13 Protection of intellectual property
rights outside the EU
| (34753)
6201/13
SWD(13) 30
| Commission report on the protection and enforcement of intellectual property rights in third countries
|
| Legal base | —
|
| Department | Business, Innovation and Skills
|
| Basis of consideration | EM of 23 March 2013
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| Previous Committee Report | None
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| Discussion in Council | None foreseen
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
|
Background
13.1 Effective protection of intellectual property rights
(IPRs) is essential in today's knowledge society, where competitiveness
relies essentially on creativity and innovation. EU companies
need stable and safe IPR regimes, not only in the EU where this
is already ensured to a large extent, but also abroad, where infringement
of IPR can cause significant financial losses for EU right holders
and legitimate businesses. EU consumers also need to be protected
from the harm that can be caused by counterfeit imports, such
as medicines, food and beverages, body care articles, toys and
electrical equipment. Despite almost all the trading partners
of the EU adopting legislation that implements at least the minimum
standards set out in the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS), serious deficiencies have
been noted in some countries in terms of the practical implementation
of such legislation and the way it is enforced.
13.2 So as to focus its efforts effectively,
the Commission carries out periodical surveys of the protection
and enforcement of IPRs outside the EU. Information gathered through
these surveys, together with other sources of information, helps
the Commission determine a list of priority countries where deficiencies
in the protection and enforcement of IPRs cause the greatest injury
to EU interests, and where, therefore, the Commission will focus
its efforts. The survey is a specific action point from the Strategy
for the Enforcement of Intellectual Property Rights in Third Countries,
adopted by the Commission in 2004, with the purpose of reducing
the level of IPR infringements beyond EU borders. Information
gathered through the 2010 survey has been used to prepare this
report on the protection and enforcement of intellectual property
rights in third countries. More than 400 replies were received,
covering around 80 countries. Around 60% of respondents were businesses.
13.3 This report summarises the methodology used
in determining the priority countries and provides a rationale
for determining the updated list of priority countries. The report
provides an assessment of the IPR situation by each priority country,
acknowledging positive efforts made, and highlighting areas which
are still of concern. It also sets out EU action taken to improve
the IPR regime in each priority country.
The report
Global results
13.4 On a scale from nought to ten (with nought
being the worst), more than 70% of the respondents gave marks
of five or lower in regard to the effectiveness of the current
IPR (protection and enforcement) situation, reflecting a poor
perception of the average level of IP protection in a number of
third countries and confirming the need for continued action.
Not surprisingly, the protection of IP was viewed by respondents
as particularly problematic in certain third countries and these
will require particular attention in the years to come.
13.5 Assessing the extent to which IPR protection
and enforcement has improved over the last two years, more than
two thirds of the respondents gave marks of five or lower (on
the same scale), reflecting a stable situation (without noticeable
improvement nor worsening at a global level).
SPECIFIC ISSUES
13.6 The replies were variable in regard to the
effectiveness of the IP protection mechanisms. The data suggests
that problems in the area of copyright, designs, data protection
and geographical indications were somewhat less frequent than
for patents and trademarks (for both of which respondents gave
scores of three and four with a higher frequency).
13.7 No clear trend in the replies could be identified
on the effectiveness of enforcement mechanisms in connection with
the various IP rights, with all of them attracting evenly distributed
scores (centred on two which was consistently the most frequently
assigned score).
13.8 Regarding the various enforcement mechanisms
(administrative, civil, criminal measures, customs procedures)
the replies suggest that the situation is worrying, with average
marks below 2.5 for each of them (on a scale from nought to five),
and marks of one and two attracting the most replies.
13.9 The most frequently suffered infringements
related to trade marks (mentioned by 44% of the respondents),
followed by patents and copyrights (each mentioned by about 24%
of the respondents) and then the other IP rights to a lesser extent.
These infringements were mainly linked to local sales and local
production (mentioned by 43% and 37% of the respondents respectively),
followed by importation into the country concerned (29%), while
exportation from the country concerned either to the EU or to
other third countries attracted lower scores (each of these two
cases being mentioned by about 12% of the respondents).
13.10 30% of the respondents declared that infringement
of their IP rights resulted in risks to the health or safety of
customers, which is particularly worrying, the Commission says.
13.11 25% of respondents considered that there
are differences in the treatment of enforcement cases between
nationals and foreigners in the country concerned, and 17% considered
that certain provisions of national IP law in the country concerned
are specifically detrimental to foreign right. About 25% of the
respondents reported local measures which, while not constituting
IPR infringements as such, are nevertheless considered to be particularly
detrimental to foreign right-holders.
UPDATED LIST OF PRIORITY COUNTRIES
13.12 The number of goods suspected
of infringing IP rights,
detained by customs at EU borders, remains disturbing, with more
than 114 million articles detained in 2011 (corresponding to 91,245
interventions of customs services). Products for daily use and
products potentially dangerous to the health and safety of European
consumers now account for 28.6% of the total amount of detained
articles (suspected trademark infringements concerning food and
beverages, body care articles, medicines, electrical household
goods and toys), up from 14.5% in 2010.
13.13 To better focus EU cooperation on IPR protection
and enforcement with third countries, the Commission considers
that the list of priority countries, first identified in 2006
and updated in 2009, has to be reviewed. It also says that many
of the countries mentioned below are making substantial efforts
to improve and strengthen their IPR protection and enforcement
systems, for example by reviewing national legislation, increasing
number of actions carried out by law enforcement bodies, and improving
institutional capacity in the administrations concerned (in particular
through the training of staff).
13.14 One of the main conclusions of the report
is that China remains the main challenge regarding IPR enforcement,
not only because it attracted the most responses and the strongest
concerns from EU industry, but also because 73% of all suspect
(imported) goods detained at EU borders in 2011 and not released
came from China. However, in certain product categories, other
countries were the main source, notably Turkey for foodstuffs,
Thailand in the case of non-alcoholic beverages, Panama for alcoholic
beverages, and Hong-Kong for mobile phones.
13.15 Deficiencies in IPR systems are identified
not only in emerging countries, but also in certain developed
countries. This is for instance still the case for Israel (significant
issues regarding pharmaceutical-related IPR) and Canada (regarding
the protection of pharmaceuticals and geographical indications).
The USA has still not implemented two IPR-related WTO panel decisions
that affect European right-holders.
13.16 Attempts by the EU and other supporters
of an effective IPR system to constructively address enforcement
problems in multilateral fora (WTO, World Intellectual Property
Organisation (WIPO), World Customs Organisation (WCO))
continue to be opposed by countries such as India, Brazil, Ecuador,
Argentina, Nigeria and others. This has prevented these institutions
from addressing IPR enforcement issues that could be discussed
and resolved multilaterally.
13.17 Priority countries are split into three
categories with the highest priority (priority 1) being those
countries where the situation regarding IPR protection and enforcement
is the most detrimental to EU right holders. The priority countries
are:
- priority 1: China;
- priority 2: India, Indonesia, the Philippines,
Turkey; and
- priority 3: Argentina, Brazil, Canada, Israel,
Korea, Malaysia, Mexico, Russia, Thailand, Ukraine, USA, Vietnam.
China
Progress
13.18 In recent years, China has made important
efforts to align its legal system with international IPR standards.
It has clear objectives and a long term strategy in the field
of IPR, with the overall ambition to become an innovation economy
by 2020. In this area the reference is still the National IP Strategy
(NIPS) adopted in June 2008, which has been complemented by
the 12th Five
Year Plan released in March 2011 with the objective of
developing an "innovative country".
13.19 The new Patent Law that entered into force
in 2009 was in this respect a major step forward. The (still on-going)
revision of the Trademark Law, as well as the launch in 2011 of
a new revision of the Copyright Law, will also constitute key
components of the future IPR environment in China. The "Special
Campaign against the infringements upon IPR and the Manufacturing
and Sales of Counterfeit and Inferior Commodities" ended
in June 2011 and the decision — influenced by the EU and
others — to continue on a permanent basis the structure
created to coordinate the Campaign demonstrates the increased
importance given by China to IPR protection and enforcement. It
is also evident that the Chinese authorities are making efforts
to improve the understanding and knowledge of IP and the importance
of its protection, among relevant officials involved in the protection
and enforcement of IP. The strong increase in patent and trademark
applications, including among Chinese stakeholders (92% of the
patent applications in 2011 were filed by domestic applicants),
also demonstrate the need for a well-functioning IPR system.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.20 China remains the main concern of EU companies,
as evidenced by both the comments provided by respondents to the
survey and the fact that 73% of all suspect (imported) goods detained
at EU borders in 2011 and not released came from China (without
mentioning the significant damages reported by European companies
due to Chinese counterfeit goods found on the Chinese or other
non-European markets).
13.21 The improvements recently introduced have
not kept pace with the scale of infringements, especially regarding
online piracy and fake markets. The improvements that had been
observed during the Special Campaign are under threat because
the efforts of Chinese authorities has somewhat decreased, in
particular at provincial level, after the end of this initiative.
The situation is also due to the fact that access to the Chinese
judicial system remains difficult in practice, because of burdensome
and costly legalisation and notarisation requirements, the lack
of an effective preliminary injunction system, and the inadequacy
of the damages awarded. It is also reported that criminal sanctions
are still difficult to obtain. Moreover, the willingness of authorities
to take effective action is at times — although improving
— affected by a lack of effective cooperation between involved
authorities, by insufficient training of the staff involved, and
by a very low level of public awareness regarding IPR. A more
recent worrying development is a noted increase in cases involving
the theft of trade secrets in China, as well as cases of trade
secret theft that occur outside China for the benefit of Chinese
entities, combined with difficulties in gaining appropriate remedies
through Chinese courts in such cases .
13.22 To an important extent the weaknesses of
IPR enforcement in China are also due to the very unequal picture
that exists between the provinces and cities. In the most advanced
provinces or cities like Beijing or Shanghai the standards of
the courts are reasonably good and improving while in other cities
this is not yet the case. Moreover, the lack of independence of
the judicial system in China creates additional burden to EU companies,
locals are often favoured in opposition to foreigners, in particular
in cases involving strategic industries or state-owned enterprises.
13.23 Additionally, China also tends to be wary
of multilateral efforts to fight piracy and counterfeiting, and
thus has to date not demonstrated real engagement for in-depth
enforcement discussions in international fora.
EU ACTION
13.24 The need for China to better protect IPR
is a constant message conveyed by the Commission to Chinese authorities
at all levels of government, including the highest level.
13.25 The EU and China in 2004 established a
framework for co-operation and dialogue in the area of IPR, with
two components: an EU-China IP Dialogue, which takes place once
a year in Brussels or in Beijing and allows both sides to exchange
information and prospective views on a wide range of IPR issues,
including legislative, regulatory and enforcement aspects of trademark,
patent, design, geographical indication and copyright protection;
and an EU-China IP Working Group, which takes place twice a year
in Beijing, with the participation of European industry. Unlike
the Dialogue, the Working Group focuses on more concrete issues
or sectors and is more technical in nature.
13.26 The co-operation and dialogue have been
supported by technical co-operation activities within the IPR2
Project (of about €16 million for the 2007-11 period). This
program ended in September 2011. A new co-operation programme
is being prepared between China and EU which should be launched
early in 2013.
13.27 The IP Dialogue, the IP Working Group and
the IPR2 project have provided a unique opportunity for the EU
to engage China in a constructive dialogue on IP issues of concern
to the EU. As a result, China has for example taken a number of
EU comments and concerns into account when revising some of its
IPR legislation, relating namely to patents, copyrights and trademarks
(especially, in this case, regarding bad faith trademark applications
and well-known trademarks). However, despite these positive developments,
significant progress on priority issues for the EU is still needed,
especially insofar as IPR enforcement in China is concerned.
13.28 Another positive development was the adoption
in 2009 of an EU-China Action Plan concerning customs co-operation
on IPR enforcement. This plan foresees the exchange of general
risk information and trends, the creation of networks of seaports
and airports to target high risk consignments, strengthening cooperation
with other law enforcement agencies, and the development of partnerships
between business communities and customs authorities in China
and the EU. The second phase covers the period 2011-2012. Agreement
has been reached to extend the Action Plan to a third phase starting
in 2013. The creation of a network has provided the EU with very
valuable insights into the possibilities for collaboration between
customs of the associated airports and seaports. This has resulted
in a number of concrete detentions and cases, some of them high-profile
ones. The port-to-port approach has also facilitated information
exchange and established strong working relations that should
be maintained. The same applies with regards to the enhanced collaboration
with business in the EU-China Customs activities on IPR enforcement.
In 2012 a successful seminar took place on strengthening cooperation
between customs and other law enforcement agencies in China. Overall,
the EU is reasonably satisfied with the implementation of the
Action Plan so far; however, at the same time it should be stressed
that there is still much room for improvement.
13.29 So as to help EU small and medium-sized
enterprises (SMEs) understand the peculiarities of the Chinese
IPR system, the Commission has been providing support since 2008
through the China IPR SME Helpdesk. This service provides free-of-charge
helpline, trainings, and web-based self-help materials.
13.30 Progress is also sought through negotiating
an ambitious bilateral agreement on geographical indications.
That would include a high level of protection from all the agencies,
an ex-officio protection in China for our names (shortlist), and
a single window to which to apply in the future. In parallel,
we seek a joint action against counterfeiting in wines and spirits.
These two initiatives were underlined at the September 20, 2012,
EU-China Summit in Brussels.
India
Progress
13.31 Some limited improvements have been noted
in Indian IPR legislation, for example regarding enforcement by
customs services, as well as co-operation between various enforcement
departments, IPR awareness amongst officials, and increased manpower
in the Patent Office.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.32 In India, several constraints applicable
to the protection of patents are detrimental to EU companies.
This applies in particular to certain aspects of patent law where
restrictive patentability criteria combined with difficulties
to enforce patents granted, and with extremely broad criteria
being applicable for granting compulsory licences or for the revocation
of patents, make the effective patent protection in India very
difficult, notably for pharmaceuticals and chemicals but also
for other sectors where local innovation is being promoted. Another
area of concern is the apparent absence of an effective system
for protecting undisclosed test and other data generated to obtain
marketing approval for pharmaceutical and agricultural chemical
products against unfair commercial use, as well as unauthorized
disclosure.
13.33 Further progress remains necessary regarding
IPR enforcement, including through a stronger commitment of relevant
authorities to fight IPR infringements, and through sanctions
against infringers that act as an effective deterrent. It still
appears that the implementation of IPR enforcement mechanisms
needs further strengthening, especially outside of Delhi. Concerns
have also been reported by respondents with respect to the length
and uncertainty of the outcome of court proceedings, as well as
insufficient trained officials, in particular in the judiciary.
Strong engagement from the authorities to enforce IP and to improve
the implementation of civil, criminal and customs procedures will
remain very important not only for right-holders but also for
creating a climate favourable to innovation.
13.34 The large number of locally produced infringing
goods remains a source of serious concern, especially regarding
patents and trademarks. Detentions of suspect goods of Indian
provenance by EU customs are worrying notably for medicines and
related products (a sector where India represented 28% of all
articles detained in 2011), especially when considering the associated
potential risks for patients' health. Another issue, making it
more difficult for customs to take action, is that IPR-infringing
medicines are often sent in small consignments (in terms of number
of articles detained in postal traffic into the EU, about 36%
were medicines in 2011, and about 35% of all postal articles detained
by EU customs were shipped from India).
13.35 Externally, India often opposes multilateral
efforts to address piracy and counterfeiting in fora such as WTO,
WCO and WIPO. It is important that IPR enforcement discussions
take place at these institutions and that India participates in
the debate in an open and result-oriented spirit. The same considerations
apply to the on-going international climate change (United Nations
Framework Convention on Climate Change (UNFCCC)) negotiations,
where India (with other countries) push for measures which would
weaken IPR protection in that area (such as patentability exclusions,
systematic compulsory licensing).
EU ACTION
13.36 The EU is pursuing a number of avenues
of action. Most importantly, the EU is currently negotiating with
India a Free Trade Agreement (FTA) including an IPR chapter, but
so far progress has been very limited. An IP Dialogue was agreed
with India in 2005, but has regrettably never been implemented
due to reticence on the Indian side. Such a mechanism has demonstrated
(with other third countries) its utility as a mean to informally
and rapidly discuss emerging IPR issues, including concrete difficulties
faced by right-holders.
13.37 The Commission recently adopted a proposal
to amend the EU Customs Regulation (May
2011), which includes specific language clarifying the status
of generic medicines in transit, and published related guidelines.
One of the aims of this proposal was to ensure that the problems
that arose in recent years regarding the detention by EU customs
of Indian generic drugs transiting via the EU would not reoccur.
Indonesia
Progress
13.38 Some improvements and positive developments
have taken place in Indonesia over the last few years. Indonesian
authorities have expressed more political will to improve their
IP environment. The laws on the protection of patents, trademarks,
designs, copyright and trade secrets appear to be relatively clear
although some still lack implementing rules. Trademark registration
is reported to be faster than in the past. Moreover, some further
positive points were mentioned by respondents regarding enforcement,
notably the willingness of Indonesian authorities to eradicate
corruption (even if it is still reported as a serious problem),
and to improve the effectiveness of the police and of the Commercial
Court which handles IP civil legal cases.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.39 Important weaknesses persist in the enforcement
of IPRs in Indonesia, in particular in view of the absence of
efficient and coordinated actions by enforcement bodies, and the
lack of deterrent sanctions (many of the cases initiated are not
prosecuted). In addition, there appears to be insufficient allocation
of well trained staff.
13.40 Respondents also noted the lack of transparency
in IPR registration procedures, involving limited public access
to data, and stressed the lack of public awareness about the importance
of IP protection and enforcement in Indonesia. Inadequate customs
enforcement was mentioned in particular since inefficient border
controls allow easy access for Chinese counterfeit products into
the country. Digital piracy and, more broadly, corruption have
also been reported to be widespread.
EU ACTION
13.41 The EU has engaged in high-level discussions
on IP with Indonesia, most recently in the framework of the EU-Indonesia
Business Dialogue. Moreover, the third phase of the EU-ASEAN Cooperation
Project on IPR (ECAP III) is in the process of being finalised
and launched.
13.42 Given the positive feedback from users
of the China IPR SME Helpdesk, and the IPR challenges in Indonesia,
the Commission is now setting up an ASEAN IPR SME Helpdesk. This
service, starting early 2013, will provide free-of-charge helpline,
trainings, and web-based self-help materials.
The Philippines
Progress
13.43 Some improvements have taken place in the
Philippines in the last two-three years, in particular regarding
awareness-raising and training provided, increased cooperation
between public and private sectors as well as amongst IP authorities
themselves. IP laws and regulations are, despite some shortcomings,
described as "solid" by most respondents. The issuance
(in November 2011) of guidelines and approved Rules of Procedure
on IPR cases, which recommend the designation of 22 special IP
courts, were signalled as one of the most recent and important
positive developments in the IP field.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.44 Reported weaknesses relate in particular
to low public awareness, slow IP rights registration procedures.
Moreover, insofar as IPR enforcement is concerned, deficient interagency
coordination seems to remain a particular obstacle to effective
IPR protection and enforcement. In particular respondents noted
a lack of leadership, systems and procedures in the inter-agency
task force that leads to weak coordination, gaps in enforcement
and prosecution. The lack of data and information for effective
decision-making, transparency of operations and monitoring of
execution policies was also being reported. It also seems to be
difficult for right holders to seek assistance from enforcement
authorities, such as police agencies, in case of an infringement.
As regards court proceedings, court cases are slow to be resolved,
the system is reportedly overburdened and inefficient and sufficient
IPR expertise seems to be missing at many levels. With regard
to criminal enforcement, low numbers of arrests and successful
prosecutions, along with inadequate punitive sanctions, fail to
deter IPR violators. Overall strong political will to improve
the situation both for IP protection and enforcement appears to
be missing.
EU ACTION
13.45 Work on re-launching the technical assistance
program ECAP III (which would also cover the Philippines, in addition
to other Asian countries) is underway and should enable training
and capacity building to take place. An ASEAN IPR SME Helpdesk
is also being set up.
Turkey
Progress
13.46 Tracking of piracy has improved as a result
of training organised jointly by the Ministry of Culture and Tourism
(MoCT), the Ministry of Interior (police), anti-piracy commissions
and the judiciary. Anti-piracy commissions are working efficiently,
and specialised IPR police units have conducted successful operations
in the fight against piracy. The administrative capacity of the
Turkish Patent Institute (TPI) has further improved as a result
of tailor-made and jointly organised training programmes. Jointly
organised events also helped improve the dialogue among IPR stakeholders.
Consistency of the TPI final decisions with IPR courts has improved
and appeals decreased. Latest statistics indicate that rejections
of the TPI decisions by IPR courts were down by 30% compared to
2009. The speed of trademark registrations has also increased.
Turkey is now an observer at the Customs Code Committee (IPR section)
and shows willingness to cooperate regarding of customs enforcement.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.47 Issues linked to bad faith registration,
"similar" trademarks and industrial designs remain unresolved
(although a positive development in this area is the on-going
elaboration of new Examination Guidelines for the registration
of patents, designs and trademarks). Existing structured dialogue
mechanisms, such as consultation meetings between the TPI and
IPR-holders, are still too weak to address systemic problems.
Draft laws on patents, industrial designs, geographical indications
and trademarks were prepared by the TPI in consultation with stakeholders.
However, they have been pending for a long time at different levels
of the law-making process. Judicial procedures including injunctions,
and search and seizure warrants are still lengthy and the decisions
of different courts in similar cases are not always consistent.
Another concern is that the number of specialised IPR judges has
decreased in recent years. Concerning customs enforcement, the
centralised customs database and IT management system is not used
effectively by the customs points to prevent counterfeit goods
from entering the market. No accurate data are provided about
checks and seizures against counterfeit goods. The effects of
the 2008 decision of the Turkish Constitutional Court, which allowed
the release of goods identified as counterfeit back to the market
(estimated to be around two million items), are still being felt.
Equally detrimental is the order to return counterfeit goods to
the offenders, together with storage problems of the confiscated
materials experienced by right-holders and difficulties in getting
preliminary injunctions continue.
EU ACTION
13.48 The second EU-Turkey IPR Working Group
(WG), held in January 2012 in Ankara, included representatives
of European industry, who were able to raise their respective
concerns. The Office for Harmonisation in the Internal Market
also presented its practice on bad faith trademarks, followed
by discussions on likelihood of confusion and well-known marks.
Turkey agreed to provide information on its review of its examination
guidelines with regard to bad faith trademarks registrations.
Overall, the meeting helped improve understanding between the
two sides and has contributed to creating the basis for more open
and fruitful discussions in the future. The third meeting of the
IPR WG is foreseen for the first quarter of 2013.
Argentina
Progress
13.49 In general, the IP laws in Argentina are
good and should provide tools for right-holders to defend their
rights in court. Certain actions have been pursued in the area
of customs and police against counterfeiting and piracy and some
structural changes have been implemented to speed up trademark
and patent examination and registration.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.50 However, it has been reported that the
process for obtaining judicial remedies is slow and disappointing
in terms of its efficiency, the level of compensation and deterrence.
The backlog of patent and trademark examinations is still problematic
and there is a lack of adequate protection of proprietary test
data linked to medical and agrochemical products. The EU may also
have concerns on new guidelines for patent examination in the
field of pharmaceuticals. On-line piracy of music is widespread.
The uncertain legal framework around internet service providers
is potentially detrimental for the access to remedies for right-holders.
Large quantities of counterfeit products are still on sale in
the big towns and cities, often in special markets, and customs
authorities do not make wide use of their ex-officio powers.
EU ACTION
13.51 Although an IP Dialogue was launched in
2008, regrettably only one meeting has taken place so far. It
would be important to continue this Dialogue, as it is a valuable
platform for a constructive discussion and increased mutual understanding
on IPR matters, and to improve the IPR situation in Argentina.
13.52 Given the positive feedback from users
of the China IPR SME Helpdesk, and the IPR challenges in Argentina,
the Commission is now setting up a Mercosur IPR SME Helpdesk.
This service, starting mid-2013, will provide free-of-charge helpline,
trainings, and web-based self-help materials.
Brazil
Progress
13.53 Domestic commitment towards a more effective
system of protection and enforcement of intellectual property
has continued. Resources and staffing levels have been raised
within the national IP office (INPI) to speed up patent and trademark
examinations and further increases are planned in the near future.
The public-private cooperation under the National Council to Combat
Piracy is also on-going and has carried out considerable training
activities, organised seminars and workshops for enforcement authorities
and the judiciary and set up visible campaigns such as the 'City
free of Piracy Project' which has covered six of the major cities
and will expand to a further six in the immediate future. The
Brazilian copyright legislation is in the process of review in
conjunction with a new law on the internet. Brazil is also developing
a register of Geographical Indications (under INPI): 35 GIs were
protected by end of October 2012, of which five EU GIs. More GIs
are now in process of individual registration, both from Brazil
and foreign countries.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.54 Despite this visible local reform and activity,
concrete improvements on the ground for IP right-holders have
not fully materialised yet. Judicial proceedings remain slow and
sanctions do not for the most part act as a deterrent. Internet
piracy is rife and registration of trademarks and patents still
take too long. Although Brazil promotes innovation and is interested
in technology transfer, it appears that Brazilian taxation of
licensing contracts and royalty payments can act as a disincentive
to foreign companies. The role of Brazilian Health Surveillance
Agency (ANVISA) in the patent examination remains an area of concern.
13.55 At an international level (in WTO, WIPO
and WCO) Brazil is still reluctant to engage in discussions on
the enforcement of IPR.
EU ACTION
13.56 On a bilateral basis, however, discussions
with Brazil which started in 2008 have continued in a positive
and constructive manner through the annual IPR Dialogues. Geographical
indications have also been addressed at the recent first meeting
of the Dialogue on Agriculture, with a view to improving mutual
understanding and protection. This forum for detailed exchange
of information is providing a good basis for mutual positive developments.
A Mercosur IPR SME Helpdesk is also being set up.
Canada
Progress
13.57 Positive developments have been noted recently
in Canada, such as a recent copyright reform bringing Canadian
legislation better in line with WIPO's "Internet Treaties"
(which still remain to be ratified by Canada, more than 10 years
after their signature), and improvements planned regarding IPR
enforcement (based on ACTA). Canada has also shown political will
to address certain IPR issues, for example with its domestic copyright
reform and by accepting to discuss with the EU the protection
of geographical indications under the framework of the Comprehensive
Economic Trade Agreement (CETA).
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.58 The Canadian IPR system still features
shortcomings, which were noted a few years ago already, not only
by foreign countries but also by domestic organisations. Despite
recent positive developments, many issues remain to be addressed,
in particular the lack of ratification by Canada of major IPR
treaties relating to trademarks and copyright, weaknesses in the
protection of pharmaceuticals and of geographical indications,
in enforcement mechanisms (in particular regarding ex-officio
customs seizures), and in the sharing of information between Canadian
IPR enforcement authorities and right-holders. Moreover, the new
copyright law includes broad exceptions which may prove detrimental
to right-holders.
EU ACTION
13.59 In the on-going negotiation of the bilateral
"CETA" trade agreement between the EU and Canada, the
EU still aims to attain the level of ambition expressed in the
joint scoping report of 2009.
Israel
Progress
13.60 Positive developments have been noted especially
regarding the amendment of several laws dealing with the protection
of IPRs for medicines. In particular, an amendment was adopted
extending the period of data protection for medicines based on
new chemical entities to six years (or six years and a half as
from marketing approval in another recognized country). In addition,
the Patent Act was amended to provide for the publication of patent
applications after 18 months from filing. The legislative process
is currently on-going as regards modifications to the patent term
extension regime in Israel. Also steps have been taken to reduce
the duration of the marketing registration procedure from 16 to
12 months.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.61 The inadequate protection of IPRs in Israel
remains a major concern. In particular, research-based pharmaceutical
companies faced (in past tense as situation changed now and too
early to draw conclusions) significant delays and difficulties
as regards the protection and commercialisation of innovative
pharmaceutical products in Israel. Patent applications were not
published prior to the grant of the patent, which resulted in
lack of any provisional protection for patent applicants. In addition,
due to the Israeli system of pre-grant opposition and the lengthy
examination of pharmaceutical patent applications (on average
more than six years), the period during which patent applications
remained unpublished and thus unprotected could last for several
years.
13.62 In addition, the exclusivity period of
protection for medicines, including, in particular, patent term
extension is considerably limited due to a linkage with the period
of protection available in one of a number of "recognised"
countries (currently including the EU, the USA and a number of
other countries). These measures are clearly detrimental to foreign
innovative pharmaceutical companies.
13.63 As regards copyright, Israel has recently
changed its copyright legislation but several concerns remain
with regard to on-line piracy. Problems also persist as regards
illegal live Internet streaming (affecting, in particular, European
sports rights owners). Israel also needs to adopt clear rules
on the liability for online intermediaries.
EU ACTION
13.64 The EU has engaged in discussions with
the Israeli authorities on some of the patent issues referred
to above and these discussions have shown a willingness of Israel
to take into account some of the concerns expressed. In particular
it has been closely following the work on legislative amendments
concerning IPR protection for medicines in Israel and has had
constructive exchanges with Israeli authorities regarding some
provisions that could negatively impact EU industry.
Korea
Progress
13.65 Improvements have taken place in particular
regarding the amendment of IP laws, notably on copyright, as well
as measures taken to address on-line piracy and sales of counterfeit
goods, new customs IT tools, and actions taken by the relevant
authorities when infringement was brought to their attention by
the right-holders. The conclusion of FTAs with the EU and the
US are also highlighted as positive points by respondents.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.66 Serious concerns are still being reported
by respondents, in particular concerning the requirements for
patent applications and the way foreign operators are treated
in the granting of patents and in their ability to enforce these
before Korean Courts. In addition, there are still concerns raised
regarding the high level of Internet piracy and the low —
insufficiently dissuasive — level of penalties. Regarding
copyright, the cumulative effect of certain Korean legislative
measures — including the public performance right in sound
recordings (2009) — has the practical effect of exempting
the vast majority of businesses in Korea from the need to obtain
a license for the public performance of music. In particular,
the Korean measures could deprive EU right holders of the full
exercise of their rights as agreed under the EU-Korea FTA.
EU ACTION
13.67 A number of initiatives are intended to
address these deficiencies. In particular, the EU and South Korea
have concluded a Free Trade Agreement (FTA) which entered into
force on 1 August 2011 and which includes an ambitious and balanced
IPR chapter. Moreover, an annual IP Dialogue is established in
the FTA between the EU and South Korea. Operators either already
do work with relevant authorities or are willing to organise IP-related
technical assistance or awareness-raising activities.
Malaysia
Progress
13.68 Positive developments regarding the IPR
situation in Malaysia include the establishment of a specialised
Intellectual Property Court, the amendment of the Trade Descriptions
Act, the on-going amendment of the Copyright Act and the increased
number of anti-piracy awareness campaigns. The result is that
awareness regarding the importance of IPR protection is slowly
improving.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.69 As a general comment several respondents
mentioned a certain apathy, insufficient understanding and political
will of the Malaysian authorities as the main problem when it
comes to IP protection and enforcement. More specifically, the
following issues were pointed out regarding IPR protection: deficient
regulation of IPR issues in general; lack of clear regulation
of customs interventions and on the distribution of competences
between concerned authorities; and a missing patent term restoration
regime. Also, some respondents complained about Malaysia's data
protection system, where the protection starts running from the
first marketing authorisation anywhere in the world, and expires
if a marketing authorisation is not applied for in Malaysia within
18 month from the granting of the first authorisation. Moreover,
insofar as IPR enforcement is concerned, there is a need to address
the lack of express authority and power of the Customs Administration
under the Customs Act 1967 and to put in place the required laws
and procedures to facilitate the exercise of this power. Also,
the sanctions for IPR infringements are considered insufficiently
deterrent.
EU ACTION
13.70 The EU and Malaysia are currently negotiating
a Free Trade Agreement which would include an ambitious yet balanced
IPR chapter. Malaysia also declared the objective of becoming
a high-income country in 2020 through their New Economic Model
(NEM) strategy, which specifically singles out innovation and
the improvement of IP protection as one of the five key policy
areas for reform, and whose provisions must be responsive to the
changing needs of industry and researchers. An ASEAN IPR SME Helpdesk
is also being set up.
Mexico
Progress
13.71 Mexico has made substantial efforts to
enhance protection and enforcement of IPRs. In particular, in
2010 the Mexican Criminal Code was modified to provide ex-officio
powers to the Attorney General enabling detection and detention
of counterfeit goods. In addition, a trademark database for customs
was launched in January 2012 to enable customs authorities to
check whether goods crossing the border are infringing a trade
mark registered in Mexico. The Mexican Institute of Intellectual
Property (IMPI) also recently successfully concluded a cooperation
project with customs authorities which consisted in sending IP
experts at custom points.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.72 Notwithstanding the progress made, the
level of IPR infringements in Mexico remains very high. Additional
measures are rapidly needed to strengthen and render more effective
the fight against counterfeiting, in particular by allowing ex-officio
action by Mexican customs.
13.73 Furthermore, Mexican legislation on geographical
indications is not compliant with TRIPS and should rapidly be
brought in line. The matter has already been discussed with Mexican
authorities for a number of years without any real progress being
made. There are many trade irritants related to the use of EU
geographical indications in Mexico.
13.74 Mexico should also take measures to adhere
soon to the Madrid Protocol on the international recognition of
trade marks.
EU ACTION
13.75 An EU-Mexico Sub-Committee on IPR meets
every year in order to discuss concerns with the adequate and
effective protection and enforcement of IPRs, review the progress
achieved and identify areas for further improvement.
Russia
Progress
13.76 Some improvement has taken place in IPR
protection and enforcement in 2010, in particular: Russia's accession
to international IPR treaties, changes in Russian IPR legislation
(in recent years), and Russian law enforcement officials' continued
engagement in criminal enforcement activities. Russia's accession
to WTO (implying its ratification of the TRIPs agreement) is also
an important development.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.77 Piracy and counterfeiting however remain
a major concern. Russia is still one of the world's largest producers
and distributors of illegal optical media. To date Russia lacks
efficient legal norms regulating copyright protection and effective
dispute settlement regarding IPR infringements; Russian legislation
also does not provide for clear rules concerning internet service
providers' liability and domestic sales and use of counterfeit
trademark goods remain widespread. Respondents also expressed
concerns regarding insufficient commitment from the relevant authorities
as illustrated for example by: an apparent reluctance by enforcement
authorities to take action against large infringers. The lack
of uniform methodology for enforcement also hinders these efforts.
According to the respondents, authorities and courts also tend
to interpret laws and regulations in a narrow way which can create
loopholes for infringers.
EU ACTION
13.78 The Commission and the relevant Russian
authorities have agreed to engage in a regular IP Dialogue (result-oriented
process, including the involvement of relevant stakeholders) to
resolve IPR problems. This Dialogue has proven useful and Russian
authorities have also engaged in wide-scale cooperation activities
concerning IPR enforcement, which is a positive step. Moreover,
the Commission, together with the copyright industry, has also
organised a number of training events on copyright infringements
through the TAIEX scheme, targeting various enforcement agencies,
which were well attended by the Russian side. The Commission together
with the Russian authorities is planning to launch a series of
training events concerning trademark infringements.
Thailand
Progress
13.79 Thailand in general has been doing a lot
of work in the area of IPR and in particular the Department of
Intellectual Property (DIP) has been particularly cooperative.
The Thai government has made stronger IPR protection and enforcement
a national priority, reflected by the creation of the National
Task Force chaired by the Prime Minister, by setting up an IPR
Dialogue with the EU and by putting forward the "Creative
Economy initiative". Thailand also acceded to the Patent
Cooperation Treaty in 2009 and prepared various amendments of
IP law, for example regarding the authority of Thai Customs to
take enforcement actions ex-officio, which unfortunately remain
pending.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.80 Thailand's IPR enforcement efforts do however
remain uneven and serious violations of IPRs continue. The Thai
copyright law is considered not to be in line with technological
developments, and actions against digital piracy have not been
sufficient. Moreover, as regards IPR examination and registration,
Thailand's patent office lacks resources to keep up with the volume
of applications, resulting in a worrying patent backlog. Moreover,
companies have raised concerns about the granting of compulsory
licenses for medicines in Thailand. A concern is whether such
licences will be granted in accordance with Thailand's TRIPS commitments,
including those under Article 31 of the TRIPS Agreement.
EU ACTION
13.81 A number of initiatives are intended to
address these deficiencies. In particular, an IP Dialogue between
the EU and Thailand has been launched in February 2011, under
which discussions on topics including geographical indications,
backlogs in patent registration, pharmaceutical issues and enforcement
issues took place. The EU also carries out technical assistance
programs with Thailand; at the moment, work on re-launching the
technical assistance program ECAP III is underway. An ASEAN IPR
SME Helpdesk is also being set up.
Ukraine
Progress
13.82 During the last survey respondents noted
some improvements regarding IPR protection and enforcement in
Ukraine, in particular the development and adoption of an IPR
action plan; the increased number of actions by enforcement authorities.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.83 Piracy and counterfeiting however remain
major concerns. Ukrainian legislation does not include adequate
provisions ensuring effective enforcement of IPR rights; they
are particularly unfit for enforcement in the digital environment.
According to respondents, criminal sanctions are not deterrent,
and there is a lack of clear rules concerning the destruction
of IPR-infringing goods and of equipment used for their production.
Concerns have been expressed whether the Ukrainian government
has sufficient political will to improve the situation; legal
proceedings are also seen as lengthy and there is a shortage of
IPR-trained judges. Customs authorities do not have the possibility
to take action against IPR-infringing goods in transit, and the
customs procedure for registering IPR-protected goods is costly.
Furthermore, stakeholders reported serious problems regarding
the functioning of collecting societies in Ukraine, in particular
the questionable withdrawal of the accreditation of representative
collecting societies and the on-going accreditation process.
EU ACTION
13.84 On a positive note, the Ukrainian authorities
have engaged in a regular bilateral Dialogue with the Commission.
This is a result-oriented process involving all competent enforcement
authorities and certain right-holders. In 2008 the Commission
initiated negotiations for a deep and comprehensive Free Trade
Area (DCFTA) with Ukraine (as part of the Association Agreement);
negotiations were concluded and the DCFTA was initialled in July
2012. This DCFTA includes an ambitious IPR chapter aiming at regulatory
approximation with the EU acquis and enforcement practices. In
addition, a € 1.4 m twinning project will start at the end
of 2012, with the aim of strengthening the administrative capacity
and competencies of the State Intellectual Property Service of
Ukraine (SIPSU) as well as other stakeholders (judges, customs,
state inspectors). It should also propose effective legal measures
against counterfeiting and piracy, and ensure effective implementation
of the enforcement legislation and sanctions for IPR infringements.
USA
Progress
13.85 The protection and enforcement of IP rights
in the USA is globally very effective, and the EU and the USA
have established in recent years a very good cooperation on IP
issues, that provides for the possibility to discuss common IPR
enforcement challenges in third countries. These exchanges have
been fruitful and efficient. The Commission also notes positively
the progress in terms of approximation of the USA patent legislation
to the prevailing international system, the so called "first-to-file
approach".
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.86 A number of problems — circumscribed
to very specific sectors — that affect EU right-holders
do however remain. The importance of the USA market and unfortunate
example these cases set for compliance with the TRIPS agreement
justify the inclusion of the USA in the list of priority countries,
the Commission states.
13.87 Despite the EUs' efforts over several years
to find a solution the continued failure of the USA to comply
with the following two Dispute Settlement decisions are of concern:
- the lack of progress in implementing the WTO
panel decision on Irish Music (Section 110(5)(B) of the USA Copyright
Act was found to be incompatible
with the WTO/TRIPs Agreement, and constitutes a blatant violation
of copyright); disrespecting WTO dispute settlement decisions
on IPR establishes a negative precedent and undermines the credibility
of countries such as the EU and USA which share an interest in
promoting effective IPR enforcement practices, notably in emerging
economies; and
- the USA administration's decision to refuse the
renewal of the Havana Club trademark on the basis of the embargo
against Cuba, which, again, is in breach of a WTO dispute settlement
decision that found Section 211 of the US Omnibus Appropriations
Act of 1998 to infringe the TRIPS Agreement; the USA's persistent
refusal to implement the latter decision sets an unfortunate precedent.
13.88 Moreover, regarding geographical indications,
EU right-holders face a number of practical problems and limitations
in ensuring the optimal protection of their rights under the US
trade mark system.
EU ACTION
13.89 The EU regularly raises the problem of
the non-compliance by the USA with WTO dispute settlement decisions
on "Havana Club" and "Irish Music" at the
WTO Dispute Settlement Body. Furthermore, the EU continues in
its bilateral contacts with the USA to actively seek a satisfactory
solution for the problems of the right-holders affected by the
lack of compliance with these decisions.
Vietnam
Progress
13.90 Since its accession to the WTO in 2006,
Vietnam made a significant legislative effort by enacting revised
laws on IP and Criminal Code, aside from nearly 40 pieces of legislation
and implementing decrees, circulars and ordinances. Vietnam is
increasingly taking IPR more seriously and is seeking to complete
its IPR legislative framework. The respondents indicated that
the legal framework is generally good and adequate. Public awareness
and general understanding of IPR are increasing and the government
encourages the training of its officials.
CONCERNS AND AREAS FOR IMPROVEMENT AND ACTION
13.91 Regarding IPR protection, the implementation
of IPR laws still requires continuous attention. Improvement is
also needed regarding awareness of the general public regarding
the importance of IPRs. Moreover, insofar as IPR enforcement is
concerned, the complexity of the system and the lack of efficient
cooperation between enforcement bodies and IPR stakeholders were
mentioned as two important issues. Respondents also highlighted
insufficient IPR understanding of the enforcement officials, and
shortage of resources, resulting in lengthy and burdensome enforcement
procedures.
EU ACTION
13.92 Negotiations for a FTA between the EU and
Vietnam were launched in June 2012. A first round of negotiations
took place in October. This FTA will include an IPR chapter and
should therefore provide a good venue for addressing key issues.
An ASEAN IPR SME Helpdesk is also being set up.
CONCLUSIONS
13.93 The Commission concludes that this prioritisation
is important in helping stakeholders protect their interests,
and for the Commission to focus resources and attention on third
countries where IPR issues are of most pressing concern. The survey
clearly shows that there is much room for improvement in third
countries of the protection and enforcement of IP rights, although
efforts and improvements from national authorities are also evident.
These positive developments partly result from our cooperation
initiatives, including "IP dialogues" with third countries
and technical assistance projects. This type of EU engagement
should continue.
The Government's view
13.94 In an Explanatory Memorandum dated 25 March
2013, the Parliamentary Under-Secretary of State for Intellectual
Property at the Department of Business, Innovation and Skills
(Lord Younger) says the report is a welcome update on the efforts
of the Commission to address weaknesses in the IPR regimes of
third countries. Focussing on those particular countries where
deficiencies in the protection and enforcement of IPRs are deemed
to cause the largest injury to EU interests should ensure that
resources and efforts are deployed to the best effect. Using mechanisms
such as free trade agreements and IPR dialogues the Commission
is able to push the messages on IPR protection and enforcement
out to third countries, and demonstrate that this issue is of
serious concern to the EU.
13.95 A new development in this report is the
narrative on EU action with priority countries. This provides
a basis for measuring the effectiveness of EU interventions in
specific countries in the future. The Government looks forward
to future reports including the work of the European Observatory
on Counterfeiting and Piracy to build strategies and develop techniques,
skills and tools for the enforcement of IPRs with third countries.
13.96 The Minister observes that the list of
priority countries remains almost unchanged from the first report,
with some countries moving between priority 2 and 3, and Mexico
being added to the list. China remains the only country at priority
1. The Canadian IPR system is still of concern to respondents
to the survey, in particular the lack of ratification by Canada
of major IPR treaties relating to trademarks and copyright, and
weaknesses in the protection of some IPRs. The USA remains on
the list due to particular circumstances relating to two specific
World Trade Organisation (WTO) dispute settlement decisions.
13.97 The list of priority countries identified
in this report aligns with those that the UK sees as being of
concern. For this reason the UK's Intellectual Property Office
has worked with UKTI and others to produce IP Business Guides
for many of these countries. In addition, since 2011 the IPO has
appointed four specialist IP attachs in key markets (China, India,
Brazil, and South East Asia) to support UK businesses and work
closely with Governments and agencies on IP issues. Many of the
priority countries are also included in the 'Special 301' Report
prepared by the US Trade Representative, which makes an annual
assessment of the IPR protection and enforcement in trading partners
of the USA.
Conclusion
13.98 We have set out the contents of this
well-researched four-yearly report because of their importance
for the protection of IP rights of UK companies trading with the
listed priority countries.
13.99 Though the report usefully highlights
what the EU is doing to combat IPR infringements in priority countries,
we consider that these efforts are, perforce, destined to be weak
in the absence of a strengthened multilateral framework for IPR.
13.100 This weakness is illustrated by the
startling fact that 73% of suspect goods detained at the EU's
borders come from China, where the EU has been politically and
financially engaged to stop counterfeiting since 2004.
13.101 This is indeed a concern when 30% of
respondents to the Commission's preliminary consultation declared
that the infringement of their IP rights resulted in risks to
consumer health or safety.
13.102 The report has no formal consequences
for the UK and so we clear it from scrutiny.
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