U.S. Efforts Have Contributed to Strengthened Laws Overseas, but Challenges Remain
Gao ID: GAO-04-1093T September 23, 2004
Although the U.S. government provides broad protection for intellectual property, intellectual property protection in parts of the world is inadequate. As a result, U.S. goods are subject to piracy and counterfeiting in many countries. A number of U.S. agencies are engaged in efforts to improve protection of U.S. intellectual property abroad. This testimony, based on a recent GAO report, describes U.S agencies' efforts, the mechanisms used to coordinate these efforts, and the impact of these efforts and the challenges they face.
U.S. agencies undertake policy initiatives, training and assistance activities, and law enforcement actions in an effort to improve protection of U.S. intellectual property abroad. Policy initiatives include assessing global intellectual property challenges and identifying countries with the most significant problems--an annual interagency process known as the "Special 301" review--and negotiating agreements that address intellectual property. In addition, many agencies engage in training and assistance activities, such as providing training for foreign officials. Finally, a small number of agencies carry out law enforcement actions, such as criminal investigations involving foreign parties and seizures of counterfeit merchandise. Agencies use several mechanisms to coordinate their efforts, although the mechanisms' usefulness varies. Formal interagency meetings--part of the U.S. government's annual Special 301 review--allow agencies to discuss intellectual property policy concerns and are seen by government and industry sources as rigorous and effective. However, the National Intellectual Property Law Enforcement Coordination Council, established to coordinate domestic and international intellectual property law enforcement, has struggled to find a clear mission, has undertaken few activities, and is generally viewed as having little impact. U.S. efforts have contributed to strengthened intellectual property legislation overseas, but enforcement in many countries remains weak, and further U.S. efforts face significant challenges. For example, competing U.S. policy objectives take precedence over protecting intellectual property in certain regions. Further, other countries' domestic policy objectives can affect their "political will" to address U.S. concerns. Finally, many economic factors, as well as the involvement of organized crime, hinder U.S. and foreign governments' efforts to protect U.S. intellectual property abroad.
GAO-04-1093T, Intellectual Property: U.S. Efforts Have Contributed to Strengthened Laws Overseas, but Challenges Remain
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Before the Committee on Government Reform:
House of Representatives:
United States Government Accountability Office:
For Release on Delivery Expected at 10: 00 a.m. EDT:
Thursday, September 23, 2004:
U.S. Efforts Have Contributed to Strengthened Laws Overseas, but
Statement of Loren Yager:
Director, International Affairs and Trade:
Highlights of GAO-04-1093T, a testimony before the Committee on
Government Reform, House of Representatives:
Why GAO Did This Study:
Although the U.S. government provides broad protection for intellectual
property, intellectual property protection in parts of the world is
inadequate. As a result, U.S. goods are subject to piracy and
counterfeiting in many countries. A number of U.S. agencies are engaged
in efforts to improve protection of U.S. intellectual property abroad.
This testimony, based on a recent GAO report, describes U.S agencies‘
efforts, the mechanisms used to coordinate these efforts, and the
impact of these efforts and the challenges they face.
What GAO Found:
U.S. agencies undertake policy initiatives, training and assistance
activities, and law enforcement actions in an effort to improve
protection of U.S. intellectual property abroad. Policy initiatives
include assessing global intellectual property challenges and
identifying countries with the most significant problems”an annual
interagency process known as the ’Special 301“ review”and negotiating
agreements that address intellectual property. In addition, many
agencies engage in training and assistance activities, such as
providing training for foreign officials. Finally, a small number of
agencies carry out law enforcement actions, such as criminal
investigations involving foreign parties and seizures of counterfeit
Agencies use several mechanisms to coordinate their efforts, although
the mechanisms‘ usefulness varies. Formal interagency meetings”part of
the U.S. government‘s annual Special 301 review”allow agencies to
discuss intellectual property policy concerns and are seen by
government and industry sources as rigorous and effective. However, the
National Intellectual Property Law Enforcement Coordination Council,
established to coordinate domestic and international intellectual
property law enforcement, has struggled to find a clear mission, has
undertaken few activities, and is generally viewed as having little
U.S. efforts have contributed to strengthened intellectual property
legislation overseas, but enforcement in many countries remains weak,
and further U.S. efforts face significant challenges. For example,
competing U.S. policy objectives take precedence over protecting
intellectual property in certain regions. Further, other countries‘
domestic policy objectives can affect their ’political will“ to address
U.S. concerns. Finally, many economic factors, as well as the
involvement of organized crime, hinder U.S. and foreign governments‘
efforts to protect U.S. intellectual property abroad.
[See PDF for image]
[End of figure]
What GAO Recommends:
GAO is not recommending executive action. However, the Congress may
wish to review the National Intellectual Property Law Enforcement
Coordination Council‘s authority, operating structure, membership, and
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 firstname.lastname@example.org.
Mr. Chairman and Members of the Committee:
Thank you for the opportunity to discuss our work on U.S. efforts to
protect U.S. intellectual property rights (IPR) overseas and our recent
report on this topic.[Footnote 1] As you know, the United States
dominates the creation and export of intellectual property--creations
of the mind. The U.S. government provides broad protection for
intellectual property through means such as copyrights, patents, and
trademarks. However, protection of intellectual property in many parts
of the world is inadequate. As a result, U.S. goods are subject to
substantial counterfeiting and piracy in many countries.
The U.S. government, through numerous agencies, is seeking better
intellectual property protection overseas. To understand more fully how
U.S. agencies have performed in this regard, you asked us to identify
and review their activities. This testimony addresses (1) the specific
efforts of U.S. agencies to improve intellectual property protection in
other nations, (2) the means used to coordinate these efforts, and (3)
challenges facing the enforcement efforts abroad.
To address these issues, we analyzed key U.S. government reports and
documents from eight federal agencies and two offices. In addition to
meeting with federal officials, we met with officials from key
intellectual property industry groups and reviewed reports they had
prepared. We also conducted field work in four countries where serious
problems regarding the protection of intellectual property have been
reported (Brazil, China, Russia, and Ukraine) and met with U.S. embassy
and foreign government officials as well as representatives of U.S.
companies and industry groups operating in those countries. We
conducted our work from June 2003 through July 2004, in accordance with
generally accepted government auditing standards.
U.S. agencies' efforts to improve protection of U.S. intellectual
property in foreign nations fall into three categories--policy
initiatives, training and assistance activities, and law enforcement
actions. The Office of the U.S. Trade Representative (USTR) leads U.S.
policy initiatives with an annual assessment known as the "Special 301"
review, which results in an annual report detailing global intellectual
property challenges and identifying countries with the most significant
problems. This report involves input from many U.S. agencies and
industry. In addition to conducting policy initiatives, most agencies
involved in intellectual property issues overseas also engage in
training and assistance activities. Further, although counterterrorism
is the overriding U.S. law enforcement concern, U.S. agencies such as
the Departments of Justice and Homeland Security conduct law
enforcement activities regarding IPR.
Several mechanisms exist to coordinate U.S. agencies' efforts to
protect U.S. intellectual property overseas, although the level of
activity and usefulness of these mechanisms vary. For example, on the
policy side, formal interagency meetings are required each year as part
of the U.S. government's annual Special 301 review. Government and
industry sources view this effort as effective and thorough.
Conversely, the National Intellectual Property Law Enforcement
Coordination Council,[Footnote 2] which was established to coordinate
domestic and international intellectual property law enforcement among
U.S. federal and foreign entities, has struggled to find a clear
mission, has undertaken few activities, and is perceived by officials
from the private sector and some U.S. agencies as having little impact.
U.S. efforts have contributed to strengthened foreign IPR laws, but
enforcement overseas remains weak and U.S. efforts face numerous
challenges. For example, competing U.S. policy objectives may take
priority over protecting intellectual property in certain countries. In
addition, the impact of U.S. activities overseas is affected by
countries' domestic policy objectives and economic interests, which may
complement or conflict with U.S. objectives. Further, economic factors,
as well as the involvement of organized crime, pose additional
challenges to U.S. and foreign governments' enforcement efforts, even
in countries where the political will for protecting intellectual
property exists. These economic factors include low barriers to
producing counterfeit or pirated goods, potential high profits for
producers of such goods, and large price differentials between
legitimate and counterfeit products for consumers.
Intellectual property is an important component of the U.S. economy,
and the United States is an acknowledged global leader in the creation
of intellectual property. However, industries estimate that annual
losses stemming from violations of intellectual property rights
overseas are substantial. Further, counterfeiting of products such as
pharmaceuticals and food items fuels public health and safety concerns.
USTR's Special 301 reports on the adequacy and effectiveness of
intellectual property protection around the world demonstrate that,
from a U.S. perspective, intellectual property protection is weak in
developed as well as developing countries and that the willingness of
countries to address intellectual property issues varies greatly.
Eight federal agencies, as well as the Federal Bureau of Investigation
(FBI) and the U.S. Patent and Trademark Office (USPTO), undertake the
primary U.S. government activities to protect and enforce U.S.
intellectual property rights overseas. The agencies are the Departments
of Commerce, State, Justice, and Homeland Security; USTR; the Copyright
Office; the U.S. Agency for International Development (USAID); and the
U.S. International Trade Commission.[Footnote 3]
U.S. Agencies Undertake Three Types of IPR Efforts:
The efforts of U.S. agencies to protect U.S. intellectual property
overseas fall into three general categories--policy initiatives,
training and technical assistance, and U.S. law enforcement actions.
U.S. policy initiatives to increase intellectual property protection
around the world are primarily led by USTR, in coordination with the
Departments of State and Commerce, USPTO, and the Copyright Office,
among other agencies. A centerpiece of policy activities is the annual
Special 301 process.[Footnote 4] "Special 301" refers to certain
provisions of the Trade Act of 1974, as amended, that require USTR to
annually identify foreign countries that deny adequate and effective
protection of intellectual property rights or fair and equitable market
access for U.S. persons who rely on intellectual property protection.
USTR identifies these countries with substantial assistance from
industry and U.S. agencies and publishes the results of its reviews in
an annual report. Once a pool of such countries has been determined,
the USTR, in coordination with other agencies, is required to decide
which, if any, of these countries should be designated as a Priority
Foreign Country (PFC).[Footnote 5] If a trading partner is identified
as a PFC, USTR must decide within 30 days whether to initiate an
investigation of those acts, policies, and practices that were the
basis for identifying the country as a PFC. Such an investigation can
lead to actions such as negotiating separate intellectual property
understandings or agreements between the United States and the PFC or
implementing trade sanctions against the PFC if no satisfactory outcome
Between 1994 and 2004, the U.S. government designated three countries
as PFCs--China, Paraguay, and Ukraine--as a result of intellectual
property reviews. The U.S. government negotiated separate bilateral
intellectual property agreements with China and Paraguay to address IPR
problems. These agreements are subject to annual monitoring, with
progress cited in each year's Special 301 report. Ukraine, where
optical media piracy was prevalent, was designated a PFC in 2001. The
United States and Ukraine found no mutual solution to the IPR problems,
and in January 2002, the U.S. government imposed trade sanctions in the
form of prohibitive tariffs (100 percent) aimed at stopping $75 million
worth of certain imports from Ukraine over time.
Training and Technical Assistance:
In addition, most of the agencies involved in efforts to promote or
protect IPR overseas engage in some training or technical assistance
activities. Key activities to develop and promote enhanced IPR
protection in foreign countries are undertaken by the Departments of
Commerce, Homeland Security, Justice, and State; the FBI; USPTO; the
Copyright Office; and USAID. Training events sponsored by U.S. agencies
to promote the enforcement of intellectual property rights have
included enforcement programs for foreign police and customs officials,
workshops on legal reform, and joint government-industry events.
According to a State Department official, U.S. government agencies have
conducted intellectual property training for a number of countries
concerning bilateral and multilateral intellectual property
commitments, including enforcement, during the past few years. For
example, intellectual property training was conducted by numerous
agencies over the last year in Poland, China, Morocco, Italy, Jordan,
Turkey, and Mexico.
U.S. Law Enforcement Efforts:
A small number of agencies are involved in enforcing U.S. intellectual
property laws, and the nature of these activities differs from other
U.S. government actions related to intellectual property protection.
Working in an environment where counterterrorism is the central
priority, the FBI and the Departments of Justice and Homeland Security
take actions that include engaging in multicountry investigations
involving intellectual property violations and seizing goods that
violate intellectual property rights at U.S. ports of entry. For
example, the Department of Justice has an office that directly
addresses international IPR problems.[Footnote 6] Justice has been
involved with international investigation and prosecution efforts and,
according to a Justice official, has become more aggressive in recent
years. For instance, Justice and the FBI recently coordinated an
undercover IPR investigation, with the involvement of several foreign
law enforcement agencies. The investigation focused on individuals and
organizations, known as "warez" release groups, which specialize in the
Internet distribution of pirated materials. In April 2004, these
investigations resulted in 120 simultaneous searches worldwide (80 in
the United States) by law enforcement entities from 10 foreign
countries[Footnote 7] and the United States in an effort known as
Although investigations can result in international actions such as
those cited above, FBI officials told us that they cannot determine the
number of past or present IPR cases with an international component
because they do not track or categorize cases according to this factor.
Department of Homeland Security (DHS) officials emphasized that their
investigations include an international component when counterfeit
goods are brought into the United States. However, DHS does not track
cases by a specific foreign connection. The overall number of IPR-
oriented investigations that have been pursued by foreign authorities
as a result of DHS efforts is unknown.
DHS does track seizures of goods that violate IPR and reports seizures
that totaled more than $90 million in fiscal year 2003. Seizures of
IPR-infringing goods have involved imports primarily from Asia. In
fiscal year 2003, goods from China accounted for about two-thirds of
the value of all IPR seizures, many of which were shipments of
cigarettes.[Footnote 8] Other seized goods from Asia that year
originated in Hong Kong and Korea. A DHS official pointed out that
providing protection against IPR-infringing imported goods for some
U.S. companies--particularly entertainment companies--can be
difficult, because companies often fail to record their trademarks and
copyrights with DHS.[Footnote 9]
Several Mechanisms Coordinate IPR Efforts, but Their Usefulness Varies:
Several interagency mechanisms exist to coordinate overseas
intellectual property policy initiatives, development and assistance
activities, and law enforcement efforts, although these mechanisms'
level of activity and usefulness varies.
Formal Interagency Coordination on Trade Policy:
According to government and industry officials, an interagency trade
policy mechanism established by the Congress in 1962 to assist USTR has
operated effectively in reviewing IPR issues. The mechanism, which
consists of tiers of committees as well as numerous subcommittees,
constitutes the principle means for developing and coordinating U.S.
government positions on international trade, including IPR. A
specialized subcommittee is central to conducting the Special 301
review and determining the results of the review.
This interagency process is rigorous and effective, according to U.S.
government and industry officials. A Commerce official told us that the
Special 301 review is one of the best tools for interagency
coordination in the government, while a Copyright Office official noted
that coordination during the review is frequent and effective. A
representative for copyright industries also told us that the process
works well and is a solid interagency effort.
National Intellectual Property Law Enforcement Coordination Council:
The National Intellectual Property Law Enforcement Coordination Council
(NIPLECC), created by the Congress in 1999 to coordinate domestic and
international intellectual property law enforcement among U.S. federal
and foreign entities, seems to have had little impact. NIPLECC consists
of (1) the Under Secretary of Commerce for Intellectual Property and
Director of the United States Patent and Trademark Office; (2) the
Assistant Attorney General, Criminal Division; (3) the Under Secretary
of State for Economic and Agricultural Affairs; (4) the Deputy United
States Trade Representative; (5) the Commissioner of Customs; and (6)
the Under Secretary of Commerce for International Trade.[Footnote 10]
NIPLECC's authorizing legislation did not include the FBI as a member
of NIPLECC, despite its pivotal role in law enforcement. However,
according to representatives of the FBI, USPTO, and Justice, the FBI
should be a member. USPTO and Justice cochair NIPLECC, which has no
independent staff or budget. In the council's nearly 4 years of
existence, its primary output has been three annual reports to the
Congress, which are required by statute.
According to interviews with industry officials and officials from its
member agencies, and as evidenced by its own legislation and reports,
NIPLECC continues to struggle to define its purpose and has had little
discernable impact. Indeed, officials from more than half of the member
agencies offered criticisms of NIPLECC, remarking that it is unfocused,
ineffective, and "unwieldy." In official comments to the council's 2003
annual report, major IPR industry associations expressed a sense that
NIPLECC is not undertaking any independent activities or effecting any
impact. One industry association representative stated that law
enforcement needs to be made more central to U.S. IPR efforts and said
that although he believes the council was created to deal with this
issue, it has "totally failed." The lack of communication regarding
enforcement results in part from complications such as concerns
regarding the sharing of sensitive law enforcement information and from
the different missions of the various agencies involved in intellectual
property actions overseas. According to an official from USPTO, NIPLECC
is hampered primarily by its lack of independent staff and funding.
According to a USTR official, NIPLECC needs to define a clear role in
coordinating government policy. A Justice official stressed that, when
considering coordination, it is important to avoid creating an
additional layer of bureaucracy that may detract from efforts devoted
to each agency's primary mission.
Despite its difficulties thus far, we heard some positive comments
regarding NIPLECC. For example, an official from USPTO noted that the
IPR training database Web site resulted from NIPLECC efforts. Further,
an official from the State Department commented that NIPLECC has had
some "trickle-down" effects, such as helping to prioritize the funding
and development of the intellectual property database at the State
Department. Although the agency officials that constitute NIPLECC's
membership meet infrequently and NIPLECC has undertaken few concrete
activities, this official noted that NIPLECC provides the only forum
for bringing enforcement, policy, and foreign affairs agencies together
at a high level to discuss intellectual property issues. A USPTO
official stated that NIPLECC has potential but needs to be
Other Coordination Mechanisms:
Other coordination mechanisms include the National International
Property Rights Coordination Center (IPR Center) and informal
coordination.[Footnote 11] The IPR Center in Washington, D.C., a joint
effort between DHS and the FBI, began limited operations in 2000.
According to a DHS official, the coordination between DHS, the FBI, and
industry and trade associations makes the IPR Center unique. The IPR
Center is intended to serve as a focal point for the collection of
intelligence involving copyright and trademark infringement, signal
theft, and theft of trade secrets. However, the center is not widely
used by industry. An FBI official associated with the IPR Center
estimated that about 10 percent of all FBI industry referrals come
through the center rather than going directly to FBI field offices. DHS
officials noted that "industry is not knocking the door down" and that
the IPR Center is perceived as underutilized.
Policy agency officials noted the importance of informal but regular
communication among staff at the various agencies involved in the
promotion or protection of intellectual property overseas. Several
officials at various policy-oriented agencies, such as USTR and the
Department of Commerce, noted that the intellectual property community
was small and that all involved were very familiar with the relevant
policy officials at other agencies in Washington, D.C. Further, State
Department officials at U.S. embassies regularly communicate with
agencies in Washington, D.C., regarding IPR matters and U.S. government
actions. Agency officials noted that this type of coordination is
central to pursuing U.S. intellectual property goals overseas.
Although communication between policy and law enforcement agencies can
occur through forums such as the NIPLECC, these agencies do not
systematically share specific information about law enforcement
activities. According to an FBI official, once a criminal investigation
begins, case information stays within the law enforcement agencies and
is not shared. A Justice official emphasized that criminal law
enforcement is fundamentally different from the activities of policy
agencies and that restrictions exist on Justice's ability to share
investigative information, even with other U.S. agencies.
Enforcement Overseas Remains Weak and Challenges Remain:
U.S. efforts have contributed to strengthened foreign IPR laws, but
enforcement overseas remains weak. The impact of U.S. activities is
challenged by numerous factors. Industry representatives report that
the situation may be worsening overall for some intellectual property
Weak Enforcement Overseas:
The efforts of U.S. agencies have contributed to the establishment of
strengthened intellectual property legislation in many foreign
countries, however, the enforcement of intellectual property rights
remains weak in many countries, and U.S. government and industry
sources note that improving enforcement overseas is now a key priority.
USTR's most recent Special 301 report states that "although several
countries have taken positive steps to improve their IPR regimes, the
lack of IPR protection and enforcement continues to be a global
problem." For example, although the Chinese government has improved its
statutory IPR regime, USTR remains concerned about enforcement in that
country. According to USTR, counterfeiting and piracy remain rampant in
China and increasing amounts of counterfeit and pirated products are
being exported from China.
Although U.S. law enforcement does undertake international cooperative
activities to enforce intellectual property rights overseas, executing
these efforts can prove difficult. For example, according to DHS and
Justice officials, U.S. efforts to investigate IPR violations overseas
are complicated by a lack of jurisdiction as well as by the fact that
U.S. officials must convince foreign officials to take action. Further,
a DHS official noted that in some cases, activities defined as criminal
in the United States are not viewed as an infringement by other
countries and that U.S. law enforcement agencies can therefore do
Challenges to U.S. Efforts:
In addition, U.S. efforts confront numerous challenges. Because
intellectual property protection is one of many U.S. government
objectives pursued overseas, it is viewed internally in the context of
broader U.S. foreign policy objectives that may receive higher priority
at certain times in certain countries. Industry officials with whom we
met noted, for example, their belief that policy priorities related to
national security were limiting the extent to which the United States
undertook activities or applied diplomatic pressure related to IPR
issues in some countries. Further, the impact of U.S. activities is
affected by a country's own domestic policy objectives and economic
interests, which may complement or conflict with U.S. objectives. U.S.
efforts are more likely to be effective in encouraging government
action or achieving impact in a foreign country where support for
intellectual property protection exists. It is difficult for the U.S.
government to achieve impact in locations where foreign governments
lack the "political will" to enact IPR protections.
Many economic factors complicate and challenge U.S. and foreign
governments' efforts, even in countries with the political will to
protect intellectual property. These factors include low barriers to
entering the counterfeiting and piracy business and potentially high
profits for producers. In addition, the low prices of counterfeit
products are attractive to consumers. The economic incentives can be
especially acute in countries where people have limited income.
Technological advances allowing for high-quality inexpensive and
accessible reproduction and distribution in some industries have
exacerbated the problem. Moreover, many government and industry
officials believe that the chances of getting caught for counterfeiting
and piracy, as well as the penalties when caught, are too low. The
increasing involvement of organized crime in the production and
distribution of pirated products further complicates enforcement
efforts. Federal and foreign law enforcement officials have linked
intellectual property crime to national and transnational organized
criminal operations. Further, like other criminals, terrorists can
trade any commodity in an illegal fashion, as evidenced by their
reported involvement in trading a variety of counterfeit and other
Many of these challenges are evident in the optical media industry,
which includes music, movies, software, and games. Even in countries
where interests exist to protect domestic industries, such as the
domestic music industry in Brazil or the domestic movie industry in
China, economic and law enforcement challenges can be difficult to
overcome. For example, the cost of reproduction technology and copying
digital media is low, making piracy an attractive employment
opportunity, especially in a country where formal employment is hard to
obtain. The huge price differentials between pirated CDs and legitimate
copies also create incentives on the consumer side. For example, when
we visited a market in Brazil, we observed that the price for a
legitimate DVD was approximately ten times the price for a pirated DVD.
Even if consumers are willing to pay extra to purchase the legitimate
product, they may not do so if the price differences are too great for
similar products. Further, the potentially high profit makes optical
media piracy an attractive venture for organized criminal groups.
Industry and government officials have noted criminal involvement in
optical media piracy and the resulting law enforcement challenges.
Recent technological advances have also exacerbated optical media
piracy. The mobility of the equipment makes it easy to transport it to
another location, further complicating enforcement efforts. Likewise,
the Internet provides a means to transmit and sell illegal software or
music on a global scale. According to an industry representative, the
ability of Internet pirates to hide their identities or operate from
remote jurisdictions often makes it difficult for IPR holders to find
them and hold them accountable.
Despite improvements such as strengthened foreign IPR legislation,
international IPR protection may be worsening overall for some
intellectual property sectors. For example, according to copyright
industry estimates, losses due to piracy grew markedly in recent years.
The entertainment and business software sectors, for example, which are
very supportive of USTR and other agencies, face an environment in
which their optical media products are increasingly easy to reproduce,
and digitized products can be distributed around the world quickly and
easily via the Internet. According to an intellectual property
association representative, counterfeiting trademarks has also become
more pervasive in recent years. Counterfeiting affects more than just
luxury goods; it also affects various industrial goods.
The U.S. government has demonstrated a commitment to addressing IPR
issues in foreign countries using multiple agencies. However, law
enforcement actions are more restricted than other U.S. activities,
owing to factors such as a lack of jurisdiction overseas to enforce
U.S. law. Several IPR coordination mechanisms exist, with the
interagency coordination that occurs during the Special 301 process
standing out as the most significant and active. Conversely, the
mechanism for coordinating intellectual property law enforcement,
NIPLECC, has accomplished little that is concrete. Currently, there is
a lack of compelling information to demonstrate a unique role for this
group, bringing into question its effectiveness. In addition, it does
not include the FBI, a primary law enforcement agency. Members,
including NIPLECC leadership, have repeatedly acknowledged that the
group continues to struggle to find an appropriate mission.
The effects of U.S. actions are most evident in strengthened foreign
IPR legislation. U.S. efforts are now focused on enforcement, since
effective enforcement is often the weak link in intellectual property
protection overseas and the situation may be deteriorating for some
industries. As agencies continue to pursue IPR improvements overseas,
they will face daunting challenges. These challenges include the need
to create political will overseas, recent technological advancements
that facilitate the production and distribution of counterfeit and
pirated goods, and powerful economic incentives for both producers and
consumers, particularly in developing countries. Further, as the U.S.
government focuses increasingly on enforcement, it will face different
and complex factors, such as organized crime, that may prove quite
difficult to address.
With a broad mandate under its authorizing legislation, NIPLECC has
struggled to establish its purpose and unique role. If the Congress
wishes to maintain NIPLECC and take action to increase its
effectiveness, the Congress may wish to consider reviewing the
council's authority, operating structure, membership, and mission. Such
considerations could help NIPLECC identify appropriate activities and
operate more effectively to coordinate intellectual property law
Mr. Chairman, this concludes my prepared statement. I would be pleased
to respond to any questions that you or other members of the committee
may have at this time.
Contacts and Acknowledgments:
Should you have any questions about this testimony, please contact me
by e-mail at email@example.com or Emil Friberg at firstname.lastname@example.org. We can
also be reached at (202) 512-4128 and (202) 512-8990, respectively.
Other major contributors to this testimony were Leslie Holen, Ming
Chen, and Sharla Draemel.
 GAO, Intellectual Property: U.S. Efforts Have Contributed to
Strengthened Laws Overseas, but Challenges Remain, GAO-04-912
(Washington, D.C.: Sept. 8, 2004).
 NIPLECC was mandated under Section 653 of the Treasury and General
Government Appropriations Act, 2000, Public Law 106-58 (15 U.S.C.
 Although the FBI is part of the Department of Justice and the USPTO
is part of the Department of Commerce, their roles will be discussed
separately because of their distinct responsibilities.
 Other policy actions include: use of trade preference programs for
developing countries that require IPR protection, such as the
Generalized System of Preferences; negotiation of agreements that
address intellectual property; participation in international
organizations that address IPR issues; and, diplomatic efforts with
 PFCs are those countries that (1) have the most onerous and
egregious acts, policies, and practices with the greatest adverse
impact (actual or potential) on the relevant U.S. products and (2) are
not engaged in good-faith negotiations or making significant progress
in negotiations to address these problems.
 The Computer Crime and Intellectual Property Section (CCIPS)
addresses intellectual property issues (copyright, trademark, and trade
secrets) within the Department of Justice's Criminal Division. In April
2004, CCIPS appointed an International Coordinator for Intellectual
 These foreign countries were Belgium, Denmark, France, Germany,
Hungary, Israel, the Netherlands, Singapore, Sweden, and Great Britain
and Northern Ireland. According to a Justice official, law enforcement
officials in Spain subsequently took action against related targets in
 For information on cigarette smuggling, see GAO, Cigarette
Smuggling: Federal Law Enforcement Efforts and Seizures Increasing,
GAO-04-641 (Washington, D.C.: May 28, 2004).
 A DHS official noted that the Trade Secrets Act (18 U.S.C. 1905)
precludes sharing information about specific imports, even where there
is criminal activity. The Trade Secrets Act makes it a criminal offense
for an employee of the United States, or one of its agencies, to
disclose trade secrets and certain other forms of confidential
commercial and financial information except where such disclosure is
"authorized by law."
 NIPLECC is also required to consult with the Register of
Copyrights on law enforcement matters relating to copyright and related
rights and matters.
 Another coordination mechanism is the IPR Training Coordination
Group, led by the State Department. This voluntary, working-level group
comprises representatives of U.S. agencies and industry associations
involved in IPR programs and training and technical assistance efforts
overseas or for foreign officials.
 See GAO, Terrorist Financing: U.S. Agencies Should Systematically
Assess Terrorists' Use of Alternative Financing Mechanisms, GAO-04-163
(Washington, D.C.: Nov. 14, 2003).