U.S. talks tough on IP enforcement

Mark LaPedus
(09/21/2005 6:09 PM EDT)

SAN JOSE, Calif. — Commerce Secretary Carlos Gutierrez on Wednesday (Sept. 20) said the United States would step up enforcement of intellectual property (IP) laws, although some believe the efforts would fall short in preventing the rampant problem in China and other nations.

In July, for example, President Bush created a new senior post within the Commerce — Coordinator for International Intellectual Property Enforcement. The Office of the Coordinator for International Intellectual Property Enforcement will be tasked with helping to combat IP violations under the guidance of Gutierrez.

This week, U.S. officials arrived in China to discuss IP issues with Chinese leaders, according to Gutierrez, who insisted Washington has taken a zero-tolerance stance on IP infringement.

“We believe that the theft of IP is unacceptable,” Gutierrez declared at a press event here hosted by chip equipment giant Applied Materials Inc. (Santa Clara, Calif.). “The protection of IP is vital to our growth and global competitiveness in the United States.”

Despite the tough stance and ongoing threats by Washington over the years, IP theft still appears to be out of control and on the rise. IP theft is estimated to cost U.S.-based companies about $250 billion in sales annually, contributing to the loss of 750,000 jobs, according to the Commerce Department.

Pulling no punches, Gutierrez said the biggest IP offenders are Brazil, China, India and Russia. “Those are the big ones,” he said, adding that 36 nations remain on a U.S. “watch list.”

Some nations are making progress faster than others. “India has a law on the books,” he said. “Brazil’s progress is mixed.”

China, however, remains problematic despite a number of measures and threats from the U.S. government. Pirated enterprise software, for example, remains a major issue in China. “We continue to have a huge problem with China,” Gutierrez acknowledged. “Ninety percent [of the enterprise software in China] is counterfeit.”

Even consumer goods are the subject of IP violations. At the press event, Gutierrez held up a pair of “Denali” snow shoes made by Cascade Designs Inc. He said the snow shoes from the U.S.-based manufacturer sell for $150. In comparison, “knock-off” shoes from a Chinese company sell for only $15, he said.

To combat IP theft, Commerce has implemented a multiprong strategy. For example, the Coordinator for International Intellectual Property Enforcement will play a significant role in the ongoing implementation of the Bush administration’s Strategy Targeting Organized Piracy (STOP!) Initiative, which was launched in 2004.

STOP! is a government-wide initiative to block trade around the world in pirated and counterfeit goods. It is also intended to empower U.S. businesses to secure and enforce their IP rights, he said.

The software industry has lobbied hard in recent years for tougher measures to prevent piracy, especially in China. Beijing joined the World Trade Organization in 2001. Since then, critics have complained that it has failed to adequately enforce WTO rules on IP protection.

Critics have also complained that related U.S. export control policy toward China is muddled. The Pentagon has generally opposed high-tech sales to China, while the Commerce Department has said it handles high-tech export license applications to China on a case-by-case basis.