The Ukraine was recently flagged by the Office of the United States Trade Representative as the worst abuser of U.S. intellectual property (IP) rights. The designation was part of the agency’s annual report on the adequacy and effectiveness of U.S. trading partners’ protection and enforcement of IP rights.
As explained by the U.S. Trade Representative, the agency designated Ukraine a Priority Foreign Country (PFC) due to severe deterioration of IP enforcement. Specifically referenced areas of concern included “government use of pirated software and piracy over the Internet, as well as denial of fair and equitable market access through the authorization and operation of copyright collecting societies.”
This was the first time in seven years that a country earned this designation. The PFC designation is reserved by statute for countries with the most egregious IP rights violations, policies and practices with the greatest adverse impact on relevant U.S. products, and that are not entering into good faith negotiations or making significant progress in negotiations to provide adequate and effective IPR protection. Under Section 301 of the 1974 Trade Act, the United States is authorized to seek sanctions directly or through the World Trade Organization (WTO).
Ten countries – Algeria, Argentina, Chile, China, India, Indonesia, Pakistan, Russia, Thailand, and Venezuela – are on the Priority Watch List, the U.S. Trade Representative’s second most egregious ranking. With regard to China, the report cites troubling “indigenous innovation” policies that may unfairly disadvantage U.S. rights holders and the growing problem of misappropriation of trade secrets.
As the report highlights, “Thefts may arise in a variety of circumstances, including those involving departing employees, failed joint ventures, cyber intrusion and hacking, and misuse of information submitted to government entities for purposes of complying with regulatory obligations.” The report also notes that “public reports have further indicated that actors affiliated with the Chinese military and Chinese Government have systematically infiltrated the computer systems of over one hundred U.S. companies and stolen hundreds of terabytes of data, including all forms of trade secrets, such as proprietary technology, manufacturing processes, and confidential business information.”