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Joint Strategic Plan on Intellectual Property Enforcement ENDNOTES SECTION 1 1 U.S. Department of Commerce, “Intellectual Property and the U.S. Economy: Industries in Focus” (March 2012), accessed from https://www.uspto.gov/sites/default/files/news/publications/ IP_Report_March_2012.pdf. 2 See U.S. Department of Commerce, “Intellectual Property and the U.S. Economy: 2016 Update,” (September 2016), accessed from https://www.uspto.gov/sites/default/files/documents/IPandtheUSEconomySept2016.pdf. 3 Message by President Obama on World Intellectual Property Day (April 26, 2016), accessed from https://www.whitehouse. gov/sites/whitehouse.gov/files/images/Documents/EMessage%20World%20Intellectual%20Property%20Day.pdf. 4 Copyrights and trademarks are the most commonly violated intellectual property rights for both hard goods and online content. As a result, this Section emphasizes these intellectual property interests. Of course, there are certain activities or products that may constitute an infringement of patent rights independent from, or in combination with, one or more other intellectual property right(s). For example, a counterfeit electronic device such as a smartphone may implicate the infringement of a trademark, a copyright, and a patent right. Patent interests that are independent of counterfeiting and piracy are addressed more extensively in Section IV of this Plan. 5 See Prioritizing Resources and Organization for Intellectual Property Act of 2008 (“PRO-IP Act”), Pub. L. No. 110-403, 122 Stat. 4256 (2008). 6 Prioritizing Resources and Organization for Intellectual Property Act of 2008 (“PRO-IP Act”), Pub. L. No. 110-403, 122 Stat. 4256 (2008) (emphasis added). 7 An example that illustrates the importance of the Federal Government being aware of and seeking to keep up with technological innovations and new business models is the case of cell phone unlocking. When cell phone unlocking lost exemption status under the Digital Millennium Copyright Act, consumers lost the ability to shop for a mobile phone provider using the device they had purchased because “unlocking” a device would circumvent technical access mechanisms that are often used to protect copyright. After over 100 thousand Americans petitioned the Federal Government to restore the exemption, the U.S. Congress and the Executive Branch acted and the Unlocking Consumer Choice and Wireless Competition Act, Pub. L. No. 113-144, 128 Stat. 1751 (2014), was passed, so that the strong protections that prevent illicit actors from stealing copyrighted works would not create unintended consequences that lessened the ability for a consumer to take their business where they choose. 8 General Keith Alexander (ret.), while Director of the National Security Agency and Commander of U.S. Cyber Command, estimated that U.S. companies lose approximately $250 billion per year due to the theft of their intellectual property. See Rogin, Josh, “NSA Chief: Cybercrime constitutes the “greatest transfer of wealth in history,” The Cable (July 9, 2012), accessed from http://thecable.foreignpolicy.com/ posts/2012/07/09/nsa_chief_cybercrime_constitutes_the_ greatest_transfer_of_wealth_in_history. 9 See Section I. 10 See Section III. 11 See U.S. Government Accountability Office (“GAO”), “Intellectual Property: Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods” (April 2010), at p.16, accessed from http://www.gao.gov/assets/310/303057.pdf. 12 See Congressional Research Service, “Protection of Trade Secrets: Overview of Current Law and Legislation” (April 22, 2016) at pp.13-14, accessed from http://www.fas.org/sgp/crs/ secrecy/R43714.pdf (listing a number of factors impeding more precise calculation of the economic impact of trade secret theft, including: (1) the fact that companies may not realize that their sensitive information has been stolen until years after the theft; (2) the belief that reporting security breaches to law enforcement could harm the company’s reputation and stock prices, or damage its corporate relationships; (3) fear of offending potential customers or business partners by publicly accusing a foreign government or business competitor of trade secret theft; and (4) difficulty in measuring the monetary value of some forms of sensitive information). See also Department of Justice, American Journal Of Trial Advocacy, “Your Secrets Are Safe With Us: How Prosecutors Protect Trade Secrets During Investigation and Prosecution,” Vol. 38:461 (2016) at p.463, accessed from http://www.justice.gov/criminal-ccips/file/640271/download (observing, “Despite the potential advantages of federal prosecution, some victims of trade secret theft have been reluctant to involve the Justice Department when investigating suspected thefts. Among other reasons, victims have expressed concern that inviting a criminal investigation and prosecution will increase the likelihood of the trade secret becoming publicly revealed during investigation or at trial.”). 13 See Organization for Economic Cooperation and Development (OECD), “The Economic Impact of Counterfeiting and Piracy” (2008) (hereinafter “2008 OECD Report”), accessed from http://www.oecd.org/sti/ind/theeconomicimpactofcounterfeitingandpiracy.htm, as updated by OECD, “Magnitude of Counterfeiting and Piracy of Tangible Products: An Update” (November 2009) (hereinafter “2009 OECD Report Update”), accessed from http://www.oecd.org/sti/ind/44088872.pdf. The quotations, regarding the estimates in the 2008 Report and the 2009 Update, are in the 2009 Update at pp. 1 and 3. In the 2008 Report, the estimate is at p.13 (“Analysis carried out in this report indicates that international trade in counterfeit and pirated products could have been up to USD 200 billion in 2005.”). 14 See OECD/European Union Intellectual Property Office, “Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact” (2016) (hereinafter “2016 OECD Report”) at p.68 (emphasis in the original), accessed from https://euipo. europa.eu/tunnel-web/secure/webdav/guest/document_library/ observatory/documents/Mapping_the_Economic_Impact_study/ Mapping_the_Economic_Impact_en.pdf. In addition, the 2016 OECD Report estimated that “as much as 5.1% of EU imports in 2013 was in counterfeit and pirated products.” Id. at p.76 (emphasis in original) (“this number represents an upper limit of counterfeit imports to the EU . . . the maximum possible amount of imports of counterfeit goods”). The 2016 OECD Report also indicated that, for at least one product category, the percentage of counterfeit goods could be significantly higher (“for some EU members, the incoming flows of counterfeit footwear from China tends to reach 27% of the total incoming trade in that product category . . . [this] represents the upper level of potential trade in 46
Office of the Intellectual Property Enforcement Coordinator counterfeits, meaning that within the HS64 [footwear] category imported from China by some EU members, the share of counterfeits was reaching 27% in some years”). Id. at p.67. 15 2016 OECD Report at p.68 (emphasis in original). The Report explained that “[t]he term ‘as much as’ is crucial in this context as it refers to the upper boundary of counterfeit trade.” 16 2008 OECD Report at p.13. See also 2009 OECD Report Update at p.1 (“Based on the framework developed in OECD (2008) this short report updates the quantitative results of that study by utilising more recent international trade statistics for the calendar years 2000 to 2007. This report does not, however, update the customs interception data on which the original framework was constructed and relies on the same, aggregated customs interception data (i.e. for 1999-2005).”). 17 See International Chamber of Commerce, “Estimating the global economic and social impacts of counterfeiting and piracy” (February 2011) at pp. 5 (2008 estimates and 2015 projection) and 50 (2015 projection), accessed from http://www.iccwbo.org/Advocacy-Codes-and-Rules/BASCAP/BASCAP-Research/Economic-impact/Global-Impacts-Study/. 18 See, e.g., Office of the National Counterintelligence Executive, “Foreign Spies Stealing US Economic Secrets in Cyberspace: Report to Congress on Foreign Economic Collection and Industrial Espionage, 2009-2011,” (October 2011) at p.3, (“The theft of trade secrets from US companies by foreign economic rivals undermines the corporate sector’s ability to create jobs, generate revenues, foster innovation, and lay the economic foundation for prosperity and national security”), accessed from https://www. ncsc.gov/publications/reports/fecie_all/Foreign_Economic_Collection_2011.pdf. 19 See Rowe, Elizabeth A., “Contributory Negligence, Technology, and Trade Secrets,” 17 George Mason L. Rev., 1, 5 (2009), accessed from http://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=1060&context=facultypub. https://www.uschamber.com/ sites/default/files/legacy/international/files/Final TPP Trade Secrets 8_0.pdf See also Politico.com, Op-Ed by Senators Orrin Hatch and Chris Coons, “A Better Way To Protect Trade Secrets” (April 4, 2016), (“According to some estimates, trade secrets are worth $5 trillion to the U.S. economy, on par with patents”), accessed from http://www.politico.com/agenda/story/2016/04/a-better-way-toprotect-trade-secrets-000081#ixzz4DpHlmVNQ. 20 See The Center for Responsible Enterprise And Trade and PricewaterhouseCoopers LLP, “Economic Impact of Trade Secret Theft” (February 2014) at p.3, accessed from https://www. pwc.com/us/en/forensic-services/publications/assets/economic-impact.pdf. 21 General Keith Alexander (ret.), while Director of the National Security Agency and Commander of U.S. Cyber Command, estimated that U.S. companies lose approximately $250 billion per year due to the theft of their intellectual property. See Rogin, Josh, “NSA Chief: Cybercrime constitutes the “greatest transfer of wealth in history,” The Cable (July 9, 2012), accessed from http://thecable.foreignpolicy.com/posts/2012/07/09/nsa_chief_ cybercrime_constitutes_the_greatest_transfer_of_wealth_in_history. See also Testimony of Randall C. Coleman, Assistant Director, Counterintelligence Division, Federal Bureau of Investigation, Statement Before the Senate Judiciary Committee, Subcommittee on Crime and Terrorism (May 13, 2014), (“The Office of the National Counterintelligence Executive, using estimates from academic literature, has estimated losses from economic espionage to be in the tens or even hundreds of billions of dollars annually to the American economy”), accessed from https://www.fbi.gov/news/testimony/combating-economic-espionage-and-trade-secret-theft; see also The National Bureau of Asian Research, “The Report of the Commission on the Theft of American Intellectual Property,” (May 2013) (“The USITC reported that in 2009 U.S. firms in the IP-intensive economy lost roughly $1.1 billion from the misappropriation of trade secrets to China alone,” citing U.S. International Trade Commission, “China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy,” no. 332-519, USITC Publication 4226 (May 2011) at pp.3-37, accessed from: https://www.usitc.gov/publications/332/pub4226.pdf), accessed from http://www.ipcommission.org/report/ip_commission_report_052213.pdf; see also American Intellectual Property Law Association, “Response to Request for Public Comments for ‘Trade Secret Theft Strategy Legislative Review’ (78 Fed. Reg. 16875)” (April 22, 2013) at p.1, (“Last year, the National Security Agency described trade secret theft as the greatest transfer of wealth in history, estimating the losses of trade secret theft and cyber breaches to be in excess of $334 billion per year”), accessed from http://www.aipla.org/advocacy/executive/Documents/AIPLA%20Letter%20to%20IPEC%20on%20Trade%20 Secrets%20-%204.22.13.pdf. 22 See United States Department of Justice, Office of Public Affairs, “Kolon Industries Inc. Pleads Guilty for Conspiring to Steal DuPont Trade Secrets Involving Kevlar Technology” (April 30, 2015) (quoting Special Agent in Charge Lee: “each year, billions of U.S. dollars are lost to foreign competitors who pursue illegal commercial short cuts by stealing valuable advanced technologies. This case demonstrates the FBI’s ability to penetrate these highly sophisticated criminal schemes and bring their perpetrators to justice. Its outcome should send a clear message to foreign commercial actors who seek to illegally exploit American companies and steal our nation’s innovation and technology.”), accessed from https://www.justice.gov/opa/pr/kolon-industriesinc-pleads-guilty-conspiring-steal-dupont-trade-secrets-involving-kevlar. 23 See, Deloitte, “Beneath the Surface of a Cyberattack – A Deeper Look at Business Impacts” (2016) at p.2, (“The costs commonly associated with data breaches are only the most widely understood impacts, the damage seen above the surface. But theft of PII is not always an attacker’s objective. Rarely brought into full view are cases of intellectual property (IP) theft, espionage, data destruction, attacks on core operations, or attempts to disable critical infrastructure. Beneath the surface, these attacks can have a much more significant impact on organizations. But the tolls they take are not broadly understood and are much more difficult to quantify”), accessed from https:// www2.deloitte.com/content/dam/Deloitte/global/Documents/ Risk/gx-risk-gra-beneath-the-surface.pdf. 24 See International Chamber of Commerce, “Enhancing Intellectual Property Management and Appropriation by Innovative SMEs,” (October 2013) at pp.14–15, accessed from http://www. iccwbo.org/Advocacy-Codes-and-Rules/Areas-of-work/Intellectual-Property/Innovation-and-intellectual-property/. SECTION 1 47
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ACKNOWLEDGEMENTS With thanks to, an
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