The US on Thursday placed India on its 'Priority Watch List' alleging lack of "sufficient measurable improvements" to its Intellectual Property (IP) framework on long-standing and new challenges that have negatively affected American right holders over the past year.
"Over the past year, India took steps to address intellectual property challenges and promote IP protection and enforcement. However, many of the actions have not yet translated into concrete benefits for innovators and creators, and long-standing deficiencies persist. India remains one of the world's most challenging major economies with respect to protection and enforcement of IP," an official US report said.
The US Trade Representatives (USTR) in its report identified 11 countries, including India, in its 'Priority Watch List'. China, Indonesia, Russia, Saudi Arabia and Venezuela are among others. It has also placed 25 countries, including Pakistan and Turkey, on the Watch List.
In the report, the US said that these countries will be the subject of increased bilateral engagement with the USTR to address IP concerns.
Specifically, over the coming weeks, the USTR will review the developments against the benchmarks established in the Special 301 action plans for countries that have been on the 'Priority Watch List' for multiple years.
For such countries that fail to address US' concerns, the USTR will take appropriate actions, such as enforcement actions under Section 301 of the Trade Act or pursuant to World Trade Organisation or other trade agreement dispute settlement procedures, necessary to combat unfair trade practices and to ensure that trading partners follow through with their international commitments, it said.
In its India section of the report, the USTR said that long-standing IP challenges facing US businesses in India include those which make it difficult for innovators to receive and maintain patents in that country, particularly for pharmaceuticals, insufficient enforcement actions, copyright policies that do not properly incentivise the creation and commercialisation of content, and an outdated and insufficient trade secrets legal framework.
In addition to these long-standing concerns, India also further restricted the transparency of information provided on state-issued pharmaceutical manufacturing licenses, and expanded the application of patentability exceptions to reject pharmaceutical patents, it alleged.
India also missed an opportunity to establish an effective system for protecting against the unfair commercial use, as well as the unauthorised disclosure, of undisclosed test or other data generated to obtain marketing approval for certain agricultural chemical products, the report alleged.
According to the USTR, last year it engaged with India to secure meaningful IP reforms on long-standing issues, including patentability criteria, criteria for compulsory licensing, and protection against unfair commercial use, as well as unauthorised disclosure, of the test or other data generated to obtain marketing approval for pharmaceutical products.
In a warning to India and various other countries, the USTR said that to maintain the integrity and predictability of IP systems, governments should use compulsory licenses only in extremely limited circumstances and after making every effort to obtain authorisation from the patent owner on reasonable commercial terms and conditions.
"Such licenses should not be used as a tool to implement industrial policy, including providing advantages to domestic companies, or as undue leverage in pricing negotiations between governments and right holders," it said.
As such, it is also critical that foreign governments ensure transparency and due process in any actions related to compulsory licenses, it said.
The US will continue to monitor developments and to engage, as appropriate, with trading partners, including India, the report said.
In India, rulings by government agencies are attempting to extend the scope of mandatory collective management of rights and statutory license fees for certain types of digital music services, it said.
Also, the collection and distribution of royalties to the US and other right holders should be carried out on a national treatment basis, it added.
At the same time, the report also notes some of the best practices by India in the IP sector last year. For instance, India's Cell for Intellectual Property Rights Promotion and Management (CIPAM) organises and spearheads the government's efforts to simplify and streamline IP processes, increase IP awareness, promote commercialization, and enhance enforcement.
The USTR said India has yet to take steps to address long-standing patent issues that affect innovative industries.
Patent applicants face costly and time-consuming patent opposition hurdles, long timelines for receiving patients, and excessive reporting requirements, it said.
In the pharmaceutical and agricultural chemical sectors, it said India continues to lack an effective system for protecting against the unfair commercial use, as well as the unauthorised disclosure, of undisclosed test or other data generated to obtain marketing approval for such products.
It alleged that despite India's justifications of limiting IP protections as a way to promote access to technologies, New Delhi maintains extremely high customs duties directed to IP-intensive products, such as medical devices, pharmaceuticals, information communications technology products, solar energy equipment and capital goods.