Ukraine Tops IP Offender List, while Canada and Israel Show Improvement

According to the USTR report, Ukraine’s designation as a “priority foreign country” (PFC) - the highest negative ranking - comes as a result of the “severe deterioration of enforcement in the areas of government use of pirated software and piracy over the Internet,” and of the mismanagement of royalties collecting societies. This is the first time in seven years that a country has received this label.

Ukraine had already been flagged once as a PFC, from 2001 to 2005. Following the original designation, the country lost its eligibility for the US’ Generalised System of Preferences - the trade scheme that grants preferential duty-free entry for up to 5,000 products when imported from certain developing countries. Kiev was reinstated into the programme in January 2006.

In response to the USTR report, Ukrainian Deputy Prime Minister Kostiantyn Hryshchenko countered that the new designation is not indicative of the real situation in the country. The official also argued that the report fails to acknowledge government efforts to raise legal standards in the IP domain.

The USTR has 30 days from the publication of the report to determine whether to launch an investigation into the practices that led to Ukraine’s designation as a priority foreign country; if this investigation does occur, Washington will initiate consultations with Kiev in an effort to resolve these concerns.

Ten countries were included in this year’s “Priority Watch List,” the second-most urgent category: Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand and Venezuela.

In response, the government of Chile has said that it does not recognise the Special 301 process, as it is conducted outside the margins of the free trade agreement between Chile and US.

The lower level watch list grouped thirty countries, including Canada and Israel - both having improved from the upper tier - as well as Brazil and Mexico. Barbados, Bulgaria, Paraguay, and Trinidad and Tobago were added to the watch list, whereas Brunei and Norway are no longer on the list.

Civil Society Raises Public Health Questions

Following the report’s release, public health groups were quick to voice their concerns over the USTR’s criticisms of recent compulsory licensing decisions by India and Indonesia.

“India’s decision to restrict patent rights of an innovator based, in part, on the innovator’s decision to import its products rather than manufacture them in India, establishes a troubling precedent,” the report cautions, referring to two separate decisions issued in India this past year.

In April, New Delhi denied Swiss company Novartis a patent on a cancer drug. Last year, India granted a compulsory license allowing a local producer to market another anti-cancer drug patented by the German drugmaker Bayer.