The Office of the United States Trade Representative (USTR) issued the 2011 Special 301 Report yesterday afternoon. For those unfamiliar with the Special 301 Reports, these are reports that the Trade Act requires the USTR to publish every year identifying countries that fail to provide “adequate and effective protection” to intellectual property (IP) rights of U.S. persons. Over the years, these reports have turned into an annual exercise of naming countries whose domestic IP policies do not meet the unrealistic expectations of IP rights holders. I have written before about our concerns with these reports. These concerns remain true for this year’s report as well.

To recap: the Report places blind reliance on rights holder assertions about the presence, nature, and extent of copyright, patent, and trademark infringements; it ignores the need for balanced copyright regimes in countries through out the world; it cites countries based on vague criteria; it pressures countries to sign on to international agreements that don’t currently bind them and that these countries possibly consider detrimental to their national interest.

In addition to these general concerns, here are a few things that strike me about this year’s Report:

Dictating the Design of Domestic Laws

The Report repeatedly tells countries how they should change their laws, regulations, or practices to accommodate the interests of U.S. rights holders. For instance, the Report notes with disapproval how China has tripled the threshold value that allegedly counterfeit goods should meet before they may be subjected to criminal enforcement action. The Report notes that this high threshold is a barrier to effective enforcement and suggests that China could mitigates its effect by “valuing counterfeit goods at retail price” and including the costs of packaging in determining whether the threshold is met. Similarly, it suggests that Israel should amend its copyright law to provide for statutory damages. It also suggests that Pakistan should provide its enforcement officials the authority to act without a rights holder complaint.

Such detailed prescriptions ignore a basic tenet of international law: counties are free to make their own laws to suit their national interests. In addition, they risk alienating U.S. trading partners to suit the interests of a narrow sector of the U.S. economy. They fail to consider the legitimate interests of people in other countries.

Transparency in Law Making

The Report cites with approval countries that adopt transparent law making practices. The Report notes how such transparency would “make it easier for stakeholders to comply with legislative and regulatory changes.” Yet the USTR completely fails to see the value of the same principle applied to its own practices. Just as rights holders benefit from transparent processes that permit them to present their interests to foreign governments, the American people would benefit from transparent trade negotiations that allow them to present their interests to the USTR.

Yet the USTR adopts secrecy as its standard operating procedure. One wonders if the irony of this situation ever strikes the agency.

Greater Resources, Harsher Penalties

The Report continues to harp on the old song that more resources dedicated to enforcement and harsher penalties for infringement will magically solve the problem of infringement. Thus, it calls upon Russia to establish specialized IP courts. It asks Argentina, Indonesia, and India to impose deterrent level sentences on infringers (meaning of “deterrent level sentences” is unclear). It urges Colombia and Costa Rica to devote greater resources to enforcement efforts.

In doing so, the Report ignores pleas by PK and others in the public interest community that countries facing pressing law enforcement concerns (like violent crime) would not be able to dedicate scarce resources to IP enforcement as a matter of priority. And we are not the only ones making this point. The Department of Homeland security, in a letter outlining concerns with a previous version of ACTA, had stated that intellectual property enforcement should not hinder other “serious law enforcement priorities.” 

Ignore Evidence That Contradicts Rights Holder Assertions

I have mentioned before that IP rights holders dominate the Special 301 process and that the Reports the process generates take their assertions at face value. However, the 2010 and 2011 processes saw a greater degree of public interest participation than years before. Various public interest groups including Public Knowledge filed comments and testified before the USTR. Yet we seem to have had little impact on the findings of the Reports. In fact, this year’s Report does not even address arguments put forward by public interest groups.

One of these comments, submitted by the Social Science Research Council, was a preview into the findings of the then forthcoming empirical study that casts a shadow of doubt on industry claims of losses due to piracy and the efficacy of greater enforcement in addressing the problem. The Special 301 Report contains no acknowledgement of this study, much less presenting reasons for why its findings might not be persuasive or why they may not be incorporated in the current Report.

The scant respect given to the public interest perspective in the Special 301 Reports demonstrates what an uphill challenge reforming this process would be. But, we will press ahead, undaunted.

The Office of the United States Trade Representative (USTR) issued the 2011 Special 301 Report yesterday afternoon. For those unfamiliar with the Special 301 Reports, these are reports that the Trade Act requires the USTR to publish every year identifying countries that fail to provide “adequate and effective protection” to intellectual property (IP) rights of U.S. persons. Over the years, these reports have turned into an annual exercise of naming countries whose domestic IP policies do not meet the unrealistic expectations of IP rights holders. I have written before about our concerns with these reports. These concerns remain true for this year’s report as well.

To recap: the Report places blind reliance on rights holder assertions about the presence, nature, and extent of copyright, patent, and trademark infringements; it ignores the need for balanced copyright regimes in countries through out the world; it cites countries based on vague criteria; it pressures countries to sign on to international agreements that don’t currently bind them and that these countries possibly consider detrimental to their national interest.

In addition to these general concerns, here are a few things that strike me about this year’s Report:

Dictating the Design of Domestic Laws

The Report repeatedly tells countries how they should change their laws, regulations, or practices to accommodate the interests of U.S. rights holders. For instance, the Report notes with disapproval how China has tripled the threshold value that allegedly counterfeit goods should meet before they may be subjected to criminal enforcement action. The Report notes that this high threshold is a barrier to effective enforcement and suggests that China could mitigates its effect by “valuing counterfeit goods at retail price” and including the costs of packaging in determining whether the threshold is met. Similarly, it suggests that Israel should amend its copyright law to provide for statutory damages. It also suggests that Pakistan should provide its enforcement officials the authority to act without a rights holder complaint.

Such detailed prescriptions ignore a basic tenet of international law: counties are free to make their own laws to suit their national interests. In addition, they risk alienating U.S. trading partners to suit the interests of a narrow sector of the U.S. economy. They fail to consider the legitimate interests of people in other countries.

Transparency in Law Making

The Report cites with approval countries that adopt transparent law making practices. The Report notes how such transparency would “make it easier for stakeholders to comply with legislative and regulatory changes.” Yet the USTR completely fails to see the value of the same principle applied to its own practices. Just as rights holders benefit from transparent processes that permit them to present their interests to foreign governments, the American people would benefit from transparent trade negotiations that allow them to present their interests to the USTR.

Yet the USTR adopts secrecy as its standard operating procedure. One wonders if the irony of this situation ever strikes the agency.

Greater Resources, Harsher Penalties

The Report continues to harp on the old song that more resources dedicated to enforcement and harsher penalties for infringement will magically solve the problem of infringement. Thus, it calls upon Russia to establish specialized IP courts. It asks Argentina, Indonesia, and India to impose deterrent level sentences on infringers (meaning of “deterrent level sentences” is unclear). It urges Colombia and Costa Rica to devote greater resources to enforcement efforts.

In doing so, the Report ignores pleas by PK and others in the public interest community that countries facing pressing law enforcement concerns (like violent crime) would not be able to dedicate scarce resources to IP enforcement as a matter of priority. And we are not the only ones making this point. The Department of Homeland security, in a letter outlining concerns with a previous version of ACTA, had stated that intellectual property enforcement should not hinder other “serious law enforcement priorities.” 

Ignore Evidence That Contradicts Rights Holder Assertions

I have mentioned before that IP rights holders dominate the Special 301 process and that the Reports the process generates take their assertions at face value. However, the 2010 and 2011 processes saw a greater degree of public interest participation than years before. Various public interest groups including Public Knowledge filed comments and testified before the USTR. Yet we seem to have had little impact on the findings of the Reports. In fact, this year’s Report does not even address arguments put forward by public interest groups.

One of these comments, submitted by the Social Science Research Council, was a preview into the findings of the then forthcoming empirical study that casts a shadow of doubt on industry claims of losses due to piracy and the efficacy of greater enforcement in addressing the problem. The Special 301 Report contains no acknowledgement of this study, much less presenting reasons for why its findings might not be persuasive or why they may not be incorporated in the current Report.

The scant respect given to the public interest perspective in the Special 301 Reports demonstrates what an uphill challenge reforming this process would be. But, we will press ahead, undaunted.