The ChamberPost

Can America's Patent System be Saved?

By Dr. Mark Esper

Join us next Wednesday (July 21, at 9:30 a.m.) to hear Judge Paul R. Michel, recently retired Chief Judge of the federal court that decides all patent appeals, speaks out about America's patent system. Having served the past 22 years on the U.S. Court of Appeals for the Federal Circuit as part of a distinguished 44-year career in public service (including 7 years on Capitol Hill as a legislative aide and chief of staff), Judge Michel is well placed to provide a fair and balanced view of our nation’s patent system and what we can all do to make it the engine of growth for a robust economy. He will offer his prescription for a revitalized patent system and innovation infrastructure, which he sees as a critical national challenge today.

Here's a preview of Judge Michel's speech:

"The American economic recovery has stalled, and investments in manufacturing and hiring have faded. The innovations that could help spur economic renewal and strong job growth are instead trapped in a warehouse outside Washington DC, awaiting review by the swamped and under-funded US Patent & Trademark Office. Nearly 750,000 patent applications sit in that warehouse, while another 400,000 are at the USPTO. Congress, meanwhile, has siphoned off nearly $1 billion of the PTO’s funds -- all user fees paid by patent applicants and owners -- by diverting these much-needed patent user fees to subsidize other pet projects. How did this happen and how do we fix it?" 

GIPC Statement on “Operation In Our Sites”

By Dr. Mark Esper

Today, the U.S. Immigration and Customs Enforcement (ICE) and the U.S. Attorney for the Southern District of New York (SDNY) announced the launch of "Operation In Our Sites," a new initiative aimed fighting counterfeiting and piracy over the Internet. These actions should be commended as they will play a pivotal role in cracking down on the internet piracy that is harming our economy and costing American jobs.

Online piracy, or the digital theft of movies, music, books and other content, is a job-killing crime. There are thousands of rogue websites--many of them overseas--that take part in this illegal activity. Studies indicate that every year global music piracy leads to a loss of over 71,000 jobs, $12.5 billion in economic growth, and $2.7 billion in workers' earnings. The U.S. entertainment software industry estimated losses of over $3 billion in 2007 due to piracy. And piracy contributed to a loss of $18.2 billion in the global film industry in 2005. Unless something is done to address online piracy, these numbers will only get exponentially worse as Internet access expands and broadband speeds increase.

Stopping on-line theft is a major component of the Obama Administration’s National IP Enforcement Strategy, and “Operation In Our Sites” is an example of the kind of initiatives we would like to see from the implementation of this plan.

U.S. Chamber Joins European and Japanese Business Associations in Calling for a Strong ACTA

by Mark Esper

Today, the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC) joined BUSINESSEUROPE and the International Intellectual Property Protection Forum of Japan in calling for the conclusion of a strong Anti-Counterfeiting and Trade Agreement (ACTA). In a Tri-lateral Statement issued today, European, Japanese and American business voices called for a strong agreement that "results in more effective enforcement of IP rights," while strengthening the global economy, creating jobs and protecting consumers from dangerous products. The Statement coincides with this week’s ACTA negotiations in Lucerne, Switzerland.

Intellectual property theft—in the form of counterfeiting and piracy—is a global problem. This Tri-lateral Statement reflects the unified efforts of businesses of all sizes in the United States, Europe and Japan to protect intellectual property rights and support actions to fight counterfeiting and piracy around the world. The international business community has clearly signaled that a swift conclusion to a strong ACTA is needed, and a focus on both traditional streams of commerce and Internet theft is paramount to any successful agreement.

In part, the statement noted that "ACTA promises to enhance international cooperation among nearly 40 countries by establishing a meaningful and effective framework for the protection of IP rights. Without changing U.S., EU, or Japanese law, the agreement will help ensure that like-minded trading partners address counterfeiting and piracy and its damaging effects on investment, creation, innovation, and jobs." The agreement would do so by "raising the bar on enforcement, improving cooperation among partners, harmonizing how we confront IP theft, addressing IP theft online, and setting a positive example for nations that aspire to have strong IP enforcement regimes."

Click to read this Tri-lateral Statement it in its entirety. (PDF)

Great Innovations Demand Great Protection

By Dr. Mark T. Esper

You have to go back a long way – perhaps to the invention of the printing press, or the automobile – to find a technological advancement that has had as big an impact on the world as the personal computer (PC). Not just the big ones that NASA employed to get man to the moon in the 1960s, but the ones too that can be found in nearly every American home. Today, PCs are as prolific as television sets; some believe the computer will one day replace the TV. 

But it has been the marrying of hardware and software—with the latter diversifying and expanding in more ways than we can imagine—that has transformed every aspect of our lives.  People now have more ways to social network and build communities; businesses are far more productive and economies more prosperous; health and safety techniques are far more effective; our nation’s security is stronger than ever before; and new forms of entertainment are created every day. From work to play and everything in between, this technology has revolutionized the world we live in… and continue to do so this very moment.

Great innovations like computer hardware and software have immense value and potential. And it extends to the manufacturing sector in terms of efficiencies – whether it is the steel mill or the auto plant that employs American workers. Years of hard work, long hours of effort, millions of dollars invested, and extraordinary research by brilliant people go into inventing them. Because of their extraordinary value, others—from criminal organizations to governments—want to steal these innovations for their own gain or profit. That’s where intellectual property (IP) rights come in. These legal protections—whether they are patents, trademarks, or copyrights—safeguard these ideas from theft. The enforcement of these rights by governments is critical to defending the integrity of an innovation lifecycle that incentivizes future investment and research, and leads to tomorrow’s discoveries. Yet despite our best efforts, IP theft is increasing and doing great harm to our most innovative sectors.   

In the digital age, the software industry has become a giant driver of jobs and economic growth. In 2007, 1.7 million people were directly employed in the U.S. software and related services industry. The average salary was $85,600 per year—an amazing 195% increase over the national average per capita income of $43,900. 

As an industry, software companies contributed more than $261 billion to America’s GDP (almost 2 percent) and generated a commensurate amount in sales, income, payroll and corporate taxes to federal, state and local governments. This colossal economic force generated a $36 billion surplus for the United States’ balance of trade in 2008. One has to wonder where our economy would be if it were not for this industry, and conversely, where would we be if IP theft was not hurting this important cog in the American economic machine.

The software industry is facing a growing and acute threat from piracy—whether illegally  making or distributing  copies of  software, unlicensed use in enterprises or  illegally downloading the software over the Internet. According to the Business Software Alliance (BSA)—the “voice of the world’s business software industry”—one in every five copies of software in the U.S. is stolen, a loss valued at more than $9.1 billion as of 2008. Globally, more than one out of every three copies of software in use is stolen, attributing to a revenue loss of nearly $53 billion. And this is taking its toll on American jobs. In China, for example, BSA’s preliminary conservative estimate is that the U.S. job losses due to piracy number at least 25,000 direct jobs, and that doesn’t include the very significant multiplier effects on jobs in other sectors of the economy. 

In some countries, software piracy can be upwards of 70-80%. Not only does this do great harm to software companies who are being ripped off on a massive scale, there is a double whammy for the U.S. economy and our global competitiveness. When foreign companies steal business software designed to make them more efficient and effective, they also gain an unfair advantage over American firms by avoiding the costs our companies incur by actually purchasing their software. Less cost allows them to under-bid U.S. firms, spend more on R&D, or even pay their workers more. It simply is not fair, and it all goes back to the underlying crime of IP theft. 

With a staggering national unemployment rate of nearly 10%, and a trade in goods and services deficit of $40.3 billion, the problem of IP theft needs to be addressed immediately. An environment that defends innovation will not only save jobs and help our struggling economy, it will foster economic growth and a renewed spirit of creativity; lack of serious enforcement will do just the opposite. America cannot afford the latter.  But we have a choice:  either confront the growing crime of IP theft and create good jobs, or stand by and watch them disappear. To me, this is a no-brainer.  

This week, the U.S. Intellectual Property Enforcement Coordinator delivered to Congress America’s first-ever National IP Enforcement Strategy. This plan has the potential to strengthen our enforcement efforts in safeguarding America’s ideas, protecting our innovative and creative industries and growing our economy in the process. This plan is long overdue, but a bipartisan Congress did the right thing by mandating it in 2008, and the Administration did a good job in delivering it this week. Now it is time for action, for moving forward on this plan and implementing it while Congress, the executive branch and industry continue to fine tune it.  There is too much at stake to wait any longer.

Great innovations like the computer (both its hardware and software) always lead to new opportunities and novel discoveries. But the technology has transformed the human race and civilization in positive ways too numerous to list.  If we want this change and innovation to continue, then we need to work to stop the explosion of software piracy that is occurring all around us, on the Internet, by end-users, and by enterprises. The White House’s new national strategy promotes coordination of programs and resources across the Federal government, provides a renewed focus on these challenges and promises real progress. Working closely with Congress, our trading partners, and the private sector, success is possible. After all, it’s our only option. 

IP Plan May Have Pirates Walking the Plank

By Dr. Mark T. Esper

America has a well-deserved reputation for creating and producing the most cutting-edge forms of entertainment, high technology, and consumer goods in the world.  We have earned this distinction thanks in large measure to the ingenuity, hard work, and “can do” spirit that have marked our society for generations. 

Also critical to this success, however, is the fact that Americans’ ideas have long been safeguarded by strong intellectual property (IP) protections, what we know as copyrights, patents and trademarks.  These rights, which cover IP ranging from movies, music and software, to shoes, medicines, and computers, are guaranteed in the U.S. Constitution, thanks to the foresight of our Founding Fathers.

Not surprisingly, because of the great value that America’s IP-intensive industry bring to our economy—well over $5 trillion at last count—criminal organizations around the globe, and a number of countries as well, are trying to steal our “creations of the mind” for their own gain.  The United States’ creative community, whether known through Hollywood movies, New York publishing houses, or Nashville studios for example, is undoubtedly the world leader in entertainment and a tragic case in point.  The recently released 2010 Watch List by the International Congressional Anti-Piracy Caucus shows that the ideas and products of America’s artists and creators are increasingly at risk from online piracy.   

Online piracy, or the digital theft of movies, music, books and other content, is a job-killing crime. Studies by the Institute for Policy Innovation estimate that every year global music piracy leads to a loss of over 71,000 jobs, $12.5 billion in economic growth, and $2.7 billion in workers' earnings. The U.S. entertainment software industry estimated losses of over $3 billion in 2007 due to piracy. And piracy contributed to a loss of $18.2 billion in the global film industry in 2005.  These numbers will only get exponentially worse as Internet access expands and broadband speeds increase. 

If left unchecked, digital theft ultimately hurts all workers in the creative industries—from actors and writers to electricians, musicians, sound technicians, caterers, and stage crew workers. These criminal activities also affect those hard-working Americans in the legal distribution channels—such as the folks who work at ticket booths, shopping malls, book outlets, and video stores.  In short, the entire eco-system for books, movies, software and other content is harmed. 

So what can be done to address a problem that grows virulently, is becoming more sophisticated, and is aided by an Internet culture of “online = no crime”?  How can we improve a virtual marketplace where the “real world” rules against theft and shoplifting don’t seem to apply, or at least aren’t enforced?

The first step is to ensure our law enforcement agencies have the authorities, staff, and resources needed to crack down on the growing tide of IP theft online.  Congress can help on this front through its annual appropriations process, and by passing legislation to support enforcement activities. 

Second, the administration needs to finalize a pending Anti-Counterfeiting Trade Agreement (ACTA) with nearly forty other countries.  A robust and comprehensive ACTA will help raise the bar against counterfeiting and piracy, and improve cooperation among the countries involved.

Third, the White House needs to release and begin implementing the country’s first-ever National IP Enforcement Strategy.   The plan, which is being developed by the new U.S. Intellectual Property Enforcement Coordinator, is expected to be delivered to Congress this month.  This government-wide strategy promises to advance IP enforcement efforts by synchronizing and intensifying the work of various federal agencies in ways that will surely protect jobs and revitalize our economy.

When it comes to digital piracy in particular, a real difference can be made here; these steps can be game-changers.  An enhanced federal effort should aim to shut down “rogue” websites that are knowingly and willfully selling or distributing stolen content.  Publicly identifying these sites would also assist the private sector in doing its share to address this devastating problem.  We should also press for prosecuting these pirates and taking other actions that will put them out of business.

Key to this is Congress embracing this new strategy with the seriousness and urgency it has with other issues of such great national import.  The House and Senate should carefully review the plan, work with the White House and industry to fine tune it, and then take the proper steps to implement this strategy.   It cannot gather dust on a bookshelf. The problems of counterfeiting and piracy, and online theft in particular, are too large to ignore, and their impacts are destructive in many, many ways.  

This summer, as the movie season kicks off and critics gear up for the season’s blockbusters, we know for sure that online pirates are also gearing up to steal the creations of hard working Americans.  Too often, and increasingly so, creative people are investing a good deal of time, effort, and money to produce great works of art, only to see pirates steal the goods—be they movies, music, books or software—and then sell it to others for their own profit. 

The Global Intellectual Property Center is currently working to identify and list many of these “rogue” websites, with the intention of shining light on their illegal activities. The information we gather will then be shared with federal authorities to help enhance their enforcement efforts to crack down on these job-killing crimes. It is our hope that our work on compiling these notorious sites will complement the upcoming National IP Enforcement Strategy, and will help spur a new government wide effort to stop online piracy.  American ingenuity, the production of new forms of entertainment, and the job creation and economic growth that both bring, cannot survive long if online theft is allowed to continue the way it has for far too long.

Stolen Video Games: How Pirates Kill Jobs

By Dr. Mark T. Esper

With the 15th annual E3 (Electron Entertainment Expo) just around the corner, now seems like a good time to delve into a few common—but completely bogus—reasons used by some gamers to justify their digital theft of video games. As most people know, the illegal distribution and/or reproduction of copyrighted products—whether they are movies, music, books, or video games—is a crime known as piracy. And not surprisingly, some PC gamers have engaged in this illicit activity since the early days of the video game industry. In the last decade, however, console gamers have joined their PC brethren with modified boxes that enable circumvention of traditional copyright protection on a massive scale.

In addition to developing the ability to steal software in recent years, a sub-culture has unfortunately developed as well that rationalizes this illegal behavior “because they can.” This theft has a far reaching impact for an industry that generated revenues of roughly $19.66 billion in 2009. Jobs are also at risk. In 2007 the video game industry employed more than 80,000 people in 31 states, and was projected to grow to over 250,000 jobs by 2010. With so much at stake, it’s fascinating to hear the top excuses these pirates make to justify their crimes—and to consider one simple response: if you feel so justified, then why not walk into a real store, take a game off the shelf, and offer the policy your excuse while you’re being handcuffed? 

Excuse #1: “Games are too expensive. I’m protesting by pirating!”

Video games do cost a pretty penny these days. Some can run upwards of $60- $80, and that can add up over time. That said, games also cost a lot of money to make. These days, it is common for a studio to employ over 100 employees to make just one new product. Take Rockstar’s recently released Red Dead Redemption, one of the most popular games on the market right now. It was estimated that the game would have to sell roughly 4 million copies just to break even. Anything less than that, and the company may have to cut costs by laying off workers. You see, the profits from those games aren’t going only to senior executives, but also go to the coders, artists, writers, secretaries, and everyone else involved in the process of making one awesome game. The revenue also gets reinvested back into the company, allowing it to hire more workers or invest in new technology that will hopefully make the company’s next game even better.

Protesting the price of a good by not purchasing it is a valid consumer response; stealing it is not, however. And while most folks who think a game is too expensive might even write to the company and complain, I doubt few would go to the mall, walk into a store, and shoplift a game off the shelf. So why is doing the same seemingly “okay” in the online environment? It’s not! Either way it is breaking the law, and every stolen game means one less sale, which inevitably leads to lost revenues, lost jobs, and less innovation.  

Excuse #2: “It’s not a lost sale if I wasn’t going to buy it anyway.”

This argument is commonly brought up in response to any attempt to calculate sales lost to digital theft…or when the pirates’ other arguments have failed them. The simple truth is, if a consumer did not have enough interest or desire to purchase the game, then why are they stealing a copy in the first place?  But assuming some gamers were indeed not planning on buying the game, illegally acquiring a game is still a form of theft whether or not it is a “lost sale.”

Excuse #3: “I downloaded the game illegally just to try it out.  Once I knew I liked it, I bought it.”

This is my favorite excuse, maybe because the pirates think we are naive enough to believe it.  It’s also an argument that can’t be disproven, except through common sense, and the fact that the number of people playing the game doesn’t match the number of games sold…by the thousands.  

You see, under the logic of this excuse, any theft can be justified: “I stole the car to take it for a test drive”; “I shoplifted the CD player to check out the sound before I bought it”; or, “I took the clothes off the rack to see how I looked first before buying them.”   

But rather than debating these points, how about this: if you want to “try out” a game—which is perfectly okay—then just rent it from a store, play it at a friend’s house, or download a free demo that many companies make available before the game is released. 

So what are we to do? 

To begin, we need to keep knocking down these silly excuses for bad behavior. We need to call the pirates out, and those who defend them, and make sure everyone understands that video game piracy is stealing whether it happens in stores or online.

Next, we need to get the government to pay closer attention to these growing problems, particularly as Internet speeds and access grow. Fortunately, the United States’ first-ever National IP Enforcement Strategy is expected to be delivered to Congress in the coming weeks. This strategy promises to coordinate a government-wide approach to enforce IP laws and protect the creative ideas of not only the video game community, but entrepreneurs, artists, and innovators of all stripes as well. This strategy will play a critical role in creating American jobs and growing our economy. And if this plan meets the expectations of Congress, industry, and rights holders, then we have a much better shot at rolling back this growing tide of piracy that is killing jobs and hurting innovation.

Keeping Counterfeiting Off the ‘Pitch’

By Mark Esper

For the past few weeks, the Global Intellectual Property Center has been talking up the need for a national IP enforcement strategy to help streamline government wide efforts to fight IP theft. Counterfeiting and piracy kill jobs and hinder economic growth—both here and abroad; these are crimes that touch nearly all industries and livelihoods. Like sports….

As soccer (football for the rest of the world) fans gather in South Africa and around their TV sets for the 2010 FIFA (Fédération Internationale de Football Association) World Cup starting today, more than just the hearts of nations and the pride of the teams are on the line. Corporate sponsors have invested three years and millions of dollars in preparation for what is the biggest international sporting event outside the Olympics. In fact, the last World Cup, which was held in 2006 in Germany, had a combined record of 26.29 billion total viewers.

An event of this scale takes thousands of hours of planning and large sums of money. FIFA gets a large part of its funding from the many corporate sponsors who hope to profit from the advertising and merchandise sales.

As such, the counterfeiting of World Cup merchandise—like hats, jerseys, souvenirs, etc—and the illegal online streaming (when viewers watch the match via the internet) of the tournament threaten the foundations of this great event. The streaming of games through illegal channels not only steals jobs from the very people who work in the advertising business but this practice discourages the innovation and creation of new technologies which enable consumers to legally stream the games. U.S. content companies have invested over $100 million dollars to bring the World Cup to the living rooms of Americans this year and in 2014, and illegal streaming impacts the everyday employee who goes to work at these companies each day. 

Counterfeiting is not only illegal, but it robs the Cup’s sponsors of their investment, cutting into any revenues they hope and need to make on the games in order keep employees and create new jobs. And not only do workers in these companies suffer, but so does everyone else involved in the design, production and distribution of team and World Cup products. These are people just like you and me, trying to make a living based on our hard work, good ideas, and time invested in these efforts. 

Fake team jerseys are available for pennies on the dollar in comparison to the genuine article. To date, the South African government has confiscated roughly $2.5 million worth of knock offs. Often the counterfeit jerseys are poorly made and won’t last nearly as long as a professionally made jersey. Mementos of a once in a lifetime event are not only cheap shams that don’t last, but are stolen goods that steal jobs.
This illegal activity is serious business, and the repercussions are felt here at home. Thanks to the internet, counterfeiters can sell their fake products without ever leaving the comfort of their home – fooling unaware consumers with seemingly legitimate web sites.

As noted numerous times, the problem of counterfeiting is not a victimless crime. The true victims of this criminal activity are the authorized workers who make, package, distribute, and sell these products. These crimes put tens of thousands of American jobs at risk, which undermines our much-needed economic recovery. 

In order to create jobs and sustain our growth, we must remain vigilant with strengthened enforcement of intellectual property rights. The upcoming National IP Enforcement Strategy (click here to learn more) promises to do just that. A sound national strategy will defend America’s intellectual property by cracking down on the counterfeiting and piracy that are killing American jobs and putting consumers at risk. It has the potential to play a major role in the resurgence of America’s competiveness. 

It’s my hope that Congress will give this strategy the attention and support it demands, and that the White House will begin implementing this plan the day it is released. If you have time during the World Cup commercial breaks, consider jotting a quick note to your congressman and senators, and let them know you agree.

There is no room for counterfeiting and online pirates on the pitch. Let’s leave that to the players.

An IP Strategy for Global Competitiveness

By Mark Esper

America has been called the innovation nation, and for good reason. From semi-conductors to space travel to super computers to Hollywood blockbusters, the innovative spirit and creative minds of America have been on full display for over two centuries.  It is our free enterprise system that allows us to take chances that, if successful, return huge dividends to not only the risk taker, but to the workers who gain when a dream becomes reality. Innovation drives America’s competitiveness, and without it, our nation’s role as the world’s leading innovative force is threatened.

That is why the battle against intellectual property (IP) theft is raging, and it is a battle we absolutely must win. IP theft– the stealing of ideas and the goods and services that derive from them – has become an all too common problem both here and abroad, and it is increasing has Internet speed and access expands.  It is a problem perpetrated by criminal organizations and a handful of governments that is killing jobs and stifling the innovation that drives our economy.  Intellectual property accounts for more than one-half of all U.S. exports, helping drive 40 percent of our economic growth, and employs over 18 million Americans. So one needs to ask, if innovation subsides, what impact will this have on an already weakened economy?

The Obama Administration isn’t waiting around to find out. In the coming weeks, Victoria Espinel, America’s first Intellectual Property Enforcement Coordinator, will be delivering to Congress the nation’s first National IP Enforcement Strategy.  This plan will defend America’s intellectual property by cracking down on the counterfeiting and piracy that is killing jobs, harming consumers, and stunting our economic recovery.  It has the potential to play a major role in the resurgence of American competiveness, and it is essential that Congress move on this plan with urgency.

IP laws must be strengthened and enforced so that a business will have the confidence and predictability to invest in the research and development needed to create the next great breakthrough…and to hire the next new employee.  When businesses fear that their patent will be stolen, or their digital content will be illegally downloaded, their desire to invest, and experiment, and hire will slow.

That’s why the upcoming strategy is urgently needed and eagerly anticipated; it will go a long way to restoring confidence in innovators, entrepreneurs, and investors.  It will facilitate their instincts to experiment and explore.  It promises to both promote and protect the next great ideas.

The administration’s active engagement in protecting IP rights is significant, and should not be understated. Just recently, while in China, Secretary of State Clinton credited strong intellectual property rights as “vitally important in the 21st century global economy.”

The White House’s new National IP Strategy can play a major role in shaping this economy, and ensuring that America, and our innovative leadership, are at the cutting edge of it.  

TRIPS is a Floor, Not a Ceiling

by Mark Esper

This week, the WTO’s Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is meeting in Geneva to discuss a number of IP issues related to the 1994 World Trade Organization (WTO) agreement. One of the items reportedly on the agenda is a discussion on the legitimacy of various so-called “TRIPS-plus” measures: bilateral and multilateral agreements between countries that raise the bar on intellectual property (IP) protections.

News from Geneva is that China and India are concerned about ongoing efforts—namely the Anti-Counterfeiting Trade Agreement (ACTA) being negotiated by the U.S., EU, and nearly a dozen other countries—to improve cooperation and enforcement activities between these states against the growing problems of counterfeiting and piracy. The ACTA negotiating  countries are working to forge an ACTA, wholly consistent with TRIPS, because IP theft is killing jobs, stifling innovation, harming consumers, and retarding their economic recovery.  

Makes sense; so what’s the problem?  

According to an unnamed developing country official, China and India believe that TRIPS-plus measures “constrain flexibilities and undermine the balance of rights in the TRIPS agreement.” They believe that TRIPS is a “ceiling,” and that further efforts such as ACTA have no merit. However, this complaint doesn’t jibe with the facts—either today or over fifteen years ago when countries started signing up to this agreement.

A recent white paper, TRIPS: Floor Versus Ceiling?, has analyzed this debate and shows that TRIPS is indeed a global “floor” when it comes to IP protections. For starters, the text of the TRIPS argument itself states that TRIPS “establishes minimum levels of protection that each government has to give to the intellectual property of fellow WTO members.…” IP scholars and experts of all stripes agree that TRIPS is a “floor,” and other references to this fact can be found throughout the TRIPS agreement, as the white paper points out. Moreover, other international agreements, such as the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty, also go beyond the minimum standards of TRIPS. 

Another apparent complaint is that developing countries are “pushed into” these TRIPS-plus agreements by developed countries. But as everyone knows, free trade agreements (which often include enhanced IP protections) are voluntary arrangements where each side gives and takes to improve its own net welfare; no one is “forced” into an agreement that is detrimental to their interests. The fact is, when it comes to IP, stronger protections lead to higher levels of innovation, job creation, and economic growth in the long run.  Study after study shows that countries that have clear legal frameworks that protect IP rights and enforce these  rights vigorously, tend to see higher levels of foreign direct investment, technology transfer, and other benefits that spur development, prosperity, and economic growth.  

And this growth is not only attributed to outside investment, but also to domestic entrepreneurs, innovators, and industries that also rely on IP protections to secure capital, conduct R&D, and commercialize products that promise a sufficient return on investment safe from counterfeiters and pirates.

So what to make of India and China’s concerns over “TRIPS plus” agreements like the ACTA?  One might argue that both countries are concerned that enhanced efforts to stop counterfeit medicines, stolen software, pirated movies and music, fake apparel, and other goods coming into the EU and U.S. on a daily basis might further expose their insufficient efforts to stop these items from leaving their shores in the first place. After all, according to the Obama administration, nearly 80% of the counterfeit goods that enter the U.S. illegally each year—and valued in the hundreds of millions of dollars—comes from China. 

Or maybe these measures will demonstrate that both Beijing and New Delhi need to do more to improve their IP laws, regulations, and processes to ensure that they meet international norms and expectations.  This is something the recent Special 301 Report from the U.S. Trade Representative made abundantly clear this year…again.  

The bottom line is that countries in both the developed and developing world shouldn’t be distracted this week by China’s and India’s attempts to muddy the waters on IP protections. Global problems associated with counterfeiting and piracy these days—such as job destruction, fake goods that harm, and disincentivizing innovation—are a result of IP laws and enforcement being too weak, not too strong.  TRIPS is a global “floor” of rights and protections created to provide enhanced opportunities for the trade of innovative and creative works. In order to continue to encourage this ingenuity, foster economic growth, and combat the detrimental effects of IP theft, the international community must continue to work to strengthen—not question—IP rights and protections around the world. 

Ashifi Gogo – Fighting the Menace of Counterfeit Drugs One SMS Message at a Time

By Mark Esper

Last week, the Global IP Center had the pleasure of hosting Ashifi Gogo—a Ghanaian-born entrepreneur and CEO of Sproxil, Inc.—as part of the GIPC’s Speaker Series designed to raise awareness of topical intellectual property (IP) issues. Growing up in West Africa—where counterfeit medicines constitute between ten and thirty percent of the marketplace—the scourge of fake drugs in his native country left an impression on Gogo. Tired of seeing people dying from counterfeit drugs that contained no active ingredients, or even from others that included toxic chemicals, Gogo started Sproxil, Inc., a company that verifies the authenticity of pharmaceuticals by employing user-friendly technologies to circumvent the counterfeiters. By using text messages, consumers provide labeling information to Sproxil, which in turn verifies the legitimacy of product—all in real time using technologies and processes the local population is familiar with. Initial field tests have proven successful. Gogo hopes that Sproxil will help stem the tide of counterfeit drugs, not only in West Africa, but in other developing nations as well.

Ashifi’s story (in his own words below)—both unique and inspiring— is a somber reminder that counterfeit drugs can kill. In addition to providing consumers the tools they need to help ensure their purchases are authentic, increased enforcement efforts are needed to stem the flow of counterfeit medicines in the first place. Fortunately, the Obama Administration is working on America’s first-ever National IP Enforcement Strategy that has the potential to crack down on the counterfeiting and piracy that harms consumers, kills jobs, and impedes our economic resurgence. Enhancing our IP enforcement efforts is not only a bipartisan issue that enjoys enormous support on Capitol Hill, but it is also a critical factor in the country’s future that is endorsed by both business and labor. We look forward to learning more about the Obama Administration’s strategy to protect consumers and grow our economy when this plan is released in the coming weeks. 

In the meantime, here is Ashifi Gogo’s story:

“Counterfeit medication and sub-standard products are now a mainstream issue of concern. Recent disastrous incidents, such as the death of 84 infants in Nigeria due to tainted teething syrup, have led to much public outcry on the challenges consumers face in a global marketplace laced with counterfeit products worth over $500 billion. The private sector in a number of industries has moved past the stage of denial, where just a few years ago, it was generally unpopular to admit that one’s products were under attack by brand pirates. Today, consumers, companies and governments are asking – what can be done to stop this counterfeiting menace?

“In addition to good efforts in boosting regulatory capacity, tightening up supply chains globally and offering greater training and resources to border patrol, enforcement and customs agents, it is refreshing to see the adoption of new strategies to tackle counterfeiting and diversion. With the use of new technology and heightened public awareness, consumers can now bring significant value to the table in the fight against counterfeit goods. Given the right tools, consumers are the largest, and potentially most vigilant anti-counterfeiting force one could ever have – 6 billion anti-counterfeiting agents worldwide, with eyes in every pharmacy, corner shop and retail outlet.

“The role of the consumer in the fight against counterfeiting extends well beyond their ability to detect suspicious products. Consumers, knowingly or unknowingly, provide financial support to counterfeiters by purchasing fake products. In some cases, especially in the luxury goods sector, consumers are known to patronize goods that are confusingly similar to genuine brands. In other instances, consumers end up with fake versions of the genuine products they intended to buy. In both cases, counterfeiters equally get funded.

“As counterfeiters are in operation primarily for profit, consumers have a key role in stemming the growth of the fake products industry. If consumers refrain from purchasing fake products, counterfeiting will eventually be eliminated. For counterfeiters, no sales means no profit, and no profit means no motivation to counterfeit. Society can solve the problem of counterfeiting by patronizing products from genuine manufacturers, both branded and generic.

“So how can a consumer stay away from counterfeit products? New services leveraging the explosive growth in mobile phone adoption in the developing world have made it possible for consumers to stay away from fake medication. Our company, Sproxil, provides consumers with such a service, where with a simple text message, they can determine whether to buy or stay away from a product that could be counterfeit. Because Sproxil provides purchase decision support at the point of sale using a toll-free text message, consumers now have an easy and convenient way to stop supporting counterfeiters unknowingly every time they get tricked into buying a fake product.    

“Consumers love it. We have processed tens of thousands of text messages just a couple of weeks after launching the service in Nigeria to tackle the challenge of fake medication, and we look forward to fully exploring the promise of Crowdsourced Anti-counterfeiting – putting the power of authentication in the hands of the consumer to help solve the fake drug conundrum.”