U.S. Trade Rep Report ID's Nations Needing Stronger IP Protections

 On April 29, the Office of the U.S. Trade Representative released its 2025 Special 301 Report. Based on an annual review of the state of intellectual property (IP) protection and enforcement in foreign nations, the 2025 Special 301 Report identifies "law, policies, and practices that fail to provide adequate and effective IP protection and enforcement for U.S. inventors, creators, brands, manufacturers, and service providers, which, in turn, harm American workers whose livelihoods are tied to America’s innovation- and creativity-driven sectors." 

Mexico continues to suffer from very high rates of copyright piracy, including through online streaming, peer-to-peer file sharing, direct downloads, stream-ripping, illicit streaming devices and apps, circumvention devices for video games and consoles, and physical media. As broadband access increases, online piracy has been increasing, and stakeholders report that Mexico has one of the highest rates of music and video game piracy in the world. A barrier to effective criminal copyright enforcement is the requirement to prove a direct economic benefit to the infringer and the submission of a legitimate physical copy of the pirated content, even if the pirated copies were distributed online. The 'direct economic benefit' requirement also prevents effective criminal enforcement against not-for-profit acts of piracy, such as interrupting and distributing cable and satellite signals. According to stakeholders, civil copyright enforcement is difficult and expensive due to the lack of secondary liability for Internet service providers (ISPs), no pre-established damages, no lost profit recovery, no recovery of attorney fees, and lengthy court cases.

The 2025 Special 301 Report identifies foreign countries that the Trump Administration plans to engage during the year ahead to improve legal protections for Americans' copyrighted property and other IP overseas. Hopefully, those efforts will bear fruit and better safeguard the value of American-owned creative works. 

 

Focusing here on copyrights, areas of concern covered in the report include, "challenges with border and criminal enforcement against counterfeits, including in the online environment," "high levels of online and broadcast piracy, including through illicit streaming devices," and "systemic issues regarding IP protection and enforcement, as well as market access."

 

According to the report, "during the review period, countries such as Argentina, Bulgaria, Canada, Chile, China, Colombia, Ecuador, Guatemala, India, Mexico, the Netherlands, Pakistan, Poland, Romania, Russia, Switzerland, Thailand, and Vietnam had high levels of online piracy and lacked effective enforcement." It observed that "stream-ripping was reportedly popular in countries such as Canada, Chile, India, Mexico, Nigeria, Russia, and Switzerland."

 

Furthermore: "Stakeholders continue to report notable levels of piracy through ISDs and illicit IPTV apps, including in Algeria, Argentina, Brazil, Canada, Chile, China, Guatemala, Hong Kong, India, Indonesia, Jordan, Mexico, Morocco, Singapore, Switzerland, Taiwan, Thailand, the United Arab Emirates, and Vietnam. China, in particular, is a manufacturing hub for these devices."

 

Also, "[t]he proliferation of 'camcords' – that is high-quality unlawful video recordings of new movies shown in theaters – continues to be a significant trade problem" in Russia, China, and India. The report stated that some foreign countries need to update their laws to deter such conduct. Apparently, "the requirement in some countries that a law enforcement officer must observe a person camcording and then prove that the person is circulating the unlawfully recorded movie before intervening often precludes effective enforcement." The report added that countries such as Argentina, Brazil, Ecuador, and Russia do not effectively criminalize unauthorized camcording in theaters. 

 

Along with ongoing challenges and concerns regarding online copyright piracy in countries such as China and Russia, the report also spotlighted Mexico: 

Mexico continues to suffer from very high rates of copyright piracy, including through online streaming, peer-to-peer file sharing, direct downloads, stream-ripping, illicit streaming devices and apps, circumvention devices for video games and consoles, and physical media. As broadband access increases, online piracy has been increasing, and stakeholders report that Mexico has one of the highest rates of music and video game piracy in the world. A barrier to effective criminal copyright enforcement is the requirement to prove a direct economic benefit to the infringer and the submission of a legitimate physical copy of the pirated content, even if the pirated copies were distributed online. The 'direct economic benefit' requirement also prevents effective criminal enforcement against not-for-profit acts of piracy, such as interrupting and distributing cable and satellite signals. According to stakeholders, civil copyright enforcement is difficult and expensive due to the lack of secondary liability for Internet service providers (ISPs), no pre-established damages, no lost profit recovery, no recovery of attorney fees, and lengthy court cases.

In the year ahead, we will see if the Trump Administration is successful in prompting improvements in copyright protections for Americans in those nations identified by the 2025 Special 301 Report.

USTR Report: Foreign Nations Should Step Up Efforts to Curb Online Copyright Piracy

On April 26, the Office of the U.S. Trade Representative (USTR) released its 2023 Special 301 Report on intellectual property (IP) enforcement and protection by our nation's trading partners. The Section 301 Report provides an overview of various initiatives by the Administration to promote stronger protections for Americans' IP overseas, tracks recent trends in other nations regarding IP, and offers succinct status reports on IP protections and enforcement – or lack thereof – in individual countries. 

One area of attention in the Section 301 Report is online piracy. According to the report, in 2022 and early 2023, "countries such as Argentina, Bulgaria, Canada, Chile, China, Columbia, the Dominican Republic, India, Mexico, the Netherlands, Pakistan, Romania, Russia, Switzerland, Thailand, Ukraine, and Vietnam had high levels of online piracy and lacked effective enforcement." In particular, the report identified high incidence of music piracy by the use of "stream-ripping" software to create unlawful copies of songs in Canada, India, Korea (the report never specified North or South), Mexico, Russia, Switzerland, Ukraine, and the United Arab Emirates. 

Additionally, the Section 301 report called attention to the use of illicit streaming devices (ISDs) to facilitate unauthorized streaming of copyrighted video content offered by illicit Internet Protocol television (IPTV) services. As the report observed: "Today, there are many illegal IPTV services worldwide, many of which are subscription-based, for-profit services with vast and complex technical infrastructures." Significant levels of piracy via ISDs and illicit IPTV apps reportedly takes place in Argentina, Brazil, Canada, Chile, China, Guatemala, Hong Kong, India, Indonesia, Iraq, Jordan, Mexico, Morocco, Singapore, Switzerland, Taiwan, Thailand, Tunisia, and Vietnam. And report rightly observes that online piratical activities inflict substantial economic harm on American creators of copyrighted works and undermine the competitive viability of legitimate online platforms for distributing creative content. 

 

The Section 301 report ought to be a reminder of the need for the U.S. to keep up pressure on foreign nations that do not take IP protection and enforcement seriously and turn a blind eye to online copyright piracy and other forms of IP theft and counterfeiting. In our book, Modernizing Copyright Law for the Digital Age: Constitutional Foundations for Reform(Carolina Academic Press, 2020), Free State Foundation President Randolph May and I provide a brief history of early U.S. efforts to secure copyright protections for Americans' creative works in foreign countries. Our book also addresses the need for domestic criminal copyright enforcement against large-scale commercial piracy operations as well as the need for strong copyright protections in free trade agreements.  

Court Rules on Preemption of Publicity Rights Involving Copyrighted Works

On October 4, the U.S. Court of Appeals for the Second Circuit ruled that right of publicity claims brought by a plaintiff radio entertainer under state law are preempted by the Copyright Act because those claims focused upon copyrighted works involving the plaintiff rather than on his likeness or identity. 

The plaintiff in Melendez v. Sirius XM Radio, Inc. was a performer on a once-popular terrestrial broadcast radio program from 1988 to 2004. Thereafter, satellite radio provider Sirius XM licensed and airs new episodes of that program as well as past episodes that featured the plaintiff. The plaintiff filed a lawsuit against Sirius XM, alleging his right of publicity under California common law and statutory law were violated because his name and likeness were used for commercial gain without permission when Sirius XM aired promo ads and posted online ads for the program that used excerpts of the plaintiff's performances from archival episodes.

Section 301 of the Copyright Act contains a preemption clause: 

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. 

Free State Foundation President Randolph May and I have written about the national framework for copyrights established in the Copyright Act and Section 301's preemption of state laws in other contexts, including in our March 2022 Perspectives from FSF Scholars, "State Laws Forcing Publishers to License Ebooks to Libraries Are Unlawful."

In Melendez, the Second Circuit applied Section 301 using a two-part test to determine whether a state law claim is preempted by the Copyright Act. The first prong of the test is called the "subject matter" requirement, which applies when the claim applies to a worked fixed in a tangible medium and that is within the ambit of a category of copyrightable works. And the second prong is called the general scope or equivalence requirement, which applies when the claim involves a right that is equivalent to any of the exclusive rights that are within the general scope of Section 106 of the Copyright Act, such as the rights of reproduction and distribution.

The Second Circuit held that the state law claims raised by the plaintiff satisfied the two-part test for preemption. The court determined that the plaintiff’s statutory and common law publicity right claims applied to copyrighted works – the archival radio broadcast programs – and it also determined that his claims were not directed at the plaintiff's name, likeness, or identity separate from or beyond those copyrightable radio broadcasts.  

The Second Circuit's decision in Melendez applying Section 301 to the state publicity right claims is in accord with circuit precedent from 2020, and the court cited similar preemption decisions from the Eighth and Ninth Circuits. Apparently, there is a circuit split on this issue insofar as the Fifth, Seventh, and Tenth Circuits have rejected preemption when the state right of publicity claims involve commercial or advertising uses. 

Unless or until the Supreme Court takes up a case to resolve the circuit split, private parties who purchase or license copyrighted works should be alert to the possibility that state law claims, such as right of publicity, may be implicated by their prospective use of the copyrighted works. Those implications likely can be addressed through negotiated contract terms.  

Presidential Memorandum Addresses China’s IP Theft and Forced Technology Transfer Practices

On March 22, President Trump signed a “Presidential Memorandum on the Actions by the United States Related to the Section 301 Investigation.” The Memorandum explains that the U.S. Trade Representative’s Section 301 investigation into China’s practices involving IP theft and forced technology transfers supports four findings:

First, China uses foreign ownership restrictions, including joint venture requirements, equity limitations, and other investment restrictions, to require or pressure technology transfer from U.S. companies to Chinese entities.  China also uses administrative review and licensing procedures to require or pressure technology transfer, which, inter alia, undermines the value of U.S. investments and technology and weakens the global competitiveness of U.S. firms. 

Second, China imposes substantial restrictions on, and intervenes in, U.S. firms’ investments and activities, including through restrictions on technology licensing terms.  These restrictions deprive U.S. technology owners of the ability to bargain and set market-based terms for technology transfer.  As a result, U.S. companies seeking to license technologies must do so on terms that unfairly favor Chinese recipients. 

Third, China directs and facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and to generate large-scale technology transfer in industries deemed important by Chinese government industrial plans. 

Fourth, China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies.  These actions provide the Chinese government with unauthorized access to intellectual property, trade secrets, or confidential business information, including technical data, negotiating positions, and sensitive and proprietary internal business communications, and they also support China’s strategic development goals, including its science and technology advancement, military modernization, and economic development.

The Presidential Memorandum directs the Trade Representative to take action to address unreasonable or discriminatory practices by China that burden or restrict U.S. Commerce. Such actions include consideration of “increased tariffs on goods from China” and pursuit of “dispute settlement in the World Trade Organization (WTO) to address China’s discriminatory licensing practices.” President Trump’s Memorandum also calls for possible imposition of investment restrictions, requiring the Secretary of Treasury to propose ways “to address concerns about investment in the United States directed or facilitated by China in industries or technologies deemed important to the United States.”

A succinct overview of the Presidential Memorandum regarding Chinese-related IP theft and forced technology transfer practices as well as timeframes for implementing responsive restrictions is provided by Sarah Westwood’s March 22 article in the Washington Examiner.