Safeguarding America’s Job Creating Innovations

For an economy built to last, President Obama has said that we must innovate, educate and build on our competitive strengths as a nation.  Protecting innovation is fundamental to our country’s competitiveness in the global economy. This is especially true at a time when job creation is among our most urgent tasks.  We must stop intellectual property theft and piracy which harm our businesses and threaten American jobs.

It’s been almost two years since the Administration issued the Joint Strategic Plan on Intellectual Property Enforcement which set out 33 specific actions that we committed to undertake to improve intellectual property enforcement. These important steps will help protect both U.S. rightholders and American jobs. 

Today, I sent to Congress the second annual report outlining the significant progress we’ve made implementing the Strategy in 2011.  Some of the key highlights include:

Voluntary Private Sector Actions

• My office encouraged and facilitated dialogue between private sector entities that play a significant role in the Internet ecosystem in order for them to reach cooperative voluntary agreements to reduce infringement that are practical, effective, and consistent with principles of due process, free speech, fair use, and privacy.  The Administration’s voluntary cooperation approach has been effective as shown by the following milestone agreements:
  • American Express, Discover, eNom, GoDaddy, Google, MasterCard, Microsoft (Bing), Network Solutions, PayPal, Visa and Yahoo! agreed to form a nonprofit organization to combat illegal online pharmacies  through education and voluntary enforcement.  In 2011, the group took concrete steps towards their commitment to form a nonprofit—now called the Center for Safe Internet Pharmacies (CSIP)—and we expect to see CSIP operational this year.
  • In June 2011, major credit card companies and payment processors—American Express, Discover, MasterCard, PayPal and Visa—reached an agreement on voluntary best practices to reduce sales of counterfeit and pirated goods by cutting off sites that distribute infringing goods from conducting financial transactions through these processors. 
  • In July 2011, a voluntary agreement was finalized among several Internet service providers (ISPs) and major and independent music labels and movie studios to reduce online piracy. Under the agreement, ISPs will notify subscribers, through a series of alerts, when their Internet service accounts appear to be misused for infringement on peer-to-peer networks.  We believe this approach will have a significant impact on reducing online piracy and we will continue to monitor the implementation and outcome of this arrangement with great interest.

Legislative Reform

• In March 2011, my office released the Administration’s White Paper on Intellectual Property Enforcement Legislative Recommendations that set forth legislative recommendations to strengthen intellectual property enforcement.  The  National Defense Authorization Act (NDAA) for Fiscal Year 2012 enacted two of these recommendations that created additional tools to assist Federal authorities in the enforcement of intellectual property rights.  The NDAA:
  • Increased penalties for infringing goods that are sold to, or are for use by, the military, law enforcement, critical infrastructure or national security applications; and 
  • Provides DHS with the explicit authority to give rightholders more information that will help them in determining whether suspected fake products are genuine or not.

Counterfeit Pharmaceuticals

• Also in March 2011, we sent to Vice President Biden and to Congress a pharmaceutical strategy that set out concrete steps the Administration will take to fight counterfeit drugs sold on the Internet, smuggled into the United States, and distributed in cities nationwide and overseas, including increased law enforcement, voluntary agreements with the private sector, legislative recommendations to improve enforcement tools, increased public awareness, increased international cooperation, and targeted capacity building and training.

Increased Law Enforcement Action

• Law enforcement actions increased significantly in quantity and quality:
  • Customs and Border Protection (CBP) and Immigration and Customs Enforcement (ICE) increased seizures of counterfeit pharmaceuticals by almost 200 percent, increased fake safety and critical technology goods seizures by 44 percent, and increased overall seizures by 24 percent in comparison to FY 2010.
  • ICE Homeland Security Investigations (HSI) investigations increased by more than 17 percent, arrests increased by more than 57 percent, and convictions increased 71 percent in comparison to FY 2010.
  • FBI investigations of new trade secret cases are up 29 percent and investigations of health and safety cases are up 87 percent over FY 2010.

 Administration’s Focus on China

• China is the number one source of infringing products seized at the U.S. border and a major focus of the Administration is to ensure that China adequately protects and enforces intellectual property rights.
  • President Obama, Vice President Biden and other senior Administration officials have repeatedly engaged Chinese government officials, resulting in commitments by China to strengthen its efforts to protect intellectual property rights.
  • At the November 2011 U.S.-China Joint Commission on Commerce and Trade (JCCT), coordinated by Secretary Bryson and Ambassador Kirk, China agreed to establish, for the first time, a permanent State Council-level leadership structure, headed by a Vice Premier, to lead and coordinate intellectual property enforcement across all of China.  China also agreed to eliminate by December 1, 2011 any “indigenous innovation” product accreditation catalogues or other measures linking innovation policies to government procurement preferences.

In 2012, we are continuing our executive branch efforts to safeguard the ingenuity of America’s innovators and the jobs those ideas create -- and we look forward to continuing to work with Congress on this important issue.

Victoria Espinel is the U.S. Intellectual Property Enforcement Coordinator