Special Report – US IP Attachés Report On Strategies Abroad

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WASHINGTON, DC – American intellectual property attachés serving abroad have helped propel global discussions on intellectual property rights and have helped protect inventors’ rights amidst a “global flat economy,” but enforcement remains a difficult challenge in many parts of the world, attachés said at a recent event gathering them back home. The officials highlighted strategies for the coming year in key markets and policy environments.

Teresa Stanek Rea, deputy undersecretary of Commerce for IP and Deputy Director of the United States Patent and Trademark Office (USPTO), said the agency plans to expand its Overseas Intellectual Property Rights (IPR) Attaché program – albeit slowly – because it has been so successful as raising awareness of IP issues abroad. Attachés are currently stationed in Brazil, China, Egypt, India, Russia and Thailand.

“Intellectual property rights have never been so important and our intellectual property attachés have never been so important,” Rea said during the USPTO IP attaché roundtable at the US Chamber of Commerce. Without effective protections, intellectual property translates into a “royalty-free donation” in many parts of the globe, she added. With this fall’s passage of the America Invents Act (reform of the US patent law), she added, the attachés are “critical to help communicate our patent tools and enhanced patent quality under the new law.”

The attachés who attended Friday’s roundtable included: Conrad Wong, stationed in Guangzhou (southern), China; Nancy Kremers, stationed in Beijing (northern), China; Peter Fowler in Bangkok, Thailand; Albert Keyack, in Rio de Janeiro, Brazil; Kalpana Reddy in New Delhi, India; and Todd Reves, who is stationed in Geneva, Switzerland. They each highlighted areas of progress and challenge in their respective countries.

Brazil

There is a tremendous amount of investment being made in Brazil and business is exploding, explained Keyack, particularly because of new oil discoveries there. Problems plaguing the patent process include the fact that various agencies try to inject themselves too much in the patent process, Keyack said, and there is a backlog of trademark applications pending – a backlog which the Patent Prosecution Highway programme (which creates bilateral work-sharing) would help alleviate.

The US has helped Brazil with its backlog the past few years; the latter now has patent and trademark applications online, but “they’re a victim of their own success,” Keyack said, referring to how more applications back up the faster examiners work.

“What we see in general is, Brazil has done a very good job of implementing and creating a system for intellectual property laws for patents, copyrights and trademarks … but they need to continue to do more,” Keyack said. The country is making strides in “its ability to enforce, its ability to convict people and its ability to convince the people in Brazil that counterfeit goods and internet piracy are all connected to larger crime.”

China

China’s desire to begin manufacturing more higher-level products involving intellectual property is causing it to be more willing to stay at the negotiating table when it comes to protection and enforcement, Wong said.

“We have, as the US government as a whole, a level of respect that the Chinese government will talk to us,” Wong said. “It’s no longer a situation where it’s a bit of a standoff or there’s reticence or reluctance to meet with the US government. Is the needle moving in leaps and bounds? No. I would describe the pace as ‘glacial,’ but it is moving.”

As China seeks to improve its manufacture of products in fields like aerospace and medical research, these efforts require a more collaborative effort. Wong is working with Chinese customs officers to bring rights-holders together to discuss IP issues surrounding apparel, fast-foods, consumer goods, information technology, aerospace, counterfeit fasteners, and other products China is increasing its focus on. In August, Rea conducted a multi-city tour in China to engage officials on enforcement issues, and Wong has been engaged with Hong Kong customs officials and others to boost talks on this front.

“China is evolving again – stepping up its game. And they want to move on to the higher-value IP products,” Wong said, adding that China wants to focus more on indigenous innovation, and increase its skilled-worker force.

“China is now not only at the grownup table at Thanksgiving, but now China is dealing with enforcement issues … they’re now members at the table where they will have to address this,” Wong said.

Wong is working to set up mock trial or moot courts in 2012 for patent or enforcement issues with local universities in the region. College students are “not only going to be the future consumers in China, they’re going to be the future leaders,” he said. “So we’re getting a twofor – IP awareness and rule of law.”

China’s recent special intellectual property rights (IPR) enforcement campaign is seen as a huge success. The Special Campaign to Combat IPR Infringement and the Manufacture and Sales of Counterfeit and Shoddy Commodities, which ran from the fall of 2010 until June 2011, aimed to crack down on a variety of infringing activities, such as making and trafficking counterfeit goods and pirating audiovisual media. China has also been working with Japan and the European Union on trademark filings.

But despite these successes, Kremers said, major challenges to industry remain and include: limited market access, business licensing requirements that can be used to prevent market access, and patent quality and trade secrets issues she hopes will be discussed in next year.

This year, China signed on to the Patent Prosecution Highway (PPH) and is involved in the “IP5” work-sharing project with Europe, Japan, Korea and the United States. The goal of the IP5 is to reach some common automation processes to reduce workload and improve the quality of examination for applications filed in all five offices. Kremers said there is also a push to create a permanent coordinating office for IP enforcement, which will be particularly helpful with trademark registrations.

“It kind of removes some of the politicisation you find in the trade and other space, brings technical people who work in the field of examination … together to talk about how various countries deal with a technical problem and identify common potential practices that may raise,” Kremers said. It’s proven to be an effective way to have “a fairly neutral dialogue” to finding solutions and identifying best practices, she added.

India

General progress is being made in terms of how intellectual property is being seen as an asset by Indian companies and the public, Reddy reported. Challenges still remain, particularly in areas such as patents for pharmaceuticals and enforcing patents, but “that’s pretty much the challenge in India and the rest of the southeastern Asian region,” she added.

“The government’s trying to really strengthen that balance between promoting IP rights and protection and protecting its public. It’s that private right versus public policy debate” relevant to current hot issues like food security, biodiversity, and climate change, Reddy said. “India certainly recognises the value of intellectual property … they all know that becoming a knowledge-based economy is the only way you’re going to be able to create the jobs, create the industries, create the economy to benefit their citizens.”

India’s patent office has been updating its computer systems and hiring new examiners, which the US is helping to train, and there is more cooperation with customs officials to stop potentially counterfeit goods at all ports of entry.

But American companies are still worried about holes in Indian patent law that may not provide the desired levels of protection. “US companies are very concerned about having to disclose trade secrets, having local content requirements,” and having to abide by Indian standards different than those practices in the US, Reddy said.

The most progress can be made if demands for improvements to India’s patent system come from within – from Indian organisations and inventors, as well we American businesses – instead of just from the US government, Reddy said, so Indian government officials don’t “shut themselves off, close their ears.”

Geneva/Multilateral

[updated] Reves pointed to Russia’s submission of an online piracy proposal, welcomed by groups like the International Federation of the Phonographic Industry.

“In the enforcement field, most of us thought that was a very important step,” he said, noting that many were worried this would be Russia’s attempt to get more information on citizens, and shut certain sites down.

The EU and India are in process of negotiating a free trade agreement with an IP chapter; it may be completed by 2013 but the IP chapter is problematic, Reves said.

Reves hailed success at the World Intellectual Property Organization this year in reconvening a previously failed diplomatic conference of 2000 regarding a treaty for the protection of audiovisual performances. A number of other moving issues he pointed to include the standing committee on copyrights, protection for the visually impaired and disabled, and issues before the Intergovernmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge, and Folklore (GRTKF).

But WIPO is “back to square one” when it comes to an agreement that neared completion last summer for the visually impaired and disabled.

Thailand/ASEAN

As the attaché in Bangkok, Fowler’s office is responsible for Southeast Asia and the Association of South-East Asian Nations (ASEAN – Brunei Darussalam, Burma, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam) – a region where levels of IP protection vary greatly.

ASEAN has committed to form a customs union and further market integration by 2015, is creating an ASEAN IP portal to act as a one-stop shop for IP info for all member countries, and has made progress in cooperation among customs and border officials, particularly to try to step the rapid flow of counterfeit goods from China into the region.

ASEAN is “awash” with every kind of counterfeit product from China, Fowler said: 90 percent of items intercepted in ASEAN countries this year have been counterfeit. About 80 percent of the seizures made in the Philippines were China-originated fakes. And the problem is spreading; many counterfeiters formerly in China are now crossing borders to set up shop in Burma, Cambodia, and surrounding countries.

“The good news is that all of the enforcement officials in those governments recognise the problem and are a looking for ways to work together,” Fowler said.

With ASEAN now the fourth-largest export market for the US and the fifth largest importer for the US, Fowler noted that ASEAN consumers are extremely brand loyal; the average ASEAN consumer buys twice as many American brands as the average Chinese consumer, and nine times as many as the average Indian consumer, he said. “What that means is brand protection needs to be the equivalent – it needs to be heightened.”

Trans-Pacific Partnership

President Obama has recognised four ASEAN members for their participation in the Trans-Pacific Partnership (TPP), an agreement under negotiation that outlines ways to enhance trade and investment, promote innovation, economic growth and development.

TPP countries have agreed to reinforce the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) and move forward on talks regarding trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge, according to USTR.

TPP countries also have committed to the Doha Declaration on TRIPS and Public Health. Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and the United States are participants in the agreement. Japan is showing interest as well.

“I think TPP is creating the model,” Fowler said, noting that TPP has “resonated throughout southeast Asia. “It will hopefully be the framework or template we will be urging all ASEAN countries to move toward in terms of the kinds of standards of IP protection and enforcement we want to see in the region.”

But many stakeholders are looking for the TPP to serve as much more than just a framework.

Some industries want to be sure the agreement serves as a ceiling, not as a floor, to ensure that all countries party to it adhere to the strongest terms possible when it comes to protecting IP.

“I cannot envision a world where a China or Brazil would agree to an IP standard that would be higher than whatever we agree to in the TPP,” said Harrison Cook, vice president of international government affairs for Eli Lilly.

Eli Lilly is just one American company that manufactures biologic drugs. The healthcare reform act passed in the US in 2010 calls for a regulatory pathway to be formed to bring follow-on biologic drugs, or “biosimilars,” to market, and provides brand companies with 12 years data exclusivity in creating and marketing their products before generic firms can use brand firms’ data to make their own biosimilars. But these companies want protection abroad as well. Cook stressed that not only is patent protection important overseas, but data protection is, as well.

“If you look at the pharmaceutical industry in general and how it is advancing, the vast majority of products in the pipeline … are biologics,” he said. “So without strong data protecting regimes in place, we are going to be at a significant disadvantage moving forward in the future to the point where, ‘is the industry still viable?’”

He noted that TPP is “bigger than just the TPP countries” in that other regions are looking to take their cues, even informally. “China is watching very carefully what is going on with the TPP,” Cook said.

Many small- and medium-sized biotechnology businesses need to be sure the diversity of their inventions – such as cell lines, plants, animals – are protected in overseas markets. They need protection for the entire scope of their invention in those markets. China is of particular interest to these businesses, but concerns about the legal infrastructure there when it comes to IP protection, explained Lila Feisee, vice president of global intellectual property policy for the Biotechnology Industry Organization (BIO).

“These are inventions our companies rely on to get financing and develop the products they need,” such as biologics, Feisee said. “It’s really important for investors to feel that once they make the investment, there’s going to be some sort of recoupment.”

Michael Schlesinger, counsel to the International Intellectual Property Alliance, noted that new forms of piracy are emerging with every technological advance almost daily and the TPP has the opportunity to strongly address piracy’s many forms. “The TPP – is it a panacea to the internet problem? No,” he said, but it “absolutely” provides a framework.

“That’s one of the key aspects that can be gained from a strong agreement,” Schlesinger added.

Feisee said BIO feels the US did not make a strong enough commitment to protections in the TPP for inventions the likes of those created by BIO members. She said: “We felt the US was looking at trying to be a little more flexible on some protections we think are extremely critical.”

Liza Porteus Viana may be reached at lizapviana@gmail.com.

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