Giachino (00:05.0000 - 00:29.0405)
Welcome to IP Protection Matters. I'm your host, Renee Giachino. Today we are joined again by Karen Kerrigan, President and CEO of the Small Business and Entrepreneurship Council (SBE Council). We will be talking today about the Special 301 Report on intellectual property protection and enforcement. It's hot off the press from the Office of the United States Trade Representative. Karen, welcome back to IP Protection Matters.
Kerrigan (00:29.0415 - 00:31.0999)
Thank you, Renee. It's great to join you today.
Giachino (00:32.0000 - 00:53.0830)
Before we discuss this important report from USTR, I'd like to spend a few minutes talking about World IP Day 2025. Can you believe that last Saturday, April 26th, was the 25th anniversary of this event? Tell me why you think it's important that we celebrate World IP Day.
Kerrigan (00:54.0189 - 02:54.0666)
This is an important day for entrepreneurs, for innovation and for everyone across the world because celebrating and strengthening intellectual property rights and protections is vital to innovation and the creative breakthroughs that improve the quality of our lives and the health of the world. It is really important that varied interests come together as we did on World IP Day this past Saturday. We sponsored an ad that was joined by 15 other broad-based, diverse businesses organizations to point out the importance of IP, its contributions to society, economic growth, high paying jobs and why lawmakers, administration folks and people in government need to understand the importance of IP and recommit to strengthening and protecting IP rights. We've seen dilution over the years, but it's vital that our government and our leaders are unequivocal in their defense of IP rights.
We use this as an opportunity to promote that. And we don't stop on world days, Renee. We do this year-round. This entire week there's a variety of events and special reports that have come out. There is legislation that will be introduced up on the Hill that addresses this issue. It is an important day and we're grateful that the World Intellectual Property Organization hosts it. We run with it because it's so important to US economic growth, entrepreneurship and innovation everywhere.
Giachino (02:55.0035 - 03:06.0779)
Year after year, the SBE Council has supported and led the effort to celebrate the heartbeat of innovation. Why is this particularly important to your constituency of small businesses?
Kerrigan (03:07.0110 - 04:53.0885)
Without intellectual property rights, it'd be very difficult for an entrepreneur or a creator to take their idea to the marketplace and have consumers widely benefit from it. Having that ownership and intellectual property is really important for entrepreneurs and innovators to raise capital in the marketplace. You can't do anything without capital. Capital is the heartbeat and the fuel for innovation. That investment is so critical. And investors have to have a return on that investment.
Knowing that a creator or an inventor has the patent, the copyright, the IP and [knowing] that it's not going to be stolen or going to be widely copied is critical to raising capital and bringing that idea to the broader marketplace. We're talking across industries, whether it's manufacturing, the music industry, the creative arts, the biopharmaceutical industry or the energy industry. There's innovation and creativity everywhere. This has been central. The fuel to innovative success in the US is having intellectual property rights and we do see this being embraced and copied by those countries that do want higher levels of entrepreneurship and investment. Knowing that individuals have intellectual property rights - that is what moves economies forward and moves innovation forward.
Giachino (04:54.0214 - 05:09.0209)
Speaking of music, I think very often people don't appreciate or understand the importance of IP protection in that arena. Each year there's a new theme for World IP Day. What was this year's theme?
Kerrigan (05:09.0540 - 06:58.0660)
It was all about music, which is the heartbeat of innovation. Last year it was all about women and the role of women in innovation. So this year it is all about music. Every year, picking a theme, whether it's entrepreneurs, whether it's women, whether it's music or the arts, it just demonstrates the wide impact of IP on a variety of industries and the creators and innovators in those industries that really keep those industries vibrant and competitive and keep the economy growing. It is the heartbeat of innovation, and we took that and said, look at the heartbeat of the music industry. It is also about the heartbeat of innovation across all industries.
The US IP system drives economic growth by accounting for $7.8 trillion in GDP. That's 41% of total GDP and more than 47 million jobs. You see the wide and broad impact of IP-intensive industries. The music industry is just one of them. You have biopharmaceutical, manufacturing, the food industry, technology and technology innovation and who knows what the new industries will be of tomorrow given AI and where innovation is headed in the future.
Giachino (06:59.0000 - 07:34.0286)
We all know that numbers can speak volumes. SBE Council brought together a coalition of allies, and the Center for Individual Freedom was proudly one of the signers, on the ad urging Congress and the Trump Administration to support and strengthen the frameworks that uphold IP rights and protections. I think that's the perfect segue for us to turn the discussion now to the USTR's 2025 Special 301 Report. Before we dive into the 2025 report, can you give us some historical background on this?
Kerrigan (07:34.0936 - 09:20.0299)
The Special 301 Report, which is produced annually by the USTR, is a congressionally-mandated report that monitors and reviews the intellectual property protection practices of US trading partners. It really is used as a tool to look at our trading partners and whether are they respecting US IP rights. It goes country by country. It calls out various countries. They'll put them on watch lists or priority lists in terms of if they are stealing US IP or if there are lapses in their IP protections and systems that put US IP at risk. Annually, the USCR does this report. There's input from the private sector in terms of providing feedback and what's actually happening on the ground.
It’s very important for foreign countries and actors to know that we are monitoring this. We're calling these countries out. We will use the report to persuade them and to push them to do the right thing. Hopefully that's occurring through our trade negotiations and some of the discussions that we're having with them. Some people call it a name and shame report, but it's vital that we do this because countries will run roughshod and pilfer US IP if we don't do this. We've seen market improvements over the years because of this Special 301 Report.
Giachino (09:20.0809 - 09:33.0500)
The SBE Council sent a letter back in February to leaders in the House Ways and Means and the Senate Finance Committees. For people who want to read the full letter, they can go to SBEcouncil.org. What was the purpose of your letter?
Kerrigan (09:34.0000 - 11:32.0559)
To call out the fact that over the course of the Biden Administration there had been a dilution of that report. It really was not calling out the countries to the extent that it should. There was not a robust defense of US IP rights and the importance behind the fact that American IP owners and those who had patents and copyrights had a right to profit from those creations and innovations.
We even saw removal of the numbers of the economic impact in the US and across the world. From our perspective it became a weak tool or a non-tool and it really cut against the original purpose of the annual report, which was to drive home the message that countries cannot pilfer US IP, there will be a price to pay and that we would specifically identify practices that worked against IP protections and rights.
We sent that letter up to House and Senate trade leaders in February, and we got a great response. Obviously there was a lot of concern. I’m happy to report that in the new Special 301 Report that came out yesterday there was a major shift. It was like night and day, Renee. It was refreshing to see a Special 301 Report that defended IP. It named countries. It got back to the original intent and the persuasive force behind the report.
Giachino (11:33.0049 - 12:13.0489)
Unlike prior years, there appears to be new language in the report that indicates that over the coming weeks the USTR is going to review the developments in these countries that have been on this priority watch list for year after year against these benchmarks that were established in the Special 301 action plans for those countries.
In a recent proclamation from the White House that was issued in conjunction with World IP Day, President Trump said, “My Administration is taking strong action to protect the promise of American innovation.” It seems that USTR is going to have the full support of the current Administration. Do you see it that way as well?
Kerrigan (12:13.0859 - 14:23.0070)
I do, absolutely. Part of the Administration's and President Trump's America-first trade policy is focusing on how US companies and businesses, and I'll use the President's words, are getting “ripped off.” We see non-trade and trade barriers that being erected by some countries across the globe, some specifically that are waging war on US big tech companies, issuing fines and doing other actions that milk these companies out of millions of dollars. They really are protectionist measures. So you have that piece, but then you have the IP piece as well.
We do know China has been a really bad actor in this regard. They shamelessly rip off American IP. Part of doing business, if you're going to be doing it in a way that provides certainty, is that it is fair for businesses across the globe. When you say you have IP protection rights in your country, which China says it does, you actually have to enforce them. We're very pleased about the Special 301 Report, about the president's proclamation, and about what we see is focus, action and attention in this regard.
The US has to send a message about the importance of IP and IP rights. When we do that, when we enforce it and when we call countries out, the countries themselves really have to look inside and make changes that are not only going to be helpful for US IP, but also for the IP rights of their own citizens who are trying to build businesses, create growth for the economies there and make them more competitive across the globe.
Giachino (14:23.0520 - 15:11.0349)
It certainly was a Herculean effort. As I understand it, the USTR reviewed more than a hundred trading partners for this year's Special 301 Report. It placed 26 of them on either the priority watch or the watch list. [It placed] 8 countries on the priority watch list. I'll list them - Argentina, Chile, China, India, Indonesia, Mexico, Russia and Venezuela. There were 18 trading partners on the watch list. Those include Algeria, Barbados, Belarus, Bolivia, Brazil, Bulgaria, Canada, Colombia, Ecuador, Egypt, Guatemala, Pakistan, Paraguay, Peru, Thailand, Trinidad, Tobago, Turkey and Vietnam. A long list. Any surprises there, Karen?
Kerrigan (15:12.0159 - 17:07.0380)
I don't think so. I think the good news is that this report came out at a time where the Administration is currently having many talks with countries across the globe because of the tariff policy. There are dozens and dozens of countries we're having talks with. I think this report can be used as leverage. It is sort of disappointing, if you will, in terms of Mexico with the USMCA [US-Mexico-Canada Agreement]. They're on the priority watch list in 2025 because they've had long-standing and significant IP concerns. Many of these relate to their implementation of the USMCA.
When we do trade agreements with countries, like the USMCA with Mexico and Canada, we at least expect our neighbors to follow the rules and the laws and implement those trade agreements as written. That can set a standard for other trade agreements that we have with other countries across the globe. To me, that's disappointing. That's going to be up for renegotiation this year. We've been talking to Canadian and Mexican officials in terms of how they can improve their implementation and enforcement. To me, that has been disappointing because we are neighbors and because of the close relationship that we have. We were hopeful that the new agreement, given how much both Canada and Mexico specifically benefit from US trade, that they would be supportive of implementing the USMCA provisions, particularly as it relates to IP.
Giachino (17:07.0828 - 17:44.0642)
While we've been having this conversation, a press release rolled off from the SBE Council applauding USTR's return to defending American IP and persuasive force in the newly released Special 301 Report. For individuals who want to read that hot off the press press release, you can go to SBEcouncil.org.
Karen, I know that undoubtedly means that this is going to be a very, very busy day for you. I thank you very much for your time today. Our guest has been Karen Kerrigan, President and CEO of the Small Business and Entrepreneurship Council (SBE Council). Karen, any final parting thoughts?
Kerrigan (17:44.0772 - 18:15.0605)
We're really excited about the new Administration. There's bipartisan action up on the Hill. There'll be two new bills re-released actually from the previous Congress, the PERA Act and the PREVAIL Act, that will strengthen patents and IP rights. We're excited about that. We think we're going to see some positive movement this year, and I would encourage people to sign up for e-news at SBEcouncil.org. You can stay up to date on this issue as well as many others that impact entrepreneurs and small businesses.
Giachino (18:15.0605 - 18:27.0130)
They impact every American's life. We're certainly seeing that play out as well. Karen, thank you for your time today. As always, we appreciate your time and the wonderful work of the SBE Council. Have a wonderful day.