Igor Stravinsky’s The Rite of Spring describes, in musically graphic terms, the sacrificing of a young maiden as part of a pagan ritual. In recent years, the United States Trade Representative has taken to engaging in its own rite of spring, namely publishing its “Special 301 Report”. This report purportedly addresses “the adequacy and effectiveness of U.S. trading partners’ protection of intellectual property rights (IPR)”. In fact, that description of the report, taken from the USTR website, is something of a misnomer, as the bulk of the report focuses on what the USTR considers to be the inadequacy and ineffectiveness of its trading partners’ protection of IP rights: of the 77 countries reviewed, over half – 42 – wound up on one of the three lists of countries that don’t measure up to the USTR’s standards.
As has become an annual part of the USTR’s ritual, Israel once again has found itself on the “Priority Watch List”, i.e. among the worst of the worst, like China. Which for several reasons makes people who follow the Israel IP scene pause to wonder what political agenda was behind this year’s Special 301 Report, and why yet again Israel merited being the USTR’s sacrificial maiden.
First, categorizing Israel with China is absurd. Ignore for the moment that population-wise China is about 200 times larger than Israel, and that its GDP likewise dwarfs Israel’s. Among the major issues with China are the widespread production of counterfeit goods and theft of trade secrets. But there’s nothing to compare when it comes to Israel. Regarding counterfeits, even proportionally to Israel’s size, the problem of counterfeit of goods in Israel nowhere near approaches that in China. That’s in large part because Israel has statutory measures granting IP rights, and the executive and judicial bodies in Israel work with the rights holders to enforce those rights. Contrast that with China, where, if statutory protections even exist, the authorities often turn a blind eye to the goings-on. China manufactures and exports goods bearing counterfeit marks, but if those goods show up Israel, the mark owner can have them seized; Customs will sua sponte hold such goods at the port; and once seized, the fakes will eventually be destroyed, with someone from the infringing side being made to bear the costs. Similarly, Israel has trade secret legislation, which likewise can be and is enforced.
In fact, the USTR deems Israel’s level of protection in these areas to be sufficient. So if Israel provides what the USTR considers to be adequate protection and enforcement on the counterfeit and trade secret theft front, what’s the USTR’s beef with Israel? Purportedly inadequate legislation in three areas, two of them tied explicitly to pharmaceuticals: data exclusivity, patent term extension calculation, and early (18-month) publication of patent applications.
This brings to the fore the second puzzling aspect of the USTR’s categorization of Israel: Israel already has data exclusivity and patent term extension provisions. It’s just that the USTR decided the protections already in place aren’t quite good enough. That issue was actually addressed last year, when the U.S. Secretary of Commerce and the Israel Minister of Industry and Trade reached an agreement, and the USTR seemed prepared to divest Israel of its “habitual offender” status. As reported in earlier posts (here and here), in accordance with that agreement, changes would be made to Israel’s existing data exclusivity legislation (the period of exclusivity would be lengthened from five to six-and-half years, although the legislation would still not be an impediment to Israeli drug exporters), and to its existing patent term extension (PTE) legislation (the process for obtaining PTEs and calculating PTE would be simplified, and a mechanism for filing PTE requests before receipt of MOH approval or grant of the patent would be enabled). Furthermore, Israel patent applications, which hitherto were opened to the public only upon completion of substantive examination by the ILPTO, would be opened 18 months after the priority date. (In fact, as reported here, a draft bill to this effect had already been circulated for comment before the agreement was signed.) It was agreed that the legislative changes would be made quickly, and once they were made, Israel would be dropped not only from the “priority watch list” but also from the “watch list” (which lists not the worst of the worst but the merely bad).
What the USTR may or may not have taken into account when making that last stipulation was the snail’s pace of the Israel legislative process. Even if that was an oversight, it doesn’t make the USTR’s position any less disingenuous. It’s not like Israel hasn’t moved at all on these things, or that the Minister out-and-out lied. To the contrary: as the USTR well knows, there is movement, and a good faith effort is being made to push all the pieces of legislation forward. In some cases, the delay has been due to as mundane an issue as the government ministries responsible for drafting the legislation being short-staffed. That makes Israel an “IP offender” on the order of China?
Moreover, the USTR didn’t tell the Israelis was that the USTR itself would further slow the amendment process, by insisting on reviewing and approving drafts of legislation. (Why the Israeli bodies charged with drafting that legislation acceded to the USTR’s request is both puzzling and disconcerting.) So while legislation on all three fronts is slowly making its way through the system, that’s not good enough for the USTR, which cited the failure to enact the promised reforms – the “failure” to which the USTR is partly to blame – as the primary reason for putting Israel back on the priority watch list. As Arlo Guthrie might say, you got a lot of damn gall.
It’s also more than a little hypocritical for the USTR to be impatient with Israel. The Israeli legislation isn’t moving along any more slowly than “patent reform” in the USA, which has been percolating in Congress in one form or another since 2005, and only now appears to be on the cusp of being adopted. And unlike the changes Congress seems set to adopt, Israel’s changes probably won’t gut its patent system, as Senator Leahy seems hell-bent on doing in the USA.
The Special 301 also "encourages" Israel to adopt statutory damages for copyright infringement. Hello, McFly? Someone at the USTR ought to learn Hebrew: Israel copyright law has had statutory damages for an awfully long time, including in the 2007 revision of the Copyright Act. Actually, they don't even need to learn Hebrew: learning how to use the internet would be sufficient, since WIPO Lex actually contains an English text of that statute, and section 56 says in plain English that a copyright holder is entitled to up to 100,000 shekels for damages, without the need for proof. So before the USTR criticizes Israel for not having what it deems to be 21st century IP laws, the USTR itself might try joining the 21st century.
By publishing this report, and continuing to equate Israel with China because Israel’s data protection and patent term extension schemes aren’t quite what the USTR wants, the USTR only undermines its position in the eyes of Israeli policy makers and those who follow IP law.