Intellectual Property
Strategy for Targeting Organized Piracy (STOP) Requires Changes for Long-Term Success Gao ID: GAO-07-74 November 8, 2006U.S. government efforts to protect and enforce intellectual property (IP) rights are crucial to preventing billions of dollars in losses and mitigating health and safety risks from trade in counterfeit and pirated goods. These efforts are coordinated through the National Intellectual Property Law Enforcement Coordination Council (NIPLECC), created by Congress in 1999, and the Strategy for Targeting Organized Piracy (STOP), initiated by the Bush administration in 2004. This report describes the evolution of NIPLECC and STOP, assesses the extent to which STOP addresses the desirable characteristics of an effective national strategy, and evaluates the challenges to implementing a strategy for protecting and enforcing IP rights. GAO examined relevant documents, interviewed agency and industry officials, and assessed STOP using criteria previously developed by GAO.
Although NIPLECC and STOP originated under different authorities, the lines between them have become increasingly blurred. NIPLECC is a coordinating council, while STOP is a strategy involving coordination led by the National Security Council. While NIPLECC has struggled to define its purpose, STOP generated coordination and attention to IP protection from the outset. Congress gave NIPLECC an oversight role, funding, and an IP Coordinator as its head in 2005, but STOP remains prominent. Their functions, however, increasingly overlap. The IP Coordinator regularly conducts STOP activities and speaks for STOP before Congress and private industry. Most significantly, NIPLECC recently adopted STOP as its strategy. STOP is a good first step toward a comprehensive integrated national strategy to protect and enforce IP rights and has energized protection efforts. GAO found, however, that STOP's potential is limited because it does not fully address the characteristics of an effective national strategy, which GAO believes helps increase the likelihood of accountability, as well as effectiveness. STOP does not fully address characteristics related to planning and accountability. For example, its performance measures lack baselines and targets. STOP lacks a discussion of costs, the types and sources of investments needed, and processes to address risk management. Finally, STOP lacks a full discussion oversight responsibility. The current structures present several challenges to implementing a long-term strategy. First, NIPLECC retains an image of inactivity, and many private sector groups GAO interviewed were unclear about its role. STOP, despite its energy and prominence, lacks permanence beyond the current administration. Second, NIPLECC's commitment to implementing an effective strategy is unclear. For instance, NIPLECC's recent annual report does not explain how it plans to provide oversight. NIPLECC officials have sent mixed signals about STOP's role, with one saying STOP should include metrics to measure progress, and another calling STOP an account of administration efforts, not a strategy.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-74, Intellectual Property: Strategy for Targeting Organized Piracy (STOP) Requires Changes for Long-Term Success
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Report to the Chairman, Committee on Government Reform, House of
Representatives:
United States Government Accountability Office:
GAO:
November 2006:
Intellectual Property:
Strategy for Targeting Organized Piracy (STOP) Requires Changes for
Long-term Success:
Intellectual Property:
GAO-07-74:
GAO Highlights:
Highlights of GAO-07-74, a report to the Chairman, Committee on
Government Reform, House of Representatives
Why GAO Did This Study:
U.S. government efforts to protect and enforce intellectual property
(IP) rights are crucial to preventing billions of dollars in losses and
mitigating health and safety risks from trade in counterfeit and
pirated goods. These efforts are coordinated through the National
Intellectual Property Law Enforcement Coordination Council (NIPLECC),
created by Congress in 1999, and the Strategy for Targeting Organized
Piracy (STOP), initiated by the Bush administration in 2004. This
report describes the evolution of NIPLECC and STOP, assesses the extent
to which STOP addresses the desirable characteristics of an effective
national strategy, and evaluates the challenges to implementing a
strategy for protecting and enforcing IP rights. GAO examined relevant
documents, interviewed agency and industry officials, and assessed STOP
using criteria previously developed by GAO.
What GAO Found:
Although NIPLECC and STOP originated under different authorities, the
lines between them have become increasingly blurred. NIPLECC is a
coordinating council, while STOP is a strategy involving coordination
led by the National Security Council. While NIPLECC has struggled to
define its purpose, STOP generated coordination and attention to IP
protection from the outset. Congress gave NIPLECC an oversight role,
funding, and an IP Coordinator as its head in 2005, but STOP remains
prominent. Their functions, however, increasingly overlap. The IP
Coordinator regularly conducts STOP activities and speaks for STOP
before Congress and private industry. Most significantly, NIPLECC
recently adopted STOP as its strategy.
STOP is a good first step toward a comprehensive integrated national
strategy to protect and enforce IP rights and has energized protection
efforts. GAO found, however, that STOP‘s potential is limited because
it does not fully address the characteristics of an effective national
strategy, which GAO believes helps increase the likelihood of
accountability, as well as effectiveness. STOP does not fully address
characteristics related to planning and accountability. For example,
its performance measures lack baselines and targets. STOP lacks a
discussion of costs, the types and sources of investments needed, and
processes to address risk management. Finally, STOP lacks a full
discussion oversight responsibility.
The current structures present several challenges to implementing a
long-term strategy. First, NIPLECC retains an image of inactivity, and
many private sector groups GAO interviewed were unclear about its role.
STOP, despite its energy and prominence, lacks permanence beyond the
current administration. Second, NIPLECC‘s commitment to implementing an
effective strategy is unclear. For instance, NIPLECC‘s recent annual
report does not explain how it plans to provide oversight. NIPLECC
officials have sent mixed signals about STOP‘s role, with one saying
STOP should include metrics to measure progress, and another calling
STOP an account of administration efforts, not a strategy.
What GAO Recommends:
To improve strategic planning for IP protection, GAO recommends that
the IP Coordinator, in consultation with the National Security Council
and the STOP agencies (1) take steps to ensure that STOP fully
addresses the six characteristics of a national strategy and (2)
clarify how NIPLECC will carry out its oversight and accountability
responsibilities in implementing STOP as its strategy. The IP
Coordinator concurred with both recommendations.
[Hyperlink: http://www.gao.gov/cgi-bin/getrpt?GAO-07-74.]
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Loren Yager at (202) 512-
4128 or yagerl@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Lines between NIPLECC and STOP Have Blurred into Overlapping Structures:
STOP Is a Good Initial Effort but Does Not Yet Fully Address the
Desirable Characteristics of an Effective National Strategy:
Current Structures Create Challenges to an Effective Integrated
Strategy:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: GAO's Analysis of STOP as an Effective National Strategy:
Appendix III: Bush Administration: Strategy for Targeting Organized
Piracy Accomplishments and Initiatives:
Appendix IV: Comments from the Department of Commerce:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Comparison of Features of NIPLECC and STOP:
Table 2: Summary of Desirable Characteristics for an Effective National
Strategy:
Figures:
Figure 1: Primary U.S. Government Agencies and Entities Supporting U.S.
Intellectual Property Rights:
Figure 2: Key Events Relevant to NIPLECC and STOP:
Figure 3: Extent to Which STOP Addresses GAO's Desirable
Characteristics of an Effective National Strategy:
Abbreviations:
APEC: Asia Pacific Economic Cooperation:
CACP: Coalition against Counterfeiting and Piracy:
CBP: Customs and Border Protection:
CAFTA-DR: Central America-Dominican Republic Free Trade Agreement:
CHIP: Computer Hacking and Intellectual Property:
CRM: Case Referral Mechanism:
DOJ: Department of Justice:
DHS: Department of Homeland Security:
EU: European Union:
FDA: Food and Drug Administration:
FBI: Federal Bureau of Investigation:
GPRA: Government Performance Results Act:
ICE: Immigration and Customs Enforcement:
IP: intellectual property:
IPR: intellectual property rights:
NIPLECC: National Intellectual Property Law Enforcement Coordination
Council:
MOFCOM: China's Ministry of Commerce:
OECD: Organization for Economic Cooperation and Development:
SPP: Security and Prosperity Partnership:
STOP: Strategy for Targeting Organized Piracy:
USPTO: U.S. Patent and Trademark Office:
USTR: U.S. Trade Representative:
WTO: World Trade Organization:
United States Government Accountability Office:
Washington, DC 20548:
November 8, 2006:
The Honorable Tom Davis:
Chairman:
Committee on Government Reform:
House of Representatives:
Dear Mr. Chairman:
U.S. government efforts to protect and enforce intellectual property
(IP) rights overseas are crucial to preventing billions of dollars in
losses to U.S. industry and IP rights owners and addressing health and
safety risks resulting from the trade in counterfeit and pirated goods.
IP protection and enforcement cut across a wide range of U.S. agencies
and functions, as well as those of foreign governments, making
coordination among all parties essential.
The U.S. government has developed a complex structure to achieve
coordination of IP enforcement efforts. In 1999, Congress created the
interagency National Intellectual Property Law Enforcement Coordination
Council (NIPLECC) as a mechanism to coordinate U.S. efforts to protect
and enforce IP rights in the United States and overseas.[Footnote 1] In
October 2004, the President announced the Strategy for Targeting
Organized Piracy (STOP) to "smash the criminal networks that traffic in
fakes, stop trade in pirated and counterfeit goods at America's
borders, block bogus goods around the world, and help small businesses
secure and enforce their rights in overseas markets." STOP also calls
for collaboration among U.S. agencies. Then, in the Consolidated
Appropriations Act of 2005, Congress created the position of
Coordinator for International Intellectual Property Enforcement to head
NIPLECC.[Footnote 2] In addition, the act mandated, among other things,
that NIPLECC promulgate a strategy for protecting American intellectual
property abroad and oversee its implementation. Recently, NIPLECC
adopted STOP as that strategy.
In response to your request to understand more fully U.S. government
efforts to develop a comprehensive and integrated strategy with a long-
term perspective to combat IP counterfeiting and piracy, this report
(1) describes the evolution of the relationship between NIPLECC and
STOP, (2) assesses the extent to which STOP addresses the desirable
characteristics of an effective national strategy, and (3) evaluates
the challenges to ensuring the implementation of a long-term integrated
strategy for protecting and enforcing IP rights.
To meet these objectives, we examined NIPLECC and STOP official
documents and reviewed the legislative history of NIPLECC. To determine
the extent to which STOP serves as a national strategy for combating
trade in counterfeit and pirated goods, we assessed STOP using the six
desirable characteristics of an effective national strategy developed
in previous GAO work.[Footnote 3] GAO has used this methodology to
assess and report on the administration's strategies relating to
combating terrorism, restructuring DOD's global force posture, and
rebuilding Iraq.[Footnote 4] National strategies with these desirable
characteristics offer policymakers and implementing agencies a
management tool that can help ensure accountability and more effective
results.[Footnote 5] We also obtained and analyzed documents required
under the Government Performance Results Act (GPRA) of 1993, as well as
IP-related planning documents from the government agencies involved
with STOP. We assessed the extent to which these agency documents
support STOP goals and add information that may support elements
necessary for an effective national strategy. In addition, we
interviewed agency officials involved in NIPLECC and STOP, including
the Coordinator for International Intellectual Property Enforcement. We
also interviewed members of the private sector, which we selected
judgmentally to ensure that we obtained the views of major cross-
industry associations, as well as individual associations and companies
representing key industries that are heavily affected by IP violations
such as the manufacturing, entertainment, and pharmaceutical
industries. In all we spoke to 20 representatives from 16 private
sector groups. We conducted our work from January 2006 through October
2006 in accordance with generally accepted government auditing
standards. See appendix I for a more detailed description of our scope
and methodology. See appendix II for a detailed discussion of GAO's
analysis of STOP using the six desirable characteristics of an
effective national strategy. See appendix III for the STOP strategy.
Results in Brief:
NIPLECC and STOP originated under different authorities, but the lines
between them have become increasingly blurred, creating overlapping
structures to protect and enforce IP rights. NIPLECC is a coordinating
council created by Congress in 1999, while STOP is a strategy initiated
by the White House in 2004 under the auspices of the National Security
Council, with a strong coordination component; both involve nearly the
same agencies.[Footnote 6] However, unlike NIPLECC, which has struggled
to define its purpose, STOP generated active coordination and has
sponsored IP protection related activities from the outset. Although
Congress augmented NIPLECC's capabilities and clarified its purpose
through passage of the Consolidated Appropriations Act of
2005,[Footnote 7] STOP remains more prominent. NIPLECC's Coordinator
for International Intellectual Property Enforcement (also known as the
IP Coordinator), a position created by the 2005 act and filled by
presidential appointment in July 2005 to head NIPLECC, has regularly
been participating in STOP activities and acted as a STOP spokesperson
to Congress and private industry. In addition, NIPLECC cites STOP
activities as among its accomplishments in its September 2006 report to
Congress and the President.[Footnote 8] Significantly, the NIPLECC
principals recently identified STOP as their strategy for protecting
American IP overseas, as one of the requirements under the Consolidated
Appropriations Act. (See app. III for the complete STOP strategy.)
STOP is a good first step toward a comprehensive, integrated national
strategy to protect and enforce U.S. intellectual property, and it has
energized agency efforts. However, we found that STOP's full potential
as a strategy is limited because it does not fully address the six
desirable characteristics of an effective national strategy. We believe
these characteristics would improve the likelihood of STOPís long-term
effectivenss and ensure accountability.[Footnote 9] STOP does not fully
address key characteristics related to planning and accountability,
missing key elements such as a discussion of performance measures,
resources, risk management, and designation of oversight
responsibility. While STOP generally addresses goals and subordinate
objectives and activities, it only partially addresses performance
measures; for example, it reports the number of calls to the U.S.
Patent and Trademark Office (USPTO) hotline, but it does not provide
data on baselines or targets to assess how well the activities are
being implemented. The strategy does not address resources,
investments, and risk management; for instance, it lacks a discussion
of current or future costs, the types or sources of investments needed
to target organized piracy, and processes to effectively balance the
threats from counterfeit products with the resources available. In
addition, STOP also partially addresses organizational roles and
responsibilities by citing many examples of agency roles with respect
to their STOP activities; however, it does not discuss a framework for
accountability among the STOP agencies, such as designating
responsibility for oversight. While some of these elements are
addressed in individual agency documents, the need to consult multiple
agency documents underscores the strategy's lack of integration and
limits its usefulness as a management tool for effective oversight and
accountability.
Several challenges to the implementation of an effective long-term
strategy result from the current structures. First, despite NIPLECC's
key role of providing permanence, it continues to have leadership
problems. NIPLECC retains an image of inactivity among the private
sector despite its enhanced mandate and, in July 2006, Senate
appropriators expressed concern about the lack of information provided
by NIPLECC on its progress. Second, while agency and private sector
officials praise STOP for energizing U.S. IP protection efforts, STOP
lacks permanence. The authority and influence STOP enjoys as a
presidential initiative could disappear after the current
administration. Third, NIPLECC's commitment to implementing STOP as a
successful strategy remains unclear, creating a challenge for
accountability. NIPLECC' September 2006 report describes numerous STOP
activities but does not articulate how NIPLECC plans to carry out its
oversight responsibility mandated by Congress. Agency officials we
interviewed generally considered STOP to be the U.S. government's IP
strategy. However, NIPLECC officials have sent mixed signals about the
extent to which they believe STOP is meant to provide performance
measures and information on resource levels. For instance, one NIPLECC
representative said that STOP should include metrics to measure
progress that should be reported on by the IP Coordinator. Yet, another
NIPLECC representative told us that STOP was a fact sheet rather than a
strategy. While the IP Coordinator stated in congressional testimony
that STOP is NIPLECC's strategy, he also told us that STOP was never
meant to be an institutional method for reporting priorities and
metrics to the President or Congress. Furthermore, the STOP strategy
neither makes reference to NIPLECC's oversight role, nor does STOP
articulate a framework for oversight and accountability among the STOP
agencies carrying out the strategy.
To improve STOP's effectiveness as a planning tool and its usefulness
to Congress:
We recommend that the IP Coordinator, in consultation with the National
Security Council and the six STOP agencies, including the Departments
of Commerce, Homeland Security, Justice, and State; and the Office of
the U.S. Trade Representative; and the Food and Drug Administration,
take steps to ensure that STOP fully addresses the six characteristics
of a national strategy.
To clarify NIPLECC's oversight role with regard to STOP:
We recommend that the IP Coordinator, in consultation with the National
Security Council and the six STOP agencies, including the Departments
of Commerce, Homeland Security, Justice, and State; and the Office of
the U.S. Trade Representative; and the Food and Drug Administration,
clarify in the STOP strategy how NIPLECC will carry out its oversight
and accountability responsibilities in implementing STOP as its
strategy.
We provided USTR, the Departments of Commerce, Justice, Homeland
Security, and State; and USPTO, Food and Drug Administration, and the
IP Coordinator with a draft of this report for their review and
comment. The IP Coordinator, through the Department of Commerce in
consultation with the USPTO and the International Trade Administration,
provided technical comments. The Department of Homeland Security, the
Food and Drug Administration, and the Office of the U.S. Trade
Representative also chose to provide technical comments. We modified
the report where appropriate. The Departments of Justice and State did
not provide any comments. We also received written comments from the
U.S. Coordinator for International Property Enforcement (IP
Coordinator), which are reprinted in appendix IV. The IP Coordinator
reiterated our message that STOP was a good first step toward a
comprehensive, integrated strategy to protect and enforce U.S.
intellectual property rights and that it had energized U.S. efforts. He
concurred with our recommendations, stating that his office would
review them, and planned to identify opportunities for improvement
based on those recommendations, where appropriate.
Background:
Intellectual property is an important component of the U.S. economy,
and the United States is an acknowledged global leader in its creation.
However, the legal protection of intellectual property varies greatly
around the world, and several countries are havens for the production
of counterfeit and pirated goods. Technology has facilitated the
manufacture and distribution of counterfeit and pirated products,
resulting in a global illicit market that competes with genuine
products that complicates detection and actions against violations.
High profits and low risk have drawn in organized criminal networks,
and the public is often not aware of the issues and consequences
surrounding IP theft. The Department of State has cited estimates that
counterfeit goods represent about 7 percent of annual global trade, but
we note that it is difficult to reliably measure what is fundamentally
a criminal activity.[Footnote 10] Industry groups suggest, however,
that counterfeiting and piracy are on the rise and that a broader range
of products, from auto parts to razor blades, and from vital medicines
to infant formula, are subject to counterfeit production. Counterfeit
products raise serious public health and safety concerns, and the
annual losses that companies face from IP violations are substantial.
Eight federal agencies, as well as entities within those agencies
including the Federal Bureau of Investigation (FBI) and USPTO,
undertake the primary U.S. government activities in support of IP
rights. These eight agencies are: Departments of Commerce, State,
Justice, and Homeland Security; the U.S. Trade Representative (USTR);
the Copyright Office; the U.S. Agency for International Development;
and the U.S. International Trade Commission. These agencies undertake a
wide range of activities that fall under three categories: policy
initiatives, training and technical assistance, and law enforcement.
U.S. international trade policy initiatives to increase IP protection
and enforcement are primarily led by USTR, in coordination with the
Departments of State, Commerce, USPTO, and the Copyright Office, among
other agencies. The policy initiatives are wide ranging and include
reviewing IP protection abroad and negotiating agreements that address
intellectual property. Key activities to develop and promote enhanced
IP protection through training or technical assistance are undertaken
by the Departments of Commerce, Homeland Security, Justice, and State;
the FBI; USPTO; and the Copyright Office.
A smaller number of agencies and their entities are involved in
investigating IP violations and enforcing U.S. IP laws. Working in an
environment where counterterrorism is the central priority, the
Department of Justice, including the FBI, and the Department of
Homeland Security take actions that include engaging in multicountry
investigations involving intellectual property violations and seizing
goods that violate IP rights at U.S. ports of entry. The Food and Drug
Administration (FDA) also investigates intellectual property violations
for FDA-regulated products as part of its mission to assure consumer
safety. Finally, the U.S. International Trade Commission has an
adjudicative role in enforcement activities involving patents and
trademarks. These agencies, and their entities, may be affiliated with
NIPLECC, STOP, or both as indicated by figure 1.
Figure 1: Primary U.S. Government Agencies and Entities Supporting U.S.
Intellectual Property Rights:
[See PDF for image]
Source: GAO.
Note: NIPLECC is required to consult with the Register of Copyrights on
copyright law enforcement matters. Immigration and Customs Enforcement,
while not an original member, was reported as a member of NIPLECC in
the council's fifth annual report issued in September 2006.
[End of figure]
Lines between NIPLECC and STOP Have Blurred into Overlapping Structures:
NIPLECC and STOP originated separately under different authorities, but
the lines between them have become increasingly blurred. They share
similar goals, including coordination of IP protection and enforcement,
and involve nearly the same agencies. Five of the six STOP agencies
house NIPLECC principals. NIPLECC is a coordinating council created by
Congress, while STOP is a strategy initiated by the White House with a
strong coordination component. NIPLECC has struggled to define its
purpose, while STOP has generated active coordination and sponsored IP
protection related activities from the outset. Although Congress passed
legislation to enhance NIPLECC's mandate, STOP remains more prominent
and is characterized by a high level of activity and visibility. The IP
Coordinator, who heads NIPLECC, regularly participates directly in STOP-
sponsored activities and represents STOP before Congress and private
industry. Finally, significantly, NIPLECC adopted STOP as its strategy
for protecting IP overseas in February 2006.
NIPLECC and STOP Originated under Different Authorities but with
Similar Goals:
NIPLECC and STOP were created under different authorities, NIPLECC as a
congressional mandate and STOP as a presidential initiative. In 1999,
Congress created NIPLECC to coordinate domestic and international
intellectual property law enforcement among U.S. federal and foreign
entities. The council's membership is designated by statute and
includes (1) Assistant Secretary of Commerce and Commissioner of
Patents and Trademarks (USPTO); (2) Assistant Attorney General,
Criminal Division (Justice); (3) Under Secretary of State for Economic
and Agricultural Affairs (State); (4) Ambassador, Deputy United States
Trade Representative (USTR); (5) Commissioner of Customs (Legacy
Customs);[Footnote 11] and (6) Under Secretary of Commerce for
International Trade (Commerce). NIPLECC is also required to consult
with the Register of Copyrights on copyright law enforcement matters.
In addition, officials from the USPTO and the Department of Justice are
the co-chairs of NIPLECC. Congress required NIPLECC to report its
coordination efforts annually to the President and to the Committees on
Appropriations and the Judiciary of the Senate and the House of
Representatives. NIPLECC's authorizing legislation included no specific
dollar amount for funding or staff.
Although created to coordinate U.S. IP law enforcement efforts, NIPLECC
has had difficulties. In our September 2004 report, we stated that
NIPLECC had struggled to define its purpose. Our 2004 report noted that
NIPLECC had little discernible impact and had not undertaken any
independent activities, according to interviews with both industry
officials and officials from its member agencies, and as evidenced by
NIPLECC's own annual reports. From 1999 through the end of 2004,
NIPLECC produced three annual reports that did little more than provide
a compilation of individual agency activities. Indeed, we reported that
officials from more than half of the member agencies offered criticisms
of NIPLECC, remarking that it was unfocused, ineffective, and
ìunwieldy.î In official comments to the council's 2003 annual report,
major IP industry associations expressed a sense that NIPLECC is not
undertaking any independent activities or having any impact. However,
some officials interviewed did cite positive contributions supporting
IP efforts, including an IP training database Web site. Finally, we
noted in our 2004 report that if Congress wished to maintain NIPLECC
and take action to increase its effectiveness, it should consider
reviewing the council's authority, operating structure, membership, and
mission.[Footnote 12]
In October 2004, the President launched STOP, a separate initiative led
by the White House under the auspices of the National Security Council,
to target cross-border trade in tangible goods and strengthen U.S.
government and industry IP enforcement actions. While STOP made no
mention of NIPLECC's role, STOP members are the same agencies that
house NIPLECC members, except that STOP includes the FDA. According to
a high-level official who participated in the formation of STOP, the
initiative was intended to protect American innovation,
competitiveness, and economic growth. It stemmed from the recognition
that U.S. companies needed protection from increasingly complex and
sophisticated criminal counterfeiting and piracy. As part of STOP,
agencies began holding meetings, both at working levels and higher, to
coordinate agency efforts to tackle the problem.
Congress Enhanced NIPLECC While STOP Continues to Play the Prominent
Role in Coordination:
Congress addressed NIPLECC's lack of activity and unclear mission in
the 2005 Consolidated Appropriations Act in December 2004. The act
called for NIPLECC to (1) establish policies, objectives, and
priorities concerning international IP protection and enforcement; (2)
promulgate a strategy for protecting American IP overseas; and (3)
coordinate and oversee implementation of the policies, objectives, and
priorities and overall strategy for protecting American IP overseas by
agencies with IP responsibilities. The act appropriated $2 million for
NIPLECC's expenses through the end of the fiscal year 2006. It also
created the position of the Coordinator for International Intellectual
Property Enforcement, also known as the "IP Coordinator," to head
NIPLECC. The IP Coordinator is appointed by the President and may not
serve in any other position in the federal government. The co-chairs
for NIPLECC are required to report to the IP Coordinator. In July 2005,
the Secretary of Commerce announced the presidential appointment of the
IP Coordinator. Table 1 compares NIPLECC and STOP.
Table 1: Comparison of Features of NIPLECC and STOP:
Features: NIPLECC: Origin: Congressional mandate: Leadership: *
Coordinator for International Intellectual Property Enforcement (IP
Coordinator); * Co-Chairs from USPTO and Justice report to Coordinator;
Membership: By agency and position: 1. Department of Justice: Assistant
Attorney General, Criminal Division; 2. Department of Commerce: Under
Secretary for IP and Director of USPTO; and the Under Secretary for
International Trade; 3. Department of Homeland Security: Commissioner
of U.S. Customs and Border Protection; and the Assistant Secretary for
Immigration and Customs Enforcement; 4. Department of State: Under
Secretary for Economic, Business, and Agricultural Affairs; 5. Office
of the U.S. Trade Representative: Deputy U.S. Trade Representative;
Dedicated funding; $2 million (for fiscal years 2005 and 2006);
Dedicated staff: Seven (IP Coordinator, four staff members, and two
detailees); Meetings: Quarterly.
Features: STOP: Origin: White House initiative; Leadership: * National
Security Council; Membership: By agency: 1. Department of Justice; 2.
Department of Commerce; 3. Department of Homeland Security; 4.
Department of State; 5. Office of the U.S. Trade Representative; 6.
Food and Drug Administration; Dedicated Funding: None; Dedicated Staff:
None; Meetings: Approximately monthly (scheduled on an ad hoc basis).
Source: GAO.
Note: NIPLECC is required to consult with the Register of Copyrights.
[End of table]
Since obtaining enhanced capabilities under the 2005 Consolidated
Appropriations Act, NIPLECC has made some progress, through NIPLECC's
administrative staff, including the IP Coordinator, an assistant, a
policy analyst, part-time legislative and press assistants, and
detailees from USPTO and CBP. Examples of the office's activities
include working with the Commercial Law Development Program[Footnote
13] to train foreign governments on IP enforcement, co-hosting an IP
regulation training and industry partnership conference in Chicago,
working with the Department of State on an IP-related Web site for
information sharing among U.S. agencies, working with USPTO to
implement a workshop on border enforcement of IP rights in India,
working with the Department of Justice to identify IP regulation
enforcement needs in India, and producing four country fact sheets
highlighting the status of IP protection. In addition, the IP
Coordinator has facilitated two NIPLECC meetings, established the
practice of holding NIPLECC meetings quarterly, and NIPLECC has issued
two annual reports since the 2005 act. The 2004 annual report was made
available in June 2005 and is similar to earlier reports in that it is
a compilation of individual agency activities. However, the 2005 annual
report, which was released in September 2006, represents a departure in
substance and style. For example, it provides a broad overview of the
problem of IP violations and how the U.S. government is supporting U.S.
business to address it, as well as a description of the activities of
the IP Coordinator's office. Another new aspect of the report is that
it provides examples of U.S. government actions to improve IP
protection in China. (See fig. 2 for a time line of key NIPLECC and
STOP events.)
Figure 2: Key Events Relevant to NIPLECC and STOP:
[See PDF for image]
Note: STOP participants meet on an ad hoc basis approximately once or
twice a month. According to NIPLECC annual reports, NIPLECC principals
met four times in 2000, once in 2001, twice in 2002, and once in 2003.
No NIPLECC principals meetings were reported to have been held in 2004
or 2005. NIPLECC principals held two meetings in 2006 with the IP
Coordinator, and hereafter plan to meet on a quarterly basis.
[End of figure]
Unlike NIPLECC, STOP from its beginning has been characterized by a
high level of active coordination and visibility. Agency officials with
whom we spoke said that STOP meetings occurred once or sometimes twice
a month, and were driven by particular issues or events, and also
involved status checks on ongoing efforts and discussing and
prioritizing new ones. For example, agency officials met to ensure that
IP was given attention at the European Union summits and to share
talking points for international trips. In addition, USPTO established
a hotline to give businesses a point of contact for information on IP
rights enforcement and report problems in other countries. The hotline
is fielded by attorneys with regional expertise. Commerce developed a
Web site to provide information and guidance to right holders on how to
register and protect their IP assets in markets around the world. STOP
also launched multiagency delegations to engage foreign officials and
the private sector on IP protection and enforcement. Officials from
STOP agencies traveled to Asia during April 2005 and 2 months later to
countries in the European Union. STOP agencies also work with the
Coalition Against Counterfeiting and Piracy (CACP), an association
jointly led by the U.S. Chamber of Commerce and National Association of
Manufacturers, which U.S. private sector officials we interviewed have
stated is their primary mechanism of interfacing with agency officials
representing STOP. STOP officials work with CACP on their ìNo Trade in
Fakesî program to develop voluntary guidelines companies can use to
their supply and distribution chains are free of counterfeits.
NIPLECC Adopts STOP As Its Strategy:
The lines between NIPLECC and STOP have become increasingly blurred.
The IP Coordinator, who heads NIPLECC, regularly participates directly
in STOP activities. For example, the IP Coordinator has effectively
functioned as a STOP spokesperson overseas, to Congress, and to U.S.
private industry. Significantly, NIPLECC has adopted STOP as the
strategy it is required to promulgate under the 2005 Consolidated
Appropriations Act. The IP Coordinator told us that STOP was not meant
to cover all aspects of IP but represented a good start toward an
effective strategy. He believed that it made sense to use STOP as
NIPLECC's strategy rather than starting anew. The STOP strategy was
updated since it was announced in October 2004 and is encompassed in
the June 2006 document, Bush Administration: Strategy for Targeting
Organized Piracy, Accomplishments and Initiative. The document consists
of five general goals and discusses activities associated with each
goal. The goals are (1) empowering American innovators to better
protect their rights at home and abroad, (2) increasing efforts to
seize counterfeit goods at our borders, (3) pursuing criminal
enterprises involved in piracy and counterfeiting, (4) working closely
and creatively with U.S. industry, and (5) aggressively engaging our
trading partners to join our efforts. (See app. III to view this latest
document representing the STOP strategy, which we evaluate in the next
section.)
STOP Is a Good Initial Effort but Does Not Yet Fully Address the
Desirable Characteristics of an Effective National Strategy:
STOP represents progress toward developing a comprehensive integrated
national strategy for IP protection and enforcement and has experienced
some success. However, we found that STOP does not fully address the
six desirable characteristics of an effective national strategy that we
believe would improve the likelihood of its long-term effectiveness and
ensure accountability. Our analysis showed that STOP does not fully
address key characteristics related to planning and accountability,
missing elements such as a discussion of performance measures,
resources, risk management, and designation of oversight
responsibility. While we found that some strategy documents belonging
to individual STOP agencies supplemented some of the characteristics
not fully addressed in STOP, the need to consult multiple agency
documents limits the usefulness of STOP as an integrated strategy to
guide policy and decision makers in allocating resources and balancing
priorities with other important objectives.
Effective National Strategic Planning Has Six Desirable Characteristics:
While national strategies are not required by executive or legislative
mandate to address a single, consistent set of characteristics, GAO has
identified six desirable characteristics of an effective national
strategy. It is important that a national strategy contain these
characteristics, and their underlying elements, because they enable
implementers of the strategy to effectively shape policies, programs,
priorities, resource allocations, and standards so that federal
departments and other stakeholders can achieve the desired results.
National strategies provide policymakers and implementing agencies with
a planning tool that can help ensure accountability and effectiveness.
A summary of the six characteristics is presented below, and appendix
II provides a more detailed discussion of GAO's criteria.
* Purpose, Scope, and Methodology-addresses why the strategy was
produced, the scope of its coverage, and the process by which it was
developed.
* Problems, Risks, and Threats-discusses or defines problems the
strategy intends to address, their causes, and the operating
environment, and also provides a risk assessment, including an analysis
of the threats and reliability of available data.
* Goals, Objectives, Activities, and Outcome-Related Performance
Measures-addresses what the strategy strives to achieve and the steps
needed to reach the goals, as well as priorities, milestones, and
performance measures to monitor and evaluate results.
* Future Costs and Resources Needed-addresses what the strategy will
cost, the sources and types of resources and investments needed, and a
risk management framework to guide where those resources and
investments should be targeted.
* U.S. Government Roles, Responsibilities, and Coordination Mechanisms-
clarifies implementing organizations' relationships in terms of
leading, supporting, and partnering, and designates responsibility for
the overall framework for accountability and oversight.
* Strategy's Integration among and with Other Entities-addresses both
how the strategies' goals and objectives relate to those of government
agencies and how the agencies plan to implement the strategy.
We believe a national strategy should ideally contain all of these
characteristics and present them in this order because they flow
logically from conception to implementation. Specifically, the
strategy's purpose leads to the definition of the problems and risks it
intends to address, which in turn leads to specific actions for
tackling those problems and risks, allocating and managing the
appropriate resources, identifying different organizations' roles and
responsibilities, and finally to integrating action among all relevant
parties and implementing the strategy.
We recognize that strategies themselves are not end points, but rather
dynamic, working documents. As with any strategic planning effort,
implementation is the key. The ultimate measure of these strategies'
value will be the extent to which they are useful guidance for policy
and decision makers in allocating resources and balancing priorities
with other important objectives. It will be important over time to
obtain and incorporate feedback from the "user" community as to how the
strategies can better provide guidance and how Congress and the
administration can identify and remedy impediments to implementation,
such as legal, international, jurisdictional, or resource constraints.
STOP Is Missing Several Elements Important to Planning and
Accountability:
Figure 3 shows that STOP partially addresses five of the six
characteristics and their key elements, and does not address any of the
elements within one characteristic. Our analysis noted that STOP does
not address any elements related to resources, investment, and risk
management and only partially addresses a number of elements within the
other five characteristics that are important for planning and
accountability, including performance measures and designation of
oversight responsibility. A full discussion of each characteristic and
our analysis can be found in appendix II.
Figure 3: Extent to Which STOP Addresses GAO's Desirable
Characteristics of an Effective National Strategy:
[See PDF for image]
[End of figure]
STOP partially addresses the third characteristic, which is important
for planning and accountability. Although STOP identifies five main
goals, it does not always provide subordinate objectives and is missing
key elements related to performance measures such as priorities,
milestones, and a process for monitoring and reporting on progress. For
example, under its goal of pursuing criminal enterprises, STOP clearly
lists subordinate objectives of increasing criminal prosecutions,
improving international enforcement, and strengthening laws. But,
subordinate objectives under its goal of working closely and creatively
with U.S. industry can only be inferred. Also, STOP mentions
implementing a new risk model to target high-risk cargo but does not
specify time frames for its completion. Although STOP cites output-
related performance measures [Footnote 14] such as the USPTO STOP
hotline receiving over 950 calls during fiscal year 2005 and a 45
percent increase in the number of copyright and trademark cases filed
from fiscal year 2004 to fiscal year 2005, these figures are presented
without any baselines or targets to facilitate the assessment of how
well the program is being carried out. In addition, STOP cites outcome-
related performance measures for a few activities.[Footnote 15] For
example, STOP goal of pursuing criminal enterprises includes shutting
down sophisticated international peer-to-peer networks used by over
133,000 members. Without effective performance measures, STOP's goals,
objectives, and activities cannot be effectively measured, and
policymakers cannot effectively monitor STOP's progress.
STOP does not address any of the elements within the fourth
characteristic related to resources, investments, and risk management.
As a result, decision makers are limited in their ability to determine
necessary resources, manage them, and shift them with changing
conditions. STOP neither identifies current or future costs of
implementing the strategy, such as those related to investigating and
prosecuting IP-related crime or conducting IP training and technical
assistance, nor does it identify the sources or types of resources
required. While the strategy states that ìAmerican businesses lose $200
to $250 billion a year to pirated and counterfeit goods,î it does not
provide a detailed discussion of the economic threat to U.S. business,
discuss other risks such as the potential threats to consumer health
and safety from counterfeited products, or discuss how resources will
be allocated given these risks.
STOP also partially addresses elements within the fifth characteristic
of organizational roles, responsibilities, and coordination. STOP
identifies lead, support, and partner roles for specific activities.
For example, it identifies the White House as leading STOP and
indicates partnering roles among agencies, such as the Department of
Homeland Security's Immigration and Customs Enforcement (ICE) and the
Department of Justice's FBI joint role of running the National
Intellectual Property Rights (IPR) Center. However, STOP does not
discuss a process or a framework for oversight and accountability among
the agencies carrying out the strategy. Although STOP discusses
specific instances of coordination among member agencies, it lacks a
clear and detailed discussion of how overall coordination occurs. For
instance, there is no mention of STOP meetings, their frequency,
objectives, or agendas.
Some Agency Planning Documents Contain Characteristics Missing in STOP:
We found that some STOP agency planning documents provided additional
detail on missing elements important to planning and accountability.
For example, the October 2004, Report of the Department of Justice's
Task Force on Intellectual Property, and, June 2006, Progress Report of
the Department of Justice's Task Force on Intellectual Property clearly
sets forth the Department of Justice's strategies, objectives,
activities and associated milestones and performance measures for
improving the department's overall intellectual property enforcement.
The June 2006 progress report details how the Department of Justice
implemented the 31 recommendations made by the Task Force in 2004 and,
where appropriate, how it exceeded those milestones and objectives in a
number of important areas. For instance, the 2004 report recommended
increasing the number of Computer Hacking and Intellectual Property
(CHIP) units by 5; the progress report indicated that, by June 2006, an
additional 12 units were added, increasing the total number of CHIP
units nationally to 25.
CBP articulates its strategies, objectives, activities, and associated
milestones and performance measures related to STOP in its 2006
Priority Trade Issue: IPR Trade Strategy.[Footnote 16] For example, the
first objective within CBP's strategy identifies the IPR risk model as
a STOP deliverable and provides targets, measures, and milestones to
track performance. Associated targets included a 15 percent increase in
efficiency, using cargo selectivity criteria to develop a baseline,
indicating a milestone of completing a pilot test by March 2005 with
implementation pending. Another example of an agency document that
addresses other characteristics not addressed in STOP is USPTO's annual
Performance and Accountability Report for 2005, which discusses the
resources available for USPTO's IP-related operations during that
fiscal year, including the costs associated with patent and trademark
related programs.
STOP Does Not Fully Integrate Agencies' Planning Documents:
We found that STOP partially addresses the sixth desirable
characteristic regarding integration, which involves the extent to
which the STOP strategy consistently articulates how it relates as a
national strategy to STOP agencies' own strategies, goals, and
objectives. This characteristic also encompasses how STOP demonstrates
the extent to which the agencies' strategies have shared goals and
objectives. While STOP refers to agency strategies for some STOP
agencies, it does not do so for others. For example, STOP cites the
Department of Justice's October 2004 Report of the Department of
Justice's Task Force on Intellectual Property and links one of its STOP
objectives, increasing criminal prosecutions, to the task force.
However, STOP does not clearly link its objectives with those cited in
other agencies' planning documents relevant to IP enforcement, such as
CBP's most recent Priority Trade Issue: IPR Trade Strategy.[Footnote
17] In addition, STOP does not consistently show the linkages among the
agencies' goals and objectives supporting STOP. For example, under its
objective of pursuing criminal enterprises, STOP does not discuss how
the objectives of the Department of Justice's task force might be
linked to the goals and objectives found in an ICE strategy. It is
important that STOP not only reflects individual agencies' priorities
and objectives but also integrates them in a comprehensive manner,
enhancing collaboration among the agencies and providing a more
complete picture to policy makers with oversight responsibilities. The
absence of clear linkages underscores the strategy's lack of
integration and limits the usefulness of STOP as a management tool for
effective oversight and accountability.
Current Structures Create Challenges to an Effective Integrated
Strategy:
Several challenges to implementation of an effective long-term
integrated strategy result from the current structures. First, NIPLECC
continues to have leadership problems despite enhancements made by
Congress. Second, in contrast, STOP has a positive image compared with
NIPLECC but lacks permanence. STOP's authority and influence, which
results from its status as a presidential initiative, could disappear
after the current administration. Third, NIPLECC's commitment to
implementing STOP as a successful strategy remains unclear, creating a
challenge for accountability.
IP Coordinator Praised, but NIPLECC Retains an Image of Weak Leadership:
Since Congress enhanced its powers, NIPLECC has been given a key
leadership role in overseeing the development of policies, objectives,
and priorities for IP protection and enforcement and in implementing an
overall strategy. Yet, NIPLECC retains an image of inactivity within
some of the private sector. For example, almost half of the 16 private
sector groups with whom we spoke expressed the opinion that NIPLECC was
inactive or a nonplayer. In addition, representatives from 10 of these
groups were unclear about NIPPLEC's role, and many said that they were
unclear about the difference between NIPLECC and STOP. Finally, in July
2006, Senate appropriators expressed concern about the lack of
information provided by NIPLECC on its progress.
On the other hand, both agency officials and private sector
representatives with whom we spoke consistently praised the IP
Coordinator, who heads NIPLECC, saying that he was effectively
addressing their concerns by making speeches, communicating with their
members, and heading U.S. delegations overseas, although they most
often associated his activities with STOP. In fact, most of the
activities of the IP Coordinator's office cited in NIPLECC's latest
annual report are part of STOP. While the IP Coordinator has noted in
congressional testimony that NIPLECC has made some valuable
contributions, such as updating a database for IP training overseas and
contributing legislative suggestions to improve domestic IP laws, he
acknowledged that there is unmet potential for NIPLECC.
Energized STOP Has Features That May Limit Its Long-term Effectiveness:
Agency officials and members of the private sector attribute STOP's
effectiveness to its status as a White House initiative and its
resulting authority and influence. However, there is uncertainty
whether this authority and influence will continue beyond the current
administration because priorities may shift after the next presidential
election. In addition, STOP has weaknesses as a national strategy,
including its failure to fully address key characteristics related to
planning and accountability such as performance measures, resources and
investments, risk management, and designation of oversight
responsibility. Uncertainty as to whether STOP will have the same White
House support in a new administration and its current shortcomings as a
strategy may impact NIPLECC's ability to successfully implement and
monitor it.
However, despite STOP's lack of permanence, it is viewed as energizing
U.S. IP protection and enforcement efforts and is generally praised by
agency officials and industry representatives. The IP Coordinator
stated in congressional testimony that STOP has built an expansive
interagency process that provides the foundation for U.S. government
efforts to fight global piracy. Several agency officials participating
in STOP cited its advantages. They said that STOP gave them the
opportunity to share ideas and support common goals. Many agency
officials with whom we spoke said that STOP had brought increased
attention to IP issues within their agencies and the private sector, as
well as abroad, and attributed that to the fact that STOP came out of
the White House, thereby lending it more authority and influence. One
agency official pointed out that IP was now on the President's agenda
at major summits such as the G8 and the recent European Union
summits.[Footnote 18] Another agency official praised STOP for giving
constituent agencies the flexibility to add to and enhance existing IP
enforcement and protection efforts.
Private sector representatives with whom we spoke generally had
positive views on STOP, although some thought that STOP was a
compilation of new and ongoing U.S. agency activities that would have
occurred anyway. One industry representative noted that STOP is a
coordinated outreach to foreign governments that provided a
collaborative alternative to the Special 301 process,[Footnote 19]
whose punitive aspects countries sometimes resented. Another indicated
that his association now coordinates training with CBP that is specific
to his industry as a result of contacts made through STOP. In addition,
most private sector representatives with whom we spoke agreed that STOP
was an effective communication mechanism between business and U.S.
agencies on IP issues, particularly through CACP, a cross-industry
group created by a joint initiative between the Chamber of Commerce and
the National Association of Manufacturers. Private sector officials
have stated that CACP meetings are their primary mechanism of
interfacing with agency officials representing STOP. There were some
industry representatives, though, who questioned whether STOP had added
value beyond highlighting U.S. IP enforcement activities. Some
representatives considered STOP to be mainly a compilation of ongoing
U.S. IP activities that pre-existed STOP. For example, Operation Fast
Link[Footnote 20] and a case involving counterfeit Viagra tablets
manufactured in China, both listed as STOP accomplishments, began
before STOP was created.
NIPLECC's Unclear Commitment Impairs Accountability:
Ambiguities surrounding NIPLECC's implementation of STOP as a
successful strategy create challenges for accountability. How NIPLECC
will provide accountability through STOP, in practice, remains unclear.
For instance, although NIPLECC's most recent annual report describes
many STOP activities and the IP Coordinator's direct involvement in
them, it does not explain how the NIPLECC principals and the IP
Coordinator plan to carry out their oversight responsibilities mandated
by Congress to help ensure a successful implementation of the strategy.
In addition, the STOP strategy document has not been revised to mention
NIPLECC's oversight role or articulate a framework for oversight and
accountability among the STOP agencies carrying out the strategy.
Furthermore, while agency officials we interviewed generally considered
STOP to be the U.S. government's IP strategy, NIPLECC officials have
sent mixed signals about the extent to which they believe STOP is meant
to provide accountability in terms of performance measures and resource
levels. One official representing NIPLECC said that the STOP strategy
should have goals and objectives, including metrics to measure progress
about which the IP Coordinator should report. However, a NIPLECC
representative from another agency told us that this document was a
fact sheet rather than a strategy and that it should not be assessed as
a national strategy but as an account of administration efforts.
Similarly, a NIPLECC representative from a third agency was skeptical
whether STOP should be assessed as NIPLECC's strategy. Finally, the IP
Coordinator stated in congressional testimony that STOP is NIPLECC's
strategy but also told us that STOP was never meant to be an
institutional method for reporting priorities and metrics to the
President or Congress, or to manage resources. Yet, as mentioned
earlier, these are key characteristics of any strategy.
Conclusions:
Combating IP counterfeiting and piracy requires the involvement of many
U.S. agencies. The STOP strategy has brought attention and energy to IP
efforts within the U.S. government. Agency participants and industry
observers have generally supported the new effort. At the same time,
the challenges of IP piracy are enormous and will require the sustained
and coordinated efforts of U.S. agencies, their foreign counterparts,
and industry representatives to be successful. The current structure
presents several challenges. STOP is an important first step in the
development and implementation of an integrated strategy, but it is not
well suited to address the problem over the long term. As a
presidential initiative, STOP lacks permanence beyond the current
administration. This poses challenges to its long-term effectiveness
because STOP depends upon White House support. In addition, STOP does
not fully address the six desirable characteristics of an effective
national strategy that we believe would improve the likelihood of its
long-term effectiveness and ensure accountability. This limits its
usefulness as a tool to prioritize, guide, implement, and monitor the
combined efforts of multiple agencies to protect and enforce IP rights.
While NIPLECC offers STOP some permanence and congressional oversight,
it is unclear how NIPLECC will carry out its responsibilities in
practice, which, along with its legacy of inactivity, raises questions
about the prospects for improving STOP and sustaining its positive
momentum. NIPLECC's persistent difficulties create doubts about its
ability to carry out its mandate - that of bringing together multiple
agencies to successfully implement an integrated strategy for IP
protection and enforcement that represents the coordinated efforts of
all relevant parties.
Recommendations for Executive Action:
To improve STOP's effectiveness as a planning tool and its usefulness
to Congress:
We recommend that the IP Coordinator, in consultation with the National
Security Council and the six STOP agencies, including the Departments
of Commerce, Homeland Security, Justice, and State; and the Office of
the U.S. Trade Representative; and the Food and Drug Administration,
take steps to ensure that STOP fully addresses the six desirable
characteristics of a national strategy.
To clarify NIPLECC's oversight role with regard to STOP:
We recommend that the IP Coordinator, in consultation with National
Security Council and the six STOP agencies, including the Departments
of Commerce, Homeland Security, Justice, and State; and the Office of
the U.S. Trade Representative; and the Food and Drug Administration,
clarify in the STOP strategy how NIPLECC will carry out its oversight
and accountability responsibilities in implementing STOP as its
strategy.
Agency Comments and Our Evaluation:
We provided USTR; the Departments of Commerce, Justice, Homeland
Security, and State; USPTO; Food and Drug Administration; and the IP
Coordinator with a draft of this report for their review and comment.
The IP Coordinator, through the Department of Commerce in consultation
with USPTO and the International Trade Administration, provided
technical comments. The Department of Homeland Security, the Food and
Drug Administration, and the Office of the U.S. Trade Representative
also chose to provide technical comments. We modified the report where
appropriate. The Departments of Justice and State did not provide any
comments.
We also received written comments from the U.S. Coordinator for
International Property Enforcement (IP Coordinator), which are
reprinted in appendix IV. The IP Coordinator reiterated our message
that STOP was a good first step toward a comprehensive, integrated
strategy to protect and enforce U.S. intellectual property rights and
that it had energized U.S. efforts. He concurred with our
recommendations, stating that his office would review them, and planned
to identify opportunities for improvement based on those
recommendations, where appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to appropriate congressional committees; the U.S. Trade Representative;
the Secretaries of the Departments of Commerce, Justice, Homeland
Security, and State; the Director of the United States Patent and
Trademark Office; and the Director of the U.S. Food and Drug
Administration. We also will make copies available to others upon
request. In addition, the report will be available at no charge on the
GAO Web site at http://www.gao.gov.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4128 or at yagerl@gao.gov. Contact points for
our Office of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made major contributions
to this report are listed in appendix V.
Sincerely yours,
[Signed by]
Loren Yager:
Director, International Affairs and Trade:
[End of section]
Appendix I: Scope and Methodology:
As part of GAO's review of U.S government efforts to develop a
comprehensive and integrated strategy with a long-term perspective to
combat intellectual property counterfeiting and piracy, we reviewed
documents related to the National Intellectual Property Law Enforcement
Council (NIPLECC) and the Strategy for Targeting Organized Piracy
(STOP). Specifically, we reviewed legislation authorizing NIPLECC and
augmenting its capabilities and mandate, as well as its legislative
history. We also examined official STOP documents including the
strategy document, Web site contents, IP fact sheets, NIPLECC meeting
minutes, and NIPLECC's annual reports.
To determine the extent to which STOP serves as a national strategy for
combating trade in counterfeit and pirated goods, we assessed STOP
using the six desirable characteristics of an effective national
strategy developed in previous GAO work.[Footnote 21] The six
characteristics are (1) the purpose, scope, and methodology; (2) the
problem definition and assessment of risks the strategy intends to
address; (3) the goals, subordinate objectives, activities, and
performance measures; (4) resources, investments and risk management;
(5) organizational roles, responsibilities and coordination, including
oversight; and (6) the strategy's integration into the goals,
objectives and activities of its implementing agencies. (See app. II
for a full description of the six characteristics). First, we developed
a checklist using the six desirable characteristics of an effective
national strategy and verified the relevance of the checklist to the
STOP strategy. Specifically, three analysts from the audit team
independently reviewed the April 2006 Bush Administration: Strategy for
Targeting Organized Piracy, Accomplishments and Initiatives document by
applying the checklist to the strategy, then met to discuss the
relevance of the checklist to the information contained in the
document. The analysts concluded that the checklist was relevant and
appropriate for assessing STOP as a strategy. Second, six analysts--
three from the audit team and three with experience using the
methodology for prior GAO work--independently assessed STOP using the
checklist. The six analysts then divided into two panels, each with a
mix of audit team and nonaudit team members and an adjudicator. Each
panel discussed their observations and reached consensus on a
consolidated assessment. Finally, the two panels met to reconcile any
differences in their consolidated assessments using adjudicators as
facilitators if needed. On the basis of these evaluations, we developed
a consolidated summary of the extent that STOP addressed the six
characteristics and 29 elements of an effective national strategy. We
repeated this process when the June 2006 Bush Administration: Strategy
for Targeting Organized Piracy, Accomplishments and Initiatives
document became available. These results are presented in figure 3 of
this report.
We gave each of the 29 elements under the six characteristics an
individual rating of either: "fully addresses," "partially addresses,"
or "does not address." According to our methodology, a strategy "fully
addresses" an element of a characteristic when it explicitly cites all
parts of the element, and the strategy has sufficient specificity and
detail. Within our designation of "partially addresses," one or more of
the element's individual parts should be addressed. A strategy "does
not address" an element of a characteristic when it does not explicitly
cite or discuss any parts of the element of that characteristic, or any
implicit references to the elements are either too vague or general to
be useful. We conducted our review of STOP as a national strategy from
April to October of 2006.
We also obtained and analyzed documents required under the Government
Performance Results Act (GPRA) of 1993, and IP-related planning
documents, from the government agencies involved with STOP. The GPRA
documents we reviewed included the "Performance Annual Report," the
"Annual Performance Plan," and the "Strategic Plan." We assessed the
extent to which these agency documents support STOP goals and add
information that may support characteristics and elements necessary for
an effective national strategy.
In addition, we interviewed agency officials involved in NIPLECC and
STOP, including the Coordinator for International Intellectual Property
Enforcement. We also interviewed representatives from the private
sector. We used U.S. Customs and Border Protection data on commodities
seized for IP violations to select the private sector groups
judgmentally to ensure that we obtained the views of major cross-
industry associations, as well as individual associations and companies
representing key industries that are heavily affected by IP violations
such as the manufacturing, entertainment, and pharmaceutical
industries. In all we spoke to 20 representatives from 16 private
sector groups. Interviewees included the 6 cross-industry associations
addressing IP violations, 7 industry level associations, and
representatives from three companies. We also reviewed their
testimonies before Congress when available. We conducted our audit work
from February to October of 2006 in accordance with generally accepted
government auditing standards.
[End of section]
Appendix II: GAO's Analysis of STOP as an Effective National Strategy:
In prior work, GAO identified six desirable characteristics of an
effective national strategy that would enable its implementers to
effectively shape policies, programs, priorities, resource allocations,
and standards and that would enable federal departments and other
stakeholders to achieve the identified results. GAO further determined
that national strategies with the six characteristics can provide
policymakers and implementing agencies with a planning tool that can
help ensure accountability and more effective results. GAO has applied
this set of characteristics in our assessment of strategies for
combating terrorism, defense management costs, and the National
Strategy for Victory in Iraq.
National strategies are not required by executive or legislative
mandate to address a single, consistent set of characteristics, and
they contain varying degrees of detail based on their different scopes.
Furthermore, we found there was no commonly accepted set of
characteristics used for an effective national strategy. Nonetheless,
after consulting numerous sources, GAO identified a set of desirable
characteristics that we believe would provide additional guidance to
responsible parties for developing and implementing the strategies--and
to enhance their usefulness as guidance for resource and policy
decision makers and to better ensure accountability.
Six Desirable Characteristics Were Developed from Numerous and Diverse
Sources:
To develop these six desirable characteristics of an effective national
strategy, GAO reviewed several sources of information. First, GAO
gathered statutory requirements pertaining to national strategies, as
well as legislative and executive branch guidance. GAO also consulted
the Government Performance and Results Act of 1993, general literature
on strategic planning and performance, and guidance from the Office of
Management and Budget on the President's Management Agenda. In
addition, among other things, GAO studied past reports and testimonies
for findings and recommendations pertaining to the desirable elements
of a national strategy, as well as recommendations by national
commissions and research organizations that have commented on national
strategies. Furthermore, we consulted widely within GAO to obtain
updated information on strategic planning, integration across and
between the government and its partners, implementation, and other
related subjects.
GAO developed these six desirable characteristics, identified in table
2, based on their underlying support in legislative or executive
guidance and the frequency with which they were cited in other sources.
We believe a national strategy should ideally contain all of these
characteristics. Although the authors of national strategies might
organize these characteristics in a variety of ways and/or use
different terms, we present them in this order because they flow
logically from conception to implementation. Specifically, the
strategy's purpose leads to the definition of the problems and risks it
intends to address, which in turn leads to specific actions for
tackling those problems and risks, allocating and managing the
appropriate resources, identifying different organizations' roles and
responsibilities, and finally to integrating action among all relevant
parties and implementing the strategy.
Table 2: Summary of Desirable Characteristics for an Effective National
Strategy:
Desirable characteristic: Purpose, scope, and methodology; Description:
Addresses why the strategy was produced, the scope of its coverage, and
the process by which it was developed; Examples of elements: *
Principles guiding development; * Impetus: e.g., legislation; *
Definition of key terms and mission areas; * Process and methodology to
produce strategy (via interagency task force, private input, etc.).
Desirable characteristic: Detailed discussion of problems, risks, and
threats; Description: Addresses the particular national problems and
threats at which the strategy is directed; Examples of elements: *
Discussion and definition of problems, causes, and operating
environment; * Risk assessment, including analysis of threat and
vulnerabilities; * Quality of data: constraints, deficiencies, unknowns.
Desirable characteristic: Desired goals, objectives, activities, and
output-related and outcome-related performance measures; Description:
Addresses what the strategy is trying to achieve, steps to achieve
those results, as well as the priorities, milestones, and performance
measures to gauge results; Examples of elements: * Overall results
desired; * Hierarchy of goals and subordinate objectives; * Priorities,
milestones, and performance measures to gauge results; * Specific
performance or activity measures; * Limitations on progress indicators.
Desirable characteristic: Description of future costs and resources
needed; Description: Addresses what the strategy will cost, the sources
and types of resources and investments needed, and where resources and
investments should be targeted by balancing risk reductions and costs;
Examples of elements: * Resources and investments associated with
strategy; * Types of resources required; * Sources of resources; *
Economic principles, e.g., balancing benefits and costs; * Resource
allocation mechanisms; * Mandates/incentives to spur action; *
Importance of fiscal discipline; * Linkage to other resource documents;
* Risk management principles.
Desirable characteristic: Delineation of U.S. government roles and
responsibilities and coordination mechanism; Description: Addresses who
will be implementing the strategy, what their roles will be compared to
others, and mechanisms for them to coordinate their efforts; Examples
of elements: * Lead, support, and partner roles and responsibilities; *
Accountability and oversight framework; * Potential changes to
structure; * Specific coordination processes; * Conflict resolution
mechanism.
Desirable characteristic: Description of strategy's integration with
implementing agencies; Description: Addresses how a national strategy
relates to the strategies' goals, objectives, and activities of
implementing agencies; Examples of elements: * Integration with other
national strategies (horizontal); * Integration with relevant documents
from other implementing organizations (vertical); * Implementation
guidance; * Details on subordinate strategies and plans for
implementation (e.g., human capital, enterprise architecture).
Source: GAO.
[End of table]
We recognize that strategies themselves are not end points, but rather,
are starting points. In our view, the strengths of some strategies are
useful in suggesting ways to enhance the value of other strategies,
fill in gaps, speed implementation, guide resource allocations, and
provide oversight opportunities. As with any strategic planning effort,
implementation is the key. The ultimate measure of these strategies'
value will be the extent they are useful as guidance for policy and
decision makers in allocating resources and balancing stated priorities
with other important objectives. It will be important over time to
obtain and incorporate feedback from the "user" community as to how the
strategies can better provide guidance and how Congress and the
administration can identify and remedy impediments to implementation,
such as legal, international, jurisdictional, or resource constraints.
STOP Partially Addresses Five Characteristics and Does Not Address One:
Our analysis showed that the strategy partially addresses five of the
six desirable characteristics of an effective national strategy and
fails to address one characteristic. As indicated in figure 3, shown
earlier, the Strategy for Targeting Organized Piracy (STOP) is missing
key elements within each characteristic related to planning and
accountability such as performance measures, resources and investments,
and designation of oversight responsibility. The following section
discusses the STOP strategy as it relates to each of the desirable
characteristics of an effective national strategy.
STOP Discusses Purpose and Scope but Lacks Detailed Discussion of
Methodology:
This characteristic addresses why the strategy was produced, the scope
of its coverage, and the process by which it was developed. For
example, a strategy should discuss the specific impetus that led to its
being written (or updated), such as statutory requirements, executive
mandates, or other events. Furthermore, a strategy would enhance
clarity by including definitions of key, relevant terms. In addition to
describing what it is meant to do and the major functions, mission
areas, or activities it covers, a national strategy would ideally
address its methodology. For example, a strategy should discuss the
principles or theories that guided its development, the organizations
or offices that drafted the document, or working groups that were
consulted in its development. A complete description of purpose, scope,
and methodology make the document more useful to organizations
responsible for implementing the strategies, as well as to oversight
organizations such as Congress.
STOP clearly identifies the purpose of the strategy as protecting and
enforcing IP through targeting organized piracy, which encourages
American innovation and keeps American businesses competitive
throughout the world. However, STOP does not provide a complete
discussion of the purpose because it does not clearly discuss the
specific impetus that led to the creation of this particular strategy
at the time it was written. Such an impetus might include a discussion
of increasing demand by the victims of IP violations, relevant
legislation or executive mandates, or key events related to piracy that
may have functioned as a catalyst in developing the strategy. STOP
fully addresses the element regarding the scope of the strategy. The
five general goals serve to clearly identify the major functions and
mission areas the strategy covers and provides supporting activities
for each goal. STOP, however, does not include a discussion of its
methodology such as the process that produced the strategy, what
organizations or offices were involved in drafting the document or
whether it was the result of a working group.
STOP Identifies the Problem but Lacks Detailed Discussion of Risk
Assessment:
This characteristic addresses the particular national problems and
threats at which the strategy is directed. Specifically, this means a
detailed discussion or definition of the problems the strategy intends
to address, their causes, and operating environment. In addition, this
characteristic entails a risk assessment, including an analysis of the
threats to and vulnerabilities involved with the problem and
implementing the strategy. Specific information concerning a risk
assessment helps responsible parties better implement the strategy by
ensuring that priorities are clear and focused on the greatest needs. A
discussion of the quality of data available regarding this
characteristic, such as known constraints or deficiencies, would also
be useful.
Global piracy and counterfeiting are identified as the problem in the
strategy addresses. While these terms are not defined in detail, the
strategy contains additional information on the types of piracy and
counterfeiting that affect U.S. businesses such as references to
software piracy, counterfeit labels, and counterfeit Viagra.
STOP only partially addresses the causes of the problem and the
operating environment. The strategy implies, but does not clearly
discuss, some causes of global piracy and counterfeiting when
describing its activities. For instance, STOP discusses efforts to
assist companies with supply chain management and U.S. government case
referral mechanisms to address instances where foreign governments fail
to provide adequate IP protection to U.S. businesses. In addition, STOP
refers to, but does not clearly discuss, a variety of operating
environments relevant to counterfeiting, such as references to IP
violations on the internet and seizures of counterfeit products at the
U.S. border, as well as in warehouses in China.
Further, STOP does not provide a detailed risk assessment of the
threats involved in counterfeiting and piracy. While the strategy
states that ìAmerican businesses lose $200 to $250 billion a year to
pirated and counterfeit goods,î it neither provides a detailed
discussion of the economic threat to U.S. business nor does it discuss
other risks such as the potential threats to consumer safety from
counterfeited products. STOP also states that profits related to piracy
are ìone way for criminal networks to support their heinous activitiesî
but does not discuss the issue any further. In addition, STOP does not
include any discussion regarding the quality of data it cites in the
strategy or on counterfeiting and piracy in general.
STOP Addresses Goals and Activities but Lacks Important Elements for
Measuring Performance:
This characteristic addresses what the national strategy strives to
achieve and the steps needed to garner those results, as well as the
priorities, milestones, and performance measures to gauge results. At
the highest level, this could be a description of the overall results
desired, followed by a logical hierarchy of major goals, subordinate
objectives, and specific activities to achieve results. In addition, it
would be helpful if the strategy discussed the importance of
implementing parties' efforts to establish priorities, milestones, and
performance measures, which help ensure accountability. Ideally, a
national strategy would set clear desired results and priorities,
specific milestones, and outcome-related performance measures while
giving implementing parties flexibility to pursue and achieve those
results within a reasonable time frame. If significant limitations on
performance measures exist, other parts of the strategy should address
plans to obtain better data or measurements, such as national standards
or indicators of preparedness. Identifying goals, objectives, and
performance measures aids implementing parties in achieving results and
enables more effective oversight and accountability. Identifying
priorities and milestones would provide decision makers with
information to better assess progress and manage time and resources. In
addition, identifying and measuring outcome-related performance, rather
than output measures alone, would allow for more accurate measurement
of program results and assessment of program effectiveness.[Footnote
22] STOP fully addresses goals and activities in its strategy document,
while partially addressing subordinate objectives and performance
measures.
STOP clearly identifies its goals and further identifies overall
results desired with references to a level playing field for American
businesses throughout the world. STOP goals are to:
* empower American innovators to better protect their rights at home
and abroad,
* increase efforts to seize counterfeit goods at our borders,
* pursue criminal enterprises involved in piracy and counterfeiting,
* work closely and creatively with U.S. industry, and:
* aggressively engage our trading partners to join U.S. efforts.
STOP also presents numerous activities clearly associated with each
goal. In general, STOP only partially addresses subordinate objectives
because they are clearly stated under some goals, but implied or
otherwise, unclear in other goals. Under the third goal for example, to
pursue criminal enterprises involved in piracy and counterfeiting, STOP
clearly identifies increasing criminal prosecutions, improving
international enforcement and strengthening laws as the subordinate
objectives. In contrast, the subordinate objectives are not clearly
identified under the fourth goal to work closely and creatively with
U.S. industry, although they can be inferred based on the activities,
such as helping businesses to ensure their supply and distribution
chains are free of counterfeiters and correcting faulty business
practices.
STOP is missing a number of elements within this characteristic that
are important for effective monitoring and oversight, including a clear
discussion of priorities, milestones, and processes for monitoring and
reporting on progress. For example, STOP mentions implementing a new
risk model to target high-risk cargo but does not specify time frames
for its completion.
STOP only partially addresses output-related and outcome-related
performance measures, lacking information relevant to assessing how
well programs are implemented and their impacts as compared with the
intended purpose. For example, STOP cites output-related performance
measures such as the number of calls received on the U.S. Patent and
Trade Mark Office (USPTO) STOP hotline, the number of small businesses
that attended four intellectual property Road Show events in 2005, the
number of prosecutors in the Computer Hacking and Intellectual Property
(CHIP) units within the Department of Justice and the percentage
increase in copyright and trademark cases filed. However, these figures
are presented without any baselines or targets needed to assess
progress. In addition, STOP cites outcome-related performance measures
for a few activities, such as shutting down a sophisticated
international peer-to-peer network used by over 133,000 members. It
should be noted that performance measures should be carefully chosen to
be meaningful for each goal, acknowledging limitations, and avoiding
perverse incentives where possible.
STOP provides no discussion of any processes for monitoring and
reporting on progress or the limitations of its output-related and
outcome-related performance measures. Without effective performance
measures in place, STOP's goals, objectives and activities cannot be
effectively measured. In the absence of these elements policymakers
cannot effectively monitor STOP's progress toward its stated goals.
STOP Does Not Address Elements Relevant to Resources, Investments, or
Risk Management:
This characteristic addresses the costs and resources involved in
implementing the strategy and how the strategy balances those costs
with the benefits and risks. This characteristic discusses the current
and future costs of the strategy, the sources of resources and
investments associated with the strategy (e.g., federal agencies,
private sector), and the types of investment needed (e.g., human
capital, information technology, research and development, budgetary).
Ideally, a strategy would also identify where those resources and
investments should be targeted and appropriate mechanisms to allocate
resources. A national strategy should also address the difficult, but
critical, issues about who pays and how such efforts will be funded and
sustained in the future.
A national strategy should also discuss linkages to other resource
documents, such as federal agency budgets or human capital, information
technology, research and development, and acquisition strategies.
Finally, a national strategy should also discuss in greater detail how
risk management will aid implementing parties in prioritizing and
allocating resources, including how this approach will create society-
wide benefits and balance these with the cost to society. Guidance on
costs and resources needed using a risk management approach helps
implementing parties allocate resources according to priorities; track
costs and performance; and shift resources, as appropriate. Such
guidance also would assist Congress and the administration in
developing a more effective strategy to achieve the stated goals.
STOP does not address elements related to resources and investments or
risk management. STOP does not identify current or future costs of
implementing the strategy. Costs related to implementing STOP would
include, among other things, costs related to investigating and
prosecuting of IP related crime, conducting IP training and technical
assistance, and developing new risk assessment technologies. STOP also
does not identify the sources, or types, of resources required by the
strategy. While the strategy document lists numerous activities, some
involving multiple agencies, it neither indicates which agencies have
employed what types of resources to carry out the activity, nor does it
identify the level and type of resources needed in order to effectively
implement the activity. Furthermore, with no established priorities or
discussion of risk management, the strategy does not address how to
allocate resources in order to best manage the threats of counterfeit
products with the resources available to target organized piracy. As a
result, the resources necessary to implement STOP cannot be reliably
determined and policymakers are limited in their ability to manage
resources and shift them as appropriate with changing conditions.
STOP Partially Addresses Organizational Roles and Coordination but
Lacks Framework for Oversight:
This characteristic addresses which organizations will implement the
strategy, their roles and responsibilities, and mechanisms for
coordinating their efforts. This characteristic entails identifying the
specific federal departments, agencies, or offices involved, as well as
the roles and responsibilities of private and international sectors, if
appropriate. A strategy would ideally clarify implementing
organizations' relationships in terms of leading, supporting, and
partnering. In addition, a strategy should describe the organizations
that will provide the overall framework for accountability and
oversight, such as the National Security Council, Office of Management
and Budget, Congress, or other organizations. Furthermore, a strategy
should also identify specific processes for coordination and
collaboration between sectors and organizations--and address how any
conflicts would be resolved. Addressing this characteristic fosters
coordination and enhances both implementation and accountability.
STOP provides some information on organizational roles and
responsibilities, such as identifying lead, support, and partner roles
for specific activities. For example, it identifies the White House as
leading STOP and indicates partnering roles among agencies, such as
between the Department of Homeland Security's Immigration and Customs
Enforcement (ICE) and the Department of Justice's Federal Bureau of
Investigation (FBI), which jointly run the National Intellectual
Property (IPR) Center. However, STOP neither discusses the need, nor
designates any agency with responsibility for providing framework for
oversight and accountability within the strategy.
STOP also partially addresses mechanisms for coordination. For example,
the strategy discusses some coordination among member agencies in its
description of STOP activities but lacks a clear and detailed
discussion of how overall coordination occurs among agencies. For
instance, there is no mention of STOP meetings, their frequency,
objectives, or agendas. In addition, there is no discussion of how
agencies coordinate on IP issues that may involve law enforcement
sensitive material among agencies and other entities with which they
collaborate. Furthermore, STOP does not address how conflicts among
member agencies should be resolved.
STOP Partially Addresses Integration with Member Agencies but Lacks
Linkage to Individual Agency Goals and Objectives:
This characteristic addresses both how a national strategy relates to
other strategies' goals, objectives, and activities (horizontal
integration)--and to subordinate levels of government and other
organizations and their plans to implement the strategy (vertical
integration). For example, the strategy could indicate how it relates
to implementing agencies' shared goals, subordinate objectives, and
activities. Similarly, related strategies should highlight their common
or shared goals, subordinate objectives, and activities. In addition,
the strategy could address its relationship with relevant documents
from implementing organizations, such as the strategic plans, annual
performance plans, or annual performance reports required of federal
agencies by the Government Performance and Results Act. A strategy
should also discuss, as appropriate, various strategies and plans
produced by the state, local, private, or international sectors. A
strategy also should provide guidance such as the development of
national standards to link together more effectively the roles,
responsibilities, and capabilities of the implementing parties. A clear
relationship between the strategy and other critical implementing
documents helps agencies and other entities understand their roles and
responsibilities, foster effective implementation, and promote
accountability.
STOP partially addresses this characteristic. STOP associates its goals
with specific member agencies. For example, pursuing criminal
enterprises is associated with the Department of Justice, and
increasing efforts to stop counterfeits goods at the border is
associated with the U.S. Customs and Border Protection. However, STOP
does not consistently articulate how it relates to agencies'
strategies, goals, and objectives. While STOP is missing many elements
related to the desirable characteristics, we found that agency planning
documents contained some of the missing information. For example, we
identified federal agency planning documents that provide additional
detail on missing elements important to planning and accountability
that STOP did not adequately address. However, the need to consult
multiple agency documents underscores the strategy's lack of
integration and limits the value of STOP as a management tool for
effective oversight and accountability. Clearly linking STOP to the
agencies' own strategies is important to ensure that the strategy not
only reflects individual agencies' priorities and objectives but also
integrates them in a comprehensive manner, enhancing collaboration
among the agencies and providing a more complete picture to
policymakers with oversight responsibilities.
[End of section]
Appendix III: Bush Administration: Strategy for Targeting Organized
Piracy Accomplishments and Initiatives:
[See PDF for image]
[End of figure]
Bush Administration:
Strategy for Targeting Organized Piracy:
Accomplishments and Initiatives:
June 2006:
[See PDF for image]
[End of figure]
Bush Administration Strategy For Targeting Organized Piracy:
June 2006:
"In order to keep this economy innovative and entrepreneurial, it's
important for us to enforce law, and if the laws are weak, pass new
laws, to make sure that the problem of counterfeiting, which has been
growing rapidly.. is held in check."
-President George W. Bush (March 16, 2006):
Our competitive advantage is only as good as our ability to protect our
ideas. And to protect our ideas we need to ensure that there is a level
playing field for American businesses throughout the world.
In October of 2004, the Bush Administration announced an initiative
that reinforced this objective - the Strategy Targeting Organized
Piracy (STOP). STOP! is led by the White House and brings together
USTR, the Department of Commerce, the Department of Justice, the
Department of Homeland Security, the Food and Drug Administration and
the State Department. STOP! is the most comprehensive initiative ever
advanced to fight global piracy where it starts, block bogus goods at
America's borders and help American businesses secure and enforce their
rights around the world.
The problem of global piracy and counterfeiting confronts many
industries, exists in many countries and demands continuous attention.
That's why this Administration is committed to stopping trade in
pirated and counterfeit goods. And through President Bush's leadership,
we created a five-point plan under STOP!:
1. Empower American innovators to better protect their rights at home
and abroad.
2. Increase efforts to seize counterfeit goods at our borders.
3. Pursue criminal enterprises involved in piracy and counterfeiting.
4. Work closely and creatively with U.S. industry.
5. Aggressively engage our trading partners to join our efforts.
Through effective coordination we have effectively implemented this
plan U.S. government agencies are working more closely together and we
have made significant progress. We are achieving results, maintaining
the commitment of senior Administration officials, institutionalizing
an unprecedented level of coordination within the federal government
and receiving attention around the world. The message that we are
delivering is - the United States takes the issue of intellectual
property enforcement very seriously, we are leveraging all of our
resources to address it and we have high expectations of all of our
global trading partners.
The following pages describe the approaches that we are taking and the
results we have achieved.
Office of the U.S. IPR Coordinator1:
[See PDF for image]
[End of figure]
Empower American Innovators To Better Protect Their Rights At Home And
Abroad:
"This administration is committed to helping U.S businesses remain
competitive by protecting intellectual property so that American
ingenuity remains a driving force in the United States and the world's
economy."
-Secretary of Commerce Carlos Gutierrez (March 16, 2006):
"The development of intellectual property is one of the driving forces
of U.S. economic competitiveness, and we will utilize all tools at our
disposal to ensure that U.S. intellectual property rights are
protected."
-U.S. Trade Representative Rob Portman (October 26, 2005):
To help American innovators secure and enforce their rights across the
globe, we have new federal services and assistance:
We created a hotline (1-866-999-HALT), which is staffed by specialized
attorneys who counsel businesses on how to protect their intellectual
property rights (IPR) and work with callers on how to best resolve
problems. In cases where the individual or company has properly
registered its rights, its issue can then be referred to a trade
compliance team that will monitor their case and work to see what next
steps can be taken.
We also developed a website (www.stopfakes.gov) and brochure to provide
information and guidance to rights holders on how to register and
protect their IPR in markets around the world.
We created downloadable "IP toolkits" to guide businesses through
securing and enforcing their rights in key markets across the globe.
These toolkits are available at the Stopfakes.gov website, and cover
key trading partners such as China, Russia, India, Mexico, Korea and
Taiwan.
In November 2005, Commerce Secretary Gutierrez announced the China
Intellectual Property Rights (IPR) Advisory Program. This program is
done in conjunction with the American Bar Association, the National
Association of Manufacturers and the American Chamber of Commerce in
China. It offers small and medium-sized U.S. businesses free IPR
consultation with an attorney.
We are continuing to expand our IP attache program in China and
positioning new attaches in Brazil, Russia, India, Thailand and the
Middle East. Having IP attaches stationed in these countries will
enhance our ability to work with local government officials to improve
IP laws and enforcement procedures in addition to assisting U.S.
businesses to better understand the challenges of protecting and
enforcing their IPR.
Also, we are providing training for U.S. embassy personnel to be
effective first responders to IPR issues in order to identify problems
abroad and assist rights holders before fakes enter the market and the
supply chain.
* The Stopfakes.gov website has received over 1.8 million visits.
* In FY 2005, the STOP! Hotline received over 950 calls and during
the first quarter of FY 2006 we have received over 550 calls.
* During our four 2005 IP Road Show events, in Salt Lake City,
Phoenix, Austin and Miami we had a total of 740 small business
attendees.
Office of the U.S. IPR Coordinator 2:
[See PDF for image]
[End of figure]
Increase Efforts To Seize Counterfeit Goods At Our Borders:
"Illicit profits from counterfeit or pirated goods are one way for
criminal networks to finance their heinous activities. We are
confronting counterfeiters with the full force of the law and we're
moving aggressively to seize their assets and put them out of business."
-Secretary of Homeland Security Michael Chertoff (April 6, 2006):
We need to increase our efforts to stop fake and counterfeit goods at
America's borders:
The Department of Homeland Security (DHS), through the enforcement
efforts of U.S. Customs and Border Protection (CBP) and U.S.
Immigration and Customs Enforcement (ICE), is a key player in the STOP!
Initiative, working to stop counterfeiters and pirates from bringing
fake products into the United States. In fiscal year 2005, DHS seized
8,022 shipments of counterfeit and pirated goods valued at more than
$93 million. Since 2001 CBP has made over 31,000 seizures of fake and
counterfeit goods.
The following chart provides a break down of the major countries frOm
which CBP IP-related .seizures originated:
Top Trading Partners:
Top Five Countries by Value for IPR Seizures - FY 2005:
[See PDF for image]
Source: Department of Homeland Security, U.S. Customs and Border
Protection:
[End of figure]
We have begun implementing a new risk assessment model and technologies
to cast a wider, tighter net on counterfeit and pirated goods and to
stop these goods at our borders. CBP's new risk assessment model uses
several sources of data, including historical seizure information, to
target high-risk cargo while facilitating the flow of legitimate goods.
With post-entry verification (IPR audits), CBP added a new IPR
enforcement tool to complement traditional physical examination of
goods at the border. We are issuing penalties on imports of fakes
uncovered during IPR audits, and working with businesses to develop
internal control systems to prevent imports of counterfeit and pirated
goods.
Additionally, we have developed an online recordation tool for rights
holders to record their trademarks and copyrights with CBP. Recordation
provides a higher level of protection for trademarks and copyrights and
makes it easier for CBP to identify fake goods at our borders. CBP's
online recordation tool is linked to the U.S. Patent and Trademark
Office's website, and will soon be linked to the Copyright Office's
website as well. This resource helps businesses protect their rights.
We are working with our trading partners to share information and
improve our capabilities to assess and anticipate risks. We are already
seeing early results of this effort with the European Union. We have
followed up on the U.S./EU Economic Ministerial held last year, where
leaders of both governments committed to expand information sharing of
customs data and information. The United States and the:
Office of the U.S. IPR Coordinator 3:
[See PDF for image]
[End of figure]
European Union, as part of a bilateral IP working group, are
implementing an action plan to strengthen IPR enforcement, including
through greater customs cooperation.
The Department of Homeland Security's Immigration and Customs
Enforcement (ICE) and the Department of Justice's Federal Bureau of
Investigation (FBI), two of the lead investigative agencies in the
fight against both domestic and international IPR crime, jointly run
the National IPR Center. The Center identifies and addresses developing
IPR issues and trends and advances that information through outreach
and training with foreign governments. Additionally, the FBI serves as
the co-chair for Interpol's IPR international training sub-committee,
and in that role provides regular training to officials overseas on IPR
enforcement.
The tools and relationships developed under STOP! have produced real
results. For example, ICE special agents working in conjunction with
the Chinese government and U.S. industry conducted the first ever joint
US-Chinese enforcement action on the Chinese mainland and disrupted a
network that distributed counterfeit motion pictures worldwide. More
than 210,000 counterfeit DVDs were seized. Chinese authorities also
destroyed three warehouses that were being used to store the
counterfeit DVDs that would have been distributed worldwide.
Pursue Criminal Enterprises Involved In Piracy And Counterfeiting:
"In the United States, we have made the protection of intellectual
property rights a law enforcement priority, and we are waging an
aggressive and successful campaign against intellectual property crime
on multiple fronts."
-Attorney General Alberto Gonzales (November 18, 2005):
Law enforcement continues to play a leading role in dismantling
criminal enterprises that steal intellectual property:
U.S. law enforcement agencies arc also working closely with industry to
gather information, develop cases and bring convictions against the
criminals who steal their IP. We need to be as sophisticated and
creative as the criminals. It is important that government and industry
work together with coordinated efforts.
The Department of Justice (DoJ) plays a key role in dismantling
criminal enterprises that steal intellectual property, improving
international enforcement efforts, and ensuring that there is a strong
legal regime for the protection of intellectual property throughout the
world. To that end, as part of the STOP! Initiative, the Attorney
General formed an Intellectual Property Task Force to examine how it
could maximize its efforts to protect intellectual property rights. In
October of 2004, the first Task Force Report was released and it
included a comprehensive set of recommendations on steps that the
Department of Justice could take to better protect IPR. U.S. law
enforcement agencies, the Justice Department in particular, have
achieved significant results as discussed below.
Increasing Criminal Prosecutions:
Increased the number of copyright and trademark cases filed from FY
2004 to FY 2005 by 45%.
* Increased the number of defendants prosecuted for intellectual
property offenses by 97% from FY 2004 through the end of FY 2005.
* Created five new Computer Hacking and Intellectual Property (CHIP)
Units in the U.S. Attorney's Offices in Nashville, Orlando, Pittsburgh,
Sacramento, and Washington D.C., bringing the total number of
specialized units to 18.
* Increased the total number of CHIP prosecutors nationwide to 230.
* Continued to dismantle and prosecute multi-district and international
criminal organizations that commit intellectual property crimes,
including:
Office of the U.S. IPR Coordinator 4:
[See PDF for image]
[End of figure]
* Leading the international takedown against members of over 22 major
online software piracy groups in Operation Site Down in June 2005,
involving 12 countries, the simultaneous execution of over 90 searches
worldwide, the eradication of at least eight major online distribution
sites, and confiscation of an estimated $50 million in pirated
software, games, movies, and music. Prosecutors have indicted 44
defendants and obtained 17 felony convictions in connection with this
operation to date;
* Shutting down a sophisticated international peer-to-peer network
known as Elite Torrents, used by over 133,000 members, in the first-
ever criminal action against a Bit Torrent file-sharing network;
* Obtaining felony conspiracy and copyright convictions against 26
software, game, movie, and music pirates as part of the ongoing
Operation FastLink, the largest law enforcement action ever taken
against online intellectual property offenders;
* Obtaining convictions against two Los Angeles-area men for conspiracy
and trafficking in over 700,000 counterfeit Viagra tablets manufactured
in China and worth over $5.6 million. o Indicting the four leaders of
one of the largest counterfeit goods operations ever uncovered in New
England - breaking up a scheme to sell more than 30,000 luxury goods
worth more than $1.4 million.
Improving International Enforcement:
The Justice Department recently deployed an IP law enforcement
coordinator for Asia, who is stationed in Bangkok, Thailand. This
individual will work closely with prosecutors in the Department's
Computer Crime and Intellectual Property Section and Office of
International Affairs to oversee IP law enforcement training and assist
U.S.-based enforcement efforts in the region.
In addition, DoJ has executed agreements to implement obligations of
the US/EU Mutual Legal Assistance and Extradition Agreements. These
agreements ensure cooperation regarding intellectual property crimes
with Austria, Belgium, Denmark, Finland, France, Hungary, Ireland,
Latvia, Lithuania, Luxembourg, Netherlands, Portugal, Slovenia, Spain,
Sweden, and the United Kingdom; and we have completed negotiations with
the nine remaining E.U. countries - Cyprus, Czech Republic, Estonia,
Germany, Greece, Italy, Malta, Poland and Slovakia.
We trained and provided technical assistance to more than 2,000
prosecutors, investigators, judges and IP experts from 94 countries
regarding the protection and enforcement of IPR.
We have initiated bilateral discussions with China on criminal IP
enforcement and are working toward establishing a bilateral law
enforcement experts group to improve operational cooperation and
coordination in joint and cross-border investigations. We are also
working closely with other member countries in a G8 IP Experts working
group, and will soon be proposing and pursuing specific IP enforcement
projects in the G8 Lyon-Roma Group on Crime and Terrorism.
Strengthening Laws:
The Bush Administration is working with Congress to strengthen laws and
penalties related to intellectual property rights enforcement,
including the:
* Stop Counterfeiting in Manufactured Goods Act, H.R. 32 (March 2006):
* Prohibits the trafficking of counterfeit labels, emblems, containers
or similar labeling components that may be used to facilitate
counterfeiting; provides for forfeiture of articles bearing or
consisting of a counterfeit mark and proceeds of any property derived
from proceeds of, or used in the commission of, a violation; expands
the definition of "trafficking"
Office of the U.S. IPR Coordinator 5:
[See PDF for image]
[End of figure]
for certain counterfeiting crimes and clarifying that trafficking in
counterfeit goods or labels includes possession with intent to traffic
in such items.
* Family Entertainment and Copyright Act, S. 167 (April 2005):
* Outlaws camcording in movie theaters and provides a new 3-year felony
for the distribution of a pre-release work by making it available on a
publicly-accessible computer network. Recognizes the premium value of
copyrighted works before they are released to the public. * Anti-
Counterfeiting Amendments of 2004, H.R. 3632 (December 2005):
* Allows law enforcement officials to seize material and equipment used
to make counterfeit products and labels.
* Intellectual Property Protection Act of 2005:
* The Department of Justice transmitted to Congress the
Administration's proposed legislation entitled the "Intellectual
Property Protection Act of 2005," a comprehensive reform package that
would toughen penalties for intellectual property crimes, expand
criminal intellectual property protections, and add investigative tools
for criminal and civil intellectual property rights enforcement.
Work Closely And Creatively With U.S. Industry:
"We believe that successful 21st century economies will be those that
unleash the power of private enterprise and innovation. Innovation is
the most important resource in our increasingly knowledge-based
economy. Global trade in pirated and counterfeit goods threatens
innovation."
-Secretary of Commerce Carlos Gutierrez (February 26, 2006):
We are conducting extensive outreach with U.S. industry and trade
associations, and want to hear their stories. Companies need to be
aggressive advocates of their own IP. We are working actively with the
business community as we go forward. They are our eyes and cars on the
ground and know better than anyone how inadequate IPR enforcement
affects their businesses. We will continue to work together to find
solutions and lead enforcement efforts.
We are working with U.S. and international trade associations such as
the American Bar Association, American Chamber of Commerce in China,
Business Software Alliance, Entertainment Software Association,
International Chamber of Commerce, International Intellectual Property
Alliance, International Federation of Phonographic Industries, Motion
Picture Association, National Association of Manufacturers, The
Pharmaceutical Research and Manufacturers of America, Quality Brands
Protection Committee, Recording Industry Association of American, U.S.
Chamber of Commerce and the U.S.-China Business Council, to name just a
few.
Additionally, we are working with the Coalition Against Counterfeiting
and Piracy, a U.S. Chamber of Commerce and National Association of
Manufacturers led association on the "No Trade in Fakes" program to
develop voluntary guidelines companies can use to ensure their supply
and distribution chains are free of counterfeits.
We are also conducting post-entry verifications (IPR audits) on
companies vulnerable to IP violations and working with them to correct
their faulty business practices. U.S. Customs and Border Protection
(CBP) uses post-entry verifications of importing companies to detect
discrepancies and systemic weaknesses in the area of IPR protection. We
then work with audited companies to devise solutions and remedies for
deficient and vulnerable areas.
Office of the U.S. IPR Coordinator 6:
[See PDF for image]
[End of figure]
We have education campaigns that take place across America to teach
small and medium-sized enterprises how to secure and protect their
rights and where to turn for federal resources and assistance. It is
important to note that only 15% of small businesses that do business
overseas know that a U.S. patent or trademark provides protection only
in the United States. Companies need to make sure that they register
for intellectual property protection overseas. We recently had
education programs in Northern Virginia, San Diego and Atlanta, and we
have upcoming programs in Nashville and Columbus. These events help
educate businesses on what intellectual property rights are, why they
are important, and how to protect and enforce these rights domestically
and internationally.
With China, an important tool that we use to help our industry is the
IPR Case Referral Mechanism (CRM) which was created by the U.S.
government to facilitate the submission of individual U.S. company IPR
cases through China's Ministry of Commerce (MOFCOM) to relevant Chinese
agencies. Our inter-agency team reviews cases where the Chinese
government fails to provide adequate protection of IPR to U.S.
businesses, and after an internal vetting process, sends approved cases
to the Chinese government to facilitate their resolution. Five cases
have already been submitted to the Chinese through the Case Referral
Mechanism.
Aggressively Engage Our Trading Partners To Join Our Efforts:
"But while innovation will push our economies forward, a lack of
fairness will hold its back. American businesses lose $200 to $250
billion a year to pirated and counterfeit goods. Innovation stimulates
economic growth, but innovation will suffer without proper protection
for intellectual property rights."
-Secretary of State Condoleezza Rice (March 19, 2005):
"Trade can raise living standards for millions. But a vibrant trade
system must be based on fairness and trust. All countries benefit from
honest commerce. All countries suffer from dishonest commerce. Today's
pirates are more clever and steal more than the bandits of the high
seas from an earlier time. It is tougher to track them down and shut
them down but we must succeed."
-U.S. Trade Representative Rob Portman (March 15, 2006):
We are reaching out to our trading partners and building international
support. U.S. leadership is critical and we are active on a number of
fronts:
When U.S. government officials meet with our global trading partners
for bilateral and multilateral discussions, IPR protection and
enforcement are always top priorities.
Promoting International Engagement:
G-8: At the 2005 G8 meeting, President Bush secured an agreement from
fellow leaders to focus on IP enforcement, and we are working with our
G8 counterparts to develop a strong IP enforcement program in 2006.
APEC: Within the Asia Pacific Economic Cooperation (APEC) forum last
year, we secured an endorsement of a U.S.-Japan sponsored `APEC Anti-
Counterfeiting and Piracy Initiative' to reduce trade in counterfeit
goods and to combat online piracy, while increasing cooperation and
capacity building. Last November this initiative resulted in agreement
by the leaders of APEC's 21 member economies to a set of model
guidelines to reduce trade in counterfeit and pirated goods, to protect
against unauthorized copies, and to prevent the sale of counterfeit
goods over the Internet. We are currently working to implement and
expand these model guidelines.
FTAs: Constant, high-level engagement to improve enforcement of
intellectual property rights has been a vital part of U.S. trade policy
for many years. The importance of intellectual property enforcement is:
Office of the U.S. IPR Coordinator 7:
[See PDF for image]
[End of figure]
reflected, for example, in the provisions of U.S. trade agreements and
in the Administration's utilization of the "Special 301" provisions of
U.S. trade law. The Bush Administration makes intellectual property
rights a priority when negotiating new free trade agreements. Our free
trade agreements provide cutting-edge protection for intellectual
property with strong rules to combat counterfeiting and piracy. This
was seen in the recent Central America-Dominican Republic Free Trade
Agreement (CAFTA-DR), as well as the recently concluded free trade
agreements with Colombia and Peru. Over the past year, we worked
closely with our CAFTA-DR partners and the governments of Australia,
Morocco, Singapore and Bahrain to bring their intellectual property
enforcement regimes up to the high standards required by our free trade
agreements.
OECD: Additionally, we have commissioned a study by the Organization
for Economic Cooperation and Development (OECD) to examine the impact
of global counterfeiting and piracy. Our inter-agency team has held
several meetings with OECD officials to follow-up and assist with this
study. We are looking for sound, reliable and accurate information to
be produced with this study, so that we may have accurate metrics that
can be used effectively by senior policymakers and by industry as we
continue building international support to stem the flow of fake and
counterfeit goods and keep them out of global supply chains.
SPP: The Administration has also launched a cooperative effort under
the Security and Prosperity Partnership (SPP) with Canada and Mexico to
develop a strategy for combating piracy and counterfeiting in North
America. Work is underway through a trilateral task force and efforts
will focus on enhancing detection and deterrence of counterfeiting and
piracy and expanding public awareness of the need to protect and
enforce intellectual property rights.
Bilateral: Under the STOP Initiative, we have conducted outreach to
Canada, the European Commission, France, Germany, Hong Kong, Japan,
Korea, Mexico, Singapore and the United Kingdom laying the basis for
increasing cooperation on IP enforcement.
European Union: In January, we met with European Union officials at the
White House for a series of meetings to address global piracy. Follow
up meetings were held in Brussels in March. We are breaking new ground
and have begun to expand our cooperation with the EU - focused
initially on border enforcement, a strategy to address specific
problems in third countries and other international cooperation and
working with the private sector.
Japan: Japan is one of our key international partners in the fight
against counterfeiting and piracy. We continue to work with Japan under
STOP!, especially on the APEC initiatives discussed above. Our
cooperation under STOP! is just one part of our broader bilateral IPR
cooperation. For example, last October, Japan and Switzerland joined
with the U.S. in requesting that China disclose key IPR enforcement
data under WTO transparency rules.
On March 30, 2006, Secretary Gutierrez and Japan's Minister of Economy,
Trade, and Industry announced expanded bilateral cooperation on IPR
protection and enforcement. This cooperation will allow the two
countries to confront the growing problem of global piracy and
counterfeiting together. Highlights of the new agreement include
increasing assistance and education for SMEs; sharing information on
IPR enforcement activities; strengthening technical assistance to third
countries, and streamlining the patent process.
India: In March 2006 during President Bush's visit to India, a joint
statement was released stating that the U.S. and India would work
together to promote innovation, creativity and technological
advancement by:
Office of the U.S. IPR Coordinator 8:
[See PDF for image]
[End of figure]
providing a vibrant intellectual property rights regime, and to
cooperate in the field of intellectual property rights to include
capacity building activities, human resource development and public
awareness programs.
Building on President Bush's visit to India in March, U.S. IPR
Coordinator Chris Israel recently led an inter-agency delegation to
India to discuss issues of 1P policy, enforcement and trade. The
delegation met with Indian government officials - at both the Central
and State Government level; and engaged both U.S. and Indian private-
sector stakeholders, academics and legal practitioners to continue our
efforts to promote increased trade and economic development through
effective IP protection. While in India, Coordinator Israel announced
the Bush Administration's framework for engaging India on intellectual
property and trade promotion. This plan revolves around three key
areas, which include: Bilateral Cooperation, Education and Engaging
both U.S. and Indian Industry. Bilaterally, we are working with India
on IP through our Trade Policy Forum, High Technology Cooperation Group
and the Commercial Dialogue. With the placement of a Bush
Administration IP Attache in New Delhi, we plan on continuing our
capacity building and educational outreach efforts with the Indian
Government and Industry.
On the IP front, India has made some progress and we are committed to
continuing to work with India as they fine-tune their IPR legal
framework and develop an effective system to enforce intellectual
property rights.
Training and Capacity Building: The U.S. has conducted several hundred
IP training and capacity building programs around the world to improve
criminal and civil IPR protection. To that end, the Administration has
established a Global Intellectual Property Academy to consolidate and
expand our training programs for foreign judges, enforcement officials
and administrators.
Highlights of our Training and Capacity Building Programs:
* Brazil - Since 2001, the U.S. government has sponsored 15 IP-related
programs involving Brazilian government officials, nearly half of which
took place in Brazil.
* Russia - Since 2001, the U.S. government has conducted well over 15
training and capacity building programs involving Russian government
officials.
* India - The U.S. government has conducted over a dozen IP training
and capacity building programs with Indian officials and we continue to
conduct conferences to train Indian academics and officials on IP
enforcement and WTO TRIPS obligations. In addition, U.S. intellectual
property experts will participate in a four-city IP enforcement
training program in India in May 2006.
* China - Since 2001, the U.S. government has conducted well over 50
training programs involving Chinese government officials.
Addressing Global IP Enforcement Concerns:
China: The U.S. government is working on many fronts to engage China on
IPR concerns, and under President Bush's leadership, we have developed
an effective China IP strategy. The Bush Administration's China IP
strategy is built on four pillars: bilateral engagement; effective use
of our trade tools; expanding law enforcement cooperation; and working
with the private sector. We are utilizing all of our resources to
effectively implement our approach.
In February 2006, Ambassador Portman announced the results of a top-to-
bottom review of U.S. trade policy with China. It identified weak
protection of intellectual property as one reason why the U.S.-China
trade relationship lacks balance in opportunity, as well as equity and
durability.
Office of the U.S. IPR Coordinator9:
[See PDF for image]
[End of figure]
Ambassador Clark Randt at our Embassy in Beijing holds an annual IPR
Roundtable which brings together senior U.S. and Chinese officials and
U.S. business representatives. The Roundtable gives U.S. rights holders
the opportunity to discuss the problems they are facing and find the
solutions that they need. Also, our Embassy and Consulate officers on
the ground are a valuable asset for U.S. companies. They play a
critical role as IPR "first responders" helping U.S. businesses resolve
cases when their rights are violated.
Russia: The U.S. is working with Russia to strengthen IP protection and
enforcement. Ambassador Portman recently raised the issue of
intellectual property protection with Russian Minister of Economic
Development and Trade German Gref stating that IPR protection and
enforcement is a shared responsibility within the Russian government.
Recent positive statements made by President Putin recognize that IPR
protection is both an economic issue for the Russian government and a
public health concern for the Russian people. The Russian government
needs to take steps to curb the high rates of piracy that exist in
Russia and demonstrate that their enforcement efforts are providing
deterrence and producing results.
Also, the work of the U.S.-Russia IP Working Group remains a high
priority, as the United States, through USTR, and Russia work to
address a number of IPR-related issues and steps that need to be taken.
Office of the U.S. IPR Coordinator 10:
[End of Section]
Appendix IV: Comments from the Department of Commerce:
[See PDF for image]
[End of figure]
United States Department Of Commerce:
Office of the U.S. Coordinator for:
International Intellectual Property Enforcement:
Washington, D.C. 20230:
October 25, 2006:
Loren Yager:
Director, International Affairs and Trade:
U.S. Government Accountability Office:
Washington, DC 20548:
Dear Mr. Yager:
Thank you for the opportunity to review GAO's report on overall federal
efforts to promote strong intellectual property protection and the
specific efforts of the Bush Administration's Strategy Targeting
Organized Piracy (STOP!). Our office very much appreciates the
dedicated and comprehensive effort which went into drafting this report.
As you stated in the report; "..the challenges of IP piracy are
enormous, and will require the sustained and coordinated efforts of
U.S. agencies, their foreign counterparts, and industry representatives
to be successful." Per our direction from the President and Congress,
we have pursued such a coordinated approach since the creation of the
Office of International Intellectual Property Coordination in July
2005. We will continue to seek ways to improve coordination and welcome
the guidance and suggestions of all parties to ensure the prospect of
sustained success for the future.
As your report also indicates, "STOP! is a good first step toward a
comprehensive, integrated strategy to protect and enforce U.S.
intellectual property and it has energized agency efforts." Despite any
perceived weaknesses in its initial structure, we are strongly
encouraged that GAO has concluded that the "STOP! strategy has brought
attention and energy to IP efforts within the U.S. government [and
that] [a]gency participants and industry observers have generally
supported the new effort."
We look forward to reviewing further GAO's two primary recommendations
to more fully address the six characteristics of a national strategy
and to clarify how our office will address oversight and accountability
aspects involved with the further development and implementation of the
STOP! initiative. In turn, we plan to identify opportunities for
improvement, based on those recommendations, where appropriate.
Thank you again for the opportunity to participate in this process and
lay the groundwork for incorporating the benefits of your research and
insight.
Best regards,
[Signed by]
Chris Israel:
U.S. Coordinator for International Intellectual Property Enforcement:
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
Loren Yager, (202) 512-4128, or yagerl@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Christine Broderick,
Assistant Director; Nina Pfeiffer; Jasminee Persaud; and Wendy Ho made
significant contributions to this report. Martin De Alteriis, Kelly
Baumgartner, Karen Deans, Etana Finkler, Ernie Jackson, Patrick Hickey,
and Terry Richardson also provided assistance.
FOOTNOTES
[1] NIPLECC was established under Section 653 of the Treasury and
General Government Appropriations Act, 2000 (Pub. L. No.106-58), 15
U.S.C. 1128.
[2] The Consolidated Appropriations Act, 2005 (Pub. L. No. 108-447),
Division B, Title II.
[3] GAO, Combating Terrorism: Evaluation of Selected Characteristics in
National Strategies Related to Terrorism, GAO-04-408T (Washington D.C.:
Feb. 3, 2004).
[4] GAO, Defense Management: Comprehensive Strategy and Annual
Reporting Are Needed to Measure Progress and Costs of DOD's Global
Posture Restructuring, GAO-06-852, (Washington D.C.: Sept. 13, 2006);
and Rebuilding Iraq: More Comprehensive National Strategy Needed to
Help Achieve U.S. Goals, GAO-06-788 (Washington D.C.: June 28, 2006).
[5] The six characteristics are (1) a clear purpose, scope, and
methodology; (2) a discussion of the problems, risks, and threats the
strategy intends to address; (3) the desired goals and objectives,
activities, and performance measures; (4) a description of the
resources needed to implement the strategy; (5) a clear delineation of
the organizational roles and responsibilities, including oversight as
well as mechanisms for coordination; and (6) a description of how the
strategy relates to subordinate levels of government and their plans to
implement the strategy. These six characteristics can be subdivided
into 29 separate elements for more detailed assessment.
[6] NIPLECC legislation includes Departments of Commerce (U.S. Patent
and Trademark Office and International Trade Administration), Homeland
Security (originally Legacy Customs), Justice (Criminal Division),
State (Bureau of Economic and Business Affairs), and the Office of the
United States Trade Representative. STOP includes the same agencies
with the addition of the Federal Drug Administration.
[7] In December 2004, Congress augmented NIPLECC's capabilities in the
Consolidated Appropriations Act of 2005, which created the Coordinator
for International Intellectual Property Enforcement position and
provided $2 million for NIPLECC's expenses through fiscal year 2006.
[8] Report to the President and Congress on Coordination of
Intellectual Property Enforcement and Protection, September, 2006. The
National Intellectual Property Law Enforcement Coordination Council.
[9] While national strategies are not required by executive or
legislative mandate to address a single, consistent set of
characteristics, GAO has identified six desirable characteristics of an
effective national strategy.
[10] The Organization for Economic Co-operation and Development (OECD)
is conducting a study on IP, examining the extent to which counterfeit
goods are entering global trade and associated data reliability issues.
[11] NIPLECC's authorizing legislation designates the Commissioner of
Customs as a council member. This individual remained a NIPLECC member
after the formation of the Department of Homeland Security in 2003, but
under the new title of Department of Homeland Security's Commissioner
of Customs and Border Protection. NIPLECC's fifth annual report, issued
in September 2006, added a second representative from the Department of
Homeland Security, the Assistant Secretary for Immigration and Customs
Enforcement, which includes investigative functions that had been
conducted under the former Legacy Customs.
[12] See GAO, Intellectual Property: U.S. Efforts Have Contributed to
Strengthened Laws Overseas, but Challenges Remain, GAO-04-912
(Washington D.C.: Sept. 8, 2004).
[13] The Commercial Law Development Program, a program of the U.S.
Department of Commerce Office of the General Counsel, is uniquely
tasked with providing technical assistance in the commercial law arena
to the governments and private sectors of transitional countries in
support of their economic development goals.
[14] An "output measure" records the actual level of activity or
whether the effort was realized and can assess how well a program is
being carried out.
[15] An "outcome measure" assesses the actual results, effects, or
impact of an activity compared with its intended purpose.
[16] IPR Goal: Improve the effectiveness of IPR enforcement by actively
supporting the administration's STOP initiative and by ensuring a
single uniform approach and focusing on known or alleged violators with
high aggregate values or whose infringing products threaten health,
safety, and economic security or have possible ties to terrorist
activity.
[17] CBP's most recent Priority Trade Issue: IPR Trade Strategy was
issued on May 16, 2006. The prior IPR Trade Strategy was issued on May
20, 2005.
[18] The G8 is an annual summit that involves nine countries, including
Canada, France, Germany, Italy, Japan, the United Kingdom, Russia, and
the United States. The European Commission President is also a G8
member.
[19] The "Special 301" provisions of the Trade Act of 1974, as amended,
require USTR to identify foreign countries that deny adequate and
effective protection of intellectual property rights or fair and
equitable market access for U.S. persons that rely on intellectual
property protection.
[20] Under the Department of Justice's Operation Fast Link, on April
2004, law enforcement authorities executed over 120 total searches
during the previous 24 hours in 27 states and in 10 foreign countries.
Four separate undercover investigations were simultaneously conducted,
striking all facets of the illegal software, game, movie, and music
trade online.
[21] GAO-04-408T.
[22] An "output measure" records the actual level of activity or
whether the effort was realized and can assess how well a program is
being carried out. An "outcome measure" assesses the actual results,
effects, or impact of an activity compared with its intended purpose.
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