Industry, Intergovernmental Organizations Launch Global Anti-Piracy Blitz

By William New
Multinational companies have long complained about cheap, dangerous knock-offs of their products undermining their profits and reputation, but in a two-day annual high-level gathering along with key intergovernmental organisations this week, they have taken the anti-piracy and counterfeiting campaign to new heights.

Industry and the organisations have seized upon ties to organised crime and the health and safety risks to individuals of fake products as a focal point as they put greater resources, pressure and effort into changing laws and public perception to be more supportive of their concerns.

But the top-level business executives, government and intergovernmental officials were not joined on the panels by representatives of the public, and may have been speaking largely to a room of likeminded people.

The third Global Congress on Combating Counterfeiting and Piracy, being held this year in Geneva on 30-31 January, is co-hosted by the World Intellectual Property Organization (WIPO), World Customs Union and Interpol.

WIPO Director General Kamil Idris, who is from Sudan, called the event an “ideal opportunity to raise public awareness” about the problems of counterfeiting and piracy, which undermine the “social fabric” and carry “human costs.” Idris, who has made IP protection a central tenet of his 8-year tenure, said WIPO’s “central message” is that “human creativity and innovation, developed and exploited through an efficient intellectual property system” is the best way.

Idris said there is increasing political will at the national level to improve IP protection in countries’ own interest. He said WIPO is “at the heart” of national, regional and international efforts to set standards for IP protection, and touted its work such as the advisory committee on enforcement, responding to requests for legal assistance and extensive training programmes.

Christoph Blocher, federal councillor at the Swiss Federal Department of Justice and Police, said counterfeiting is conducted by “well-organised criminal gangs” and requires cooperation among stakeholders. He described efforts to reform Swiss law on intangible property to stop transit of illegal goods and give greater flexibility to Swiss customs officials, plus strengthen penalties.

Ronald Noble, secretary general at the International Criminal Police Organization (Interpol) said the group is creating a database on international intellectual property crime, will help gather info and make easier to share.

On the risk of profits from counterfeits going to terrorists, Noble said, “We need to believe and recognise it as a real risk” since they use other illegal profitable channels such as drugs.

IP crime is a “serious threat that requires urgent action,” said Noble, who described three initiatives, beginning with data collection and exchange. Interpol makes intelligence available to all law enforcement worldwide through a secure network. The database will focus, among other things, on trafficking routes, and allow that entries into the database automatically queries into other databases to look for matches.

The second initiative is global cooperation against counterfeit pharmaceuticals. “Fake drugs kill thousands of people per year,” he said. Finally, the group will establish global anticrime centres for intelligence, data collection and training, with one specialising in IP crime.

Michel Danet, secretary general of the World Customs Organization, said it will announce 60 to 70 measures against counterfeiting and piracy at its June annual meeting. The measures may be “unpopular” and will cut across areas such as exporting, transit operations, and free zones, he said. WCO also will hold a series of seminars worldwide, and will target 60 countries with no counterfeiting or piracy legislation to help them draft legislation working with European governments. It also will set up a fund for capacity-building, and will seek to raise the issue on the agendas of multilateral groups like the Group of Eight or the Group of 77.

Danet told a press conference that low-priced counterfeits may be used for money-laundering by organised crime.

Industry Groups Merge Anti-Piracy Efforts

Industry efforts formed to fight counterfeiting and piracy did what industry does best when it wants to increase its impact: merge. The Global Business Leaders Alliance Against Counterfeiting (GBLAAC) announced at the meeting that it has joined the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy (BASCAP) to create a larger group under the BASCAP name.

Meanwhile, in her presentation, Dee Ann Weldon-Wilson, president of the International Trademark Association (INTA), called for new solutions. INTA has three proposals, she said: To harmonise criminal laws across the world so as to raise basic standards of enforcement against all aspects of criminal activity; to urge national governments to pass laws and regulations to stop transhipment through their countries; and for governments and the private sector to continue their campaign to build awareness of the problem.

Guy Sebban, secretary general of the International Chamber of Commerce, said BASCAP’s plans for 2007 include three lines of action. These include: the continuation of raising awareness; and working with governments, not on passing the right legislation, but rather to focus on enforcement of existing laws “or of laws not yet in place.”

The third action will be a long-term effort to change public perception about counterfeiting and piracy, as the public is currently not in favour of protection. Industry will try to do this by putting more focus on the harmful safety and health aspects and ties to organised crime, Sebban said. “By saying that more often and more loudly, we have the possibility” of reaching a larger number of people, he said. And to win developing country support, more emphasis will be placed on the limitations it puts on technology transfer, he added. This could be seen as a threat by some developing countries.

Bernd Pfaffenbach, secretary of state at the German Federal Ministry of Economics and Technology, highlighted the importance of the issue for Germany itself as well as in the country’s role in the presidency of the European Union until July, and as host of the upcoming meeting of the Group of Eight industrialised nations. In particular, the subject is “very high on the agenda” of the G-8, he said. Germany will seek to bring more industry views into the G-8, but did not mention the views of the public.

Draft OECD Study Shows New Data on Economic Impact

Preliminary results from a study by the Organization for Economic Cooperation and Development (OECD) presented at the Congress support industry’s claims. It shows that counterfeiting and piracy are occurring in virtually every economy, with 27 OECD countries cited as sources for fakes. But five Asian countries – China, Thailand, Hong Kong, Korea and Malaysia – were the origin of nearly 60 percent of seizures of illegal products. The early findings were presented by John Dryden, OECD deputy director for science, technology and industry.

Other preliminary findings are that distribution is increasingly infiltrating legitimate supply chains, including established retail shops. The Internet and free shipping zones also are key contributors. Also found was that consumption patterns vary. For instance, the Middle East buys a significant portion of counterfeit automotive parts, and Africa is a major destination for counterfeit pharmaceuticals.

The scope of products is “broad and expanding,” according to surveys conducted with industry and public authorities. Textiles were the most common target for counterfeit (30 percent), followed by machinery equipment (17 percent). “What is striking in a closer examination of the data is the number of products that could pose health and safety risks,” Dryden said. This should bolster industry efforts to win more public support for its fight.

OECD said evaluation is difficult as data continues to be sketchy. The conservative estimate OECD came up with is that counterfeit and pirated goods traded internationally account for US$176 billion, which is about 2.4 percent of world trade in manufactures. The study is due to be public in May.

Xiong Xuanguo, vice president of the People’s Supreme Court in China, described the country’s system and said it is working. But he acknowledged that in some regions there remain “outstanding problems” as the local economies and societies develop. He cited a need for improvements in laws and enforcement, with the Supreme Court making changes to bolster punishment and standardisation of enforcement. In addition, greater transparency of activities will be added, with more sharing of information on judgments, and an increase in transnational exchanges.

WTO Work on IP Enforcement

Rufus Yerxa, deputy director general at the World Trade Organization, described how IP enforcement is addressed at the WTO, including through the Council on the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Members’ IP enforcement is examined in a review process, and a TRIPS provision allows members to ask others for more information about their IP protection (recently used by the United States and Switzerland with China).

Yerxa also cited the “easily overlooked” TRIPS Article 69 under which members agree to cooperate to eliminate infringing goods. The WTO dispute settlement system has not seen much activity relating to IP violations, he said, and the few complaints that have appeared there have ended in amicable settlements. Many smaller WTO members have not yet been required to implement TRIPS.

Yerxa said some members such as Japan, European Union and the United States, have mentioned piracy and counterfeiting concerns to the TRIPS Council. The US recently made a new submission on modern seizure methods, he said. But other members argue that the enforcement issue is not appropriate for the council, arguing for instance, that the WIPO enforcement advisory committee might be better, he said. WTO cooperation with WIPO is “particularly intensive,” Yerxa said.

Michael Keplinger, WIPO deputy director general for copyright and related rights, discussed how “rapid technological development facilitates wholesale piracy.” Among WIPO activities were some 50 IP enforcement training events in 2005-2006, he said. Keplinger mentioned WIPO negotiations for a treaty on protection of broadcasters’ signals.

Eckhart Guth, head of delegation of the European Commission to UN international organisations, highlighted the problem of broadcasting signal theft, especially relating to sports programming.

Lobbying Message

Bob Wright, vice chairman of General Electric and chairman and CEO of NBC Universal, said attendees must work to move intellectual property protection to the “absolute top of the public policy agenda.” They must also bring key private sector players into the fight.

The message, Wright said, should be that IP protection is critical for any nation’s economic growth, that piracy and counterfeiting threaten health and safety, and that it is massive in scale and involves organised crime, requiring changes in strategy and resources for law enforcement.

Wright said it is important for the public to understand that purchasing pirated or counterfeited products is “not an victimless crime, and that they themselves may be the victim.” In a press conference, Wright defended China’s system and said protection would increase there once the country has enough of its own intellectual property to protect.

“Where Are the Consumer Organisations?”

At the press conference, a question was raised about the absence of consumer organisations on the panels. Danet replied that journalists “ask good questions,” but said industry and international organisations “are opening to consumer organisations.” A WIPO organiser told media that the focus is not on broader questions of IP rights, but rather on commercial scale problems.

But Wright asserted, “Consumer organisations would be violently in agreement with everything said in this meeting,” as they are “very concerned” with product testing and approval to give assurance the product they purchase is as advertised.

William New may be reached at wnew@ip-watch.ch.