Intellectual Property Rights and International Trade
Congressional research reportMay 12, 2020
Ask Donna
What actually matters in this document.
Text
Intellectual Property Rights and
International Trade
Shayerah Ilias Akhtar
Specialist in International Trade and Finance
Ian F. Fergusson
Specialist in International Trade and Finance
Liana Wong
Analyst in International Trade and Finance
Updated May 12, 2020
Congressional Research Service
7-....
www.crs.gov
RL34292
Intellectual Property Rights and International Trade
Summary
This report provides background on intellectual property rights (IPR) and discusses the role of
U.S. international trade policy in enhancing IPR protection and enforcement abroad. IPR are legal
rights granted by governments to encourage innovation and creative output by ensuring that
creators reap the benefits of their inventions or works. They may take forms such as patents, trade
secrets, copyrights, trademarks, or geographical indications (GIs). Congress has constitutional
responsibility for legislating and overseeing IPR and international trade policy. Responsibility for
developing IPR policy, engaging in IPR-related international negotiations, and enforcing IPR
laws cuts across multiple U.S. government agencies.
The protection and enforcement of IPR is an important and long-standing component of U.S.
international trade policy and U.S. trade negotiating objectives. U.S. trade policy also seeks to
address new and evolving issues in the IPR landscape related to the growing role of emerging
markets in the global marketplace and the development of new technologies, including related to
digital trade.
Since the North American Free Trade Agreement (NAFTA) and the 1995 World Trade
Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS
Agreement), trade policy has been used to advance IPR rules internationally. The TRIPS
Agreement set minimum standards for IPR protection and enforcement. The United States
engages in efforts with other trading partners to build on the TRIPS Agreement, particularly
through the negotiation of regional and bilateral free trade agreements (FTAs). Since 1988,
Congress has included IPR as a principal trade negotiating objective for trade agreements in trade
promotion authority (TPA). The specific negotiating objectives on IPR, including in the most
recent renewal of TPA, in the Bipartisan Trade Promotion and Accountability Act (P.L. 114-26),
seek to negotiate TRIPS-plus provisions in U.S. FTAs. To date, the United States has entered into
14 FTAs with 20 countries, which generally include IPR commitments exceeding obligations
under the TRIPS Agreement (“TRIPS-plus”). IPR issues were prominent in the U.S. renegotiation
of the NAFTA that culminated in the U.S.-Mexico-Canada Trade Agreement (USMCA). They
also may surface in other U.S. trade liberalization or free trade agreement negotiations, such as
with the European Union (EU) and the United Kingdom (UK), which may depend on the
outcome of UK-EU negotiations on their post-Brexit trade relationship.
Other trade policy tools also are available to advance U.S. international IPR objectives under
various U.S. statutory authorities known as Special 301, Section 301, Section 337, and preference
programs (such as the Generalized System of Preferences).
In legislating on and monitoring IPR issues related to international trade policy, Congress may:
examine the role of IPR in U.S. trade policy, including the implications of IPR
trade negotiating objectives in Trade Promotion Authority;
conduct oversight of implementation of the IPR commitments in existing trade
agreements, as well as U.S. trade negotiations with the EU and the UK;
conduct oversight of the role of IPR in U.S. economic growth and innovation,
and how the protection and enforcement of IPR relates to other public policy
goals, such as access to medicines in poor or developing countries and crossborder data flows;
consider additional policy options to address IPR concerns in emerging
economies that are not a part of existing U.S. FTAs or included in current U.S.
FTA negotiations. This may also include new and evolving IPR issues, such as
Congressional Research Service
Intellectual Property Rights and International Trade
China’s industrial policies that promote indigenous innovation through IP theft,
forced localization and technology transfer policies, forced localization barriers
to trade, and trade secret theft through cybercrime; and
examine the effectiveness of the current U.S. coordinating structure and the
adequacy of current federal resources for promoting international IPR support.
Congressional Research Service
Intellectual Property Rights and International Trade
Contents
IPR Definitions ................................................................................................................................ 1
Types of IPR .............................................................................................................................. 1
Patents ................................................................................................................................. 1
Trade Secrets ....................................................................................................................... 2
Copyright ............................................................................................................................ 2
Trademarks ......................................................................................................................... 3
Theft of Intellectual Property .................................................................................................... 3
Infringement........................................................................................................................ 3
Piracy .................................................................................................................................. 3
Counterfeiting ..................................................................................................................... 4
Trade Secret Theft ............................................................................................................... 4
Cybertheft ........................................................................................................................... 4
Innovation Indicators ....................................................................................................................... 4
Role of IP in U.S. Economy and Trade ........................................................................................... 6
Overall Role .............................................................................................................................. 6
Royalty and Licensing Charges................................................................................................. 7
Specific U.S. Industries ............................................................................................................. 7
“Fair Use” Industries ................................................................................................................. 8
Quantifying IPR Infringement ......................................................................................................... 9
Limitations on Data Estimating IPR Infringement Costs .......................................................... 9
International Economic Effects ................................................................................................ 11
U.S. Economic Effects ............................................................................................................ 12
Customs Seizure Data ....................................................................................................... 12
Overall U.S. Estimates ...................................................................................................... 14
The Organizational Structure of IPR Protection............................................................................ 15
Multilateral IPR System .......................................................................................................... 16
World Trade Organization (WTO) .................................................................................... 16
Doha Declaration on the TRIPS Agreement and Public Health ....................................... 18
World Intellectual Property Organization (WIPO) ........................................................... 20
U.S. Trade Law ....................................................................................................................... 21
Special 301 ........................................................................................................................ 21
Section 301 ....................................................................................................................... 23
Section 337 ....................................................................................................................... 23
Generalized System of Preferences .................................................................................. 25
U.S. Trade Promotion Authority and Negotiating Objectives ................................................. 27
2002 Trade Promotion Authority ...................................................................................... 27
May 10, 2007 Bipartisan Trade Agreement ...................................................................... 27
2015 Trade Promotion Authority ...................................................................................... 28
Free Trade Agreements and Negotiations under the Trump Administration ........................... 29
United States-Mexico-Canada Agreement (USMCA) ...................................................... 29
Ongoing and Future Free Trade Agreement Negotiations ................................................ 30
Core Provisions in U.S. Trade Agreements ............................................................................. 31
Patents ............................................................................................................................... 31
Copyright .......................................................................................................................... 39
Trade Secrets ..................................................................................................................... 40
Trademarks ....................................................................................................................... 41
Congressional Research Service
Intellectual Property Rights and International Trade
Geographical Indications (GIs) ......................................................................................... 43
New and Evolving Issues .................................................................................................. 45
Issues for Congress ........................................................................................................................ 47
U.S. Efforts to Promote IPR Through Trade Policy ................................................................ 47
Enforcement of IPR Commitments ......................................................................................... 48
Effectiveness of the U.S. IPR Organizational Structure.......................................................... 49
Looking Forward ........................................................................................................................... 50
Office of the United States Trade Representative (USTR) ..................................................... 51
Department of Commerce (Commerce) .................................................................................. 51
Department of Justice (DOJ) ................................................................................................... 52
Department of Homeland Security (DHS) .............................................................................. 52
Department of Health and Human Services ............................................................................ 53
Library of Congress................................................................................................................. 53
Department of State................................................................................................................. 54
U.S. Agency for International Development (AID) ................................................................ 54
United States International Trade Commission (ITC) ............................................................. 54
Coordinating and Advisory Bodies ......................................................................................... 54
Figures
Figure 1. Patent filings through PCT, 2015-2019 ............................................................................ 5
Figure 2. U.S. Trade in Services: Royalties and License Fees from Intellectual Property
Use, 2013-2018 ............................................................................................................................ 7
Figure 3. Overview of IPR Seizures by CBP ................................................................................ 13
Figure 4. IPR Seizures at U.S. Borders: Composition of Commodities, FY2018 ......................... 14
Figure 5. Different Scenarios for Data Exclusivity and Patent Protection .................................... 38
Tables
Table 1. Estimated International Economic Losses Due to Counterfeiting and Piracy,
Selected Years............................................................................................................................. 12
Table 2. IPR Seizures at U.S. Borders: Source Economies, FY2018 ............................................ 13
Table 3. USTR 2020 Special 301 Report: Country Designations ................................................. 22
Table 4. IPR-Related U.S. Government Agencies and Coordinating Bodies ................................ 26
Appendixes
Appendix A. Overview of IPR-Related U.S. Government Agencies and Coordinating
Bodies ......................................................................................................................................... 51
Contacts
Author Contact Information .......................................................................................................... 56
Congressional Research Service
Intellectual Property Rights and International Trade
Introduction
Individual nation states have developed intellectual property rights (IPR) regimes reflecting their
domestic needs and priorities, although the United States and other countries have acceded to
several IP-related conventions and treaties since the 1800s. Over time, IPR protection and
enforcement have come to the forefront as a key international trade issue for the United States—
largely due to the role of intellectual property in an innovative U.S. economy and as a U.S.
competitive advantage—and figure prominently in the multilateral trade policy arena and in
regional and bilateral U.S. free trade agreements (FTAs).
Congress has legislative, oversight, and appropriations responsibilities related to IPR and trade
policy more generally. This role of Congress stems from the U.S. Constitution, which provides
Congress with the power to “promote the Progress of Science and useful Arts, by securing for
limited Times to Authors and Inventors the exclusive Right to their respective Writings and
Discoveries” and to “regulate Commerce with foreign Nations.”1 Since 1988, Congress has
included IPR as a principal U.S. trade negotiating objective, and has passed laws such as “Special
301” to advance protection and enforcement of U.S. IPR in global markets. The context for
congressional interest may include policy concerns such as: the role of IPR in the U.S. economy;
the impact of IPR infringement on U.S. commercial, health, safety, and security interests; the
effect of foreign indigenous innovation and localization requirement on U.S. IPR; and the balance
or relationship between protecting IPR to stimulate innovation and advancing other public policy
goals.
This report discusses the different types of IPR and IPR infringement, the role of IPR in the U.S.
economy, estimated losses associated with IPR infringement, the organizational structure of IPR
protection, U.S. trade policy, and issues for Congress regarding IPR and international trade.
IPR Definitions
Types of IPR
IPR are legal rights granted by governments to encourage innovation and creative output. They
ensure that creators reap the benefits of their inventions or works. They take a variety of forms,
such as patents, trade secrets, copyrights, trademarks, or geographical indications. Through IPR,
governments grant a temporary legal monopoly to innovators by giving them the right to limit or
control the use of their creations by others. IPR may be traded or licensed to others, usually in
return for fees and/or royalty payments. Although the World Trade Organization (WTO)
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement)
provides minimum standards for IPR protections, such rights are granted on a national basis and
are, in general, enforceable only in the country in which they are granted. However, WTO
members are obligated to abide by WTO rules, and their IPR enforcement practices can be
challenged by other WTO members through the WTO dispute settlement process.
Patents
The Patent Act (Title 35 of the United States Code) governs the issuance and use of patents in the
United States. Patents are granted for inventions of new products and processes (known as utility
patents). Patents also may be granted for new designs and plant varieties. For an invention to be
1 U.S. Constitution, Article 1, Section 8.
Congressional Research Service
1
Intellectual Property Rights and International Trade
patentable, it must be new and “non-obvious” (involving an inventive step), and have a potential
industrial or commercial application. The patent provides the holder with the exclusive right to
exclude others from making, using, selling, or importing into the United States the patented
invention for a period of 20 years.2 The patent right is based on the proposition that granting
inventors a temporary monopoly over their invention will encourage innovation and promote the
expenditure of money on research and development (R&D). The temporary monopoly may allow
a patent holder to recoup these up-front costs by charging higher prices for the patented invention.
In return for this economic rent, the patent holder must disclose the content of the invention to the
public, along with test data and other information concerning the invention. This is meant to spur
further creativity by those seeking to build on the patent after its expiration. Domestically, patents
are granted by the U.S. Patent and Trademark Office (PTO) of the Department of Commerce.
Trade Secrets
Any type of valuable information, including a “formula, pattern, compilation, program, device,
method, technique, or process,” may be kept by its owner as a trade secret. To be a trade secret,
the information must derive independent economic value from not being generally known or
readily ascertainable by others, and be subject to reasonable efforts by the owner to maintain its
secrecy.3 Examples of trade secrets include blueprints, customer lists, pricing information, and
source code. While protection of patents and copyright is an exclusive matter of federal law, trade
secret protection is found not only in federal law, but also in state law. Most states have adopted
the Uniform Trade Secret Act (UTSA), a model law drafted by the National Conference of
Commissioners on Uniform State Laws.
There are important differences between trade secrets and patents. Individuals do not have to
apply for trade secret protection as they would for patents. Protection of trade secrets originates
immediately with the creation of the trade secret; there is no process for applying for protection or
registering trade secrets. Trade secret protection does not expire unless the trade secret becomes
generally known. In contrast, patent applicants must disclose information about their innovation
to the PTO in order to acquire a patent. The scope of protection is also different: patents preclude
almost all uses of the invention by others, whereas trade secret law only prevents acquisition or
misappropriation of a trade secret by improper means, such as theft. Patents thus offer right
holders stronger protection but for a limited period of time. While applying for a patent can be a
costly and lengthy process, patents are valuable if the confidentiality of the innovation is fragile
(e.g., if the invention is easily reversed engineered) or if the area of research is highly
competitive.
Copyright
Protection of copyrights in the United States is based on the Copyright Act (Title 17 of the United
States Code). Copyrights protect original expressions of authorship, fixed in physical and/or
digital forms. Such protections include literary or artistic works such as books, music, sound
recordings, movies, paintings, architectural works, and computer code, and (in some cases)
databases. Traditionally, copyrights differed from patents in that there was no claim to industrial
applicability or novelty of the idea. The expression of the idea—the particular way it was
conveyed in words, images, or sounds—and not the idea itself, was being copyrighted. While
some of the criteria for copyrights differ from those of patents, the objective is the same:
2 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.
3 Uniform Trade Secret Act, §1(4).
Congressional Research Service
2
Intellectual Property Rights and International Trade
furthering creativity by promoting investments of time, money, and effort to create works of
cultural, social and economic significance. U.S. law provides copyright protection for life of the
author plus 70 years for personal works, or 120 years from creation (or 95 years from publication)
for corporate works. Copyrights may be registered by the U.S. Copyright Office of the Library of
Congress, although protection arises immediately upon fixation in a tangible medium of
expression.
Trademarks
Trademark protection in the United States is governed jointly by state and federal law. The main
federal statute is the Lanham Act of 1946 (Title 15 of the United States Code). Trademarks permit
the seller to use a distinctive word, name, symbol, or device to identify and market a product or
company. Marks can also be used to denote services from a particularly company. The trademark
allows quick identification of the source of a product, and for good or ill, can become an indicator
of a product’s quality. If for good, the trademark can be valuable by conveying an instant
assurance of quality to consumers. Trademark law serves to prevent other companies with similar
merchandise from free-riding on the association of quality with the trademarked item. Thus, a
trademarked good may command a premium in the marketplace because of its reputation. To be
eligible for a trademark, the words or symbol used by the business must be sufficiently
distinctive; generic names of commodities, for example, cannot be trademarked. Trademark rights
are acquired through use or through registration with the PTO.
A related concept to trademarks is geographical indications (GIs), which are also protected by
the Lanham Act. The GI acts to protect the quality and reputation of a distinctive product
originating in a certain region; however, the benefit does not accrue to a sole producer, but rather
the producers of a product originating from a particular region. GIs are generally sought for
agricultural products, or wines and spirits. Protection for GIs is acquired in the United States by
registration with the PTO, through a process similar to trademark registration.
Theft of Intellectual Property
Infringement
IPR infringement is the misappropriation or violation of the IPR. In the case of patents,
infringement of a patent owner’s exclusive rights involves a third party’s unauthorized use, sale,
or importation of the patented invention. Copyright infringement occurs when a third party
engages in reproducing, performing, or distributing a copyrighted work without the consent of the
copyright owner. The greatest challenge to the patent right in the context of international trade is
infringement in foreign countries, or non-observance by WTO member states of the minimum
standards of the TRIPS Agreement. In addition to the term infringement, other terms are used to
describe certain violations of IPR.
Piracy
The term “piracy” generally refers to copyrights and generally refers to widespread, intentional
infringement. The major challenge facing copyright protection is piracy, either through physical
duplication of the work, illegal dissemination of copyrighted material (such as computer software,
music, or movies) over the internet, and/or participation in commercial transactions of
copyrighted materials without the consent of the copyright owner. Piracy can also mean the
registration or use of a famous foreign trademark that is not registered in the country or is invalid
because the trademark has not been used.
Congressional Research Service
3
Intellectual Property Rights and International Trade
Counterfeiting
An imitation of a product is referred to as a “counterfeit” or a “fake.” Counterfeit products are
manufactured, marketed, and distributed with the appearance of being the genuine good and
originating from the genuine manufacturer.4 The purpose of counterfeit goods is to deceive
consumers about their origin and nature, harming both the trademark owner and consumers.
Counterfeiting and copying of original goods are major challenges for trademarked products. The
counterfeited product can be sold for a premium because of its association with the original item,
while reducing the sales of the original items. Consumer experience with a counterfeited good of
inferior quality can damage the reputation of the trademark product. Additionally, counterfeited
goods of inferior quality may be potentially harmful to health and safety. Popular examples of
counterfeit products include fake fashionwear (e.g., counterfeits of brand-name bags and watches)
or fake pharmaceutical products (e.g., counterfeits of brand-name prescription medicines).
Trade Secret Theft
Misappropriation of trade secrets is a civil violation under federal and state laws. Theft of trade
secrets may also be a federal crime in some circumstances. 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
Cybertheft
Criminal activity, including IP theft, increasingly occurs in the online environment. Internetrelated crimes are often referred to as cybercrime, though no one definition appears to exist for it
within the U.S. government.7 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.”8 Other terms that may encompass internet-related IPR theft include cyber intrusions and
cyberattacks.
Innovation Indicators
According to the Organization for Economic Co-operation and Development (OECD), innovation
is the “implementation of a new or significantly improved product (good or service), or process, a
new marketing method, or a new organizational method.” Possible innovation-related indicators
include activities concerning commercializing inventions and new technologies.9 Trends in the
4 Counterfeit goods should be distinguished from generic goods, i.e., in the case of generic forms of pharmaceutical
medicines.
5 See CRS Report R42681, Stealing Trade Secrets and Economic Espionage: An Overview of the Economic Espionage
Act, by Charles Doyle. For more information, see CRS Report R43714, Protection of Trade Secrets: Overview of
Current Law and Legislation, by Brian T. Yeh.
6 USTR, 2015 Special 301 Report, April 2015, p. 20.
7 CRS Report R42547, Cybercrime: Conceptual Issues for Congress and U.S. Law Enforcement, by Kristin Finklea and
Catherine A. Theohary.
8 Office of Justice Programs, Bureau of Justice Statistics, “Cybercrime.”
9 National Science Board (NSB), Science and Engineering Indicators 2015, pp. 6-39 – 6-49.
Congressional Research Service
4
Intellectual Property Rights and International Trade
total number of patent applications under the Patent Cooperation Treaty (PCT), an international
patent filing system administered by the World Intellectual Property Organization (WIPO), may
be illustrative (see Figure 1).10 The United States remains the source of the world’s largest
number of PCT filing applications, followed by China and Japan; together, these three countries
accounted for almost 64% of all PCT applications filed in 2019. China overtook the European
Union (EU) and Japan in 2017.11 While China has become a top patent filer, the number of
patents (quantity) does not necessarily reflect leadership in patent quality and innovativeness.12
The top fields of technology in PCT filings were digital communication, computer technology,
audio-visual technology, electrical machinery/apparatus/energy, and optics.13
Figure 1. Patent filings through PCT, 2015-2019
By country where application originated
Source: CRS analysis based on data from WIPO IP Statistics Data Center.
Notes: Annual data is based on patent applications’ filing date.
10 “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.
11 The European Union represented in the data is the EU-27, reflecting the departure of the United Kingdom from the
EU.
12 Ana Maria Santacreu and Heting Zhu, "What Does China’s Rise in Patents Mean? A Look at Quality vs. Quantity,"
May 2018, https://research.stlouisfed.org/publications/economic-synopses/2018/05/04/what-does-chinas-rise-inpatents-mean-a-look-at-quality-vs-quantity.
13 WIPO, “PCT publications by technology,” WIPO IP Statistics Data Center, Retrieved March 9, 2020.
Congressional Research Service
5
Intellectual Property Rights and International Trade
Role of IP in U.S. Economy and Trade
Intellectual property generally is viewed as a long-standing 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. Industries that rely on patent protection include the
aerospace, automotive, computer, consumer electronics, pharmaceutical, and semiconductor
industries. Copyright-reliant industries include the software, data processing, motion picture,
publishing, and recording industries. Trademarks and trade secrets are widely used in most
industries, but certain industries are especially trademark-intensive, including the apparel,
pharmaceuticals, and electronics industries.14 Other industries that directly or indirectly benefit
from IPR protection include retailers, traders, and transportation businesses, which support the
distribution of goods and services derived from intellectual property.15
Overall Role
IP-intensive industries play a major role in the U.S. economy and international trade. What
follows are some findings from a 2016 study by the U.S. Department of Commerce.16
U.S. economic impact. In 2014, a subset of the most intellectual propertyintensive industries directly supported 27.9 million jobs in the United States, or
about 18% of total U.S. employment. They also indirectly supported 17.6 million
U.S. jobs via the supply chain in other industries. In 2014, the wages of
employees working in IP-intensive industries tended to be about 46% higher on
average than those working in non-IP-intensive industries. These industries
accounted for about $6.6 trillion in value added to the U.S. economy, more than
one-third of the U.S. gross domestic product (GDP).
U.S. trade in goods. In 2014, IP-related merchandise exports amounted to $842
billion (52% of total U.S. merchandise exports), while IP-related merchandise
imports reached $1,391 billion (about 70% of total U.S. merchandise imports).
Key sectors for IP-intensive merchandise exports include semiconductor and
electric parts, basic chemicals, pharmaceuticals and medicine, measuring and
medical instrument, and computer and peripheral equipment.17
U.S. trade in services. In 2012, exports of services by IP-intensive industries
totaled about $81 billion (about 12% of total U.S. private services exports). Key
sources of services exports included the software publishing, financial services,
computer systems design and related services, motion picture and video, and
management and technical consulting industries. The study did not provide
information on imports of services by IP-intensive industries, though it should be
14 Department of Commerce, Intellectual Property and the U.S. Economy: 2016 Update, September 2016,
https://www.uspto.gov/sites/default/files/documents/IPandtheUSEconomySept2016.pdf.
15 Stephen E. Siwek, “Engines of Growth: Economic Contributions of the US Intellectual Property Industries,”
commissioned by NBC Universal, 2005, p. 2.
16 Department of Commerce, Intellectual Property and the U.S. Economy: 2016 Update, September 2016,
https://www.uspto.gov/sites/default/files/documents/IPandtheUSEconomySept2016.pdf.
17 Trade statistics may not capture the full importance of IP-intensive products to the U.S. economy, as many IPintensive 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.
Congressional Research Service
6
Intellectual Property Rights and International Trade
noted that the United States runs an overall surplus in international trade in
services.18
Royalty and Licensing Charges
The role of IP-intensive industries in U.S. trade in services includes charges for U.S. IP, i.e.,
receipts (exports) and payments (imports) of royalties and licensing fees. Rights holders may
authorize the use of technologies, trademarks, and entertainment products that they own to
entities in foreign countries, resulting in revenues through royalties and license fees. Between
2013 and 2018, U.S. receipts for use of royalties and licensing fees have remained relatively
steady while there has been a slight increase in payments from U.S. firms to foreign firms. In
2018, U.S. receipts from cross-border trade in royalties and license fees (relating to patent,
trademark, copyright, and other intangible rights) totaled $129 billion, while U.S. payments of
royalties and license fees to foreign countries amounted to $56 billion, resulting in a trade surplus
of $73 billion (see Figure 2).
Figure 2. U.S. Trade in Services: Royalties and License Fees from Intellectual
Property Use, 2013-2018
(billions of U.S. dollars)
Source: BEA, U.S. International Services data.
Specific U.S. Industries
Industry-specific figures may further demonstrate the role of IP in the U.S. economy. For
example:
18 CRS Report R43291, U.S. Trade in Services: Trends and Policy Issues, by Rachel F. Fefer.
Congressional Research Service
7
Intellectual Property Rights and International Trade
Copyright industries. According to a study commissioned by the International
Intellectual Property Alliance (IIPA), in 2017, industries categorized as part of
the “core” copyright industries (e.g., computer software, videogames, books,
newspapers, periodicals and journals, motion pictures, recorded music, and radio
and television broadcasting) contributed about $1.3 trillion to the U.S. economy
(“value-added” to current GDP), representing about 6.9% of the U.S. economy.
The study also estimated that the “core” copyright industries employed nearly 5.7
million workers in 2017, representing about 4% of the total U.S. workforce. In
addition, the study estimated that foreign sales of certain U.S. copyright sectors
totaled $191.2 billion in 2017.19
Pharmaceutical industry. Between 1998 and 2019, employment in the industry
grew 26%. According to the Pharmaceutical Researchers and Manufacturers of
America (PhRMA), in 2017, American biopharmaceutical companies supported
more than 800,000 jobs in R&D and more than 4 million jobs in total, when
accounting for indirect jobs (vendors and suppliers) and induced jobs (additional
private economic activity).20 According to PhRMA, R&D investment was about
$97 billion in 2017.21
Manufacturing industry: Based on data from a study by NDP Analytics, a
private-sector research firm, IP-intensive manufacturing industries performed
better than non-IP-intensive industries when comparing key economic measures:
R&D investment, wages, exports, value-added, and gross output.22 For example,
in 2015, the study estimated that exports per employee for IP-intensive
manufacturing industries averaged about $177,033, compared to about $63,778
on average for non-IP-intensive manufacturing industries.23
Software industry: Software.org, an independent research organization, reported
that the software industry directly employs around 3 million workers and more
than 14 million when accounting for indirect jobs in 2018. The report also stated
that the industry directly contributed $845 billion in value-added to the U.S. GDP
and invested almost $83 billion in R&D.24
“Fair Use” Industries
Some advocacy groups assert that empirical analysis of 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
19 Stephen E. Siwek, Copyright Industries in the U.S. Economy: The 2018 Report, Economists Incorporated, Prepared
for the International Intellectual Property Alliance (IIPA).
20 PhRMA, 2019 Profile: Biopharmaceutical Research Industry, Washington, DC, July 2019.
21 Ibid.
22 Nam D. Pham, IP-Intensive Manufacturing Industries: Driving U.S. Economic Growth, NDP Analytics, September
2017.
23 Ibid, p. 21.
24 Software.org: BSA Foundation, Software: Growing U.S. Jobs and the GDP, 2019,
https://software.org/reports/software-growing-us-jobs-and-the-gdp/.
Congressional Research Service
8
Intellectual Property Rights and International Trade
of which may include news reporting, research, teaching, and library use.25 For example, by one
estimate, in 2014, businesses that rely on “fair use” exceptions to U.S. copyright law generated
total revenue of $5.6 trillion on average and $2.8 trillion on average of value-added (16% of total
U.S. current dollar GDP).26 Additionally, employment associated with “fair use” totaled around
18 million of U.S. employment in 2014, and U.S. exports associated with “fair use” totaled $368
billion in 2014.27
Quantifying IPR Infringement
Advances in information and communications technology (ICT) and declining costs of
transportation, spurred by lower trade barriers, 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, most 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 2017, the biopharmaceutical industry
invested around $91 billion for research and development in the United States.28 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.29
Limitations on Data Estimating IPR Infringement Costs
Quantification of the economic losses associated with IPR infringement has been a long-standing
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
Illicit nature of IPR infringement. Because IPR infringement is illicit and
secretive, tools that are used to measure legitimate business activity cannot
necessarily be used to measure economic losses from IPR infringement. As such,
25 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
Brian T. Yeh.
26 Thomas Rogers and Andrew Zamosszegi, Fair Use in the U.S. Economy: Economic Contribution of Industries
Relying on Fair Use: 2017, Prepared for CCIA, 2017, p. 3.
27 Ibid., p. 7.
28 PhRMA, 2019 Profile: Biopharmaceutical Research Industry, Washington, DC, July 2019.
29 For example, see Global Intellectual Property Center (GIPC), U.S. Chamber of Commerce, Measuring Momentum:
GIPC International IP Index, First Edition, December 2012.
Congressional Research Service
9
Intellectual Property Rights and International Trade
it may be easier to quantify the positive contribution of copyright industries to
the U.S. economy more precisely than to measure the losses to the U.S. economy
from copyright piracy.
Quantifying specific components of economic impact. The economic impact of
IPR infringement depends on a range of factors, including the different types of
infringing goods being sold, the rate at which consumers substitute buying
infringing goods for legitimate goods, and IPR infringement’s deterrent effect on
R&D and other investment. It may be difficult to measure precisely these
components of the economic impact of IPR infringement.30
Assumptions used to calculate economic impact. Methods for calculating data
on counterfeiting and piracy often involve certain assumptions. Estimates of
losses from IPR infringement can be highly sensitive to how these assumptions
are derived and weighted. The basic economic model employed in some IPR loss
estimates assumes that there is substitutability between pirated and legitimate
goods. For example, under this model, sales of pirated goods may be equated to
revenue losses of legitimate U.S. copyright businesses. Some analysts suggest
that legitimate firms face a competition threat only if the individuals purchasing
IPR-infringing products would be able and willing to purchase the legitimate
product at the price offered when IPR infringement is not present.31 For
consumers in developing countries, especially, this assumption may not be
tenable.
IPR infringement in the digital environment. While IPR infringement in the
past primarily constituted counterfeiting and piracy of physical goods (such as
CDs and books), there has been a growing amount of piracy taking place through
digital mediums (such as illegal downloading and streaming of music, movies,
and books over the internet). The use of virtual private networks (VPN) also
makes it harder to track down the original location of infringement. It may be
more complex to measure IPR infringement that takes place in the digital
environment, and in turn, more difficult to measure the associated economic
losses accurately. Quantifying the economic cost of trade-secret theft may be
hampered by the reluctance of companies to disclose such theft, as well as
difficulties assessing the monetary value of the secrets stolen. U.S. trade losses
due to copyright infringement may be higher than reported because estimates
often do not account for all forms of piracy, such as internet piracy. One study
estimates that nearly 24% of global internet traffic infringes on copyright.32
Sources of data. Estimates on economic losses from IPR infringement come
from a range of sources, including academic, policy, and industry sources.
According to a U.S. Government Accountability Office (GAO) study, the U.S.
government does not systematically collect data or analyze the impacts of
counterfeiting and piracy on the U.S. economy. In many cases, the federal
government relies on estimates conducted by industry groups. However,
companies may be reluctant to disclose their IPR losses because of possible
30 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.
31 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.
32 Envisional, Technical Report: An Estimate of Infringing Use of the Internet, January 2011.
Congressional Research Service
10
Intellectual Property Rights and International Trade
reputational and commercial risks, and industry associations may not always
release their proprietary data sources and methods, complicating efforts to verify
such estimates.33
International Economic Effects
While assessments of the overall global economic costs of infringement on copyrights,
trademarks, and patents are limited, available evidence indicates that the adverse economic
effects of global IPR infringement stand in the hundreds of billions of dollars, and are increasing.
Customs data on seizures of counterfeit and pirated goods may offer some idea of the magnitudes
involved in terms of impact on producers and exporters.
A 2019 study jointly conducted by the Organization for Economic Cooperation and Development
and the EU Intellectual Property Office (EUIPO) examined international trade in counterfeit
goods using customs seizure data for 2014 through 2016.34 The OECD/EUIPO study estimated
that the value of international trade in counterfeit and pirated goods was as much as $509 billion
(equivalent to 3.3% of world trade) in 2016, up from the estimated $461 billion (2.5% of world
trade) in 2013, according to a 2016 joint OECD-EUIPO study.35 The study also noted the
industries impacted by IP infringement increased when compared to a previous study: products
seized by customs between 2014 and 2016 covered 92% of Harmonized System (HS) chapters
compared to 80% for the 2011 to 2013 period.36 OECD noted the significant increase in the use of
small parcels as the form of delivery, which presents more challenges for customs officials to
detect counterfeit and pirated goods. According to a 2017 OECD study that estimated trade of
counterfeit and pirated information and community technology (ICT) goods, fake ICT goods
accounted for up to 6.5% of total ICT trade and almost 43% of seized goods infringed the IP
rights of U.S. firms.37 Counterfeit ICT goods may be consumer electronics, communication
equipment, and electronic components.
Building on the 2016 OECD-EUIPO work is a study commissioned by the Business Action to
Stop Counterfeiting and Piracy (BASCAP), a business initiative organized by the International
Chamber of Commerce. According to BASCAP, the total value of counterfeit and pirated
products was an estimated $923 billion to $1.1 trillion in 2013, and is projected to reach $1.9 to
$2.8 trillion in 2022 (see Table 1).38
33 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.
34 Organization for Economic Cooperation and Development (OECD) and European Union Intellectual Property Office
(EUIPO), Trends in Trade in Counterfeit and Pirated Goods, 2019.
35 OECD and EUIPO, Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, 2016.
36 The Harmonized System (HS) is an international commodity classification system that the World Customs
Organization (WCO) developed and maintains.
37 OECD, Trade in Counterfeit ICT Goods, March 2017.
38 Frontier Economics, The Economic Impacts of Counterfeiting and Piracy, A Report Commissioned by Business
Action to Stop Counterfeiting and Piracy (BASCAP), February 2017.
Congressional Research Service
11
Intellectual Property Rights and International Trade
Table 1. Estimated International Economic Losses Due to Counterfeiting and Piracy,
Selected Years
(billions of U.S. dollars)
Category
2013
2022
Internationally traded counterfeit and
pirated products
$461
$991
Domestically produced and consumed
counterfeit and pirated products
$249-456
$524-959
$213
$384-856
$923-1,130
$1,900-2,810
Digitally pirated products
Total
Source: Frontier Economics, The Economic Impacts of Counterfeiting and Piracy, A Report Commissioned by
Business Action to Stop Counterfeiting and Piracy (BASCAP), February 2017.
Notes: BASCAP economic loss estimates are restricted to the 35 OECD member countries.
U.S. Economic Effects
While specific estimates vary, the available data suggest that U.S. economic losses from IPR
infringement are significant.
Customs Seizure Data
Data on pirated and counterfeit seizures of imports at U.S. borders by the Department of
Homeland Security (DHS) shed light on the magnitude of the issue in the U.S. context. In
FY2018, the number of IPR seizures at the U.S. border totaled 33,810 commodities (shipped by
express, mail, cargo, and other ways) valued at $1.4 billion (manufacturer’s suggested retail price,
MSRP).39 The total number of seizures per year has been increasing while the estimated value
remained relatively constant since 2014 (Figure 3).
39 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 2018.
Congressional Research Service
12
Intellectual Property Rights and International Trade
Figure 3. Overview of IPR Seizures by CBP
FY2010-FY2018
Source: U.S. Customs and Border Protection, IPR annual seizure statistics.
China and Hong Kong ranked as the two largest source economies for seizures by value (see
Table 2). The commodities seized were diverse, with watches/jewelry and handbags/wallets
being the top two types seized. Goods seized in FY2018 included shipments of circumvention
devices that violated the Digital Millennium Copyright Act (DMCA, P.L. 105-304). Customs data
may be limited in that they do not reflect digital-based IPR infringement.
Table 2. IPR Seizures at U.S. Borders: Source Economies, FY2018
(Estimated MSRP, millions of U.S. dollars)
U.S. Trading Partner
Estimated MSRP
% of Total
Total
$1,399.9
100%
China
$761.1
54.0%
Hong Kong
$440.3
31.0%
India
$20.0
1.0%
Korea
$10.1
0.7%
Canada
$7.8
0.6%
Turkey
$5.8
0.4%
Vietnam
$5.2
0.4%
Taiwan
$5.0
0.4%
Malaysia
$4.7
0.3%
Pakistan
$2.8
0.2%
All Others
$137.1
10%
Congressional Research Service
13
Intellectual Property Rights and International Trade
Source: CRS analysis of data from Department of Homeland Security, “Intellectual Property Rights Seizure
Statistics Fiscal Year 2018.”
Notes: Based on manufacturer’s suggested retail price (MSRP) of goods had they been genuine.
Figure 4. IPR Seizures at U.S. Borders: Composition of Commodities, FY2018
(Estimated MSRP, millions of U.S. dollars)
Source: CRS analysis of data from Department of Homeland Security, “Intellectual Property Rights Seizure
Statistics Fiscal Year 2018.”
Notes: Based on manufacturer’s suggested retail price (MSRP) of goods had they been genuine. “Other”
includes consumer products, computers/accessories, automotive/aerospace, toys, and more.
Overall U.S. Estimates
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.40 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.
In 2017, the commission estimated the annual cost to the U.S. economy due to counterfeit goods,
pirated software, and theft of trade secrets to be between $225 billion and $600 billion; this
40 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.
Congressional Research Service
14
Intellectual Property Rights and International Trade
estimate does not include the costs of patent infringement and economic espionage because they
are difficult to quantify.41 These estimates have been cited widely, including in the annual IP
report to Congress by the U.S. Intellectual Property Enforcement Coordinator (IPEC), a
statutorily created position in the White House (P.L. 110-403).42 Efforts also have been made to
quantify U.S. economic losses from IPR infringement in terms of specific countries (see text
box).
Estimate of Losses to U.S. Firms from IPR Infringement in China
The U.S. International Trade Commission (ITC) estimated losses to “firms in the U.S. IP-intensive economy that
conducted business in China in 2009” to be about $48.2 billion in sales, royalties, or license fees due to IPR
infringement in China. According to the ITC, this estimate is based on statistical analysis that falls within a broad
range of $14.2 billion to $90.5 billion; the range reflects limitations of the underlying data as many firms were
unable to calculate losses. In terms of specific sectors, the information/other services sector sustained the largest
losses—at a point estimate of $26.7 billion, within a range of $11.8 billion to $48.9 billion. In terms of specific
types of IPR infringement, losses from copyright infringement were the largest—at a point estimate of $23.7
billion, within a range of $10.2 billion to $37.3 billion. ITC also estimated that firms in the U.S. IP-intensive
economy spent about $4.8 billion (within a range of $279.1 million to $9.4 billion) in 2009 to address possible
Chinese IPR infringement.
According to submissions from stakeholders to the 2018 U.S. Trade Representative (USTR) Section 301 report on
China, there are also intangible losses to U.S. firms from IPR infringement. For example, technology transfer
requirements when U.S. firms want to invest in the Chinese market may make U.S. firms less competitive in the
global market when they lose exclusive rights to their IP. In its submission to USTR for the purpose of the Section
301 report, a U.S. firm estimated that it sustained “more than $120 million in damages in the form of lost sales and
revenue” as a result of Chinese state-sponsored cyber theft. The firm further stated that it lost its first-mover
advantage and competitiveness in the market.
Source: ITC, China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy,
Investigation No. 332-519, USITC Publication 4226, May 2011; USTR, Findings of the Investigation into China’s Acts,
Policies, Practices Related to Technology Transfer, Intellectual Property, and Innovation Under Section 301 of the Trade Act
of 1974, March 22, 2018.
Note: ITC results reflect responses to an ITC questionnaire to 5,051 U.S. firms in sectors considered to be IPintensive. ITC used statistical sampling techniques to extrapolate results to the U.S. IP-intensive economy (16.3%
of the U.S. economy). The statistical significance of the findings varied. See the report for more information.
In terms of losses from cyber theft of IP, a 2018 report by McAfee and the Center for Strategic
and International Studies (CSIS) estimates annual losses to be $10 billion to $12 billion in the
United States and $50 billion to $60 billion globally.43
The Organizational Structure of IPR Protection
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.
41 U.S. Commission on the Theft of American Intellectual Property, Update to the IP Commission Report, February
2017. 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.”
42 U.S. Intellectual Property Enforcement Coordinator (IPEC), Annual Intellectual Property Report to Congress,
February 2019, p. 32.
43 James Lewis, Economic Impact of Cybercrime–No Slowing Down, Center for Strategic and International Studies
(CSIS), February 2018.
Congressional Research Service
15
Intellectual Property Rights and International Trade
Multilateral IPR System
World Trade Organization (WTO)
At the center of the present multilateral trading system is the World Trade Organization, an
international organization established in 1995 as the successor to the General Agreements on
Tariffs and Trade (GATT).44 The WTO was established as the result of the Uruguay Round of
multilateral trade negotiations (1986-1994), which led to agreements to liberalize and establish or
enhance rules on trade in goods, services, agriculture, and other nontariff barriers to trade. One of
the Uruguay Round agreements was the Agreement on Trade-Related Aspects of Intellectual
Property Rights, which sets minimum standards on IPR protection and enforcement with which
all WTO member states must comply. The United States, 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
treatment of IP under the World Intellectual Property Organization (see below) instead. However,
developing countries agreed to address IP issues in the WTO 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 nationals of
other WTO members no less favorably in terms of IPR protection than the country’s own
nationals) and most-favored-nation treatment (any advantage in IPR protection granted to
nationals of another WTO member shall be granted to nationals of all other WTO member states).
Much of the TRIPS Agreement sets out the extent of the agreement’s coverage of the various
types of intellectual property: patents, copyrights, trademarks, trade secrets, GIs, industrial
designs, layout of circuitry design, and test data. The TRIPS Agreement provisions build on
several existing IPR treaties administered by the WIPO (discussed below). Another part of the
TRIPS Agreement provides standards of enforcement for IPR covered by the agreement. It
enumerates standards for civil and administrative procedures and remedies, the application of
border measures, and criminal procedures. A Council for the TRIPS Agreement was established
to monitor implementation of the agreement and transitional arrangements were devised for
developing countries. Finally, the agreement provides for the resolution of disputes under the
Uruguay Round Agreement’s Dispute Settlement Understanding (see text box). The binding
nature of the WTO dispute settlement mechanism, with the possibility of the withdrawal of trade
concessions (usually the reimposition of tariffs) for noncompliance, sets this agreement apart
from previous IPR treaties that did not have effective dispute settlement mechanisms.
44 The GATT was originally established in 1947.
Congressional Research Service
16
Intellectual Property Rights and International Trade
U.S. WTO Cases Against China on IPR
The United States has filed three cases against China regarding IP: two that challenged Chinese practices under the
TRIPS Agreement and one challenge under the General Agreement on Trade in Services (GATS). The first two
were brought under the George W. Bush Administration and the third under President Trump.
DS 362: Measures Affecting the Protection and Enforcement of Intellectual Property Rights. In this case brought
in 2007, the dispute settlement panel largely ruled in the favor of the United States that
China’s denial of copyright protection to works without censorship approval is inconsistent with the TRIPS
Agreement.
China’s practice to publicly auction IPR-infringing goods seized at the border, with the only requirement being
that fake brands and trademarks be removed from the goods, is impermissible under the TRIPS Agreement.
However, the panel ruled that more evidence was needed before deciding whether the thresholds for prosecution
of counterfeiting and piracy in China’s criminal law were consistent with the TRIPS Agreement. China agreed to
implement the WTO’s ruling.
DS363: Publications and Audiovisual Products. In August 2009, a WTO panel ruled that a number of China’s
restrictions on trading rights and distribution of IPR-related products were inconsistent with GATS. However, the
WTO panel did not address whether China’s censorship policies or import limitations on foreign films violate
WTO rules. China agreed to implement the WTO’s ruling.
DS542: Certain Measures Concerning the Protection of Intellectual Property Rights. In this case, the United
States alleges that China allows domestic firms to continue to use patented technology after a licensing contract
ends and requires contracts that discriminate against foreign technology. Consultations were requested in March
2018, and a panel was composed in January 2019. However, the case has been suspended since June 11, 2019, to
allow for continued consultations between the United States and China.
The United States and China signed a phase one trade agreement on January 15, 2020, to resolve some issues
raised by the United States under Section 301 of the Trade Act of 1974. Among other things, China committed to
strengthen IP enforcement, but most U.S. concerns on IP, technology transfers, and other issues remain to be
addressed in a potential phase two deal.45
The TRIPS Agreement also seeks a balance of rights and obligations between protecting private
right holders and the obligation “to secure social and cultural development that benefits all.”46
Article 7 declares that
... the protection and enforcement of IPR should contribute to the promotion of
technological innovation and to the transfer and dissemination of technology, to the mutual
advantage of producers and users of technological knowledge and in a manner conducive
to social and economic welfare and to a balance of rights and obligations.
This paragraph attempts to link the protection of IPR with greater technology transfer, including
technology covered by IPR protection, to the developing world. The language itself has been
interpreted in various ways. Developed countries have tended to consider this language
exhortatory, but developing countries have tried, without much success, to make technology
transfer a meaningful obligation within the TRIPS Agreement system. Article 66.2 of the
agreement requires developed country members to provide incentives to their enterprises and
institutions to promote technology transfer to least-developed countries (LDCs) to assist them in
establishing a viable technology base. Developed countries report annually on their efforts to
encourage technology transfer.
Complying with international IPR standards may impose greater burdens on developing countries
than developed countries. Developing countries generally have to engage in greater efforts to
bring their laws, judicial processes, and enforcement mechanisms into compliance with the
45See CRS In Focus IF11284, U.S.-China Trade and Economic Relations: Overview, by Karen M. Sutter and CRS
Insight IN11208, U.S. Signs Phase One Trade Deal with China, by Karen M. Sutter.
46 Pascal Lamy, “Trade-Related Aspects of Intellectual Property Rights - Ten Years Later,” Journal of World Trade,
October 2004, p. 925.
Congressional Research Service
17
Intellectual Property Rights and International Trade
TRIPS Agreement. Consequently, developing countries were given an extended period of time in
which to bring their laws and enforcement mechanisms into compliance with the TRIPS
Agreement. Developing countries and post-Soviet states were given an additional four years from
the entry into force of the agreement (January 1, 1995). For products that were not covered by a
country’s patent system (such as pharmaceuticals in many cases), an additional five years was
granted to bring such products under coverage. For developing countries, all provisions of the
TRIPS agreement should now be in force. For the least developed countries, the phase-in period
for IPR commitments was originally extended 10 years to January 1, 2006 (Article 66.1). In 2002,
the WTO extended IPR obligations for LDCs with respect to pharmaceuticals to January 1,
2016.47 In addition, the WTO has extended the overall transitional period twice for LDCs.48 As
such, LDCs are not required to apply TRIPS Agreement provisions—other than Articles 3, 4, and
5, until July 1, 2021, or until they cease to be LDCs.49 Article 66.1 acknowledges the:
special needs and requirements of least-developed country Members, their economic,
financial and administrative constraints, and their need for flexibility to create a viable
technological base.
Doha Declaration on the TRIPS Agreement and Public Health
In agreeing to launch the Doha Round of WTO trade negotiations, trade ministers adopted a
“Declaration on the TRIPS Agreement and Public Health” on November 14, 2001.50 The
Declaration sought to alleviate developing country dissatisfaction with aspects of the TRIPS
regime. It delayed the implementation of patent system provisions for pharmaceutical products
for LDCs until 2016. The declaration committed member states to interpret and implement the
agreement to support public health and to promote access to medicines for all. The Declaration
recognized certain “flexibilities” in the TRIPS Agreement to allow each member to grant
compulsory licenses for pharmaceuticals and to determine what constitutes a national emergency,
expressly including public health emergencies such as HIV/AIDS, malaria, and tuberculosis or
other epidemics. Paragraph 6 of the Doha Declaration directed the WTO members to formulate a
solution to a related concern, the use of compulsory licensing by countries with insufficient or
inadequate manufacturing capability. (See COVID-19 text box below.)
On the eve of the Cancun Ministerial in August 2003, WTO members agreed on a Decision51 to
waive the domestic market provision of the TRIPS article on compulsory licensing (Article 31(f))
for exports of pharmaceutical products for “HIV/AIDS, malaria, tuberculosis and other
epidemics” to LDCs and countries with insufficient manufacturing capacity. This Decision was
incorporated as an amendment to the TRIPS agreement at the Hong Kong Ministerial in
December 2005.
47 “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.
48 WTO TRIPS Council, “Extension of the Transition Period Under Article 66.1 for Least Developed Country
Members,” June 12, 2013.
49 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.
50 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.
51 “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.
Congressional Research Service
18
Intellectual Property Rights and International Trade
The amendment required ratification from two-thirds of WTO member states. The deadline for
ratification was extended five times before the amendment entered into force on January 23,
2017. To date, 102 of the total 162 WTO members52 have ratified the amendment.53 A group of
high-income countries (Australia, Canada, the European Union, Iceland, Japan, New Zealand,
Norway, Switzerland, and the United States) declared they would not avail themselves of this
option as importers.54
The system established by the WTO allows LDCs and countries without sufficient manufacturing
capacity to issue a compulsory license to a company in a country that can produce such a product.
After a matching compulsory license is issued by the producer country, the drug can be
manufactured and exported subject to various notification requirements, as well as quantity and
safeguard restrictions. While several exporting countries have established laws and procedures for
implementing this system, one (Rwanda) has availed itself of the system to import HIV/AIDS
medicines from a generic manufacturer in Canada.55
COVID-19 and Access to Medicine
The Coronavirus Disease 2019 (COVID-19) pandemic may reopen a debate over the relationship between WTO
trading rules and countries’ ability to obtain needed drugs or vaccinations. As noted above, TRIPS created the first
enforceable minimum standards for international IPR. It affirmed that patents “shall be available for any
inventions…in all fields of technology, provided that they are new, involve an inventive step and are capable of
industrial application.” It also applied the principle of nondiscrimination on issuance of patents based on
technology, place of invention, or site of use. This standard was particularly important to innovative
pharmaceutical manufacturers because several countries did not provide for patenting pharmaceutical products
prior to TRIPS, or, as in the case of India, provided process patents that covered the manufacturing process but
not product itself. However, TRIPS does provide for limited exceptions to the patent right. For example, a
country may limit patent rights provided the limitation does not “unreasonably” conflict with the normal
exploitation of a patent. The agreement also contains exceptions allowing a party to exclude from patentability
items to protect human life and health, as well as diagnostic, therapeutic and surgical measures. The Doha
Declaration on TRIPS and Public Health (see above) affirmed that TRIPS provisions should be interpreted to
promote public health and access to medicine.
TRIPS also allows for compulsory licensing, but places limitations on its use. A compulsory license is an
authorization by a government for third parties (such as a company or the government itself) to manufacture or
use a product under patent without the permission of the rights holder. TRIPS permits signatories to issue
compulsory licenses for patented inventions, if the third party attempts to obtain permission from the patent
holder and negotiates reasonable commercial terms, although this requirement can be waived in times of national
emergency or other extenuating circumstances. In any case, the third party must provide “adequate”
remuneration to the patent holder for the use of the patent. Another restriction limits its use primarily to the
domestic market, although countries may issue compulsory license to send products to least-developed countries
that lack domestic production capabilities. The allowance for least-developed countries and a clarification of the
meaning of national emergency became part of the amendment to TRIPS that originated with the Doha
Declaration. U.S. bilateral and regional FTAs largely have not addressed the issue of compulsory licensing, but have
contained provisions incorporating the Doha Declaration.
In practice, the use of compulsory licenses has been rare; the threat of invoking a compulsory license as a
negotiating tactic for countries to obtain better prices from a manufacturer has been more common. The United
States generally has sought to dissuade other nations from using compulsory licensing, even placing greater
52 The European Union (EU) signed an Instrument of Acceptance for EU members.
53 “Members accepting amendment of the TRIPS Agreement,” http://www.wto.org/english/tratop_e/trips_e/
amendment_e.htm.
54 TRIPS, Article 31bis, Annex, (b), fn. 3.
55 WTO, “TRIPS and public health: dedicated webpage for notifications,” https://www.wto.org/english/tratop_e/
trips_e/public_health_e.htm.
Congressional Research Service
19
Intellectual Property Rights and International Trade
limitations on its use in early U.S. FTAs with Australia, Singapore, and Jordan. However, with the COVID-19 virus,
it has been reported that certain governments are taking preliminary steps to revisit its use. Israel is the first
country to issue a compulsory license in the context of COVID-19 for the AbbVie drug Kaletra (lopinavir/
ritonavir). The next day AbbVie announced it would no longer enforce patents worldwide for lopinavir/ritonavir. 56
In March 2020, the parliaments of Canada and Germany passed legislation clarifying or streamlining the ability to
use compulsory licenses in their countries. The National Assemblies of Chile and Ecuador are calling for the use of
compulsory licenses in fighting the COVID-19 pandemic.57
For more information see, see CRS Legal Sidebar LSB10436, COVID-19: International Trade and Access to
Pharmaceutical Products, by Nina M. Hart.
World Intellectual Property Organization (WIPO)
In addition to the WTO, the other main multilateral venue for addressing IPR issues is the World
Intellectual Property Organization, a specialized agency affiliated with the United Nations, with
its own executive, legislative, and budgetary powers. Established in 1970, following the 1967
WIPO Convention’s entry into force, WIPO is charged with fostering the effective use and
protection of intellectual property globally. WIPO’s mandate focuses exclusively on intellectual
property, in contrast to the WTO’s broader international trade mandate. WIPO’s antecedents are
the 1883 Paris Convention for the Protection of Industrial Property and the 1886 Berne
Convention for the Protection of Literary and Artistic Work. Most of the substantive provisions of
these two treaties are incorporated in the WTO’s TRIPS Agreement. WIPO’s primary function is
to administer a group of IPR treaties which put forth minimum standards for member states. All
international IPR treaties, save TRIPS, are administered by WIPO.
The Trump Administration has prioritized the need to counter growing Chinese influence in
global functional organizations, including WIPO. Its goal is to preserve the integrity of these
organizations to ensure they remain impartial and credible and that their focus and work continue
to support U.S. interests and key tenets of the open global trading system, including protection of
IPR. In On February 26, 2020, China’s ambassador to the United Nations Chen Xu accused the
United States of meddling in the upcoming World Intellectual Property Organization leadership
election. U.S. diplomats reportedly lobbied to block China’s candidate, Wang Binying, and
promote Daren Tang, a candidate nominated by Singapore. On March 4, 2020, the WIPO
Coordination Committee nominated Daren Tang to be the next Director General of WIPO. Mr.
Tang prevailed with 55 votes, while Ms. Wang received 28 votes.
To address digital technology issues not dealt with in the TRIPS Agreement, WIPO established
the WIPO Copyright Treaty (WCT) and WIPO Performance and Phonograms Treaty (WPPT) in
1996, oftentimes collectively referred to as the “WIPO Internet Treaties.” These treaties establish
international norms aimed at preventing unauthorized access to and use of creative works on the
internet or other digital networks.
Other WIPO activities include patent law harmonization efforts. In 2000, WIPO signatories
adopted the Patent Law Treaty (PLT), which called for harmonization of patent procedures. This
agreement went into force on April 28, 2005. Discussions began in 2001 for a Substantive Patent
Law Treaty (SPLT), which would target harmonization issues specifically related to patent grants,
56 “Israel defies AbbVie to import generic drugs for COVID-19,” by Dani Kass, Law360, March 19, 2020,
https://www.law360.com/articles/1255079/israel-defies-abbvie-ip-to-import-generic-drugs-for-covid-19.
57 “Corona virus pandemic could change global patent rights,” by Adam Behsudi, Politico Pro Trade, April 1, 2020.
Congressional Research Service
20
Intellectual Property Rights and International Trade
but were put on hold in 2006. Different views reportedly emerged among developed and
developing countries on what should be the objectives of substantive harmonization of patent
laws, including whether it was an appropriate goal.58 Government leaders participating in the
Group of 8 (G-8) meeting in July 2008 called for “accelerated discussions” of the SPLT.59 While
discussions remain stalled, the main focus of the WIPO’s work in this area has been on “building
a technical and legal resource base from which to hold informed discussions in order to develop a
work program” on various patent issues.60 Presently, patent law harmonization efforts also are
occurring in groupings outside of WIPO, including the Trilateral Cooperation, composed of the
European Patent Office, Japan Patent Office, and U.S. Patent and Trademark Office (USPTO);
another forum is the IP5, composed of the members of the Trilateral Cooperation and also the
Korean Intellectual Property Office and China’s State Intellectual Property Office.61
WIPO’s other functions include assisting member states through training programs, legislative
information, intellectual property institutional development, automation and office modernization
efforts, and public awareness activities. WIPO’s enforcement activities are more limited than
those of the WTO. Through its Advisory Committee on Enforcement (ACE), WIPO cooperates
with member states to promote international coordination on enforcement activities.
U.S. Trade Law
Several provisions of U.S. law address IPR trade policy and enforcement. These laws are
implemented and administered by a number of U.S. government agencies and coordinating bodies
(see Table 4 and Appendix A).
Special 301
Section 301 of the Trade Act of 1974 as amended (P.L. 93-618, 19 U.S.C. §2242) is the principal
U.S. statute for identifying foreign trade barriers due to inadequate intellectual property
protection. The 1988 Omnibus Trade and Competitiveness Act (P.L. 100-418) strengthened
section 301 by creating “Special 301” provisions, which require the USTR to conduct an annual
review of foreign countries’ intellectual property policies and practices. By April 30 of each year,
the USTR must identify countries that do not offer “adequate and effective” protection of IPR or
“fair and equitable market access” to U.S. entities that rely on intellectual property rights.
According to an amendment to the Special 301 provisions by the Uruguay Round Agreements Act
(P.L. 103-465), the USTR can identify a country as denying sufficient intellectual property
protection even if the country is complying with its TRIPS commitments. These findings are
submitted in the USTR’s annual “Special 301” report (see Table 3). Most recently, the Trade
Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125) added trade secrets to list of the
types of IPR whose protection by a foreign country is subject to monitoring under Special 301.
The USTR can designate countries in one of several statutorily or administratively created
categories:
58 David J. Kappos, “Patent Law Harmonization: The Time is Now,” Landslide, vol. 3, no. 6 (July/August 2011).
59 Monika Ermert, “G8 Governments Want ACTA Finalised This Year, SPLT Talks Accelerated,” Intellectual
Property Watch, July 9, 2008.
60 WIPO, “Standing Committee on the Law of Patents (SCP),” http://www.wipo.int/policy/en/scp/.
61 U.S. Patent and Trademark Office, “Harmonization,” http://www.uspto.gov/learning-and-resources/ip-policy/
harmonization.
Congressional Research Service
21
Intellectual Property Rights and International Trade
Priority Foreign Country: A statutory category for those designated by the
USTR as having “the most onerous or egregious acts, policies or practices that
deny intellectual property protection and limit market access to U.S. persons or
firms depending on intellectual property rights protection” with the “greatest
adverse impact (actual or potential) on the relevant United States products.”
These countries may be investigated under section 301 provisions of the Trade
Act of 1974.62 If a country is named as a “Priority Foreign Country,” the USTR
must launch an investigation into that country’s IPR practices. The USTR may
suspend trade concessions and impose import restrictions or duties, or enter into
a binding agreement with the priority country that would eliminate the act,
policy, or practice under scrutiny. Since the advent of the WTO, the United States
has brought cases to the WTO rather than impose unilateral retaliation.
Priority Watch List: An administrative category created by the USTR for those
countries whose acts, policies, and practices warrant concern, but who do not
meet all of the criteria for identification as Priority Foreign Country. The USTR
may place a country on the Priority Watch List when the country lacks proper
intellectual property protection and has a market of significant U.S. interest. If
designated on the Priority Watch List, the USTR must develop an action plan
with respect to that foreign country. If the President, in consultation with USTR,
determines that the foreign country fails to meet the action plan benchmarks, then
the President may take appropriate action with respect to the foreign country.
Watch List: An administrative category created by USTR to designate countries
that have intellectual property protection inadequacies that are less severe than
those on the Priority Watch List, but still attract U.S. attention.
Section 306 Monitoring. A tool used by USTR to monitor countries for
compliance with bilateral intellectual property agreements used to resolve
investigations under section 301.
Out-of-Cycle Review. A tool used by USTR to monitor countries’ progress on
intellectual property issues, and which may result in status changes for the
following year’s Special 301 report. In 2010, USTR also began publishing
annually the Notorious Markets List as an out-of-cycle review separately from
the annual Special 301 report; the report identifies online and physical markets
“that reportedly engage in, facilitate, turn a blind eye to, or benefit from
substantial copyright piracy and trademark counterfeiting.”
Table 3. USTR 2020 Special 301 Report: Country Designations
Special 301 Category
2020 Special 301 Designation
Priority Foreign Country
No countries listed this year
Priority Watch List
Algeria, Argentina, Chile, China, India, Indonesia, Russia, Saudi Arabia, Ukraine,
and Venezuela
Watch List
Barbados, Bolivia, Brazil, Canada, Colombia, Dominican Republic, Ecuador,
Egypt, Guatemala, Kuwait, Lebanon, Mexico, Pakistan, Paraguay, Peru, Romania,
Thailand, Trinidad & Tobago, Turkey, Turkmenistan, United Arab Emirates,
Uzbekistan, and Vietnam
Section 306 Monitoring
China
62 For the Special 301 provisions, see 19 U.S.C. §2242; Trade Act of 1974, as amended, (P.L. 93-618, §182).
Congressional Research Service
22
Intellectual Property Rights and International Trade
Special 301 Category
2020 Special 301 Designation
Out-of-Cycle Reviews
Saudi Arabia (upcoming), Malaysia, and “notorious markets”
Source: CRS adaption from USTR, 2020 Special 301 Report.
Notes: For the 2020 Special 301 Report, USTR reviewed the IPR policies and practices of more than 100
countries, and designated 36 of the countries in one of several categories.
The Special 301 statute provides the overall guideline for identifying countries for the various
lists. However, placement on one of the lists takes into consideration a host of factors specific to
the country, 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 the effectiveness of their
enforcement, 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. No “weighting criteria” or formula exists 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 301
Title III of the Tariff Act of 1930, as amended (Sections 301 through 310, 19 U.S.C. §2411)—
collectively referred to as “Section 301”—grants the USTR a range of responsibilities and
authorities to investigate and take action to enforce U.S. rights under trade agreements and
respond to certain foreign trade practices.63 Section 301 provides a statutory means by which the
United States imposes trade sanctions on foreign countries that violate U.S. trade agreements or
engage in acts that are “unjustifiable” or “unreasonable” and burden U.S. commerce. Prior to
1995, the United States used Section 301 extensively to pressure other countries to eliminate
trade barriers and open markets to U.S. exports. The creation of an enforceable dispute settlement
mechanism in the WTO significantly reduced U.S. use of Section 301. The United States retains
the flexibility to determine whether to seek recourse for foreign unfair trade practices in the WTO
and/or act unilaterally. President Trump has been more willing to act unilaterally to promote what
the Administration considers to be “free,” “fair,” and “reciprocal” trade. The President has
imposed increased tariffs under Section 301 on U.S. imports from China due to concerns over
China’s forced technology transfer requirements and intellectual property rights practices,
including cyber-enabled theft of U.S. IPR and trade secrets.64 The Phase I trade deal that the
Trump Administration reached with the Chinese government addresses some aspects of IP issues,
while leaving other systemic IP issues to address in potential bilateral trade talks.65
Section 337
Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. §1337), 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.,
63 CRS In Focus IF11346, Section 301 of the Trade Act of 1974, by Andres B. Schwarzenberg.
64 For more information, see CRS In Focus IF10708, Enforcing U.S. Trade Laws: Section 301 and China, by Wayne
M. Morrison.
65 CRS Insight IN11208, U.S. Signs Phase One Trade Deal with China, by Karen M. Sutter.
Congressional Research Service
23
Intellectual Property Rights and International Trade
integrated circuit designs), or protected design rights. While the statute has been used to counter
imports of products judged to be produced by unfair competition, monopolistic, or anticompetitive practices, in recent years it has become increasingly used for its IPR enforcement
functions. 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. Unlike other trade remedies, such as antidumping or countervailing duty actions, no
showing of injury due to the import is required for “statutory” IP cases.
The U.S. International Trade Commission (ITC) administers Section 337 proceedings. ITC
investigates complaints either brought to it, mainly by companies, or ones commenced under its
own initiative. An administrative law judge provides an initial determination to the ITC which
can accept the initial determination or order a further review of it in whole or in part. If the ITC
finds a violation, it may issue two types of remedies: exclusion orders or cease and desist orders.
Exclusion orders, enforced by the U.S. Customs and Border Protection (CBP),
are issued to stop infringing imports from entering the United States. Exclusion
orders can be general or limited. General exclusion orders apply to all products
that are found in violation of Section 337, regardless of source. Limited exclusion
orders apply to the goods originating from the specific firm(s) found to be in
violation of Section 337. Limited exclusion orders typically are the more
commonly issued type of exclusion order. The ITC issues general exclusion
orders if such a broad-based exclusion is necessary to prevent the circumvention
of the limited exclusion order, or if there is a pattern of violation and it is difficult
to identify the source of infringing products.
Cease and desist orders, enforced by ITC, require the firm to stop the sale of the
infringing product in the United States.
The ITC may consider several public interest criteria and decline to issue a remedy. Also, the
President may disapprove a remedial order during a 60-day review period for “policy reasons.” A
presidential review of a remedial order often considers several relevant factors, including “(1)
public health and welfare; (2) competitive conditions in the U.S. economy; (3) production of
competitive articles in the United States; (4) U.S. consumers; and (5) U.S. foreign relations,
economic and political.”66
The number of active Section 337 investigations conducted by the ITC generally has trended
upward over the past decade (see text box). The overwhelming majority of Section 337 cases
involve allegations by private firms of patent infringement. Investigations concern a range of
technologies, including smartphones and other wireless devices, smart televisions,
semiconductors, GPS devices, windshield wiper blades, and tires.67 According to the ITC, there is
“substantial overlap between the industries that dominate our IP docket and the four industries
determined in a Department of Commerce study to be the most patent-intensive industries in the
United States”—computer and peripheral equipment, communications equipment, semiconductor
and other electronic components, and other computer and electronic products.68
FY2019 Section 337 Statistics
66 S. Rep. No. 93-1298, 93d Cong. 2d Sess. 199 (1974).
67 ITC, Budget Justification Fiscal Year 2016, p. 7.
68 Ibid., p. 19; Department of Commerce, Intellectual Property and the U.S. Economy, Industries in Focus, March
2012.
Congressional Research Service
24
Intellectual Property Rights and International Trade
Number of new complaints and ancillary proceedings – 58 (compared to 40 in FY2006)
Number of investigations and ancillary proceedings completed – 60 (compared to 30 in FY2006)
Number of active investigations: 127 in FY2019 (compared to 70 in FY2006)
Types of unfair acts alleged in active investigations: sole patent infringement – 110; solely trademark infringement –
3; solely trade secret misappropriation – 4; combination of unfair acts alleged - 10
Number of investigations completed on the merits: 22 (compared to 12 in FY2006)
Length of investigations completed on the merits: shortest – 9.4 months, longest – 29.3 months, average -17.7
months (compared to, in FY2006, shortest – 3.5 months, longest 19.0 months, and average – 12.0 months)
Number of active exclusion orders (as of December 31, 2018): 114
Number of remedial orders issued: general exclusion orders - 5, limited exclusion orders - 10, cease and desist
orders – 16 (compared to, in FY2006, GEOs – 3, LEOs -5, CDOs – 2)
Settlement/consent order share of total number of investigations terminated – 33% of 42 investigations (compared
to 46% of 26 investigations in FY2006)
Complaints withdraw share of total number of investigations terminated – 12% of 42 investigations (compared to
8% of 26 investigations in FY2006)
Source: U.S. International Trade Commission.
Legislative efforts related to Section 337 have focused on addressing jurisdictional problems
associated with holding foreign websites accountable for piracy and counterfeiting, renewing
congressional and public debate about the balance between protecting U.S. intellectual property
and promoting innovation.69 Congress could take these issues up again, as well as other issues,
including the effectiveness of CBP’s enforcement of Section 337 exclusion orders. A 2014
Government Accountability Office study found that CBP’s management of its exclusion order
process at ports contained weaknesses that result in inefficiencies and an increased risk of
infringing products entering U.S. commerce; it recommended that CBP update its internal
guidance related to sharing information sharing for trade alerts and monitoring.70 CBP has since
implemented recommendations to ensure that active exclusion orders from the ITC are posted on
CBP’s intranet.71
Generalized System of Preferences
The Generalized System of Preferences (GSP) is a U.S. trade and development program that
provides preferential duty-free entry to certain products from designated developing countries.72
The purpose of the program is to foster economic growth in developing countries by increasing
their export markets. GSP operates on a nonreciprocal basis. The Trade Act of 1974, as amended
(19 U.S.C. §2461-67), authorized the GSP for a ten-year timeframe, and the program has been
renewed from time to time. Congress most recently extended the GSP program until December
31, 2020, in the Consolidated Appropriations Act, 2018 (P.L. 115-141).
Although GSP is nonreciprocal, it can be used to promote stronger intellectual property protection
and enforcement abroad. Under the GSP statute, the President must consider a set of mandatory
69 For example, see S. 2029 and H.R. 3782, the Online Protection and Enforcement of Digital Trade Act introduced in
the 112th Congress.
70 Government Accountability Office (GAO), Intellectual Property: U.S. Customs and Border Protection Could Better
Manage its Process to Enforce Exclusion Orders, GAO-15-78, November 2014.
71 GAO follow-up with CBP on recommendations. For more information, see https://www.gao.gov/products/GAO-1578.
72 See CRS Report RL33663, Generalized System of Preferences (GSP): Overview and Issues for Congress, by Vivian
C. Jones.
Congressional Research Service
25
Intellectual Property Rights and International Trade
criteria that a country must fulfill in order to be designated as a GSP beneficiary. Additionally, the
President may evaluate a country on the basis of certain discretionary criteria, including the
country’s provision of IPR protection.73 For example, in light of heightened concern over India’s
intellectual property environment, President Trump removed India from the Generalized System
of Preferences beneficiary list on May 31, 2019.74
The GSP program undergoes an annual review by the GSP Subcommittee of the interagency
Trade Policy Staff Committee (TPSC), which is headed by the USTR. As part of its evaluation,
the TPSC addresses concerns about specific country practices (such as intellectual property
protection) and makes recommendations to the President. In October 2019, the President partially
restored GSP benefits to Ukraine for certain products based on the determination that the country
made progress towards providing IPR protection; Ukraine’s GSP benefits had been suspended in
December 2017.75 Based on industry petitions concerning IPR protection, USTR reports as
ongoing its reviews of the country practices of Indonesia, South Africa, and Uzbekistan.76
Table 4. IPR-Related U.S. Government Agencies and Coordinating Bodies
Department of
Commerce
Patent and
Trademark Office
International Trade
Administration
Department of
Homeland
Security
Customs and
Border Protection
Immigration and
Customs
Enforcement
U.S. Secret Service
Department of
Justice
Other Federal
Agencies
Coordinating and
Advisory Bodies
Civil Division
Criminal Division
Federal Bureau of
Investigation
Office of Justice
Program
U.S. Attorney’s
Office
U.S. Trade
Representative
Department of
Health and Human
Services (Food and
Drug
Administration)
Library of Congress
(Copyright Office)
Department of
State
U.S. Agency for
International
Development
U.S. International
Trade Commission
Office of the U.S.
Intellectual Property
Enforcement
Coordinator (IPEC)
National Intellectual
Property Rights
Coordination
Center (IPR
Center)
Interagency for
Trade
Implementation,
Monitoring, and
Enforcement
(ICTIME)
Private Sector
Advisory
Committee System
Source: CRS analysis.
Notes: For more information, see Appendix A.
73 91 U.S.C. §2462(b)(2).
74 “Proclamation to Modify the List of Beneficiary Developing Countries Under the Trade Act of 1974,” May 31, 2019,
https://www.whitehouse.gov/presidential-actions/proclamation-modify-list-beneficiary-developing-countries-trade-act1974-2/.
75 Proclamation 9955, “To Modify Duty-Free Treatment Under the Generalized System of Preferences and for Other
Purposes,” 84 Federal Register 58567, October 31, 2019.
76 USTR, “Active GSP Country Practices Reviews,” updated as of December 2019.
Congressional Research Service
26
Intellectual Property Rights and International Trade
U.S. Trade Promotion Authority and Negotiating Objectives
Trade promotion authority (TPA) is the time-limited authority that Congress uses to set U.S. 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.77 In recent grants of TPA, IPR issues
have become important negotiating objectives.
IPR negotiating objectives for FTAs were first enacted by the Omnibus Trade and
Competitiveness Act of 1988 (P.L. 100-418). The statute sought enactment and enforcement of
adequate IPR protection from negotiating partners. It also sought to strengthen international rules,
dispute settlement, and enforcement procedures through the General Agreement on Tariffs and
Trade and other existing intellectual property conventions. This negotiating mandate led to the
establishment of the TRIPS Agreement during the Uruguay Round of multilateral trade
liberalization negotiations and the IPR provisions in the North American Free Trade Agreement.
In the period since the 1988 Act, the IPR provisions of NAFTA and the TRIPS Agreement
became the template for other bilateral or regional FTAs. The focus of IPR negotiating objectives
shifted from creating to strengthening the IPR trade regime with the Trade Promotion Authority
Act of 2002 (P.L. 107-210), under which several FTA negotiations were concluded by the George
W. Bush Administration.
2002 Trade Promotion Authority
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 IPR terms 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 IPR 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.
May 10, 2007 Bipartisan Trade Agreement
The May 10, 2007 Bipartisan Trade Agreement (“May 10 Agreement”)—related to the thenpending 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.78 After the transfer of control of the House
following the 2006 elections, some Members of the new Democratic majority sought certain
changes in these pending U.S. FTAs. With respect to IPR, the congressional leadership sought to
77 See CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, by Ian F.
Fergusson.
78 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.
Congressional Research Service
27
Intellectual Property Rights and International Trade
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, 2007.79 Following the 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 the United States
considers South Korea to be a developed country.
2015 Trade Promotion Authority
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, 2015.
The IPR negotiating objectives include and expand on the 2002 objectives. The 2015 objectives
recognize the importance of digital trade to the economy and seek provisions to prohibit cyberand trade secret theft. The IPR objectives are considered principal negotiating objectives. This
means 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.”80 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 [IPR] 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 for strong enforcement of IPR;
Negotiating the prevention and elimination of government involvement in
violations of IPR such as cyber-theft or piracy;81 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.”82
79 CRS Report RL33743, Trade Promotion Authority (TPA) and the Role of Congress in Trade Policy, by Ian F.
Fergusson; and CRS Report R43491, Trade Promotion Authority (TPA): Frequently Asked Questions, by Ian F.
Fergusson and Richard S. Beth.
80 ibid.
81 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.
82 This objective that did not specifically refer to the patent protection provisions found in the May 10, 2007, Bipartisan
Trade Agreement (discussed above), and the added language seemingly could have been used to justify including or
excluding those provisions in future FTAs.
Congressional Research Service
28
Intellectual Property Rights and International Trade
Free Trade Agreements and Negotiations under the Trump
Administration
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. IPR chapters in trade
agreements include provisions on patents, copyrights, trademarks, trade secrets, GIs, and
enforcement. In general, the United States has viewed the TRIPS Agreement and WIPOadministered 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.
United States-Mexico-Canada Agreement (USMCA)
USMCA is the first trade agreement approved by Congress under the 2015 TPA. In many ways it
builds on previous U.S. FTAs, including NAFTA, but it features some divergences from previous
FTAs as well. NAFTA was the first FTA to contain an IPR chapter, which in turn was the model
for the TRIPS Agreement that came into effect
IPR Highlights in USMCA
a year later in 1995.83 NAFTA predated the
Digital enforcement. Extends IPR enforcement,
widespread use of the commercial internet,
including for copyrights, to the digital environment.
and subsequent IPR chapters in U.S. FTAs
Trade secrets. Requires criminal procedures and
contain obligations more extensive than those
penalties for trade secret theft, including cyber-theft;
found in TRIPS and NAFTA.
also clarifies that state-owned enterprises are subject
to trade secret protection requirements.
In general, U.S. FTAs have followed the TPA
Internet Service Providers (ISPs). Requires
negotiating objective that agreements should
“notice and takedown” processes to address ISP
“reflect a standard of protection similar to that
liability while allowing an alternative system to remain
found in U.S. law.” In addition, President
for Canada (“notice and notice”).
Trump’s objectives for the NAFTA
Trademarks. Extends trademark protection to
renegotiation reflected TPA-2015 and the aims sounds and “collective marks”; removes administrative
requirements to enable easier protection and
of U.S. negotiators in the Trans-Pacific
enforcement of trademarks.
Partnership, although in some instances the
Geographical indications (GIs). Requires
negotiated TPP outcomes were less
administrative procedures for recognizing and opposing
84
extensive. The United States achieved most
GIs, including guidelines for determining when a name
of what it sought in the proposed USMCA;
is common. Also, for GIs protected through
however, the Administration and some
international agreements, includes requirements on
Members of Congress subsequently negotiated transparency and opportunity to comment or oppose
GI recognition.
several changes to the agreement, including in
the IPR chapter. USMCA changes, and the
amendments known as the Protocol of Amendment (POA), are included in the description of core
IPR provisions discussed further below. USMCA is currently scheduled to come into effect on
July 1, 2020, but the ability to achieve the measures necessary to come into compliance with the
accord have cast that timeframe into doubt.
83 See CRS In Focus IF10033, Intellectual Property Rights (IPR) and International Trade, by Shayerah Ilias Akhtar
and Ian F. Fergusson.
84 The TPP was an FTA negotiated between the United States and 11 other countries in the Asia-Pacific region. Upon
taking office in 2017, President Trump withdrew the proposed agreement from U.S. consideration. The 11 other
countries subsequently ratified a revised agreement known as the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership (CPTPP). See CRS In Focus IF10000, TPP: Overview and Current Status, by Brock R.
Williams and Ian F. Fergusson.
Congressional Research Service
29
Intellectual Property Rights and International Trade
Ongoing and Future Free Trade Agreement Negotiations
IPR issues may arise in a number of ongoing and future U.S. FTA negotiations under the Trump
Administration. It remains to be seen to what extent elements of USMCA will serve as a template
for these negotiations.
On October 16, 2018, the Trump Administration notified Congress, under TPA, of its intent to
enter trade agreement negotiations with the EU, the UK, and Japan.
Regarding the EU, the TPA notification followed the July 2018 Joint Statement (agreed between
President Trump and then-European Commission President Jean-Claude Juncker) that aimed to
de-escalate trade tensions, including over tariff measures. The negotiations appear to be at an
impasse due to lack of U.S.-EU agreement over their scope. While the U.S. specific negotiating
objectives envision a broad-based trade agreement, the EU negotiating mandate is limited to nonagricultural tariffs and some regulatory cooperation. The U.S.-EU negotiating approach remains
unclear, including the extent to which the negotiations may address IP issues.
The United States and EU both maintain strong IPR standards and generally prioritize IPR
protection and enforcement as a key trade negotiating objective. In past U.S.-EU trade
negotiations on the proposed Transatlantic Trade and Investment Partnership (T-TIP) under the
Obama Administration, treatment of IPR was a major point of debate.85 A key issue was, and
continues to be, differing approaches to protection and enforcement of geographic indications.
The EU seeks strong GI protection because of GIs’ 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—as opposed to a separate system—and expresses concern that the EU
approach to GIs is “over-broad” and negatively affects trademarks and market access for U.S.
products that use generic names.86 Despite these differences, the United States and EU have
potential for cooperation on other IP issues, such as developing rules on trade secrets, an area of
U.S. and EU concern in light of increased instances of trade secret cyber-theft.87
Similar issues could arise in prospective U.S.-UK trade negotiations, particularly to the extent
that the UK remains aligned with EU rules and regulations. GI issues, while potentially
significant, may not be as charged as in the U.S.-EU trade negotiations. A major issue for the UK
is the potential impact of an FTA on pharmaceutical drug pricing. According to the specific
negotiating objectives issues issued by the USTR, a U.S. priority for the negotiations is to “[s]eek
standards to ensure that government regulatory reimbursement regimes are transparent, provide
procedural fairness, are nondiscriminatory, and provide full market access for U.S. products.”88 In
the UK, there have been many public calls for ensuring that the National Health Service’s
pharmaceutical pricing model is not undermined by any IP or regulatory commitments in a U.S.UK FTA.
In the case of Japan, the scope of specific negotiating objectives released by the USTR include
IPR as part of a broad range of issues to be covered in an agreement. However, the initial stage
85 See CRS Report R43387, Transatlantic Trade and Investment Partnership (T-TIP) Negotiations, by Shayerah Ilias
Akhtar, Vivian C. Jones, and Renée Johnson.
86 USTR, 2012 National Trade Estimate Report on Foreign Trade Barriers, March 2015, p. 136, https://ustr.gov/sites/
default/files/2015%20NTE%20Combined.pdf.
87 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.
88 USTR, “United States-United Kingdom Negotiations: Summary of Specific Negotiating Objectives,” February 2019.
Congressional Research Service
30
Intellectual Property Rights and International Trade
one trade agreement reached by the United States and Japan, which entered into force on January
1, 2020, is limited to industrial and agricultural goods, and cross-border digital trade.89 It is
unclear if a second stage of the trade agreement would include IPR issues.
In other developments, on February 6, 2020, President Trump announced that the Administration
intends to enter into FTA negotiations with Kenya, and the Administration provided Congress
with a formal notification under TPA on March 17, 2020.90 USTR has identified copyright piracy
and government use of unauthorized software as issues of concern with respect to Kenya.91
Core Provisions in U.S. Trade Agreements
What follows is a discussion of some of the central patent, copyright, trademark and other IP
commitments in U.S. FTAs and how they relate to the WTO TRIPS Agreement (see “World Trade
Organization (WTO)”).
Patents
Patent protection is one of the more contentious areas of U.S. FTA negotiations on IPR issues. In
the context of pharmaceuticals, the United States and other developed countries generally support
strong patent rights as necessary to provide incentives for innovation and enable rights holders to
recoup R&D and regulatory costs and invest in future innovations. Some developing countries,
however, maintain that patents may raise the costs of drugs and delay the entry of lower-cost
generic competitors into the market, leading to concerns about affordability and 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 rights, 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.
Some key patent provisions in U.S. FTAs and their evolution are discussed below.92
Patent-Eligible Subject Matter
TRIPS, NAFTA, subsequent U.S. FTAs, and the USMCA have made patents available “for any
inventions, whether products or processes, in all fields of technology, provided that they are new,
involve an inventive step and are capable of industrial application.”93 These agreements generally
have also described three exceptions for which a party can exclude from patentability:
inventions, the prevention of commercial exploitation within their territory of
which is necessary to protect ordre public or morality, including to protect
89 CRS In Focus IF11120, U.S.-Japan Trade Agreement Negotiations, by Cathleen D. Cimino-Isaacs and Brock R.
Williams.
90 USTR, “President Trump Announces Intent to Negotiate Trade Agreement with Kenya,” press release, February 6,
2020.
91 USTR, 2019 Special 301 Report, April 2019.
92 For a discussion of pharmaceutical patent provisions in U.S. law, see for instance, CRS Report R41483, Follow-On
Biologics: The Law and Intellectual Property Issues, by John R. Thomas.
93 TRIPS, Article 27.1.
Congressional Research Service
31
Intellectual Property Rights and International Trade
human, animal or plant life or health or to avoid serious prejudice to the
environment, provided that such exclusion is not made merely because the
exploitation is prohibited by their law;
diagnostic, therapeutic, and surgical methods for the treatment of humans or
animals;
animals other than microorganisms, and essentially biological processes for the
production of plants or animals, other than non-biological and microbiological
processes.94
Most agreements require patents be made available for plant varieties, but some allowed the
exclusion of plants other than microorganisms.
Since the 2005 U.S.-Morocco FTA, some agreements have required patent coverage of “new uses
or methods of using a known product.” This protection was also included in the Bahrain, Oman,
and South Korea FTAs, as well as the USMCA as originally negotiated. The FTAs with Morocco,
Bahrain and Oman also included required patent eligibility for treatments for medical conditions.
However, with respect to the final USMCA, the entire provision was dropped in the protocol of
amendment (POA). According to House Ways and Means Committee Democrats, the provision
would have “locked in the practice of ‘patent evergreening’ in which pharmaceutical companies
obtain hundreds of patents related to a product to block generic competition and price
reductions.”95 Views are mixed on patent evergreening, as another view is that the practice
provides patents for new uses and methods of existing products and incentivizes innovations in
developing products with new methods of dispensation (such as that would avoid a trip to the
hospital), or a product with fewer side-effects.96
Pharmaceutical Patent Protection in India
Since 2012, India has denied or revoked patents for several cancer and hepatitis C drugs developed by Western
pharmaceutical companies. India’s Supreme Court has decided to prohibit patents for certain chemical forms
absent a showing of “enhanced efficacy,” although the products are protected by patents in many other countries.
Innovator companies often seek patents of modified versions of originally patented products, a practice sometimes
critically referred to as “evergreening.” India’s patent laws are designed to discourage evergreening by denying a
patent unless there is a showing of enhanced efficacy of the reformulated pharmaceutical product. USTR argues
that patents are appropriate because modifications can provide new benefits, such as “fewer side effects,
decreased toxicity, improved delivery systems, or temperature or storage stability.” 97
India also has issued, or threatened to issue, compulsory licenses for pharmaceuticals. For example, in March
2012, the Indian government issued a compulsory license to an Indian pharmaceutical company to produce a
generic version of Nexavar, a kidney cancer drug produced by Bayer. India defended its decision on the basis that
the price for the patented drug was too high for most Indians.98 According to the 2019 Special 301 Report, U.S.
companies operating in India continue to be concerned about the potential threat of compulsory licenses and
94 USMCA, 20.36.2; some agreements dropped mention of one or more of these exceptions. However, these exclusions
are covered under TRIPS Article 27.2 and 27.3.
95 Improvements to the USMCA Factsheet, December 10, 2019,
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/USMCA%20win%20facts
heet%20.pdf.
96 For more information the evergreening debate, see CRS Report R40917, “Patent Evergreening:” Issues in
Innovation and Competition, by John R. Thomas, pp. 8-9 (available to congressional clients from the author upon
request).
97 USTR, 2015 Special 301 Report, p. 49.
98 “Bayer fails to block generic cancer drug in India’s top court,” Reuters, December 12, 2014.
Congressional Research Service
32
Intellectual Property Rights and International Trade
patent revocation, as well as what they perceive to be overly broad criteria for these actions under India’s
domestic law.
Term Adjustment for Unreasonable Granting Authority Delays
An adjustment to the patent term beyond its 20-year protection period may be provided in cases
of “unreasonable delays” by patent-granting authorities (e.g., PTO) in issuing patents during the
administrative review of patent applications (patent examination). Such extensions increase the
length of time right holders have no generic competition, enhancing their ability to recoup R&D
costs. 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 products. TRIPS requires
patent protection terms of a minimum of 20 years from the filing date. It does not require patent
term extensions in cases of “unreasonable” delays by issuing authorities, but it does obligate
members to ensure procedures, subject to conditions, for granting or registering patent rights
within a reasonable period of time.99 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.
U.S. FTAs provide for extensions in cases of “unreasonable” delays in the issuance of patents due
to regulatory review or administrative process that lessen the effective 20-year term of patent
protection. NAFTA allowed countries to provide such an extension, but it did not define an
unreasonable period of time. The U.S.-Chile FTA was the first U.S. FTA to define an
unreasonable delay as one “to include a delay in the issuance of the patent of more than five years
from the date of filing of the application in the Party, or three years after a request for
examination of the application has been made (5-3 definition).”100 This level of protection was
reprised in the Central American-Dominican Republic (DR-CAFTA). U.S. FTAs with Bahrain,
Oman, and South Korea defined “unreasonable” as four years from the date of filing or two years
after a request for examination.101 However, as a result of the May 10 Agreement, U.S. FTAs with
Colombia, Panama, and Peru made patent term restorations in cases of unreasonable delays for
pharmaceutical products optional, although it did contain the 5-3 definition of unreasonable in
cases such obligations were undertaken. 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.”102
USMCA. In contrast, USMCA obliges each party to provide the means to a patent holder to
adjust the term of a patent due to unreasonable delay, and requires each party to do so at the
patent holder’s request. USMCA returns to the earlier 5-3 definition.103
99 TRIPS Agreement, Article 62.2.
100 Chile FTA, Article 17.9.6.
101 Singapore, Australia, Morocco, Central American-Dominican Republic, Bahrain, Oman.
102 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.
103 USMCA, Article 20.44.
Congressional Research Service
33
Intellectual Property Rights and International Trade
Patent Term Extension for Unreasonable Curtailment
An adjustment for unreasonable curtailment refers to adjusting for delays on account of the
approval process for marketing new pharmaceutical products. Unlike most other products,
manufacturers of pharmaceutical products cannot market them even after a patent is approved.
The patent holder still needs to show the product is safe and effective to obtain marketing
approval from a regulatory authority, such as the Food and Drug Administration (FDA) in the
United States. This curtailment adjustment would ameliorate some of the time lost in obtaining
marketing approval of the drug. This provision first appeared in the U.S.-Jordan FTA, and has
continued in subsequent FTAs.104 It obligated parties to make available an extension of the patent
to compensate for unreasonable curtailment without specifying a time period. For the Panama,
Colombia, and Peru FTAs, this provision became optional.
USMCA. The USMCA renewed the obligation for parties to make available an extension of the
patent to compensate for unreasonable curtailment. It also allows for the provision of a sui
generis form of protection (e.g., a system not tied to the patent or marketing approval process).
The POA, however, permits a party to attach conditions or limitations on this obligation. The
amended text allows a party to restrict:
the applicability of the article to a single extension;
the adjustment to the first market approval granted;
length of the extension to five years; and
the length of additional sui generis protection to two years.105
Patent Linkage
Under the concept of patent linkage, if a patent currently is valid in a country, the pharmaceutical
regulatory body of that country (i.e., the counterpart of the FDA) may not grant marketing
approval for a generic version of that drug without the permission of the rights holder and must
notify the rights holder if marketing is permitted. Patent linkage arguably strengthens patent
protection, but may lengthen the time it takes for generic drugs to enter a market once the patent
expires.
Neither TRIPS nor NAFTA contain patent linkage obligations. Without them, generic drug
manufacturers could apply for marketing approval without the patent owner’s permission and
prior to the expiration of the patent. However, such generic manufacturers could still be sued for
patent infringement. In contrast, patent linkage is a common requirement in many U.S. FTAs,
beginning with the U.S.-Chile FTA.
Patent linkage provisions obligate the parties to:
notify the patent holder of any third party requesting marketing approval
effective during the term of the patent;106 and
deny marketing approval to any third party prior to the expiration of the patent,
except with the consent of the patent owner.107
104 U.S. Jordan FTA, Article 4.23(a).
105 USMCA, Article 20.46, fn. 40.
106 This provision began with the U.S.-Jordan FTA, Article 4.22.
107 For example, see U.S.-Chile FTA, Article 17.10.2
Congressional Research Service
34
Intellectual Property Rights and International Trade
The Colombia, Peru, and Panama FTAs reflected the policy changes of the May 10 Agreement,
which sought to delink marketing approval from patent enforcement. The previous two principles
became optional, and were joined, if applied, by the following obligations for a party to provide:
“expeditious” administrative or judicial procedures to challenge the validity or
applicability of a patent; and
“effective” rewards to encourage the successful challenge to the validity or
applicability of a patent.108
USMCA. As originally negotiated, the patent linkage provision of the USMCA reverted
back to the pre-May 10 standard, which prioritized enforcement of the patent and the
ability to prevent generics from obtaining market approval prior to challenging the
validity of the patent. Under the POA and in contrast to the May 10 FTAs, a party may
provide for effective rewards for challenging the validity of a patent. A footnote to this
provision suggests providing a period of marketing exclusivity to the first applicant that
successfully asserts the invalidity or non-infringement of the patent as a potential reward.
Also in contrast to the May 10 FTAs, a party may provide:
“Procedures…to promote transparency by providing information regarding applicable
patents and relevant periods of exclusivity for pharmaceutical products that have been
approved in that Party.”
This language differs from the obligation to provide “expeditious administrative or judicial
remedies” to challenge the validity of a patent per the language of the Colombia, Panama, and
Peru agreements. 109
Protection of Test Data
Data exclusivity provides a period of protection for test data110 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 a brand name drug. During the data exclusivity period, the generic company
would have to submit its own safety and effectiveness 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 innovation. At the
same time, such provisions may delay access to generic forms of drugs. (See Figure 4.)
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
obtain marketing approval, TRIPS requires members to take measures to protect such data from
disclosure and unfair commercial use, and this requirement was reaffirmed in the U.S.-Jordan
FTA.111 NAFTA further stipulated that such data could not be relied upon to support an
application for marketing approval for a reasonable period of time, which was defined as
“normally.…not less than five years” following the approval of the product by the producer of the
108 For example, see U.S.-Colombia FTA, Article 16.10.4.
109 In the United States, new drug manufacturers must list patents that claim the drug or a method of using that drug as
part of their application for FDA approval. FDA includes information on listed patents in a publication known as the
Orange Book. See CRS In Focus IF11214, Drug Pricing and the Law: Pharmaceutical Patent Disputes, by Kevin J.
Hickey.
110 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.
111 TRIPS, Article 39.3, U.S.-Jordan FTA, Article 4.22.
Congressional Research Service
35
Intellectual Property Rights and International Trade
data.112 For new chemical drug products, all subsequent U.S. FTAs, including USMCA, provided
this minimum five-year period of data exclusivity, which typically begins from the date of
marketing approval in the country. Beginning with the Singapore FTA, a party that provides a
means of granting marketing approval based on the approval of the product in another country is
required to defer approval for five years as well.113 The U.S.-Singapore FTA also began the
inclusion in FTAs of a provision that would prevent data from being used for the full five years
even if it outlasted the patent term.114
In addition, for the submission of new clinical information that includes a chemical entity
previously approved for another pharmaceutical product (new uses for known products), the U.S.Australia FTA began to require a minimum three-year period of data exclusivity for that data,
which typically begins from the date of marketing approval in the country.115 Because the
required availability of patent protection for new uses of a chemical entity previously approved
for another use was removed in USMCA (see above), this companion period of data exclusivity
was removed as well.
The Colombia, Panama, and Peru FTAs maintained five years of data exclusivity for test data
related to new chemical products. However, they also included 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”).116 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 became optional.117
Regulatory Exclusivity for Biologics
Biological products (“biologics”) are “large molecule” medical preparations derived from living
organisms. Examples include vaccines, blood and blood components, and therapeutic proteins.
Biologics are a relatively new area of pharmaceutical R&D.118 By contrast, “small molecules”
chemical formulations traditionally have been the active substances in most pharmaceutical
drugs.
Data exclusivity has a special significance for biologics. Since biologics are based on unique cell
lines or biological processes, they cannot be replicated as generics as easily and inexpensively by
relying on the originator product’s efficacy and safety test data, as is the case for traditional small
molecules-based medicine. Rather, regulatory agencies require more costly clinical trials to
approve “biosimilars.”119 U.S. law provides a 12-year period of data exclusivity for biologics.
112 NAFTA, Article 17.11.6.
113 Singapore FTA, Article 16.8.2.
114 Singapore FTA, Article 16.8.3.
115 Australia FTA, KORUS FTA, Article 18.9.1 and Article.18.9.2.
116 For example, Peru FTA, Article 16.10.2 (c).
117 Peru FTA, Article 16.10.2.
118 CRS Report R44620, Biologics and Biosimilars: Background and Key Issues, by Agata Dabrowska.
119 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.
Congressional Research Service
36
Intellectual Property Rights and International Trade
Data exclusivity protection of biologics has been an increasing area of focus in trade negotiations.
The United States first sought an additional period of exclusivity in the TPP negotiations,
although other members were unwilling to accept the 12-year proposal from the United States.120
While the United States typically bases its proposals on existing U.S. law, it only sought a 10year period of exclusivity in the USMCA. Although this level of protection was included in the
USMCA as originally negotiated, the POA removed the exclusivity period for biologics entirely, a
controversial decision that led innovator pharmaceutical groups to withdraw support from the
agreement. 121 Canada currently provides a total of eight years of biologics exclusivity while
Mexico provides a five-year exclusivity period for both small-molecule drugs and biologics.
120 TPP contained a 5-year period of exclusivity with the potential for an additional three years. Following the U.S.
withdrawal, the other TPP members suspended this provision as well.
121 See Pharmaceutical Research and Manufacturers of America (PhRMA), Press Release, December 19, 2019,
https://phrma.org/en/Press-Release/PhRMA-Statement-on-the-United-States-Mexico-Canada-Agreement-2019, and
Biotechnology Industry Association (BIO), Press Release, December 19, 2019, https://www.bio.org/pressrelease/usmca-missed-opportunity-create-positive-framework-leading-sector-21st-century.
Congressional Research Service
37
Intellectual Property Rights and International Trade
Figure 5. Different Scenarios for Data Exclusivity and Patent Protection
Source: CRS reproduction of figure from Government Accountability Office (GAO), Intellectual Property: U.S.
Trade Policy Guidance on WTO Declaration on Access to Medicines May Need Clarification, GAO-07-1198, September
2007.
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. In many countries, IPR are exhausted at the first sale for any
destination, and such goods can be exported or re-exported freely.122 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.123 This practice also has implication for the
importation of generic drugs into the United States. Pharmaceutical companies have voiced
122 For a discussion of patent exhaustion in U.S. law, see CRS Report R44962, Patent Law: A Primer and Overview of
Emerging Issues, by Kevin J. Hickey.
123 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.
Congressional Research Service
38
Intellectual Property Rights and International Trade
concerns that this practice threatens their ability to engage in price differentiation between
different markets.
Article 6 of TRIPS specifically excludes issues arising from exhaustion of IPR from WTO dispute
settlement, allowing each member to adopt different exhaustion regimes. Thus, TRIPS does not
address the issue of parallel imports. U.S. FTAs negotiated with Australia, Singapore, and
Morocco disallow parallel importing of patented products.124 Subsequent U.S. negotiated FTAs
have not included this provision, due to language included in the Science, State, Justice, and
Commerce, and Related Agencies, Appropriations Act of 2006 (P.L. 109-108), which prohibited
the use of such provisions.
Copyright
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 and NAFTA do not mention
any obligations regarding technological protection measures or rights-management information,
which is electronic information that identifies a protected work, its author, and terms and
conditions of use,125 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.126
While patent protection has experienced policy shifts in the FTAs over the years, copyright
protection provisions have remained fairly consistent. In general, U.S. FTA signatories are
obligated to provide an additional twenty years of copyright protection from the TRIPS/NAFTA
standard of 50 years after death of the author, bringing the minimum copyright term to seventy
years from the death of the author. Responding to technological innovations not contained in the
TRIPS Agreement, U.S. FTAs since the U.S.-Jordan FTA require trading partners to outlaw
circumvention of “effective technological measures” to protect access to copyrighted works.127
USMCA was the first U.S. FTA specifically to distinguish technological protection measures128
from rights management information,129 while providing similar levels of protection for each.
These provisions build on the U.S. Digital Millennium Copyright Act (DMCA) of 1998.130
Also based on the DMCA, U.S. FTAs since the U.S.-Chile FTA contain provisions that regulate
the liability of Internet service providers (ISPs) for copyright infringement that occurs within
their networks.131 Under the FTAs, ISPs are provided limited immunity from copyright liability in
certain kinds of infringing situations if they comply with regulations known as notice-and
takedown provisions. Under the notice-and-takedown process, ISPs must block access to or
remove infringing materials as soon as they are made aware of the infringement by the rights
holder, although ISPs users may file a counter-notice to restore material if they believe it is noninfringing. Copyright holders argue that it is necessary for ISPs to assist in enforcing copyright if
copyright laws are to be effective in the online context. However, critics claim that these
124 See, for example, U.S.-Australia, Article 17.9.4.
125 For a statutory definition of copyright management information, see 17 U.S.C. 1202(c).
126 For example, USMCA, Article 20.66, Article 20.67.
127 U.S.-Jordan, FTA, Article 4.13.
128 USMCA, Article 20.67, TPMs are technology or devices that limit or block access to a work to prevent copyright
infringement.
129 USMCA, Article 20.68, RMI identifies the author of a digital work and the terms and conditions relating to its use.
130 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.
131 U.S.-Chile, Article 17.23; current provisions in USMCA, Article 20.89.
Congressional Research Service
39
Intellectual Property Rights and International Trade
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.
USMCA. For the most part, USMCA follows the standard copyright provisions found in U.S.
FTAs noted above. Among the outcomes in the USMCA:
Extension of copyright terms. NAFTA alone among U.S. FTAs contained the
TRIPS 50-year standard. USMCA extends copyright terms from 50 years after
death of the author (or 50 years from the publication) to 70 years after the death
of the author (or publication). In addition, it increased the term of protection for
works from other than a natural person (such as works made for hire) to 75 years
from the year of the first authorized publication. Among the USMCA parties,
only Canada maintained the 50-year term.
Limitation and Exceptions. Confines “limitations and exceptions” to “certain
special cases that do not conflict with the normal exploitation of the work…and
do not unreasonably prejudice the legitimate interests of the rights holder.” The
USMCA does not contain additional language that was in the TPP to “endeavor
to achieve an appropriate balance” between users and rights holders in their
copyright systems, including digitally, through exceptions for legitimate purposes
(e.g., criticism, comment, news reporting, teaching, research). The “appropriate
balance” language speaks to fair-use exceptions in copyright law for media,
research, and teaching. Rights-holder groups have criticized such provisions in
the FTA context, while open internet groups have sought to have the fair-use
provision inserted into the proposed USMCA.
ISP “Safe harbor.” Protects ISPs against liability for digital copyright
infringement, provided that ISPs address intermediary copyright liability through
“notice and takedown” or alternative systems (e.g., “notice and notice” in
Canada). Rights-holder groups sought to limit what they considered “overly
broad safe harbor provisions,” while technology and business groups favored
retention.
Trade Secrets
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,
chemical and other production processes, marketing strategies, or sales information. According to
a 2014 survey by the ITC of more than 7,000 firms, 56% of internationally engaged firms
considered trade secrets “very important.”132
The USTR’s 2019 Special 301 Report described the continued need for international protection
and enforcement of U.S. trade secrets, citing the threat to U.S. competitiveness and risks to
national security from the theft of U.S. trade secrets. The report highlights concern about
inadequate protection and enforcement of trade secret law in certain countries. 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
132 Katherine Linton, “The Importance of Trade Secrets: New Directions in International Trade Policy Making and
Empirical Research,” USITC, Journal of International Commerce and Economics, September 2016.
Congressional Research Service
40
Intellectual Property Rights and International Trade
trade secret theft that results from computer hacking. In the United States, remedies for trade
secret theft primarily are found in state law, although criminal and civil remedies are also
available under federal law.
The USMCA is the first U.S. trade agreement since NAFTA to contain new provisions on trade
secrets.133 NAFTA required each party to provide the legal means for a person to prevent trade
secrets being disclosed without the consent of the person lawfully controlling the information.134
Subsequently, TRIPS language on “protection of undisclosed information” was derived from
NAFTA.135 NAFTA also prohibited limiting the duration of trade secret protection or discourage
or impede the voluntary licensing of trade secrets.
USMCA. In addition to the NAFTA language above, USMCA also requires each party to make
available civil protection and criminal enforcement136 and penalties for unauthorized and willful
misappropriation of trade secrets. However, it allows each party to determine the applicability of
its procedures among at least one of the following:
for the purposes of commercial advantage or financial gain;
related to a product or service in national or international commerce; or
intended to injure the owner of that trade secret.137
The other new feature of the USMCA trade secrets section is its prohibition on unauthorized
disclosure of trade secrets by government officials in a legal or regulatory capacity outside the
scope of their official duties.138
Trademarks
NAFTA defined trademarks as “any sign, or any combination of signs, capable of distinguishing
the goods or services of one person from those of another, including personal names, designs,
letters, numerals, colors, figurative elements, or the shape of goods or of their packaging.”139 In
addition, NAFTA defined trademarks to include service marks and collective marks (marks
denoting organizations, such as associations, unions, or cooperatives) and may include
certification marks (goods or services or providers have met certain standards.) With a few
variances, recognition of collective and certification marks are required in U.S. FTAs.
The United States has used subsequent FTAs to include sound and scent marks in trademark
protection. While NAFTA allowed parties to restrict trademarks to signs that are “visually
perceptible,” the U.S.-Singapore FTA and subsequent agreements prohibited countries from
requiring marks to be visually perceptible.
The U.S.-Chile FTA was the first agreement to require trademarks for sound marks, and that
requirement has been replicated in subsequent agreements.140 The United States has had less
success in requiring scent marks. U.S. FTAs with Chile, Panama, and the DR-CAFTA countries
133
USMCA, Section I.
134 NAFTA, Article 17.10.
135 TRIPS, Article 39.
136 TPP, from which the United States withdrew, contained provisions criminalizing trade secrets.
137 USMCA, Article 20.71.
138 Ibid., Article 20.78.
139 NAFTA, Article 1708.1.
140 U.S.-Chile FTA, Article 17.2.
Congressional Research Service
41
Intellectual Property Rights and International Trade
provide that countries may include scent marks.141 More common is the language “neither party
may deny registration solely on grounds of sounds and scents,” which appears in the FTAs with
Australia, Bahrain, Colombia, Oman, Peru, and South Korea.142 Singapore and USMCA require
each party to make “best efforts” to register scent marks.143
U.S. FTAs generally, including the USMCA, provide for:
a term of registration of no less than 10 years with the opportunity for 10-year
periods of renewal indefinitely144 (whereas TRIPS requires a seven-year term and
seven-year renewals);
protection of well-known marks, whether registered or not, for goods and
services for which they have gained their reputation; that protection may also be
protected for dissimilar goods and services provided a connection exists with the
goods and services of the owner;145
the maintenance of a trademark classification system consistent with the Nice
Agreement Concerning the International Classification of Goods and Services for
the Purposes of the Registration of Marks;146
limited exceptions such as fair use for descriptive terms; and
appropriate measures to refuse an application or cancel a registration and prohibit
the use of a trademark that is identical or similar to a well-known trademark by
administrative procedures.
NAFTA contained several provisions that have not appeared in subsequent U.S. FTAs.147
However, these elements were incorporated into the TRIPS Agreement. They stipulated that:
use of a trademark is not a prerequisite for filing an application for registration,
although parties may make registration dependent on use;
publication of each trademark must occur before registration or promptly after;
parties shall require the use of a trademark to maintain a registration, and that a
trademark may be cancelled after two years of non-use;
an owner of a registered trademark may assign the trademark without the transfer
of the business to which it belongs;
parties shall recognize use of a trademark by a person other than the trademark
owner, where such use is subject to the owner’s control, as use of the trademark
for purposes of maintaining the registration;
compulsory licensing of trademarks is not allowed; and
the nature of the goods or services to which a trademark is to be applied shall in
no case form an obstacle to the registration of the trademark.
141 For example, U.S.-Chile FTA, Article 17.2.
142 For example, U.S.-Australia FTA, Art. 17.2.2.
143 For example, USMCA, Article 20.17.
144 USMCA, Article 20.25.
145 Ibid, Article 20.21.
146 USMCA, Article 20.24.
147 NAFTA, Article 1708.
Congressional Research Service
42
Intellectual Property Rights and International Trade
Internet Domain Names
NAFTA was negotiated before the widespread use of the internet, and does not contain language
on internet governance. The U.S.-Chile and U.S.-Singapore FTAs were the first to contain
language on domain names, which have been largely retained in subsequent U.S.-FTAs including
USMCA.148 They require each party’s country-code top-level domain (ccTLD) organization to:
provide procedures to settle disputes based on principles established in the
Internet Corporation of Assigned Names and Numbers’ (ICANN) Uniform
Domain-Name Dispute-Resolution Policy (UDRP),149 in order to address and
resolve disputes related to the bad-faith registration of domain names in violation
of trademarks; and
provide a reliable and accurate database of contact information of domain name
registrants.
Geographical Indications (GIs)
GIs are geographical names that protect the quality and reputation of a distinctive product from a
specific region (e.g., Parma ham, Florida oranges). U.S. FTAs contain provisions on geographical
indications in its IPR chapters, either freestanding or as part of the trademark section. For
example, the trademark chapter requires that signs (e.g., brand logos) may serve as a geographical
indication.
In FTA negotiations, the United States has sought to limit GI protections that, from the U.S.
perspective, can improperly constrain U.S. agricultural market access in other countries by
protecting terms it views as “common.” USMCA defines a geographical indication as
an indication that identifies a good as originating in the territory of a Party, or a region or
locality in that territory, where a given quality, reputation, or other characteristic of the
good is essentially attributable to its geographical origin.150
Some previous agreements elaborated on the definition to include:
Any sign or combination of signs (such as words, including geographical and personal
names, letters, numerals, figurative elements, and colors), in any form whatsoever, shall be
eligible for protection or recognition as a geographical indication.151
GIs as Trademarks
Generally, U.S. FTAs have152 either required parties to recognize GIs as trademarks, or provide
that parties may recognize GIs as trademarks or may be considered as certification marks eligible
for trademark protection. NAFTA and the U.S.-Morocco FTA only required each party to provide
owners remedies for GI infringement but they do not specifically refer to GIs’ eligibility for
trademark protection.153 USMCA requires only that “geographical indications may be
protected through a trademark or a sui generis system or other legal means.”154
148 For example, U.S.-Chile, Article 17.3.
149 Some agreements explicitly require participation in ICANN.
150 USMCA,Article 20.1
151 For example, Article 16.2.2, fn. 4.
152 Some agreements explicitly require participation in ICANN.
153 NAFTA, Art. 17.2; Morocco, Art. 15.2.4
154 USMCA, Article 20.29.
Congressional Research Service
43
Intellectual Property Rights and International Trade
Administrative Procedures
Most U.S. FTAs require parties to provide a means to apply or petition for protection or petition
for recognition of a geographical indication and that the process adhere to certain norms and
procedures. USMCA provides that if a party provides these administrative procedures, they must
adhere to certain standards, which usually have appeared throughout U.S. FTAs. Parties shall:
accept the application or petition without requiring intercession by a Party on
behalf of its nationals;
process those applications without imposing burdensome formalities;
ensure the laws and regulation concerning GI application is readily available to
the public; and
provide contact information on the filing and administrative process concerning
the application process and status of an application.155
More recent FTAs provide that these guidelines for administrative procedures outline the process
for opposing applications or petitions as well. USMCA goes further by not only ensuring
applications are published for opposition and procedures to oppose an application, but also to:
provide a reasonable period of time for an interested person may oppose the
application;
require that administrative decisions in opposition proceedings be reasoned and
in writing, which may be provided by electronic means;
provide for cancellation of the protection or recognition afforded to a
geographical indication; and
require that administrative decisions in cancellation proceedings be reasoned and
in writing, which may be provided by electronic means.156
Opposition, Denial, Cancellation
GI provisions in U.S. FTAs also include grounds for denial, opposition or cancellation. Earlier
U.S. FTAs provided two specific justifications refusing protection:
GI is confusingly similar to a preexisting pending good faith application for a
trademark or a preexisting trademark registered in that Party; or
GI is confusingly similar to a preexisting trademark, the rights to which have
been acquired in accordance with the parties’ law.157
The U.S.-Korea FTA (KORUS) added a third justification for refusing protection of a GI that is
likely to cause confusion with a trademark that has become well known in the party’s territory.158
USMCA replaces the additional KORUS justification to refuse protection for a term customary in
common language as the common name for the relevant good in the territory of the Party.159
USMCA also sets out guidelines as to whether a term is the customary term for a good in
common language.
155 Ibid., Article 20.30.
156 Ibid.
157 For example, DR-CAFTA, Article 15.3.7.
158 KORUS, Article 18.2.15 (a) (iii).
159 USMCA, Article 20.31.1 (c).
Congressional Research Service
44
Intellectual Property Rights and International Trade
USMCA is the first U.S. FTA to include applicable procedures if a party protects or
recognizes a GI pursuant to an international agreement. This section may reflect the GIs
recognized through FTAs Canada has signed with Canada and Mexico. The provisions largely
track the notification, transparency, and opposition procedures above.
New and Evolving Issues
U.S. trade policy is increasingly focused on addressing new and evolving issues in international
IPR protection and enforcement. The IPR landscape is changing, due to both the growing role of
emerging markets in the global marketplace and the increased level of international trade taking
place in the digital environment.
Indigenous Innovation
“Indigenous innovation” is a term and government industrial policy approach developed and
deployed in China and other countries, including India. These policies generally aim to build out
and advance China and other
This text is long and has been trimmed here. Open the source document for the complete record.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.