U.S. Wages War on Product Piracy
When Alexander H. Good goes to the Itaewon shopping area in downtown Seoul, South Korea, he can find knockoffs of many major name-brand products ranging from Rolex watches to Samsonite luggage to Gucci purses mixed in with some legitimate merchandise.
As might be expected, the prices are low. A counterfeit pair of New Balance tennis shoes, for example, can be purchased for $9 a pair, compared to $130 for the real thing in the United States.
But Good does not see it as any great bargain. As director general of the U.S. and Foreign Commercial Service of the Commerce Department, part of his job is to help develop programs to crack down on the international piracy of copyrights, trademarks and patents, commonly known as intellectual properties.
His office is responsible, both domestically and abroad, for trade promotion, development of market research and international trade and investment programs. Good recently stopped in Los Angeles en route to Asia to testify on the problem before a hearing here of a congressional joint economic subcommittee on trade, productivity and economic growth chaired by Sen. Pete Wilson (R-Calif.).
Earlier this month, the Reagan Administration proposed legislation to make it easier to block imports of counterfeits of American-made goods. However, the Commerce Department began two years ago to set up a program to address the increasing problem of counterfeit goods, which has expanded into films, records, agricultural chemicals and auto and aircraft replacement parts. The United States has targeted 10 countries: Taiwan, South Korea, Singapore, Indonesia, Malaysia, Thailand, the Philippines, India, Brazil and Mexico for initial attention under the program.
Estimated to Cost $20 Billion Annually
“This doesn’t mean other countries are not involved,” explained Good, who pointed out that the United States has a problem with Canada, where U.S. television programing is illegally being taken off of satellites for unauthorized rebroadcast there.
It is estimated that the unauthorized use of U.S. trademarks, patents and copyrights is costing companies as much as $20 billion annually in lost sales and has cost about 750,000 U.S. workers their jobs, Good said. He explained that it is critical for the United States to more aggressively protect its intellectual properties “because more and more our international competitive advantage is in thinking and ideas. We can’t compete with the labor costs” overseas.
But he pointed out two major problems: convincing countries that it is in their best interest to protect such U.S. properties, particularly when quick and profitable markets are found for knockoff products, and helping the countries find solutions.
In some countries--Indonesia, for example--patent laws do not exist, and that creates special problems for American companies. Good said that if U.S. firms want to make and distribute pharmaceutical products in Indonesia, they must obtain Indonesian licenses. Applications for licenses require the firms to disclose the ingredients and formulas for their products.
During the time it takes for the Indonesian government to approve a license application, companies there sometimes reportedly begin producing the products--based on the data in the license applications.
Administration officials also say that South Korea has not been particularly cooperative with U.S. efforts to protect copyrights and patents of chemical and pharmaceutical products overseas. The United States, to put more pressure on South Korea, recently initiated an investigation of that country’s inadequate protection of such intellectual property rights.
Good noted that some progress has been made. For example:
- Japan last spring extended full copyright protection to computer software.
- Taiwan recently amended its trademark law to provide up to five years’ imprisonment for persons convicted of product counterfeiting. It has also passed a new law improving protection for foreign copyrights and extending it to computer software.
- Singapore is considering a new copyright law, based on Australia’s, that U.S. experts consider to be a great improvement over current law. Maximum penalty under the law would be a fine of $47,000 and five years in prison.
- Malaysia also is considering a new copyright law that would provide protection for computer software and would increase penalties for copyright infringement.
