Global Anti-Counterfeiting Efforts Set To Rise Further

NEW YORK – The problem of global counterfeiting has not diminished with the new year, experts said here yesterday, and 2010 promises to bring even more rampant intellectual property theft if countries do not do more to stem the problem. Some countries are mobilising to do just that.

Just uptown from where counterfeit goods line the streets of Chinatown, representatives from companies such as Tiffany & Co., Procter & Gamble, Oakley, and Eli Lilly & Company joined intellectual property security industry experts and some US lobbyists and government officials here for an anti-counterfeiting summit.

“Internet infringement is sort of a quandary for everybody,” said Ewa Abrams, attorney and director of Tiffany & Co. She added that internet auction sites selling counterfeit products under trademark names are still “a thorn in everybody’s side,” but now, social networking sites such as Facebook are new outlets for such sales, as our virtual gaming worlds such as Second Life.

In 2004, Tiffany sued eBay for contributory trademark infringement after the online auction site’s users were selling fake Tiffany wares on the site. A federal judge ruled in favour of eBay in 2008, saying it was not eBay’s job to monitor and prevent the sale of infringing products. Tiffany is challenging the ruling, and hopes to “establish a clear-cut responsibility” of the role of online retailers and Web operators so the enforcement burden does not fall solely on trademark holders, Abrams explained.

Brand protection experts agreed that there is no single solution when it comes to small or large firms protecting their brands and trademarks around the world.

Can the Government Help?

US industry often looks to government to help enforce intellectual property regimes. With theft running rampant in China, India, Russia, and even countries like Brazil and Canada, aggressive policies are needed to rein in the illegal activity, panellists agreed.

For instance, the US Chamber of Commerce and its Coalition Against Counterfeiting and Piracy (CACP) are looking to the US Congress to reauthorise spending bills for the US Customs and Border Protection (CBP) that include resources at Customs and the Immigration and Customs Enforcement (ICE) agencies dedicated to intellectual property protection at the border. A bill to do so has been introduced in the Senate and the Chamber is working to get something introduced in the House of Representatives soon.

“One of the biggest frustrations they [CACP member companies] have with Customs is not knowing who to go to in DC if they have problems,” explained Chris Merida, director of congressional and public affairs for the Chamber.

The CACP undertook a campaign in Washington to educate Customs and related enforcement officials about what more they can do to prevent fake and potentially harmful goods from entering the United States.

”I see some very clear signs at CBP that they’re waking up to the problem. But I see that they’re not doing everything they need to do,” said Jon Kent, a Washington lobbyist with the International Trademark Association.

In December, CBP announced a supply-chain management control system to acknowledge importers that meet certain intellectual property standards via providing information about their supply chain. Also in December, CBP seized 11,676 belts with counterfeit Burberry design at the Angeles/Long Beach seaport. The inspector forwarded the images to representatives of Burberry to authenticate, and the company confirmed they were fake. The appraised value of the goods was $23,954, the agency said in a press release, while legitimate value would have been over $3.2 million. Earlier that month, CBP officials also seized 701 cartons of fake Gap and Faded Glory polo shirts, along with other merchandise, at the Port of Charleston, South Carolina. The shipment totaled $28,129 but a manufacturers suggested retail price of $415,306, CBP said.

In 2009, CBP and ICE made 14,841 seizures of counterfeit and pirated goods worth $260.7 million. More than 62 percent of the value of fake goods, or $204.7 million, came from China, while India accounted for 9 percent. The value of fake products seized presenting potential safety or security risks was $32 million. Pharmaceuticals were the top product seized, it said.

“I think the effect of our campaign has been useful thus far and I’m predicting it will be even more useful,” Kent said. “There needs to be the ability of the Customs inspector, when he sees a product sitting in front of him, to be able to communicate to the rights holder, ‘I’ve got this in front of me. Is it counterfeit?’”

Merida and other US experts said that most American lawmakers see piracy and counterfeiting as a huge economic problem, as well as a health and safety issue. That is why the United States is active in discussions to further the Anti-Counterfeiting Trade Agreement (ACTA, under negotiation this week in Mexico) – the goal of which one US official stressed is not to negotiate new rights but to coordinate enforcement efforts – as well as engaged in other discussions such as the US-EU IPR Working Group, which will meet in Europe in March. The focus of that group is mainly on third-party cooperation of nations such as Chile, Russia and China. During the group’s September meeting, their discussion expanded to include how to get local law enforcement to crack down on hard-goods piracy, such as that occurring in open-air markets along the Czech-Polish border. Determining ways to motivate bad actors like Russia and India to improve their IP regime continues to be a challenge, one US official said.

Meanwhile, CBP is working closely with its European colleagues to harmonise standards on how they can identify fake products. The United States is working with India’s patent office on related issues. This spring, China will hold roundtable talks with the US on trademark squatting.

“There are very, very few senior-level officials and their counterparts around the world that don’t stress intellectual property enforcement. It’s the basis of everything we do and what we’re pinning, frankly, all of our hopes and expectations on that so far as an economic model” is concerned, explained Chris Israel, co-founder of PCT Government Relations and former US coordinator for international intellectual property enforcement for President George W. Bush.

Israel added that intellectual property is a “very, very big trade issue” for the United States. More connections are also being made between counterfeit goods and the funding of terrorist or other nefarious activity, experts asserted. The Treasury Department, for example, now sees definite linkages between organised crime and counterfeiting, Israel said.

“The sensitivity dial has really been scaled up and a lot of it has been due to industry really being more vocal about this and bringing forward more information they have,” he added.

Officials and industry representatives also agreed that the digital copyright sector has a leg up on the physical goods sector when it comes to getting lawmakers to pay attention to their piracy problem. Problems particularly exist when groups like INTA and the Chamber, which also have companies such as Google and Verizon as members, try to address brand protection and second-party liability.

“When you start bringing up the internet … and how you talk about maybe handcuffing to some degree those same companies to help with enforcement, it’s really tough,” Merida said.

Bob Kruger, principal with Robert M. Kruger Consulting and former vice president for enforcement at the Business Software Alliance, added that “the digital content lobby sucks the air out of the room for the hard goods people.” The movie and recording industries, for example, are well-financed and well-organised to get their message across.

”We were a little late to the party,” Kent added. “It took us awhile to get going. These copyright people have been at it a long time…. As long as we can make really strong public policy … as long as we’ve got health and safety on our side, I think we’re in a position to play. That’s why I think we’re going to do fine in getting anticounterfeiting legislation evolved.”

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