EC publishes report on protection and enforcement of intellectual property rights in “third countries”

On March 12, 2018, the European Commission issued a press release on a report on the “protection and enforcement of intellectual property rights in third countries”. The report was published on February 21, 2018 and is entitled – “Commission Staff Working Document – Report on the protection and enforcement of intellectual property rights in third countries”. The main objective of the report “is to identify third countries in which the state of IPR protection and enforcement gives rise to the greatest level of concern and thereby to establish an updated list of so called “priority countries” (Source: European Commission, Report on the protection and enforcement of intellectual property rights in third countries, March 2018). This endeavor mirrors the US Special 301 process of targeting countries which are deemed as failing to provide adequate and effective protection of intellectual property rights.

The Commission report established 3 categories of countries:

Priority 1: China
Priority 2: Argentina, India, Indonesia, Russia, Turkey and Ukraine
Priority 3: Brazil, Ecuador, Malaysia, Mexico, Philippines, Thailand and the United States

The report notes that the “Commission also identified a separate category of countries, where IP enforcement gives rise to concern and where developments need to be closely monitored. This category of countries includes Israel, Kuwait, Paraguay, South Africa, United Arab Emirates and Uruguay” (Source: Ibid).

The EU highlighted the following concerns:

  • unduly restrictive patentability criteria
  • counterfeit pharmaceuticals

With respect to patentability criteria, the Commission report stated,

Indonesia, India, Russia and Argentina, apply unduly restrictive patentability criteria, undermining innovation and research and preventing investment in these economies, while in Brazil, the interference of health authorities in the granting of patents in the pharmaceutical sector remains problematic. (Source:

In relation to counterfeit pharmaceuticals, the Commission cited an OECD-European Intellectual Property Office study (Mapping the economic impact of trade in counterfeit and pirated goods, 2016) noting that,

India and China are the biggest producers of counterfeit pharmaceuticals and due to the boom of e-commerce these fake products are shipped all around the world, including Europe, also in small consignments. (Source: Ibid)

The Commission report identified Argentina, China, India, Indonesia and Mexico as not providing adequate or effective regulatory data protection for pharmaceuticals and plant variety protection, and singled out China and India for inefficient protection of trade secrets and know how and Russia for burdensome regulations in relation to the protection of undisclosed information.

In relation to India, the Commission had the following concerns relating compulsory licensing and patentability criteria.

Several constraints on patent protection remain detrimental to EU companies. Restrictive patentability criteria combined with difficulties to enforce patents granted, as well as very broad criteria being applied for granting compulsory licenses or for revoking patents, make effective patent protection in India very difficult, notably for pharmaceuticals and chemicals but also for other sectors where local innovation is being promoted. (Source: Ibid)

In relation to Brazil, the Commission noted,

In 2017 the National Sanitary Regulatory Agency (ANVISA) and INPI concluded an agreement in order to speed up the examination of medicinal patent applications and to change the role ANVISA plays in the process, which has been a key concern for EU right holders for a number of years. It remains to be seen how the new role of ANVISA will influence the examination of patent applications…Another continued grave concern for the EU stakeholders is the scrutiny of ANVISA in pharmaceutical patent applications before they have been examined by INPI, although steps have been taken to supposedly realign the procedures with international standards (Source: Ibid).

In relation to Indonesia, the EC report stated,

    The new Patent Law introduced a “local working” requirement. This creates unpredictability for businesses in sectors heavily relying on patent protection and impedes the dissemination of technical information, which is indispensable for the development of new products including pharmaceuticals. The contested provisions set out that the patent holder is obliged to manufacture the patented product or use the patented process in Indonesia, and that noncompliance with the requirement triggers the possibility to issue a compulsory license. Moreover, the absence of local manufacturing of the patented product or of the use of the patented process may lead to the abolishment of the patent. These rules clearly discriminate imported patented products against domestically produced goods under patent protection.
    Certain patentability requirements in Indonesia do not seem to meet international standards. Notably the requirement to prove the “enhanced efficacy” of the pharmaceutical product when applying for secondary patent protection, limits unduly the patentable subject matter as the information on “enhanced efficacy” is generated in the course of the clinical trials which are usually ran only after the patent is granted.
    EU stakeholders consider that the Patent Law creates significant uncertainty for pharmaceutical innovators by discouraging voluntary licensing and promoting compulsory licensing on grounds that need to be more precise and consistent with Indonesia’s international obligations. (Source: Ibid)

With respect to Ecuador, the report flagged a local working requirement which stakeholders feared could trigger compulsory licensing.

With respect to the United States,

The Commission notes the lack of progress in implementing the WTO panel decision on Irish Music. Section 110(5)(B) of the US Copyright Act was found to be incompatible with the TRIPS Agreement and constitutes a copyright infringement. Disrespecting WTO dispute settlement decisions on IPR establishes a negative precedent and undermines the credibility of WTO members such as the EU and the US who share a common interest in promoting effective IPR protection and enforcement, notably in emerging economies. (Source: Ibid)

As part of the European Union’s work on the enforcement and protection of intellectual property rights, the Commission has launched a Public consultation on a “Counterfeit and Piracy Watch-List“.

The Commission provides the following rationale for establishing the EU Watch List:

    IPR infringements, and in particular commercial-scale counterfeiting and piracy cause significant economic losses for rightholders and legitimate businesses as well as to those whose employment depends on such businesses. These infringements undermine the European Union’s comparative advantages in innovation and creativity to the detriment of EU citizens and pose significant risks to consumer health and safety as well as to the environment. Besides, IPR infringements, and in particular counterfeiting and piracy also seriously harm European business trading outside the European Union, including the damage caused to geographical indications.
    Therefore, the European Commission – in the framework of the “Trade for all” communication and the EU’s Strategy for the enforcement of intellectual property rights in third countries – launches a new initiative aiming at identifying online and physical marketplaces situated outside the European Union that are reported to engage in or facilitate substantial IPR infringements, and in particular piracy and counterfeiting.

Comments to the public consultation are due by 16 April 2018.

More information can be found below:

    The European Commission – on the basis of input from the stakeholders – after thorough verification of the received information – intends to publish a so called “Counterfeit and Piracy Watch-List” in 2018, which will be updated regularly. The list will identify and describe the most problematic marketplaces – with special focus on online marketplaces – in order to encourage their operators and owners as well as the responsible local authorities and governments to take the necessary actions and measures to reduce the availability of IPR infringing goods or services.

    The Counterfeit and Piracy Watch-List will not mean to reflect findings of legal violations, nor will it reflect the European Union’s analysis of the general intellectual property rights protection and enforcement climate in the country or countries concerned.

    The European Commission requests written contributions from stakeholders identifying marketplaces that should be included in the Counterfeit and Piracy Watch-List for 2018