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New reports link intellectual property piracy to levels of economic development

WASHINGTON, DC – 05/10/07 – Violations of intellectual property rights (IPR) continue to plague world markets and pose a major challenge to innovators and artists worldwide despite clear improvements by several US trading partners, according to a new report published by the Office of the US Trade Representative (USTR).

In the report, the USTR placed 12 countries on its “priority watch list” for failing to protect adequately producers of copyrighted, patented and trademarked materials, such as movies, music and pharmaceuticals.

The list is issued annually as part of the USTR’s “Special 301” report to Congress highlighting intellectual property problems facing US companies worldwide.

The “Special 301” report also includes a more extensive watch list of countries where such protection needs further improvement.

As in previous years, Russia and China were at the top of the priority list despite some evidence of improvement in both countries.

Others included on the list were Argentina, Chile, Egypt, India, Israel, Lebanon, Thailand, Turkey, Ukraine, and Venezuela.

Another 31 countries were placed on the lower-level watch list that does not subject them to the same level of scrutiny as those on the priority list.

“Innovation is the lifeblood of a dynamic economy here in the United States, and around the world.  We must defend ideas, inventions and creativity from rip off artists and thieves,” said US Trade Representative Susan Schwab, specifically citing Russia’s intellectual property problems that center on the “large-scale production and distribution of optical media and widespread Internet piracy.”

Schwab said that in coming months the US “will carefully review” whether Russia is meeting its commitments made as part of its accession to the World Trade Organization    (WTO).

“I know that our Russian colleagues see the value of intellectual property to Russia’s economy and are working hard to deliver on their commitments,” Schwab said.  “I urge them to make the most of the coming weeks and months.”

Russia, along with Brazil, the Czech Republic, and Pakistan, will be subject to an out-of-cycle review, which may result in a change in their Special 301 status before the next annual review in 2008.

With respect to China, the report cites persistently high levels of copyright and trademark violations and mentions the recent US decision to seek consultations under the WTO dispute settlement rules on China’s IPR protection regime.

For the first time, the report also includes a special section assessing IPR protection and enforcement at the level of China’s provinces.

Schwab said the US “hopes to remain constructively engaged with China, building on the recognition of many Chinese officials that their country has its own huge stake in effective IPR protection.”

Thailand, she said, was elevated from the lower level list to the priority list due to “an overall deterioration” in the protection and enforcement of IPR.

”It cited that country’s weak legislation on optical disc media, book piracy, cable and signal theft, software piracy and apparel trademark violations as issues that have not been addressed in a meaningful way,” she said.

The report recognizes progress achieved by several US trading partners.For example, Brazil and Belize have been moved from the priority list to the watch list, while five US trading partners – the Bahamas, Bulgaria, Croatia, the European Union, and Latvia – are being removed from the watch lists altogether.

Free trade agreements (FTAs) with the US are one of the main factors leading to visible improvements in IPR protection, according to the report.

The document asserted such improvements have been made in the Central American and the Dominican Republic Free Trade Agreement (CAFTA) area.

It said high IPR protection standards also are part of the most recent and pending FTAs with Colombia, South Korea, Panama, and Peru.

The claim by the USTR report was underscored by the results of a recent project completed by the Washington, DC-based Property Rights Alliance (PRA) and its 37 global partners.

According to the group’s first International Property Rights Index (IPRI), countries with strong, well-protected property rights are more likely to thrive economically than those that don't have - or don't promote - a legal structure to protect both domestically and externally produced intellectual property.

The IPRI “proves wrong those who claim that strict property protections prevent developing countries from unlocking their growth potential with weak property protections,” the PRA said.

“Well-structured private property rights allow individuals and firms to feel secure and provide them with an incentive to innovate and produce,” said Scott LaGanga, PRA executive director, said in a news release.

The IPRI ranked 70 countries on 11 factors related to physical property rights, intellectual property (IP) rights and legal and political environments.

Advanced industrialized economies from Western Europe received the highest ranking, with Norway, the Netherlands and Denmark as the top three, while nations from Africa, Latin America and Asia ranked lowest, with Ethiopia, Bolivia and Bangladesh at the bottom of the list.

The IPRI concluded that better-performing countries have, on average, a gross domestic product per capita that is more than eight times higher than that of the worst-performing countries.

European parliamentarian Syed Kamall, who participated in a panel that had input on the report, said the Index can help countries pinpoint problems related to property rights.

Kamall is a member of the European Parliament in Brussels representing the United Kingdom.

Another panelist, Chris Israel, US coordinator for IP enforcement, said the index also can be a useful tool for developed countries’ policymakers.

“They can point to the linkage between property right protections and economic well-being as they try to persuade countries such as China, Russia, and India to more effectively protect IP rights better, he said.

“You cannot make much progress by talking only about technical flaws or specific concerns.”

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