EU Turns Its Back on Intellectual-Property Theft

When nations such as Brazil, China and India steal our intellectual property (IP), they are stealing from American companies, their employees and from the American people.

This should become an issue vital to every American. Our economy suffers, our employment picture suffers and our prestige suffers when our patents are stolen or ignored.

So I was astonished and disappointed to see the European Parliament reject the Anti-Counterfeiting Trade Agreement (ACTA), a multinational treaty designed to better protect IP around the world by creating an international system of anti-counterfeiting and property-rights protection measures.

ACTA has been strongly supported by the United States, and there’s a reason. The Office of the U.S. Trade Representative estimates that the U.S. economy lost between $200 billion and $250 billion in 2005 due to piracy and that the U.S. economy loses 373,375 jobs annually due to piracy.

In addition, U.S. workers lose $16.3 billion in earnings annually as a result of copyright piracy, of which $7.2 billion in earnings would have gone to workers in the copyright industries or in downstream retail industries and $9.1 billion in earnings would have gone to workers in other U.S. industries.

China’s piracy and counterfeiting of U.S. software and a wide range of other IP cost U.S. businesses alone an estimated $48 billion and 2.1 million jobs in 2009, the U.S. International Trade Commission (USITC) has said.

Moreover, the USITC found that if China raised its IP rights protection and enforcement efforts to comparable U.S. levels, this would translate into approximately 923,000 new jobs for U.S. IP-intensive firms.

The Business Software Alliance says theft of personal computer software around the world delivers a crushing blow to U.S. companies and the U.S. economy. Ultimately, the theft of U.S. IP means the theft of U.S. jobs.

“An astonishing 41 percent of all PC software in use is stolen — theft that totals nearly $53 billion a year, $31 billion directly from U.S. companies. We would never tolerate having four out of every 10 cars on the road be stolen, yet that is the very problem the software industry faces.”

IP theft is everyone’s problem, so the government has ramped up its vigilance. One of the big reasons is that the Federal Bureau of Investigation believes that foreign intelligence agencies have shifted their attention from defense contractors, which have sophisticated security measures in place, to software and other product companies, which may have laxer security measures in place.

An example given by the FBI is Cleveland-based Lubrizol Corp., which lost millions of dollars when an employee sold product specifications and other trade secrets to a South Korean competitor.

Homeland Security Investigations within Immigration and Customs Enforcement are including greater surveillance of operating agents in foreign countries. They now have offices in nine of the 13 priority watch list countries on the U.S. Trade Representative’s Special 301 Report on Intellectual Property Rights.

Both the National Association of Attorneys General and the Senate Committee on Small Business and Entrepreneurship have asked the Federal Trade Commission to collaborate with U.S. states on stopping the theft of IP.

They called on the FTC to enforce the “unfair methods of competition” clause under Section 5 of the FTC Act, which allows for goods that are produced with stolen software in the United States to be able to be seized by law enforcement, and that includes the manufacturing facility and the ability to impose hefty penalties. When goods are produced elsewhere and retailed in the United States, the goods can be seized at the retail site, but that has little impact on the offshore manufacturer.

When IP theft is perpetrated by manufacturers outside the United States it can be difficult for the FTC to investigate and prosecute under the constraints on the FTC’s foreign actions. When the FTC cannot prosecute the case, it can be turned over to the U.S. State and Treasury Departments.

Other important weapons in the war against IP theft are the Import Administration and the U.S. Patent and Trademark Office, which are divisions of the U.S. Department of Commerce dedicated to enforcing our international commerce agreements. But they are woefully understaffed.

We need to invest in a dramatic increase in the legal personnel in these trade-enforcement groups and we must give them the resources they need to deal with the enormity of the problem.

When foreign counties steal our IP, they steal American jobs and push back our economic recovery. The United States must commit the resources required to preserve American IP and punish those who seek to steal it. This is a war we must win.

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