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U.S. Chamber of Commerce 2018 Special 301 Submission

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U.S. Chamber of Commerce 2018 Special 301 Submission By electronic submission Sung Chang Director for Innovation and IP Office of the U.S. Trade Representative Washington, DC U.S. CHAMBER OF COMMERCE 2018 SPECIAL 301 SUBMISSION Submitted electronically to USTR via http://www.regulations.gov, docket number USTR- 2017-0024. 1 February 8, 2018 Sung Chang Director for Innovation and IP Office of the U.S. Trade Representative 600 17th Street, NW Washington, DC 20508 Re: 2018 Special 301 Identification of Countries Under Section 182 of the Trade Act of 1974: Request for Public Comment and Announcement of Public Hearing, Office of the U.S. Trade Representative Dear Mr. Chang: The U.S. Chamber of Commerce’s (“U.S. Chamber” or “Chamber”) Global Innovation Policy Center (GIPC) is pleased to provide you with our submission for the U.S. Trade Representative’s Identification of Countries Under Section 182 of the Trade Act of 1974: Request for Public Comment. The Chamber has participated in this annual exercise to analyze the global intellectual property (IP) environment for many years and is encouraged that the Office of the U.S. Trade Representative (USTR) has prioritized its commitment to promote property rights as a way to foster development and prosperity. We urge the U.S. government to continue to use all available means to work with our trading partners to address these challenges. The Chamber is the world’s largest business federation representing the interests of more than three million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. It also houses the largest international staff within any business association, providing global coverage to advance the many policy interests of our members. Over the past decade, GIPC has worked to foster a global environment that encourages inventors and creators to bring ideas to market and find solutions to the challenges the world faces. GIPC is a leading advocate for strong intellectual property standards that create jobs, save lives, and advance global economic and cultural prosperity. IP is critical to U.S. economic development and competitiveness. IP-intensive industries directly employ more than 45 million American workers and drive more than $6 trillion worth of total U.S. GDP, and these benefits are not limited to U.S. borders. The recently released sixth edition of the U.S. Chamber International IP Index, Create, shows that economies of all shapes and sizes have a stake in implementing meaningful IP regimes. The Index highlights meaningful and significant correlations between the strength of IP environments and important socioeconomic benefits, such as access to venture capital, biomedical foreign direct investment, high-value job creation, and access to technologies and online content. 2 Our Special 301 submission seeks to highlight both systemic and country-specific challenges. We take note of the global trends in IP-led innovation and creativity, highlighting both opportunities and challenges; we also include 11 countries and the European Union (EU) in this report, chosen based on factors including market size, geopolitical significance, and specific IP issues posed by that country. The Special 301 Report is a critical tool that shines a spotlight on inadequate and ineffective IP protection and enforcement in countries around the globe. We encourage the U.S. government to use this blueprint, combined with other available mechanisms, to secure meaningful action by our trading partners to improve their respective IP environments. The Chamber looks forward to working with the U.S. government to ensure that all necessary steps are taken to achieve this goal. Sincerely, David Hirschmann Executive Vice President, U.S. Chamber of Commerce President and CEO, U.S. Chamber’s Global Innovation Policy Center Myron Brilliant Executive Vice President Head of International Affairs, U.S. Chamber of Commerce 3 Contents EXECUTIVE SUMMARY ............................................................................................................ 5 GLOBAL TRENDS IN IP-LED INNOVATION AND CREATIVITY ........................................ 7 Findings from the U.S. Chamber International IP Index ............................................................ 7 Emerging Issues Online .............................................................................................................. 8 Rising Threats to Innovation, Design, and Creativity............................................................... 12 Protection of Undisclosed Information: Trade Secrets ............................................................. 14 Enforcement Landscape ............................................................................................................ 15 Regional Challenges ................................................................................................................. 18 Standard-Setting through Bilateral and Regional FTAs ........................................................... 19 Norm-Setting Multilateral Environment ................................................................................... 22 Endemic Challenges to U.S. Patent System.............................................................................. 24 Resourcing U.S. IP Leadership ................................................................................................. 25 COUNTRY-SPECIFIC TRENDS ................................................................................................ 27 Australia .................................................................................................................................... 27 Brazil ......................................................................................................................................... 31 Canada....................................................................................................................................... 39 China ......................................................................................................................................... 45 Colombia ................................................................................................................................... 70 European Union ........................................................................................................................ 75 India .......................................................................................................................................... 77 Indonesia ................................................................................................................................... 87 Malaysia .................................................................................................................................... 92 Russia ........................................................................................................................................ 96 South Africa ............................................................................................................................ 101 Turkey ..................................................................................................................................... 107 4 EXECUTIVE SUMMARY The protection of intellectual property (IP) incentivizes innovation and entrepreneurship in science, technology, and the creative arts, to deliver the latest and greatest products and services to consumers everywhere. Even as we celebrate all that IP does to improve our lives, we urge policymakers to ensure we continue to incentivize more investments in innovation and creativity. The U.S. Chamber input into the Special 301 process is framed around the sixth edition of the U.S. Chamber International IP Index (“Index”)—“Create”—a blueprint for countries seeking to become true knowledge-based economies. Every individual economy represents a blank canvas, with policymakers using broad strokes in the form of IP policy to paint their country’s innovative and creative futures. The metrics captured by “Create” benchmarks 50 economies using 40 indicators in eight categories to capture their 2017 IP landscape. New indicators in the areas of commercialization and systemic efficiency provide a more complete, bottom-to-top picture to recognize the investments countries are making in support of domestic innovation and creativity. The 2018 Index also includes five new economies: Costa Rica, Ireland, Jordan, Morocco, and the Netherlands. In 2017, both systemic and country-specific issues made global trends in IP-led innovation and creativity. With the ease of e-commerce, many more counterfeits are traveling through small parcels directly to consumers. Illicit streaming devices are paving the way for more homes to access pirated motion picture and television content around the world. Online criminal IP theft is a plague on openness, safety, and freedom on the Internet, and unfortunately profits from the hard work of America’s creative industries and the millions they employ. American IP also faces challenges abroad with regard to fair pricing for innovation and adequate laws to protect creativity. For instance, pricing policies that do not properly value healthcare innovation have the impact of undermining and devaluing IP and access to innovation. Similarly, the rising demand for creative designs in consumer products underscores the need for adequate laws that can protect both consumers and creators to drive competition and differentiation and incentivize new innovations. Furthermore, instances
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