China tops EU’s IP problem list, in its own category

China is so far in front of all other countries when it comes to infringing intellectual property that it has its own category in the European Commission’s IP protection report.

It is the only country in the tier 1 priority bracket in the report, reflecting the fact that it is the source of more than 80% of IP-infringing goods entering the EU, and has other serious problems like widespread ‘bad faith’ trademark registrations and forced technology transfer – described as an “increasingly important trade irritant”.

The new working document includes three tiers of countries, with India, Indonesia, Russia, Turkey and Ukraine in tier 2, as countries with severe systemic problems with IP protection and enforcement which have made little or no progress since the last version of the report was published two years ago.

Tier 3 includes Argentina, Brazil, Ecuador, Malaysia, Nigeria, Saudi Arabia and Thailand, billed as countries that have some serious problems in the area of IP, causing considerable harm to EU businesses.

Nigeria and Saudi Arabia make the latter category because they have emerged as important transit countries for the trade in illicit goods, says the Commission.

“As much as 82 per cent of all EU exports is generated by sectors which depend on intellectual property,” commented Commissioner for Trade Phil Hogan.

“Infringements of intellectual property, including forced technology transfer, intellectual property theft, counterfeiting and piracy threaten hundreds of thousands of jobs in the EU every year,” he added.

The document is designed to help the Commission focus its efforts on problem countries as it tries to improve IP rights protection.

The report quantifies the level of IP rights infringement by industrial sector, with cosmetics & personal care, clothing, pesticides & agrochemicals and footwear and accessories heading the list in terms of sales lost (see image alongside).

Among the other notable findings of the report is that customs lacks sufficient powers to take ex officio actions to detain, seize or destroy counterfeit and pirated goods at the border or to take action with respect to goods in transit.

It also says that counterfeit and pirated goods are often not destroyed by the enforcement authorities and find their way back to the market.

Plant varieties an emerging area of concern

A new addition to this latest edition of the report is the inclusion of an annex on protection and enforcement of plant variety rights – for example plants that have been cultivated to improve their yield, use nutrients more efficiently or resist pests, diseases and adverse environmental conditions.

The EU exported around €7.5bn-worth of plant varieties in 2016, around twice as much as it imported.

“Plant breeding can play an important role in increasing productivity and quality in agriculture, whilst minimising the pressure on the environment,” says the Commission.

“The EU wants to encourage investment and research in this area. Protection of plant varieties becomes therefore one of the Commission priorities in the coming period.