Senior Director, Brand Protection Global Intellectual Property Center, U.S. Chamber of Commerce
Experts in brand protection know the global scope of counterfeiting is significant. But consider how quickly the problem has intensified. Dangerous counterfeit versions of lifesaving medicines, luxury apparel, accessories, electronics, music and movies are too easily found within the illegal online supply chain.
We know the importance of Intellectual Property (IP). IP supports more than 45 million American jobs in 81 different industries. According to the Department of Commerce, IP-intensive industries make up more than half of all U.S. exports, or $842 billion, and almost 40 percent of U.S. GDP.
Yet the foundation of these jobs, IP, is threatened. Data from the National Crime Prevention Council in 2012 found that counterfeiting and piracy alone cost the United States as much as 750,000 jobs and $250 billion in revenue each year. These numbers are expected to grow.
Each year, the U.S. Chamber releases a Global IP Index. The Index is a tool for brand owners and worldwide policy makers alike. It ranks the IP environment in countries around the world and illustrates the significance of robust IP systems across a number of categories including patents, trademarks, copyright, treaties, trade secrets, and enforcement. A country’s IP regime plays a crucial role in the foundation of a prosperous economy as well as its continued economic growth. It also provides insight into IP risks in that country.
This year’s index notes that while the United States has the strongest IP environment in the world, it ranks fifth in enforcement. Fueling economic growth, attracting a high level of investment, and developing an environment where innovation thrives, strong IP environments yield strong economies. The flood of counterfeits entering our borders is a threat to this foundation. The enforcement ranking is incongruent with the high IP standards that the United States is known for.
Curbing counterfeits in the United States is not only important to protect consumers’ health and safety, a streamlined process to detect and seize counterfeits will deter criminals and help the United States improve its enforcement ranking. U.S. Customs and Border Protection (CBP) agents work hard to reduce the threat of counterfeits shipped in small parcels direct-to-consumer, but they need more resources to counter threats to consumer safety.
Around the world, the OECD estimates there was a $461 billion in Trade in Counterfeit and Pirated Goods in 2016—as much as 86 percent being from China and Hong Kong. Yet the U.S. Chamber report published in 2016 on Measuring the Magnitude of Global Counterfeiting found the value of counterfeit goods seized and reported by customs authorities in 38 economies was only $5.2 billion, a small fraction of the total global estimate of counterfeit goods. While world customs officials are working hard to detect and ultimately seize counterfeit goods that threaten the health and safety of consumers, the extent of their successes still represent a limited segment of global counterfeits.
It is no surprise that the on-demand nature of online shopping has drastically changed the speed at which consumers receive all types of goods. According to CBP, 11 million maritime containers arrive at seaports. At U.S. land borders, another 10 million arrive by truck and 3 million arrive by rail. An additional quarter billion individual packages arrive by air in cargo, postal, and express consignment packages. Such a volume of shipments makes it a challenge simply to identify counterfeit goods. Among these shipments, CBP seizes more than $1 billion in counterfeit goods annually—a commendable effort, but still just a small fraction of counterfeits crossing U.S. Borders.
The passage of the Trade Facilitation and Trade Enforcement Act represented the coordinated efforts of enforcement agencies and industry working together. The information-sharing provisions between industry and government and additional training opportunities architected to better support customs officials offer steps to improve detection of counterfeits. (See Legislative Update: U.S. Trade Facilitation and Trade Enforcement Act of 2015 in the BPP 1st Edition) Now, industry must continue to work with CBP on implementation of key provisions of the law including new opportunities to use technology at U.S. Ports of Entry.
An Executive Order signed on February 9, 2017, prioritizes a crackdown on transnational criminal rings and illicit activity. It also strengthens enforcement of federal law to thwart transnational criminal organizations. These groups include those who traffic in illicit sales of fake medicine online and pose a safety threat to consumers. It also prioritizes stronger enforcement against corruption, cybercrime, fraud, financial crimes, and intellectual property theft.
An Executive Order signed on March 31, 2017, will make significant advancements on implementation of the Trade Facilitation and Trade Enforcement Act as well as enhance our ongoing efforts to ensure protection of IP rights. In addition, there will be resources allocated to new prosecution practices so that federal prosecutors will treat IP crimes as a high priority.
With momentum from the new U.S. administration, industry and all brand protection professionals should be ready to advocate for prioritization of dedicated IP resources to CBP. Such prioritization can again make the United States the leader in global enforcement.
THE BRAND PROTECTION PROFESSIONAL | JUNE 2017 | VOLUME 2 NUMBER 2
2017 COPYRIGHT MICHIGAN STATE UNIVERSITY BOARD OF TRUSTEES