2014, NAM discussion of India

The National Association of Manufacturers’s (NAM) submission (7 February 2014, USTR-2013-0040) to USTR’s 2014 Special 301 Review requests that USTR designate India as a Priority Foreign Country citing concerns with India’s actions in multilateral fora including the UNFCCC, WTO and WIPO:

In multilateral forums like the UNFCCC, the WTO and WIPO, India is leading efforts to weaken existing intellectual property rights protections and to position IPR as a barrier to economic development and access to technology despite all evidence to the contrary. At the WTO, India has claimed that the intellectual property system has no links to incentivizing innovation. These claims are a distraction from urgent business and threaten to undermine the IPR of industries in the United States, India and many other countries around the world.

Here are some choice quotes from the NAM submission to USTR.

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a. India

USTR’s 2013 Special 301 Report placed India on the Priority Watch List, stating that IPR protection and enforcement challenges in India “are growing, and there are serious questions regarding the future condition of the innovation climate in India across multiple sectors and disciplines.” Over the last year, India has not only failed to address the growing challenges set out in that Report, but has taken additional steps to further deny adequate and effective IPR protection.

India denies patent protection for inventions that would otherwise meet internationally accepted criteria. Since 2012, patents for at least 16 products have been invalidated, denied or revoked for various reasons. For example, under TRIPS, patents must be granted for inventions that are new, involve an inventive step and are capable of industrial application. But India’s patent law creates an impermissible fourth “enhanced efficacy” test. On that basis, India denied

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patents last year for an anticancer therapy that is already patented in 40 other countries around the world.

Last year’s Special 301 report raised concerns that “India’s prohibition on patents for certain chemical forms absent a showing of ‘enhanced efficacy’ may have the effect of limiting the patentability of potentially beneficial inventions.” However, India has taken no steps to bring its law into line with international rules and norms. Instead, manufacturers have seen a continued erosion of patent rights for innovative medicines in India.

India is promoting actions designed to benefit its own domestic industries at the expense of patent holders in the United States and elsewhere. In late 2011, India released a National Manufacturing Policy that encourages compulsory licensing of green technology that is “not available at reasonable rates” or is not manufactured in India.5 This policy expands on a 2010 Department of Industrial Policy and Promotion discussion paper that encouraged compulsory licenses if, among other things, the patented invention is not being “worked” in India.

5 Government of India, Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, “National Manufacturing Policy,” November 2011.

6 Business Software Alliance, “Shadow Market: 2011 BSA Global Software Piracy Study,” Ninth Edition, May 2012.

7 Kerr, William and Chad Moutray, “Economic Impact of Software Piracy for Manufacturers in the U.S.,” National Association of Manufacturers, January 2014.

In 2012, India issued its first compulsory license for an anti-cancer drug, noting in its findings that the drug was imported rather than manufactured locally. This decision is inconsistent with India’s TRIPS’ obligation not to discriminate against imports and establishes a troubling precedent for other products and sectors. As USTR stated in its 2013 Special 301 Report, “the decision could potentially compel innovators outside India … to manufacture in India in order to avoid being forced to license an invention to third parties.”

Over the past year, India has failed to address the internationally inconsistent and discriminatory impact on foreign imports of its “local working” requirement. Moreover, press reports indicate that India is considering compulsory licenses for additional products under a separate provision of its Patent Act that allows the government to notify the need for such a license on the grounds of national emergency, extreme urgency and public non-commercial use.

Data protection remains a serious problem in India. USTR’s Special 301 Report consistently has highlighted India’s failure to provide adequate and effective protection against unfair commercial use, as well as unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical and agricultural chemical products. Such changes are needed to bring India’s practices in line with TRIPS. However, India has yet to take action.

Copyright piracy is widespread across India, despite reforms passed in 2012. The country is a significant source of illegal film recordings. Nearly two-thirds of all software is pirated.6 According to a recent study, global software piracy cost the United States more than 42,000 manufacturing jobs over the last decade.7 In its 2013 Special 301 Report, USTR called on India to take additional steps to combat physical and online piracy, signal theft, and circumvention of technological protection measures. No action was taken.

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India does not provide adequate and effective protection for trade secrets. The failure to protect trade secrets is particularly concerning considering the relationships many overseas firms have with the country’s service sector. Businesses abroad may have little recourse against contract service providers in India that misappropriate trade secrets. While India recognized the need to improve its trade secrets regime in its 2012 draft National IPR Strategy, it has taken no steps to strengthen its laws or enforcement.

India’s egregious acts, policies and practices are having a serious adverse impact on manufacturers in the United States and threaten further damage. They have contributed to a climate for IPR protection and enforcement that consistently ranks worst or among the very worst in the world.8 Placing India on the Priority Watch List for a 26th year is unlikely to result in meaningful progress, and USTR and other federal agencies must consider elevation to Priority Foreign Country.

8 For example, see Global Intellectual Property Center, “Charting the Course – GIPC International IP Index,” January 2014.

9 Office of the U.S. Trade Representative, “United States and India Sign Framework for Cooperation on Trade and Investment,” March 2010.

10 Government of India, Department of Industrial Policy & Promotion, “India-USA Institutional Mechanisms,” November 2013; Center for Strategic & International Studies, “U.S.-India Economic Ties: Getting Down to Business,” October 2013.

Such designation is particularly critical because India is not engaging in good faith negotiations or making significant progress in bilateral or multilateral negotiations, despite high- level interventions by President Obama, Vice President Biden, Secretary of State Kerry and U.S. Trade Representative Froman. In March 2010, former U.S. Trade Representative Ron Kirk and Indian Commerce and Industry Minister Anand Sharma signed a “Framework for Cooperation on Trade and Investment.”9 According to this Framework, the Trade Policy Forum, which was established in 2005, was to convene annually to review work undertaken by various focus groups.

The Framework tasked an “Innovation and Creativity Focus Group” with “improving intellectual property rights protection and enforcement, enhancing awareness of intellectual property rights, fostering innovation and creativity, and increasing collaboration between U.S. and Indian innovators.” Despite high hopes, the Trade Policy Forum has not met since 2010, and there appears to be little, if any, substantive bilateral dialogue ongoing in the Innovation and Creativity Focus Group.

Similarly, no other potentially relevant dialogue, such as the U.S.-India Commercial Dialogue, the High Tech Cooperation Group, or the Information and Communications Technology working group has met since 2011.10 The woeful absence of any dialogue – much less meaningful dialogue – makes clear that the Indian government lacks any serious commitment to engage and resolve the significant and long-standing problems cited every year in USTR’s Special 301 Report.

In multilateral forums like the UNFCCC, the WTO and WIPO, India is leading efforts to weaken existing intellectual property rights protections and to position IPR as a barrier to economic development and access to technology despite all evidence to the contrary. At the WTO, India has claimed that the intellectual property system has no links to incentivizing innovation. These claims are a distraction from urgent business and threaten to undermine the IPR of industries in the United States, India and many other countries around the world.

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Indeed, there is a growing risk that India’s weak IPR policies will serve as a model for other emerging economies. Some countries have already started to follow India’s lead by proposing changes to their own national laws. In May 2013, intellectual property offices of the BRICS countries agreed on a roadmap for collaboration. Their first act was to name India as the lead office to improve the influence of the BRICS in WIPO and other international forums.11

11 Companies and Intellectual Property Commission, “BRICS Intellectual Property Offices Cooperation Roadmap,” May 2013.

To address the threat of India’s deteriorating intellectual property environment and other discriminatory policies to manufacturing and jobs in the United States, the NAM and 16 other leading business associations representing nearly every sector of the U.S. economy have united to form the Alliance for Fair Trade with India (AFTI) (http://aftindia.org). AFTI is working with Congress, the Administration and partners around the world to end India’s unfair policies and to ensure they are not repeated in the future.