Volume 11 | Issue 2 | Year 2008

Intellectual Property (IP) protection is among a handful of issues that will determine America’s competitiveness in the 21st century. Your ability to create, innovate, and generate the best artistic, technological, and knowledge-based IP is essential to global economic growth and to your competitiveness as a manufacturer. And it’s under attack. Criminal networks are exploiting weaknesses in supply chains and lining their pockets by producing dangerous and defective products at your expense.
The problem continues to grow and is moving from the back alleys and black markets to more traditional, mainstream venues. The IP of innovative industries is increasingly under assault around the globe as governments and NGOs aggressively seek to erode patent, trademark, and copyright protections; undermine international trade rules; and destroy innovation and research-based industries. Anti-IP forces are pressing their attacks in the U.S. Congress, in a growing number of key nations, and in multilateral forums like the World Trade Organization, the World Health Organization, and the World Intellectual Property Organization, harming both developed and developing countries and their people.

Most people think of intellectual property theft as a victimless crime. Think again.

IP theft threatens our economic security. It is estimated that IP theft costs U.S. companies $250 billion annually. A 2007 study by the Institute for Policy Innovation shows that copyright theft costs the U.S. economy $58 billion in lost output and $2.6 billion in total lost tax revenue.

IP theft harms U.S. workers. An estimated 750,000 U.S. jobs have been lost due to this growing problem, including many high-paying manufacturing jobs. Small businesses are especially at risk because they often lack the ability and resources to protect their trademarks or copyrights. Eastman Machine Company, a fourth-generation family-owned small business in Buffalo, N.Y., that manufactures manual and automatic cutting machines, had its product line counterfeited by a Chinese manufacturer. As a result, Eastman’s legitimate product was almost completely pushed out of the world’s largest market for cutting machines. While the counterfeit product thrived, Eastman had to lay off nearly two-thirds of its workforce.

Zippo, a company that makes lighters in Bradford, Pennsylvania, laid off 121 employees, representing 20 percent of its entire workforce due to counterfeiting. Abro Industries, a company in South Bend, Indiana, that makes glues, tapes, and epoxies, has seen more than 40 of its products counterfeited. The president of Abro Industries estimates that these fakes cost the company about $15 million a year, spending millions in legal battles to protect his IP. This problem is affecting real businesses.

IP theft also jeopardizes the health and safety of your customers. From DVDs and CDs, shampoo, and batteries to car parts, prescription drugs, and electrical equipment – every product in every industry is vulnerable. These are not just people selling goods at flea markets and on street corners. These are sophisticated criminals running big businesses and infiltrating legitimate supply chains at our expense.

This is a serious problem with serious consequences. So how do we curb the growing problem of IP theft?

First, we need to educate people. Intellectual property benefits consumers, attracts investment, and creates jobs in your industry while expanding access to technology, medicines, and content. We need to get the word out here in the United States and around the globe that IP is important, and it’s worth protecting.

Second, we need to build broad domestic support for IP by the U.S. government and industry. It’s time for Congress to stiffen penalties for IP crimes, bolster enforcement resources, and make this issue atop priority. The penalties must equal the crimes. These crooks are stealing our livelihood and threatening the health and safety of Americans – often under the guise of legitimate brands – and they should be punished accordingly.

Finally, we have to attack this problem globally. We need to build global alliances to renew support for intellectual property in key international markets in order to improve enforcement and confront and defeat anti-IP activists.

Real people are being affected. The time to act is now.

Caroline Joiner is executive director, U.S. Chamber of Commerce Global Intellectual Property Center. To learn more about the Chamber’s efforts or to join the fight, visit www.thetruecosts.org.

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