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U.S. IP Policy Spins Out of Control in the 2018 Special 301 Report

DEEPLINKS BLOG
May 1, 2018

U.S. IP Policy Spins Out of Control in the 2018 Special 301 Report

Certain reports and publications from U.S. government agencies, such as those of the Congressional Research Service, have become important reference works due to their reputation for being relatively in-depth, up to date, and factual. The United States Trade Representative's (USTR) Special 301 Report [PDF], the latest annual edition of which was released last week, is not such a report.

The report claims to "call out foreign countries and expose the laws, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers." But it has no consistent methodology for assessing what is "adequate and effective." Instead of relying on rigorous analysis to quantify the differences in standards of protection and enforcement among U.S. trading partners, it is driven by anecdotes, with a bias towards those contributed by IP lobbyists such as the International Intellectual Property Alliance (IIPA) and ACTION for Trade. This is a document so heavy on spin that one gets dizzy from reading it.

Canada Joins the "Naughty List" This Year

Due to the lack of a consistent methodology for preparation of the report and its heavy reliance on submissions rather than primary sources, the countries called out in the report and the misdeeds for which they are called out change with the winds of U.S. foreign policy. This provides a good explanation for the inclusion of Canada on this year's Priority Watch List, which is reserved for the most egregious offenders (China and Russia are also among the dozen countries receiving that honor).

As Canadian law professor Michael Geist has explained, Canada's inclusion on the Priority Watch List is likely a tactic intended to bring pressure on Canada to cave in to U.S. demands in the current negotiations over a modernized North American Free Trade Agreement (NAFTA). As Professor Geist points out, Canada has long recognized the Special 301 Report for the public relations exercise that it is, correctly observing that it "fails to employ a clear methodology and the findings tend to rely on industry allegations rather than empirical evidence and objective analysis."

Unfortunately however, some other countries give the Special 301 Report more credence, and this can result in them making unwarranted changes to their law in order to placate the USTR. Earlier this year for example, Switzerland responded specifically [PDF] to U.S. criticisms of its copyright system by pointing to its introduction of a "stay down" obligation (which is a synonym for mandatory copyright upload filtering), and its loosening of personal data protection for alleged copyright infringers.

Neither of these changes was required for Switzerland to fulfil its international obligations, and they will likely result in user-generated content platforms abandoning Switzerland for jurisdictions where the regulatory environment is more favorable. Yet despite its unnecessary efforts, Switzerland remains on the Watch List again for the third year running.

A Tired, Repetitive Report

This year's Special 301 Report is a staid, by-the-numbers affair that will satisfy IP maximalist lobbyists, but will disappoint anyone who was expecting a balanced or nuanced look at the differences between U.S. and foreign IP laws and policies, and the reasons for those differences. The report maintains the line that there is only one "adequate and effective" level of IP protection and enforcement that every country should adhere to, regardless of its social and economic circumstances or its international legal obligations. The allegations that it repeats are tired and familiar, such as:

  • Countries like Brazil, Ecuador, Peru, and Taiwan do not effectively criminalize unauthorized camcording in theaters. (They are not required to do so; there is no international obligation for them to recognize this particular method of copyright infringement as a crime.)
  • Countries like Argentina, Brazil, Chile, China, Hong Kong, Indonesia, Mexico, Peru, Singapore, Taiwan, and Vietnam are accused of allowing trade in "Illicit Streaming Devices" (aka. general-purpose computers) that can be used to access copyright-infringing media streams.
  • Some country code domain name registries are accused of failing to "require the registrant to provide true and complete contact information; and make such registration information publicly available." The USTR neglects to point out that in many cases this is a deliberate policy decision due to the application of local data protection law.

An Alternative Approach to the Special 301

In EFF's submission to the USTR in its consultation over this year's report, we pointed out how the report is unbalanced by focusing only on how (some) U.S. businesses benefit from strict levels of IP protection and enforcement, without also considering how (many more) U.S. businesses also benefit from the flexibilities in U.S. intellectual property law, such as the fair use right. In our submission, we pointed out that:

Some of our trading partners do not have a fair use right in their copyright law, and this makes it harder for U.S. companies to conduct business overseas. They may run the risk of committing copyright infringement for activities that create economic and social value, and would be fully legal in the United States. For example, basic technical processes such as indexing, linking, and temporary copying may be found to infringe copyright in countries that lack a fair use doctrine.

We also suggested that the Special 301 process could be used to address the issue of foreign governments attempting to enforce their intellectual property laws on U.S. companies extraterritorially, as occured in the Equustek case. Unfortunately, neither of our suggestions had any influence on the 2018 Special 301 Report. On the contrary, the USTR goes so far as to criticize Canada for the breadth of its "fair dealing" right in copyright law, which is similar to the U.S. fair use right. No criticism is made of countries such as Mexico, which lack any close equivalent to fair use at all.

Impartiality isn't the goal of the Special 301 Report; its goal is to influence the attitudes and behaviors of U.S. trading partners to bring them into alignment with U.S. foreign policy objectives on intellectual property, regardless of whether those objectives reflect our partners' obligations under international law. As such, it continues to well serve the interests of the IP maximalist lobbyists with whom the USTR has a very close relationship. But for those who are looking for a more balanced report, the 2018 Special 301 Report has nothing to offer, and its recommendations carry no weight. 

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