25-Apr-2019: United States has again placed India on its ‘Priority Watch List’

India remains on the Priority Watch List in 2019.

Over the past year, India took steps to address intellectual property (IP) challenges and promote IP protection and enforcement. However, many of the actions have not yet translated into concrete benefits for innovators and creators, and long-standing deficiencies persist. India remains one of the world’s most challenging major economies with respect to protection and enforcement of IP.

In particular, India has yet to take steps to address long-standing patent issues that affect innovative industries.  Companies across different sectors remain concerned about narrow patentability standards, the potential threat of compulsory licensing and patent revocations, as well as overly broad criteria for issuing such licenses and revocations under the India Patents Act. Furthermore, patent applicants face costly and time-consuming patent opposition hurdles, long timelines for receiving patents, and excessive reporting requirements.

In the pharmaceutical and agricultural chemical sectors, India continues to lack an effective system for protecting against the unfair commercial use, as well as the unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for such products. In the pharmaceutical sector, Section 3(d) of the India Patents Act restricts patent-eligible subject matter in a way that fails to properly incentivize innovation that would lead to the development of improvements with benefits for Indian patients.  India still lacks an effective system for notifying interested parties of marketing approvals for follow-on pharmaceuticals in a manner that would allow for the early resolution of potential patent disputes.  Despite India’s justifications of limiting IP protections as a way to promote access to technologies, India maintains extremely high customs duties directed to IP-intensive products, such as medical devices, pharmaceuticals, information communications technology (ICT) products, solar energy equipment, and capital goods. India still maintains the draft Ministry of Agriculture and Farmers Welfare’s “Licensing and Formats for Genetically-Modified Technology Agreement Guidelines, 2016” that contain overly prescriptive terms and imposes mandatory licensing requirements that, if implemented, would undermine market incentives critical to the agricultural biotechnology and other innovative sectors.

India’s overall IP enforcement remains inadequate, and the lack of uniform progress across the country threatens to undercut the positive steps that certain states have taken. A 2019 publication produced by the Organisation for Economic Co-operation and Development (OECD), “Trends in Trade in Counterfeit and Pirated Goods,” finds that India is among the top five provenance economies for counterfeit goods.  A 2017 report from the OECD and the European Union Intellectual Property Office, “Mapping the Real Routes of Trade in Fake Goods,” revealed India to be a key producer and exporter of counterfeit foodstuffs, pharmaceuticals, perfumes and cosmetics, textiles, footwear, electronics and electrical equipment, toys, games, and sporting equipment. The 2017 report also found that 55 percent of global seizures of counterfeit pharmaceuticals, by total value, originated in India—making it by far the largest producer. The report noted that these counterfeit pharmaceuticals are shipped “around the globe, with a special focus on African economies, Europe, and the United States.

Overall levels of trademark counterfeiting remain high, and U.S. brand owners continue to report significant challenges and excessive delays in obtaining trademarks and efficiently utilizing opposition and cancellation proceedings, as well as quality of examination issues. The United States continues to urge India to join the Singapore Treaty on the Law of Trademarks.  Companies also continue to face uncertainty caused by insufficient legal means to protect trade secrets in India.

Right holders continue to report high levels of piracy and counterfeit sales, including on the Internet, in physical markets and through commercial broadcasts. Court cases and government memoranda also raise concerns that a broad range of published works will not be afforded meaningful copyright protection. Furthermore, industry has reported that continuing problems include widespread Internet piracy, unauthorized file sharing of videogames, signal theft by cable operators, commercial scale photocopying and infringing reprints of academic books, and circumvention of technological protection measures. Finally, the expansive granting of licenses under Chapter VI of the Indian Copyright Act and overly-broad exceptions for certain uses have raised concerns about the strength of copyright protection and complicated the functioning of the market for music licensing.

The 2015 passage of the Commercial Courts Act, highlighted in previous Special 301 Reports, provided an opportunity to reduce delays and increase expertise in judicial IP matters. However, to date, India has established only five courts, and right holders report that jurisdictional challenges have reduced their effectiveness. Furthermore, India’s copyright royalty board, which has been folded into the Intellectual Property Appellate Board, is not fully functional, as technical members still need to be appointed. India also has yet to ensure that collective management organizations (CMOs) are licensed promptly and able to operate effectively.

Developments, Including Progress and Actions Taken

While India made meaningful progress to promote IP protection and enforcement in some areas over the past year, it failed to resolve recent and long-standing challenges, and it created new concerns for right holders.

In early 2019, India acceded to the World Intellectual Property Organization (WIPO) Internet Treaties and the Nice Agreement. Additional amendments to the Copyright Act are needed to bring India’s domestic legislation into conformity with international best practices. The December 2018 draft Cinematograph Act (Amendment) Bill contains promising provisions to criminalize illicit camcording of films. This legislation now awaits Parliament’s approval. In early 2019, India followed through on resolving burdensome patent reporting requirements by issuing a revised Manual of Patent Office Practice and Procedure that includes the requirement for patent examiners to look to the WIPO Centralized Access to Search and Examination system and Digital Access Service to find information filed by patent applicants in other jurisdictions, which should eliminate the need for applicants to file redundant information with India. In 2018, an important judgment in a trademark infringement case resulted in a significant damage award. The Cell for Intellectual Property Rights Promotion and Management, established under the Department of Industrial Policy and Promotion to move forward implementation of the National Intellectual Property Rights Policy, continues to spearhead efforts successfully to promote IP awareness, commercialization, and enforcement throughout India and undertook new and collaborative efforts in 2018. India continues to pursue important administrative work to reduce the time for processing patent and trademark applications and digitize the process for registering a copyright.

In January 2019, the Ministry of Health and Family Welfare issued a notice that placed further restrictions on the transparency of information about manufacturing licenses issued by states, which represented a step backward toward providing an effective system for notifying interested parties of marketing approvals for follow-on pharmaceuticals in a manner that would allow for the early resolution of potential patent disputes. Right holders also reported growing concerns over the expansive application of patentability exceptions to reject pharmaceutical patents. In 2018, India also missed an opportunity to establish an effective system for protecting against the unfair commercial use, as well as the unauthorized disclosure, of undisclosed test or other data generated to obtain marketing approval for agricultural chemical products. Although a small number of India’s state authorities, including in Maharashtra and Telangana, continue to operate dedicated crime enforcement units to coordinate IP enforcement activities across various state-level IP and enforcement agencies, other states have not followed suit or face organizational challenges. Given the scale and nature of the problem, we continue to encourage India to adopt a national-level enforcement task force for IP crimes. 

India’s commitment to bilateral dialogue remains strong, and the United States intends to continue to engage with India on IP matters, including through the U.S.-India Trade Policy Forum.

The Special 301 Report is the result of an annual review of the state of IP protection and enforcement in U.S. trading partners around the world. This Report provides an opportunity 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. The identification of the countries and IP-related market access barriers in the Report and of steps necessary to address those barriers are a critical component of the Administration’s aggressive efforts to defend Americans from harmful IP-related trade barriers.