closed registrations of "internationally famous" marks with damaging results to both international owners and local legitimate businesses as well; • Adoption of the international classification system for trademarks; • Simplified, less-burdensome licensing recordal practices; • Clarification of opposition criteria; • Broader protection for famous marks; • Clearer legislative language to distinguish between descriptive and suggestive marks; • Clarification of the extent to which prior or senior users of an unregistered trademark have the right to block registration of the same or a similar mark by a junior user; • Improvement in their manual of examining procedures; • Statutory provision to amend of an existing registration and/or renewal provided that the commercial impression is the same, thereby avoiding forfeiting of the original registration date; • Enumeration of the type of record required for appellate authority; • A longer non-use period; • A provision requiring consent of a third party before an applicant may register the third-party's name, trade name, stage name, image, etc.; and • Recognition that trademark rights are not extinguished in certain circumstances, including the dissolution of the trademark owner These points, while highly technical, are not trivial. Taiwan's history in the intellectual property area proves that in addition to the lack of police, customs and judicial requirements, "technical" loopholes and archaic practices and procedures create an arbitrary gauntlet of obstacles to "adequate and effective" protection of trademarks. Only by addressing these points (as well as the others detailed in USTA's "Special 301" filing) will significant progress will be achieved. Thailand Thailand's disrespect for international trademark rights is universally recognized; it has long been the subject of industry and public sector trade complaints. In the past, these complaints focused primarily on copyright issues, but a similarly intensive focus on trademarks is now in order. The issues in Thailand range from registration practices to enforcement. Among them are: • foreign trademark applications are frequently rejected on arbitrary grounds; • enforcement of trademark rights is expensive, riddled with protracted delays; • information of pending counterfeiting raids is "leaked" to the targets of those raids; and, • a maze of obstructive civil code procedures which create barriers to effective intellectual property enforcement. The time, resources and discouraging results (e.g., minimal fines, inability to catch and halt manufacturing/distribution sources, and rarity of actual incarceration of offenders) have made attempts at enforcement in Thailand unproductive for a great many trademark owners. There are losses suffered in Thailand as well as countries around the world to which Thai pirates ship their goods. USTA strongly encourages mounting sufficient trade pressures to curb this situation in a definitive and expeditious manner. The Republic of Korea For manufacturers of various world-famous product brands (including athletic footwear, apparel and luggage) Korea remains one of the single worst offenders of trademark protection on both domestic and export market fronts. This was dramatically illustrated by detailed materials submitted to The USTR by Reebok International Ltd. Counterfeits of Reebok's trademark, and those of many other trademark owners, are exported in massive quantities throughout the world on a daily basis. They are also marketed openly and notoriously within Korea as well. As this activity indicates, the critical problem in the Republic of Korea is one of enforcement policy and practice. The Korean Foreign Trade Act, adequate staffing of customs functions in key ports, the ability to make "unannounced searches" in both criminal and civil cases and, most critically, realistic "standards of proof" for establishing infringement and obtaining prosecutions provide the Korean government the statutory authority and manpower to control these problems should it so decide. As is outlined in greater detail in the March 1993 submissions from Reebok International to the USTR, "to improve the enforcement of intellectual property rights in Korea, problems must be addressed in four basic areas: cultural/educational; stat utory; regulatory; and implementation." Reports of recent government raids and seizures, particularly in the athletic footwear industry, are promising. However, these raids (which have occurred only since Reebok's "Special 301" filing) are only a start. Long-term policy, regulatory and enforcement changes are required in order for the Republic of Korea to reach the level of generally-accepted international norms for the protection of trademarks. Both short-term and long-term measures for achieving this objective have been detailed to the USTR. USTA encourages close examination and support of these suggestions. Brazil Brazil has made only minimal steps towards protecting trademarks "adequately and effectively." Unauthorized registrations of "internationally famous" marks by local parties have been permitted in Brazil and has led to what can fairly be described as extortion practices. Court proceedings to challenge these "negotiations" are expensive and protracted. The Brazilian Patent and Trademark Office often facilitates such practices by unfairly rejecting registration applications. A detailed USTA task force report is forthcoming with respect to Brazil. It will specifically outline the judicial, administrative and enforcement impediments that hamper or completely block "adequate and effective" relief for foreign trademark owners' registration and protection of their marks. Spain Spain is also the subject of a forthcoming detailed USTA task force report. The following obstacles impede “adequate and effective" protection of foreign trademark rights: • inadequate cancellation procedures against infringing marks; • slow or cumbersome judicial procedures; • arbitrary judicial procedures; • trafficking in internationally famous trademarks by local unauthorized registrants; • uncooperative, unsympathetic and/or uninformed police and judges; • failure to improve opposition proceedings; • failure to adopt more uniform "standard" examination procedures; • failure to provide clear-cut definition of "well known" marks; • failure to provide stronger civil/criminal penalties; and, - failure to enlist broader government enforcement against counterfeiting. As was noted with respect to Taiwan and is, perhaps, even more pronounced in a civil code jurisdiction such as Spain, technical problems loom large and operate to block what most consider "adequate and effective" intellectual property protection and fair market access. Indonesia A lengthy USTA Indonesia task force report was prepared last year. On the eve of the issuance of the report, a new Indonesian Trademark Law was enacted. USTA, in consultation with the U.S. Patent and Trademark Office, is analyzing the new provisions and redrafting the original report to account for these changes. This revised filing is expected in the near term. Nevertheless, from all indications, substantial local and export counterfeiting problems continue. They range from unsatisfactory administrative examination and policies to haphazard enforcement procedures. Without significant change in its day to day trademark administrative practices, USTA believes that the new Indonesian trademark law will not satisfy all of the requirements necessary to correct the national and export counterfeiting problems currently being experienced in that market. Mexico The extensive domestic and import/export counterfeiting problems were detailed in the Mexican Appendix of USTA's "Special 301" filing. They are substantial, particularly for a NAFTA partner. While USTA has lent its support for NAFTA's adoption, it is important that Mexico's promise to provide greater trademark_protection procedures be closely monitored to ensure that they are implemented. There have been promising indications in recent months but these are only a beginning. Mexico's development of serious transshipment and "open border" policing, training and enforcement programs is vital to curtailing the substantial counterfeit traffic that continues to operate within and across its borders. Mexico also needs to develop implementing regulations for the 1990 Mexican Trademark Law and permit immediate, unrestricted criminal trademark enforcement against infringers using the provisions of the 1990 law. USTA has requested that Mexico be placed on the watch list by the USTR. There are indications of "good faith" intentions by the government to acknowledge and correct the administrative and enforcement problems with respect to counterfeiting. It is crucial to continuously monitor these developments to see that the promises made are implemented swiftly and effectively. General recommendations Counterfeiting and other international market barriers to trademark protection are a threat not only to trademark owners but also to consumers and our economic system. It is imperative that all of us give further attention to fostering a workable federal system that minimizes this corrosive problem. USTA is grateful that you and the members of your committee are willing to grapple with these issues and offers to serve as a continuing resource to you and the committee. U.S. TRADEMARK ASSOCIATION, New York, NY, May 18, 1993. Mr. WAYNE W. HOSIER, Printing Specialist, Senate Committee on Finance Washington, DC. Dear Mr. Hosier: In response to your letter of April 26 to John J. Cummins, then President of the U.S. Trademark Association (USTA), I am submitting for the record four copies of answers to additional questions regarding USTA testimony at the April 19 Special 301 hearing. Please note, at USTA's 1993 Annual Meeting concluded just last week, our members overwhelmingly approved a name change from USTA to the International Trademark Association (INTA). At the same meeting, Mr. Cummins's year-long presidency ended, and I was elected to succeed him. I have a continuing interest in Special 301, and look forward to assisting the Subcommittee in future in its important mission. Please let me know if I may be of any further assistance. Very truly yours, RICHARD M. BERMAN, President Enclosures. RESPONSES OF USTA TO QUESTIONS SUBMITTED TO MR. CUMMINS BY SENATOR GRASSLEY Question No. 1. If you had to list the top two or three most egregious countries that violate our intellectual property rights, who would they be, and what action would you recommend the United States government pursue? Answer. As stated in its Special 301 submission to the United States Trade Representative (USTR), INTA's (formerly USTA)1 survey of trademark owners internationally found that the People's Republic of China, Taiwan and Thailand are the most serious violators of trademark rights. These violations occur either directly or through condoning infringements by various businesses and they range from slow or cumbersome judicial procedures and ineffective civil and criminal remedies to blatant counterfeiting and trafficking in trademarks. INTA is working closely with the U.S. Patent and Trademark Office (USPTO) and the USTR, not only to document such violations but also to recommend remedial actions that the governments of these countries should take. We believe that the U.S. government should remain adamant in its demands that these countries fully recognize the need to protect trademark rights and to stop infringements within acceptable time frames. Question No. 2. Since 1989, Japan has been on the "Special 301 Watch List" from which the United States seeks stronger intellectual property protection. I would like to hear from each of you as to what you perceive is Japan's most flagrant violation and what if any action this administration should be contemplating? INTA (formerly USTA) is a 115 year old not-for-profit worldwide membership organization with 2,600 members. The Association's principal goal is the preservation and promotion of trademarks as essential instruments of international commerce. Since its founding in 1878, its membership has grown to over 2500 corporations, law firms and professional associations from across the United States and 90 countries. Although eighty-five of the Fortune 100 companies are INTA members, we also welcome new and small businesses. INTA crosses all industry lines, spanning a broad range of manufacturing, retail and service operations. Answer. While INTA did not include Japan in its Special 301 submission to the USTR, the Association's 1992 survey of members did reveal serious difficulties with Japan's trademark law and procedures. Specific examples include inordinate delays and burdensome formalities in registration and trademark office procedures as well as overly formalistic proof of use requirements and restrictions on trademark applications. We believe that Japan should be encouraged to remove such burdens on trademark owners and that the U.S. government should continue to monitor Japan's progress in this area. Question No. 3. I would like to ask a question as it relates to the NAFTA. As we all know, Mexico has made strides in resolving many of its intellectual property concerns and the NAFTA will resolve additional U.S. concerns if implemented. I would like each of you to tell me your position on the NAFTA generally and specifically how you envision the NAFTA strengthening the intellectual property rights issue? Answer. Because of its particular focus on trademarks, INTA has no position on NAFTA generally. Topics such as agriculture, energy, tariff elimination, and the overall potential economic impact of the Agreement are beyond the scope of INTA's purpose of the preservation and promotion of trademarks as essential elements of worldwide commerce. However, with respect to NAFTA's impact on Mexico's handling of trademark rights, INTA is cautiously optimistic. The Agreement is designed to provide "adequate and effective protection and enforcement of trademarks and other defined intellectual property rights, and to require each party to accord nationals of other parties at least the same level of treatment it accords its own. Although Mexico has made progress in this area in recent years, there is still room for improvement. (From the start, INTA has analyzed NAFTA's impact on the protection of trademarks and continues to provide information to both the Mexican and U.S. governments). INTA expects Mexico to redouble its efforts under NAFTA and, within a fairly brief period, to meet the same trademark registration and protection standards of the other parties to the Agreement. INTA also has voiced its concern about Mexico's delay in promulgating regulations for its 1990 Trademark Law. The possibility of further revisions to the current law may exacerbate this delay. INTA urges the Mexican government to issue the regulations as soon as possible. Question No. 4. Russia is the largest and wealthiest republic of the former Soviet Union. While there are no significant legal barriers to trade with Russia, there are a number of factors that discourage trade. The Russian government has shown considerable interest in formulating laws to bring the country up to world standards in the area of intellectual property. One of the weak point's with Russia is its inability to enforce existing and contemplated IPR laws. What if anything should the United States be doing to help them resolve this problem? Or should we be even contemplating trading with the Russians? Answer. Addressing the second issue first, I think that it is in the interest of the United States to promote free and fair trade with the nascent Russian democracy and its market economy. The more that we can do to promote Russia's evolution into a modern, free market and democratic state, the more opportunity there will be for U.S. businesses which own trademarks. A key catalyst for such evolution is trade. With regard to the first issue, INTA is very active in promoting the adoption of trademark laws in the former Soviet republics which are consistent with those of modern industrial nations. The Association offers advice on proposed laws and recommendations for improving laws already on the books. While INTA can provide such assistance, the major problem, as you pointed out, is Russia's inability to enforce its trademark laws. The U.S. government should give serious consideration in any aid package to Russia to including training programs by U.S. Customs, as assistance by the USPTO, and educational programs directed to the court system, to improve the registration and enforcement of trademarks throughout the country. PREPARED STATEMENT OF SENATOR ORRIN G. HATCH Mr. Chairman, I welcome our distinguished panel of business representatives. We talk too often of the macro-policy effects of trade agreement violations. But it is the micro-economic effects of these policies and practices that can destroy jobs, investments and whole industrial sectors. These concerns are found throughout the legislative history of Section 1303 of the Omnibus Trade Act of 1988, the so-called "Special 301" provision of the law. I supported Special 301 then, as I do now. As the senior Senator from Utah, which Business Week has called the nation's "Software Valley," I have seen the information technology industry of my state suffer great losses. This industry in Utah numbers over 800 companies, producing a payroll almost equal to that of our defense sector— for which Utah has also been well-known. Despite my obvious commitment to rigorous overseas protection of intellectual property and assured access to foreign markets-the twin objectives of Special 301, I have been a cautious proponent of its use. In my article in the latest issue of Computer Law Reporter, entitled "Protecting Intellectual Property Rights in China," I argue that Special 301 almost certainly induced China's adherence to the January 1992 Memorandum of Understanding with the United States. China simply could not afford being returned to the Special 301 Priority Watchlist—and the impending retaliation then being held over its head. However I also warned that the reckless use of Special 301 could ignite mutual retaliatory measures, a euphemism for trade wars. I would like to invite the committee to take note of these arguments, Mr. Chairman, and submit the article along with the balance of my remarks for the record. MIXED RESULTS OF SPECIAL 301 Mr. Chairman, as I mention in my Computer Law Journal Article, we can expect too much from unilateral measures, like Special 301. However, without more universal protections in place, like the Trade-Related Intellectual Property (TRIP) provisions of the Uruguay Round, we must protect our rights of market access and market presence. As Mr. Bale of the Pharmaceutical Manufacturers Association points out, his industry generates a substantial part of our trade earnings. But look at his costs in reaching this plateau: his R&D investments are nearly four to five times those of other industries, and his productivity nearly double that of all other foreign pharmaceutical manufacturers combined. We have an obligation to the pharmaceutical industry. I tried to meet that obligation in part nearly ten years ago, through the Hatch-Waxman Act of 1984, which extended protection to patented drugs undergoing the long approval process. I am happy to say that the act has become a model for Japan and, now, the European Community. Mr. Bale concedes some progress, but properly warns that there remains much to be done. I for one am hopeful that countries like Argentina, Korea and Thailand, will see the wisdom and benefits for themselves in following the examples of the EC and Japan in extending improved patent protection to U.S. drug manufacturers. And I want to advise these countries that they will always find willing assistance in my office. I also welcome the comments of the International Intellectual Property Association, and its many constituent associations. Along with Senators Rockefeller, Grassley, Durenberger, Stevens, Bennett, and others, I recently wrote President Clinton urging greater sensitivity in U.S. trade-related agencies to piracy losses, which now run between $12-15 billion annually. I was also pleased to work with the Business Software Alliance, and the International Anti-Counterfeiting Association, in publicizing the long list of countries still violating the most fundamental precepts of private property protection. These violators must realize, as I think China has, that foreign investment and technology will not be risked in societies that freely pirate and sell counterfeit goods. Mr. Chairman, I give back the balance of my time, and thank the chair for the privilege of commenting on Special 301. Attachment. |