USTR's Special 301 List Of 'Naughty' Countries Without Strong Enough Patent And Copyright Laws Is A Complete Joke

from the as-if-we-didn't-know-that dept

We’ve talked plenty of times about what a complete joke the USTR’s Special 301 report is. It’s supposedly a “listing” of “naughty” countries who don’t protect intellectual property enough for the US’s tastes. However, as we’ve noted, there is no methodology behind it: a bunch of industry lobbyists submit lists of what countries they don’t like to the USTR, the USTR talks to various diplomats, basically rewrites the list to “shame” certain countries, and releases the list. Canada, which has been put on the list for years despite having stricter copyright laws than the US, has officially stated that it simply does not accept the Special 301 findings as legitimate. Chile did the same thing a year ago. As I’ve mentioned before, at a conference a few years ago, I even saw the then head of the US Copyright Office mock the Special 301 report as a widely recognized joke.

Unfortunately, however, for countries who are heavily reliant on good relations with the United States, being on “the naughty” list is often an effective way to force them to jump through hoops to make Big Pharma or Hollywood happy. As we’ve discussed, Spain has been pressured into changing its copyright laws via the 301 list multiple times.

George Washington PhD student Gabriel Michael has decided to dig deep into the Special 301 Report and its history to determine if there’s any point to it at all, and his initial results suggest that the process is even more of a joke than initially suspected. He notes that there’s no real “enforcement” mechanism (at least not one that the US seems willing to use). He also notes that the US is incredibly hypocritical about it. While the Special 301 report mostly complains that other countries don’t have enough intellectual property protection, at other times it goes the other way, like when it’s the kind of IP that the US government doesn’t like (geographical indicators or GI).

…by any reasonably objective standard, the European Union offers very high levels of IP protection. Yet as recently as 2006, Special 301 listed the European Union on its watch list, citing “concerns” about the EU’s geographical indication (GI) regime. Given that GIs are a form of intellectual property, USTR essentially placed the EU on its watch list for offering too much IP—or, if you prefer, the wrong kind of IP. Interestingly, this is a tacit admission by the U.S. that at least some kinds of IP can act as trade barriers.

In researching the effectiveness of the Special 301, Michael notes that supporters of the effort point to a study done in the International Trade Journal called “Special 301 and Royalty Receipts from U.S. Trade Partners” by David Riker, which argued that the Special 301 is effective, because there’s a pretty big increase ($5.4 billion annually) in US royalty receipts from countries after being placed on the list. Michael sets out to replicate Riker’s results and discovers very, very different results, in part because Riker made some notable errors (claiming Hong Kong was on the priority list, when it wasn’t). Riker also only looked at some of the countries in the Special 301 Report. Michael looked at what happened when you viewed all of them, and he also had two more years of data to research. In the end, Michael finds that Riker’s conclusions are simply not supported by the data.

To summarize, while I was able to replicate Riker’s results, simply including additional years of data causes his findings of significance to disappear. Likewise, even in his original dataset and models, if Watch List designations are included, the findings of significance disappear.

Ultimately, these results lead me to conclude that Riker’s 2012 article is both theoretically and empirically flawed. It cannot support the conclusion that Special 301 designations are correlated with increased IP royalties from designated countries in subsequent years.

In another post, Michael points out the obvious: the Special 301 list is never actually about intellectual property protections, but about political considerations. He notes that countries that are considered to have stronger IP protection (using the Park-Ginarte Index) are often listed on the Special 301 Report, while others with less protection are not. He even looks at the average of countries on the list and off, and finds that those on the list have higher protection than those off the list:

Given that, Michael looked at the leaked Wikileaks State Department cables, where there are a bunch discussing the Special 301, and quickly notes that it’s pretty clear that political considerations were much more important than actual concerns about intellectual property conditions. In short, the Special 301 is just a way to diplomatically slap a country with whom we’re having other political issues, in order to give the US leverage on some political point. He quotes State Department cables concerning Taiwan, Saudi Arabia, Bolivia and Norway showing how it’s much more about politics.

At some point, it needs to be asked why we have the Special 301 setup at all. It seems designed mainly to piss off other countries, while making Hollywood and Big Pharma feel good. It doesn’t seem to do anything beneficial at all.

Filed Under: copyright, diplomacy, evidence, impact, intellectual property, patents, politics, special 301, ustr