(Adds reaction from industry groups)
By Krista Hughes
WASHINGTON, April 30 The United States has
resisted lobbying by U.S. businesses to take tougher trade
action against India for its intellectual property policies,
deciding against risking ties with a likely new government in
The U.S. Trade Representative avoided labeling India with
the worst offender tag in its annual scorecard on protecting
U.S. patents, copyrights and other intellectual property (IP)
Instead, the United States kept India, which is in the midst
of elections, on its Priority Watch List along with China and
eight other countries. It would start a special review of India
in the fall and "redouble" efforts to address concerns with the
new government, the U.S. Trade Representative said.
A USTR official said the purpose of the review was to assess
the new government's level of engagement and the USTR was not
contemplating a change in India's status in 2014. A new process
would start in 2015, he added, and stakeholders could give their
"Labeling India as a Priority Foreign Country just as a new
government comes to power would have meant that relations would
start off on the wrong foot, but the potential penalty which
would be levied against India will now hang over bilateral
relations," said Center for Strategic and International Studies
adjunct fellow Persis Khambatta.
Some were disappointed that the USTR failed to name India as
a "priority foreign country" - a label that can eventually lead
to trade sanctions or the loss of trade benefits - although
others stressed it was not off the hook yet.
Orrin Hatch, the top Republican on the Senate Finance
Committee and one of four top lawmakers who ordered an
investigation into Indian trade policies last year, said the
country was a "textbook example" of poor practices regarding
"A stronger response is required to dissuade other countries
from adopting similar policies," he said in a statement.
Even so, the U.S. Chamber of Commerce and the Pharmaceutical
Research and Manufacturers Of America (PhRMA), which had both
wanted India named as a top offender, welcomed the special
"Such a review provides a needed avenue for constructive
engagement with the incoming Indian government on how to resolve
the deteriorating IP environment in India," PhRMA President John
Intellectual property lawyer Steven Tepp, the president of
consultancy Sentinel Worldwide, said the planned special review
allowed the USTR to change India's ranking and should tell the
Indian government the issue needed "urgent attention".
INTELLECTUAL PROPERTY WORRIES
The USTR said India's limits on the approval of
pharmaceutical patents, a convoluted process for patent
challenges and the fact that the government was considering
opening a series of patented drugs to generic manufacturers
created "serious challenges" for some innovators.
The spread of pirated goods in India, a stalwart of the U.S.
IP black list, was also worrying. The report noted estimates
that counterfeiting and smuggling lost copyright holders almost
$12 billion in 2012.
Shops in Nehru Place market in India's capital New Delhi
primarily deal in computer peripherals, but it has also been
classified as one of the most notorious markets for piracy in
Pirated versions of copied software programs of companies
such as Adobe and Oracle and various operating
systems of Microsoft are on sale. The compact disc of
Windows 7 operating system costs 100 rupees ($1.66), compared
with about $100 for an original copy.
Alok, who sells pirated games in the market, said he does
not know about the losses incurred by companies because of
piracy. "I only care about my daily wage of 130 rupees," he
China, with the world's largest Internet user base, had low
revenue from digital sales of movies and music, suggesting
widespread piracy, the USTR said, while counterfeit goods were
readily available online. Promises that government offices would
only use legal software had not led to a jump in sales, it said.
The USTR said it had "significant concerns" about the theft
of trade secrets and urged the government to take steps to stop
Chinese companies taking advantage of overseas competitors.
Despite ongoing concerns about copyright, no action would be
taken against last year's "priority foreign country," Ukraine,
due to the current political situation, the USTR said.
The USTR also removed Italy from the intellectual property
black list altogether after it took new steps to combat
copyright piracy over the Internet.
($1 = 60.4225 Indian Rupees)
(Reporting by Krista Hughes; Additional reporting by David
Brunnstrom in Washington and Manoj Kumar and Aditya Kalra in New
Delhi; Editing by James Dalgleish and Ken Wills)