The U.S. Joint Strategic Plan on Intellectual Property
Enforcement was only published two months ago, but there are
already encouraging signs of progress on the global brand
protection front between the U.S. and China. On August 2nd,
Shanghai No. 1 Intermediate People's Court ruled, for the first
time, in favor of a company protecting its trade secrets against
misappropriation by a former employee. The industry-friendly
decision came just two days after U.S. Customs and Border
Protection (CBP) announced the seizure of more than 243,000
counterfeit consumer electronics, resulting from a successful joint
enforcement operation with China, often considered the world's
most prolific violator of intellectual property rights (IPR).
The CBP seizure also represents an important first, as the
inaugural joint effort between CBP and the General Administration
of Customs for the People's Republic of China (GACC).
GACC's Vice Minister, Zou Zhiwu, noted that the results are
"very inspiring and have consolidated our confidence and
resolve to jointly fight" IPR violations. The agencies seized
goods bearing counterfeit Apple, Blackberry, Sony, Samsung and
Beats by Dr. Dre trademarks. The joint operation also resulted in
an arrest by local law enforcement in the New Orleans area of a
U.S. citizen who repeatedly imported counterfeit headphones, which
he then sold online. CBP warned that additional joint enforcement
operations are planned.
China's new success in pursuing IPR violators was quickly
echoed in the Shanghai court decision, the first to protect trade
secrets under a new law enacted January 1, 2013. The Chinese court
ruled in favor of a U.S.-based pharmaceutical company against a
former employee who was fired for downloading documents containing
trade secrets. The judge remarked that "the new Civil
Procedure Law has filled a gap in protection of trade secrets, and
the decision of the court will help the plaintiff hedge risks from
secrets being leaked." Those risks are colossal; fakes account
for 50% of online pharmaceutical sales, according to the World
Health Organization. The pharmaceutical company sought $3.3 million
in damages against the employee.
Together, these developments signal much-needed improvement in
global supply chain security and brand protection. Approximately
70% of all counterfeits seized between 2008 and 2010 came from
China, according to a 2013 report by the U.N. Office on Drugs and
Crime. China was the source of 87% of CBP seizures over the same
period. Annually, G20 countries lose $120 billion to counterfeiting
and piracy, according to a 2011 report by Frontier Economics. In
2011, Business Action to Stop Counterfeiting and Piracy (BASCAP)
estimated that the economic impact will reach $1.7 trillion by
2015, in part prompting the U.S. and Chinese legislative reform to
bolster IPR enforcement.
In addition to the economic impact, the U.S. has also renewed its
focus on IPR enforcement as a matter of national security.
Counterfeiting is an increasingly important financial means for
criminal and terrorist organizations; in 2010, Lebanese police
confirmed that militant group Hezbollah earned millions annually
counterfeiting banned stimulants. Accordingly, the 2013 Joint
Strategic Plan on Intellectual Property Enforcement prioritizes
supply chain security by
expanding information-sharing on counterfeit goods, increasing
cooperation with international carriers, and facilitating voluntary
initiatives to reduce online piracy.
These recent actions demonstrate the importance of working
with and supporting government agencies that enforce
IPR.
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