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Posts tagged "IPR Infringement"

Stopping Counterfeits: A Matter of National Security

The National Intellectual Property Rights Coordination Center (IPR Center) has announced "Operation Chain Reaction," a new comprehensive initiative targeting counterfeit items entering the supply chains of the Department of Defense ("DoD") and other U.S. government agencies.


Nine of the 18 IPR Center members are participating in "Operation Chain Reaction."They include:

                      U.S. Immigration and Customs Enforcement (ICE), Homeland Security

                                       Investigations (HSI)

                      U.S. Customs and Border Protection (CBP)

                      Federal Bureau of Investigation

                      Naval Criminal Investigative Service

                      Defense Criminal Investigative Service (DCIS)

                      U.S. Army Criminal Investigative Command, Major Procurement Fraud Unit

                      General Services Administration, Office of Inspector General

                      Defense Logistics Agency, Office of Inspector General

                      U.S. Air Force, Office of Special Investigations


While individual agencies have focused in the past on counterfeit and misbranded items entering the federal supply chain, "Operation Chain Reaction" is the first time that IPR Center participants have come together to collectively address this ongoing problem.


Some examples of recent investigations involving counterfeit products entering the federal supply chain include:


            An investigation uncovered the purchase of counterfeit Cisco Gigabit Interface Converters by an individual - since sentenced to prison - who intended to sell them to the Department of Defense for use by the Marine Corps to transmit troop movements, relay intelligence and maintain security for a military base.


            An investigation uncovered a global procurement and distribution network based in California that provided counterfeit integrated circuits to various governmental agencies, including the military and prime DoD contractors. Agents conducted undercover purchases from individuals within the company under official Navy contracts and were provided counterfeits for weapons platforms.


            An investigation identified a Florida-based electronics broker providing counterfeit integrated circuits to DoD prime contractor fulfilling a Navy contract for components destined for implantation into ship and land-based antenna.


The IPR Center is one of the U.S. government's key weapons in the fight against criminal counterfeiting and piracy. As a task force, the IPR Center uses the expertise of its member agencies to share information, develop initiatives, coordinate enforcement actions, and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.


ICE HSI investigated nearly 2,000 intellectual property cases last fiscal year, which resulted in 365 arrests, 216 indictments and 170 convictions. ICE HSI and CBP also made 19,959 IPR seizures topping $1.4 billion MSRP in FY 2010 - a 34 percent increase from the previous fiscal year. Computer hardware was one of the top commodities seized, increasing five-fold from FY 2009 to FY 2010, including a $2.3 million ICE HSI seizure that included counterfeit military-grade semi-conductors.


To report IP theft or to learn more about the IPR Center, visit http://www.iprcenter.gov/.



U.S. Firms Report Losing Sales, Profits, Royalties, and Brand Reputations Due to Intellectual Property Infringement in China

Despite broad success in the China market, many U.S. companies have reported that the infringement of their intellectual property rights (IPR) in China and China's indigenous innovation policies have undermined their competitive positions, reports the U.S. International Trade Commission (USITC).

In response to a USITC survey, many U.S. firms reported lost sales, profits, and license and royalty fees, as well as damaged brand names and product reputation, as a result of IPR infringement in China, according to the report. U.S. firms reported losses associated with China's indigenous innovation policies as well but noted greater concern about the future implications of these evolving policies.

The report, the second of two reports on IPR infringement and indigenous innovation policies in China and their effects on the U.S. economy and employment, was released today. The USITC, an independent, nonpartisan, factfinding federal agency, conducted the studies at the request of the U.S. Senate Committee on Finance.

As requested, the Commission report estimates the size and scope of reported Chinese IPR infringement; provides a quantitative analysis of the effect of IPR infringement in China on the U.S. economy and its sectors; and assesses the effects of China's indigenous innovation policies on the U.S. economy and employment. Highlights of the report follow.

              Based on survey information, the USITC estimates that U.S. IP-intensive firms' losses from IPR infringement in China were approximately $48 billion in 2009. The survey was sent to over 5,000 U.S. firms in the IP-intensive part of the U.S. economy, which is the sector most likely to be affected by IPR infringement in China. Firms in this segment of the U.S. economy also spent approximately $4.8 billion in 2009 to address possible Chinese IPR infringement in 2009. These figures may be understated because they do not reflect losses incurred by firms in the rest of the economy.


              Firms reported that among the losses they incurred as a result of IPR infringement in China, those associated with copyright infringement were the largest monetarily, and those associated with trademark infringement were the most widespread. The "information and other services sector" represented the segment within the U.S. IP- intensive sector with the highest amount of reported losses associated with IPR infringement in China.


              U.S. firms in the IP-intensive economy reported that an improvement in China's IPR protection and enforcement to levels comparable to the United States' would likely increase employment in their U.S. operations by approximately 923,000 jobs.


              To complement the survey results, the USITC used a statistical and simulation analysis to estimate the U.S. economic effects of an improvement in China's IPR protection to levels comparable to the United States'. This analysis found the following effects: (1) a $21.4 billion increase in U.S. exports of goods and services, (2) a $87.8 billion increase in sales to U.S. majority-owned affiliates in China, (3) a potential 2.1 million increase in net U.S. employment under conditions of prolonged and high unemployment, and (4) some reallocations within the U.S. workforce towards more IP-intensive services sector jobs.


              Respondents to the USITC survey also expressed concerns about China's indigenous innovation policies, especially: (1) preferential support for Chinese firms in the form of tax incentives, subsidies, and preferential lending; and (2) China-specific technical standards. The USITC's case studies in the wind energy, telecommunications equipment, software, automotive, and aircraft sectors provide a fuller picture of the effects of China's indigenous innovation policies on these selected sectors.


China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy (Investigation No. 332-519, USITC Publication 4226, May 2011) will be available on the USITC's Internet site at http://www.usitc.gov/publications/332/pub4226.pdf.


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