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SECTION 1 CONTENTS THE GLOBAL SCALE OF INTELLECTUAL PROPERTY THEFT AND ITS UNLAWFUL EXPLOITATION BY THIRD PARTIES POSES SERIOUS THREATS TO U.S. NATIONAL INTERESTS A. The Economic Scope and Magnitude of Counterfeiting, Commercial Piracy, and Trade Secret Theft: A Global Perspective..................................................................................................................19 1. Assessments of the Scale and Economic Impact of Counterfeiting and Commercial Piracy.......................20 2. Assessments of the Scale and Economic Impact of Trade Secret Theft......................................................21 B. The Complex and Sophisticated Nature of Commercial Piracy, Counterfeiting and Trade Secret Theft in the Modern Era.........................................................................................................................21 1. Schemes Employed for the Unlawful Exploitation of Digital Content.........................................................21 2. Schemes Employed to Facilitate Illicit Trade in Counterfeit Goods............................................................26 3. The Targeting and Theft of Trade Secrets....................................................................................................31 C. The Theft and Unlawful Exploitation of Intellectual Property as Threats to U.S. National Interests........32 1. Undermines Principles of Fair Trade in the Global Economy......................................................................32 2. Threatens Consumer Health and Safety......................................................................................................33 Example: Counterfeit Personal Care Products......................................................................................33 Example: Counterfeit Consumer Electronics & Electrical Products.......................................................34 Example: Counterfeit Pharmaceuticals..................................................................................................35 Example: Counterfeit Automotive Parts................................................................................................37 3. Threatens the Environment..........................................................................................................................38 4. Exploits Labor..............................................................................................................................................39 5. Poses Threats to Domestic and International Security................................................................................40 a. The Integrity of Supply Chains and Critical Infrastructures................................................................41 b. The Convergence between Intellectual Property-Based Crime and the Financing of Criminal and Terror Networks...........................................................................42
INTRODUCTION The story of intellectual property (IP) is a story of economic growth, high-paying jobs, economic competitiveness, innovation and creative expression. “The entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.” 1 According to a 2016 U.S. Department of Commerce report 2 on the role of IP in the U.S. economy, IP-intensive industries: 0 percent higher, respectively) Account for $6.6 trillion in value added, or more than 38 percent of U.S. GDP Account for over 52 percent of all U.S. merchandise exports Support directly over 27 million jobs, and indirectly over 17 million jobs, for a total of 45.5 million jobs or 30 percent of all U.S. employment Support average weekly wages that are 46% higher than in other industries. (In patent and copyright industries, wages were 74 and 90 percent higher, respectively) Source: U.S. Department of Commerce, “Intellectual Property and the U.S. Economy: 2016 Update” (Sept. 2016) These figures demonstrate the extraordinary role of IP in our economy. In addition to being a major driver of U.S. economic growth, IP provides the incentive to create, invest in, and commercialize new inventions, products, and services, while supporting artists and authors in disseminating their works, be it literary, artistic, musical, cinematic, or other creative forms of human expression. As President Obama stated on World Intellectual Property Day in 2016, “Whether through the music or movies that inspire us, the literature that moves us, or the technologies we rely on each day, ingenuity and innovation serve as the foundations upon which we will continue to grow our economies and bridge our cultural identities.” 3 Together, innovation and creativity, and the IP structure that appropriately balances the creation of new works with SECTION 1 17
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3 SECURE AND FACILITATE LEGITIMATE
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ENDNOTES Office of the Intellectual
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SECTION 4 CONTENTS PROMOTE FRAMEWOR
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ACKNOWLEDGEMENTS With thanks to, an
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