By Andrei Iancu and David Kappos
The federal government just released its Special 301 report, which calls out foreign countries that deprive American companies of billions in revenue — and prevent the creation of countless U.S. jobs — by failing to protect their intellectual property rights.
Consider how the European Union recently changed legislation to shorten the period that new drugs can remain on the market without competition from copycats, limiting American biotech firms’ ability to earn back the money they spent developing new treatments.
The EU also hasn’t completely abandoned its proposal to allow European bureaucrats to unilaterally set licensing rates for transformative technology behind global wireless communications infrastructure, including 5G, Wi-Fi and other standardized technologies.
The government was right to recognize the EU’s increasingly hostile approach to American companies’ intellectual property rights by placing it on the report’s Watch List for the first time in two decades.
Our Northern and Southern neighbors are also failing us. Mexico doesn’t adequately protect clinical data that companies produce — at great cost — to validate the safety and efficacy of new drugs. And Mexico’s system for resolving patent disputes for purposes of promoting generic competition is ineffective.
Keeping it on the Priority Watch List would have helped drive that progress; unfortunately, the government downgraded it to the Watch List.
The federal government once again put Canada on the Watch List for falling short of USMCA commitments. Canada uses its Patented Medicine Prices Review Board to effectively erode the value of American-invented medicines. And its Online Streaming Act disadvantages American digital services providers.
While the United Kingdom wasn’t included in this year’s report, it deserved a spot on the Watch List. Its courts already purport to have the authority to set global licensing rates that cover U.S. and other nations’ patents. It has also proposed changes to dispute resolution for standard essential patent licensing that would enable the undervaluing of American companies’ innovations — a marked departure from peer nations’ policies on the matter.
China remains one of the most significant violators of Americans’ intellectual property rights, which is why it’s once again on the report’s Priority Watch List.
For instance, Chinese courts have increasingly tried to set global standard essential patent licensing rates, often at artificially depressed levels, that help Chinese manufacturers while undervaluing Western inventors.
It’s also taken aim at America’s biotech industry by limiting favorable regulatory treatment to medicines first marketed in China.
Like Mexico, China’s patent linkage system remains flawed. Its current policies don’t provide innovative drug companies with enough time to resolve patent disputes before generic competitors enter the market, giving Chinese generic manufacturers an unfair leg up at the expense of American innovators.
India likewise remains on the Priority Watch List. It’s taken some limited steps to improve intellectual property protections, but far more substantial reforms are necessary.
Brazil, with its patent prosecution delays and substantial administrative backlogs that keep innovators from enjoying a full period of patent protection, similarly remained on the Watch List.
This year’s Special 301 report took a meaningful step toward calling out misbehavior of adversaries and allies wherever it occurs. Ultimately, addressing these issues head-on is the first step towards reform.
Andrei Iancu served as the undersecretary of commerce for intellectual property and director of the U.S. Patent and Trademark Office from 2018 to 2021.
David Kappos served in the same offices from 2009 to 2013. Both serve as board co-chairs of the Council for Innovation Promotion.
This piece originally ran in The Hill.
