Key Intellectual Property Enforcement Mechanism or Toothless Tiger?

[Len]

On Friday, December 15, 2017, the US Department of Justice and Department of State announced the launch of an IP Law Enforcement Coordinator Network. The Network focuses on international trademark counterfeiting, copyright piracy and other forms of intellectual property rights infringement across the world, spanning all industry sectors. Though the components of the Network are not new, the announcement seems intended to mark a renewed focus on these issues. Domestic and foreign corporations should take note.

The launch of the Network no doubt responds to increasing concerns about the impact of IP infringement on the US economy. According to a recent Forbes article titled “Why the US Can’t Afford To Fall Behind In Intellectual Property Enforcement,” total merchandise exports of IP-intensive industries make up more than half of all US exports, or $842 billion, and almost 40% of US GDP. As the article noted, “US brands and patents are more likely to be infringed than those of any other nation, making up as much as 20% of all goods seized in the global counterfeit trade.” Yet, the “US Chamber of Commerce 2017 International IP Index shows that the US now ranks fifth, behind the UK, Sweden, France and Germany,” in its IP enforcement efforts.

A chart from the Department of State indicates that IP industries account for approximately 38% of GDP, 52% of merchandise exports, and 27.9 million jobs. IP crime’s annual cost to the US economy is a staggering $180 billion from theft of trade secrets, $18 billion from pirated US software, and $29 billion in displaced legitimate sales due to counterfeit and pirated goods.

The purpose of the “Intellectual Property Law Enforcement Coordinator Network” is to combat this significant problem. The program began in 2006, and now consists of five prosecutors (termed “Intellectual Property Law Enforcement Coordinators” or “IPLECs”) located in five regions throughout the world – Abuja, Nigeria; Bucharest, Romania; São Paolo, Brazil; Bangkok, Thailand and Hong Kong. “The network is designed to ensure that experienced US prosecutors are located in high-impact regions to enhance the capacity of individual countries to investigate and prosecute IP crimes, and to develop regional networks to more effectively deter and detect IP crimes.”

In announcing the launch, Attorney General John P. Cronan of the Criminal Division noted:

"Intellectual property rights form the foundation of American innovation and protect the American public from products that pose risks to health and safety. The protection of these rights requires robust international cooperation and coordination. The IPLEC network is dedicated to developing the capacity of our foreign partners to combat intellectual property violations and building relationships critical for that cooperation. Our strategically placed coordinators draw upon their subject matter expertise to help ensure that property holders’ rights are enforced across the globe, and that the American people are protected from harmful products entering the marketplace."

The Network assesses the capacity of law enforcement throughout each region to enforce IP rights; mentors and delivers training to investigators and prosecutors; assists in developing or strengthening institutions dedicated to enforcement of intellectual property rights; monitors trends in intellectual property rights protection and computer crimes; and provides expert assistance in support of US intellectual property rights policies and initiatives.

The launch of the program may raise significant legal questions concerning international IP enforcement for both US companies who are facing issues with respect to copyright, trademark and trade secret protections abroad, as well as those companies who could potentially face enforcement actions targeted to protect US interests. For example, in announcing the launch, the DOJ noted that “this fall an IPLEC-mentored team of Brazilian law enforcement officials launched a series of significant enforcement actions on a US Trade Representative-designated Notorious Market in São Paulo, seizing approximately 880 tons of counterfeit and contraband goods worth approximately $138 million.” While this is one small victory against counterfeiting, it remains to be seen whether the Network will in fact have a significant impact on infringement of US intellectual property rights.