The U.S. government has released its annual Special 301 report, a congressionally mandated review that singles out foreign nations for failing to safeguard American intellectual property—a failure that costs U.S. companies billions in lost revenue and destroys countless jobs. This year's edition takes a notably broader approach, calling out not just familiar antagonists like China and India, but also longtime allies including European Union members, Mexico, Canada, and the United Kingdom for policies that erode American property rights.
Former directors of the U.S. Patent and Trademark Office argue that the administration is right to spotlight these increasingly aggressive moves by partners, not just rivals. They urge Washington to press trading partners to reverse course before the damage becomes irreversible.
European Union Under Watch for First Time in Two Decades
The EU earned a spot on the report's Watch List for the first time in 20 years, reflecting growing frustration with Brussels' approach to American biotech and tech firms. The bloc recently shortened the period new drugs can remain on the market without generic competition, limiting the ability of U.S. biotech companies to recoup research and development costs. The EU also continues to push a proposal that would let European bureaucrats unilaterally set licensing rates for standard essential patents—the foundational technology behind 5G, Wi-Fi, and other wireless standards. Critics say this would effectively dictate global trade terms and undercut American innovators. The U.S. must keep flagging these policies to prevent other nations from adopting similar measures.
Mexico and Canada Fall Short on USMCA Commitments
Mexico, a key partner under the United States-Mexico-Canada Agreement, was downgraded from the Priority Watch List to the Watch List despite persistent problems. It fails to adequately protect clinical trial data for new drugs and runs a patent dispute system that allows generic competitors to bypass proper checks, violating USMCA obligations. Canada, meanwhile, remains on the Watch List for using its Patented Medicine Prices Review Board to effectively devalue American-invented medicines and for the Online Streaming Act, which disadvantages U.S. digital service providers. If Ottawa doesn't address these abuses, it could face a more serious Priority Watch List designation next year.
United Kingdom Escapes Scrutiny Despite Aggressive Policies
The UK was left off the report entirely, but former patent office directors argue it deserved a Watch List spot. British courts have asserted authority to set global licensing rates covering U.S. patents, and London has proposed changes to dispute resolution for standard essential patents that would undervalue American innovations. A Watch List designation could have pressured the UK to retract these harmful policies, they say.
China and India Remain Top Priority Watch List Offenders
China, once again on the Priority Watch List, has intensified its assault on U.S. intellectual property. Its courts increasingly try to set global standard essential patent licensing rates at artificially low levels, benefiting Chinese manufacturers while shortchanging Western inventors. Beijing also limits favorable regulatory treatment to medicines first marketed in China, pressuring U.S. biotech firms to launch there first regardless of global market assessments. Its patent linkage system remains flawed, giving Chinese generic drugmakers an unfair advantage by not providing enough time for patent disputes to be resolved before generics enter the market.
India also stays on the Priority Watch List. While it has taken some limited steps to improve IP protections, it still restricts protections for innovations that improve existing medications, lacks sufficient regulatory data protections, and tolerates lengthy patent litigation delays. Brazil, too, faces criticism for patent prosecution backlogs that keep innovators waiting.
The report underscores a bipartisan consensus that protecting American intellectual property is essential to U.S. competitiveness and job creation. As the former patent office directors put it, the U.S. must work urgently with allies to reform their ways—or risk seeing the erosion of American innovation become a permanent feature of global trade.
