).
holders may raise prices or limit access to protected goods.
Trade Policy Tools for IPR
Some Members of Congress and stakeholders have debated
The use of trade policy to advance IPR internationally
the validity of the arguments behind these rationales, such
emerged prominently with the former 1994 North American
as how IPR protections can affect access to medicines.
Free Trade Agreement (NAFTA) and World Trade
IP and Economic Impact. The U.S. government generally
Organization (WTO) 1995 Agreement on Trade-Related
assesses IP to be important to U.S. innovation, economic
Aspects of Intellectual Property Rights (TRIPS). As IPR
growth, and comparative advantage internationally. A range
took on a greater role in trade, differences in countries’ IPR
of U.S. industries rely on IPR protection. Lawful limitations
regimes led to frictions in global commerce. International
to IPR (e.g., “fair use” copyright exceptions for media,
trade rules governing IPR aimed to bring more certainty
research, and teaching) can also further innovation and add
and address IPR-related disputes more systematically.
value. IP licensing and use fees comprised 14% of U.S.
Multilateral IP Rules. TRIPS established minimum
services exports and 8% of U.S. services imports in 2022.
standards of IP protection that most WTO members must
In 2019, China overtook the U.S. historical lead to become
provide, based on core WTO nondiscrimination principles.
the top patent filer under the Patent Cooperation Treaty
It set civil, administrative, and criminal enforcement
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Intellectual Property Rights (IPR) and International Trade
procedures and remedies, and border measures. TRIPS
• Section 337 of the amended Tariff Act of 1930: Per this law,
obligations are subject to WTO enforcement.
the U.S. International Trade Commission (ITC) may ban U.S.
TRIPS has certain exceptions and flexibilities. It allows
imports that infringe on U.S. IPR. If the ITC finds a violation,
compulsory licensing for patents in specific circumstances,
it may issue an exclusion order or cease and desist order.
Section 337 cases have been largely patent-focused, though
and exempts least-developed countries from most
the number of trade secrets-related cases have been growing.
obligations until July 1, 2034, and pharmaceutical-related
•
obligations until January 1, 2033. In the 2001 WTO “Doha
Seizures: CBP enforces IPR at U.S. borders by seizing goods
that infringe on U.S. copyrights and trademarks, and enforcing
Declaration,” WTO members agreed to interpret TRIPS to
Section 337 exclusion orders.
support WTO members’ right to protect public health,
• U.S. Generalized System of Preferences (GSP): Under this
particularly to promote access to medicines. TRIPS has
program, the President considers a developing country’s IPR
elicited some stakeholder debate about how it seeks to
policies and practices when extending duty-free benefits on
balance innovation and other aims.
U.S. imports from such country. A bill to renew GSP, which
expired at the end of 2020, is pending in the 118th Congress.
COVID-19 “TRIPS Waiver
A major WTO debate has centered on how best to provide
Issues for Congress
global access to COVID-19 vaccines and therapeutics, and
Trade Policy Priorities. Congress may use potential TPA
whether to “waive” or offer greater flexibilities for TRIPS
renewal to reaffirm or modify U.S. trade negotiating
obligations. In 2022, WTO members approved a five-year
objectives on IPR. U.S. trade policy generally has promoted
“TRIPS waiver” of patent-related obligations for COVID-19
IPR expansion, but some stakeholders have debated this
vaccines. The Biden Administration’s support for the waiver
approach. USMCA sparked debate on the role of patents
divided Members of Congress. WTO members are now
and data exclusivity in incentivizing innovation and
debating whether to extend the waiver to COVID-19
supporting access to medicines, a debate renewed by the
diagnostics and therapeutics.
COVID-19 pandemic. The growth of digital trade also
Other IPR treaties, dating back to the 1800s and on which
poses issues for online intermediary liability, cross-border
TRIPS builds, are administered by WIPO, a specialized
data flows, data protection, and cyber theft of trade secrets.
U.N. agency. Newer WIPO treaties, notably the “Internet
Remedies for U.S. IP Holders. Congress may evaluate the
Treaties,” address digital IPR issues that are not in TRIPS.
timeliness of longstanding U.S. IPR trade remedies. The
U.S. IPR Trade Objectives. Since 1988, Congress has
ITC takes an average of 18 months to reach a final
included IPR protection as a principal negotiating objective
determination in Section 337 investigations. CBP may face
in trade promotion authority (TPA). The 2015 TPA (P.L.
particular challenges assessing risk, given high volumes of
114-26), which expired in 2021, directed the executive to
low-value shipments, which constitute a large share of IPR
ensure that U.S. FTAs “reflect a standard of protection
seizures. Tracking IPR infringement in e-commerce
similar to that found in U.S. law,” and apply existing IPR
shipments and supply chains poses further challenges.
protection to digital media through the WIPO “Internet
Congress also may monitor the implementation of new IPR
Treaties.” It added new objectives to address cyber theft,
remedies (e.g., P.L. 117-336, which authorizes sanctions for
protect trade secrets and proprietary information, and
theft of U.S. trade secrets by certain foreign actors).
“foster innovation and access to medicines.”
Trading Partners’ IPR Commitments. Congress may
IPR in U.S. Trade Agreements. Since NAFTA, U.S.
consider which measures may be most effective in
FTAs have included IPR obligations that build on TRIPS.
strengthening global IPR protections. Options include to
The United States-Mexico-Canada Agreement (USMCA),
enhance U.S. trade monitoring and enforcement of trading
the most recent U.S. FTA, contains new or updated IPR
partners’ IPR obligations; direct the Administration to
commitments, compared to other U.S. FTAs, including on
pursue new FTA negotiations that prioritize IPR issues; and
criminal penalties for trade secret theft, IPR enforcement in
expand the scope of ongoing executive trade initiatives to
the digital environment, and enhanced disciplines for GIs.
include IPR. Congress also may examine whether to change
Some limited trade deals also have IPR commitments. For
existing U.S. trade tools to advance IPR to increase their
example, in the 2020 U.S.-China “phase one” agreement,
effectiveness or balance with other public policy objectives.
China committed not to require technology transfer and to
Multilateral Issues. Congress may continue to oversee and
strengthen IP enforcement, but most U.S. concerns about
shape U.S. multilateral engagement on IPR. A key issue
technology transfer and IP theft remain unresolved. IPR
may be the TRIPS COVID-19 waiver; questions remain
does not appear to be a top focus of current Biden
over the effectiveness of this approach to promote global
Administration trade initiatives, such as in the Indo-Pacific,
COVID-19 treatments access; its implications for U.S.
but may come up as it relates to digital trade negotiations.
technological competitiveness (e.g., vis-à-vis China); and
Other Tools. U.S. IPR-related trade tools also include:
the role of Congress in changing U.S. obligations under
•
international IPR rules. See CRS Report RL34292,
“Special 301” of the amended Trade Act of 1974: USTR
Intellectual Property Rights and International Trade.
identifies countries with inadequate IPR regimes in its annual
statutorily required “Special 301” report. USTR reviews online
Shayerah I. Akhtar, Specialist in International Trade and
and physical “notorious” markets involved in IPR
Finance
infringement in a separate annual report. It can also investigate
and enforce U.S. IPR through Section 301 of the Trade Act of
Liana Wong, Analyst in International Trade and Finance
1974 (as USTR did with China in 2018).
IF10033
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Intellectual Property Rights (IPR) and International Trade


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https://crsreports.congress.gov | IF10033 · VERSION 20 · UPDATED

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