23 April 2002
State Department Official Cites Intellectual Property Benefits, April 23, 2002
(Wayne says more countries protect patents, trademarks)
The protection of intellectual property rights is critical to continued U.S. economic success, a senior State Department official says.
In April 23 testimony before a House of Representatives Appropriations subcommittee, Assistant Secretary of State Anthony Wayne noted that U.S. copyright industries have grown at twice the rate of the rest of the U.S. economy and now account for about 5 percent of U.S. gross domestic product (GDP).
He said that an increasing number of U.S. trading partners are beginning to understand that their future growth and development depend on active participation in the global knowledge-based economy. And this participation is hardly possible without proper protection of intellectual rights, he added.
In India, Wayne said, an information technology and software sector that enjoys copyright protection flourishes while advances of the pharmaceutical industry are stymied by the lack of basic patent protection.
He said that intellectual property protection is also a proven incentive that helps to attract domestic and foreign investment and encourage technology transfer.
Wayne said that while the U.S. government has made "tangible" progress in improving the level of intellectual property protection around the world, significant challenges remain.
He cited the growth of optical media piracy and the continued spread of computer software piracy as major concerns.
Wayne said that the State Department works with the Office of the U.S. Trade Representative and the private sector to persuade U.S. trading partners to require their government ministries and offices to use only authorized, licensed software.
He also outlined other State Department international initiatives and programs aimed at highlighting benefits of intellectual property protection and improving relevant laws and their enforcement around the world, including assistance to developing countries and new World Trade Organization members for the implementation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
This special hearing was held outside Washington in Virginia.
Following is the text of Wayne's testimony as prepared for delivery:
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Testimony of E. Anthony Wayne Assistant Secretary of State for Economic and Business Affairs before the House Appropriations Subcommittee on Commerce, Justice, State, the Judiciary and Related Agencies Loudoun County, Virginia
April 23, 2002
Thank you for the opportunity to participate in today's discussion on intellectual property rights policy and enforcement. The United States is a knowledge-based, innovation-driven economy, as evidenced by the development of technology corridors nationwide, including right here in Loudoun County. The protection of intellectual property rights is critically important to our prosperity and economic leadership.
The Department of State is committed to the Administration's goal of advancing the protection of intellectual property worldwide, to keep U.S. companies competitive in the technology marketplace. At all levels of the Department, we are actively engaged in a cooperative effort that involves other Washington agencies, the private sector, and foreign governments.
What I would like to do today is to touch on some recent trends in intellectual property protection, and then describe briefly the role of the Department of State.
Recent Trends in Intellectual Property Protection
In assessing the state of intellectual property protection overseas, we see two complementary and positive trends in recent years. First, we observe a significant, if not readily quantifiable, increased appreciation of the benefits inherent in effective protection of intellectual property rights. More and more, our trading partners are beginning to understand that their future growth and development depends in large part on their becoming active players in the global knowledge-based economy. They also are coming to appreciate that strong intellectual property protection is necessary to create an attractive investment climate. In short, economic self-interest is becoming a very important factor in enhancing intellectual property protection overseas. Our trading partners' actions to improve intellectual property protection and enforcement benefit their companies and our companies.
Recent statistics about our own economy are illustrative of the importance of intellectual property rights. The copyright industries (including software) now account for about five percent of our GDP, and this sector has grown at twice the rate of the rest of the U.S. economy.
The positive impact of intellectual property protection can also be seen in India's development of a flourishing information technology and software sector. However, the lack of basic patent protection, especially in pharmaceuticals, has undermined the incentive for India's best scientific minds to engage in original research and development in India itself. As a result, domestic innovation and growth in that sector remain stymied, while cheap generics proliferate.
Intellectual property protection is an important tool for countries at every stage of development, and a proven incentive for domestic and foreign investment, technology transfer, economic growth, and high-paying jobs in every area of technology.
Although much more remains to be done, we believe that we have made tangible progress in improving the level of intellectual property protection around the world.
Two examples are the World Intellectual Property Organization (WIPO) Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT). These treaties update and improve protection for the rights of authors and performers within the digital environment. These agreements will provide a legal framework to facilitate further development of electronic commerce. The U.S. is a signatory to both treaties, and our Congress has already amended our laws to enable us to implement the treaties. Enough countries have now ratified both treaties to bring them into force -- the WCT came into force in March, and the WPPT will do so in May.
Although the trends for effective intellectual property protection are positive, significant challenges remain. A key focus of this year's Special 301 review, under the chairmanship of the Office of the U.S. Trade Representative (USTR) has been the growth of piracy of optical media (music CDs, video CDs, CD-ROMs, and DVDs).
This pernicious form of piracy spreads quickly and can infect entire regional markets unless strong and effective measures are taken to prevent illicit operators from setting up shop. But it can be stopped if governments are willing to act.
For example, when the pirates moved into new, illicit fields of opportunity in Ukraine, the Department and our Embassy in Kiev began working intensively with USTR, other government agencies and the private sector to press the Government of Ukraine to close down pirating facilities. For a time, our joint efforts were somewhat successful, but the commitment of the Government of Ukraine unfortunately did not last. Last year's designation of Ukraine as a Priority Foreign Country and the imposition of trade sanctions send a strong signal that we will not tolerate wanton piracy of our intellectual property.
Another priority will be implementing initiatives to proactively combat computer software piracy. The Department of State is working closely with USTR and the private sector to persuade our trading partners to require government ministries and offices to use only authorized, licensed software. In addition, we are working closely with USTR and other Washington agencies to help ensure that WTO [World Trade Organization] Members comply fully with their obligations under the TRIPS [Trade-Related Aspects of Intellectual Property Rights] Agreement.
The success we achieve through these and other intellectual property initiatives depends on the close and constructive relationship we enjoy with the private sector. The progress we have made to date has been and will continue to be a joint enterprise.
The State Department's Role in Intellectual Property Rights Policy and Enforcement
The Department of State has, as its primary mission, the use of U.S. foreign policy tools to protect Americans' security and prosperity. The protection of intellectual property abroad figures prominently among our international economic objectives. Our Ambassadors and embassy country teams around the world have as a priority objective the protection of intellectual property by mobilizing U.S. Government resources in the field and aggressively engaging host government officials and the local private sector.
Internal Preparation
New Foreign Service officers first learn about the importance we attach to intellectual property in entry level training courses. We also provide intellectual property training in our mid and senior level professional courses. Specialized training for economic officers includes instructional modules on intellectual property. Working with our colleagues in the U.S. Patent and Trademark Office (USPTO) and the Copyright Office of the Library of Congress (Copyright Office), we also provide a stand-alone course that is geared specifically to economic officers being assigned to positions in countries where intellectual property issues are particularly challenging.
Chiefs of Mission and Deputy Chiefs of Mission are briefed on intellectual property issues before assuming their duties. They and economic officers headed to overseas posts also meet with relevant Washington agencies and private sector representatives.
Cooperative Activities
The Department of State plays a key role in the annual USTR-led Special 301 review of country intellectual property practices. Participating agencies rely heavily on the accurate, up-to-date information we receive from our posts abroad. The objective of the review is not simply to give our trading partners an intellectual property report card. Rather, we seek to employ Special 301 to leverage real progress with host governments. In this regard, our Ambassadors and embassy officers overseas play a critical role. They are well positioned to effectively convey our views and they have the on-the-ground contacts needed to work the issues with host governments and the private sector.
Our participation in the Special 301 process is a year-long commitment to bilateral engagement with countries worldwide. Our posts are continuously looking for ways to bring together all parties of the intellectual property community, and to help them work together more effectively.
With growing evidence of links between intellectual property crime, organized crime and funding for terrorist activities, embassy country teams are seeking to foster closer ties between U.S. Government agencies and the foreign counterparts who work these enforcement issues.
One area where this cooperative approach has been critical is in international negotiations. At last year's WTO Ministerial in Doha, the Department of State worked closely with our USTR colleagues, including Claude Burcky who is on this panel, and the private sector to reach agreement on a separate Ministerial Declaration on TRIPS and Public Health. The Declaration successfully fended off efforts to weaken TRIPS by reaffirming the commitment of WTO Members to the TRIPS Agreement and the flexibility the Agreement affords WTO Members in pursuing their public health objectives.
The Department of State has joined with other U.S. Government agencies in working closely with the World Intellectual Property Organization (WIPO). In addition to establishing new norms in the area of intellectual property, the WIPO Patent Cooperation Treaty saves our inventors and innovators countless dollars as well as time in registering patents overseas. WIPO also provides a valuable service in training developing countries to improve their intellectual property regulatory regimes. A number of its training programs are conducted in cooperation with U.S. Government agencies and the U.S. private sector.
Training, Technical Assistance and Public Diplomacy
As developing countries strive to improve their intellectual property regimes, the U.S. Government and the private sector are receiving an increasing number of requests for intellectual property training and technical assistance.
The U.S. Agency for International Development (USAID) provides assistance to the implementation of TRIPS by developing countries and new WTO members. The Department of State's Bureau of International Narcotics and Law Enforcement also funds intellectual property training abroad. Our Bureau of Educational and Cultural Affairs funds travel to the United States by officials, academics, journalists and business people from developing countries. The purpose of these visitor programs is to demonstrate the benefits of protecting intellectual property rights.
The U.S. Customs Service, USPTO, the Federal Bureau of Investigation, the Department of Justice, the Department of Commerce, the Copyright Office, and USTR participate in training and assistance activities by providing experts for programs funded by USAID, the Department of State, and their own resources. U.S. industry also funds and provides significant amounts of training to developing countries.
The Department of State chairs an Intellectual Property Rights Training Coordination Group that works with other U.S. agencies and the private sector to prioritize training and assistance proposals and to ensure we get the most out of our training and assistance investments. It responds to training and assistance recommendations from both our embassies overseas and industry. To enable government and the private sector to more effectively pool their efforts, the Group is working to improve a database of training programs. Examples of some of these programs include:
-- Seminars sponsored by USAID for the Jordanian public and private sector on benefits of intellectual property protection, and training for Jordanian judges on intellectual property laws.
-- International Law Enforcement Academies' IPR enforcement programs, where the Department of State provides the facility and program funding and U.S. Government enforcement agencies provide the substantive expertise.
-- Conferences sponsored by the Department of Commerce under its Commercial Law Development Program (CLDP), which bring in officials from foreign governments. A recent conference in Croatia included officials from Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Former Yugoslav Republic of Macedonia, and Romania.
-- Twice-annual Intellectual Property Enforcement and substantive intellectual property rights programs, both sponsored by USPTO in Washington, D.C. The Department of State, through its posts worldwide, assists the USPTO by locating eligible candidates for both programs.
Our embassies and consulates also have hosted assistance programs sponsored by the private sector. For example, in Bulgaria, the Motion Picture Association of America (MPAA) sponsored a program to train border control police and customs officers on identification of pirated products. In Croatia, the Business Software Alliance (BSA) provided software anti-piracy training for trade inspectors.
Some of the most effective training programs are educational efforts organized or sponsored by the Department of State's public diplomacy corps. A recent example is a conference that was organized by the Public Affairs Section of our Consulate General in Sao Paulo, Brazil. The purpose of the conference was to explore ways to combat piracy in the Brazilian market, including better training and public/private collaboration.
The conference was itself a shining example of the partnering that is possible with the private sector. The Consulate General staff worked with the Brazilian government and industry representatives to organize the conference, drawing in law enforcement officials, representatives of anti-piracy groups, and leaders from the entertainment and software industries. The value of this conference -- and this type of initiative -- was confirmed by positive post-conference comments from both MPAA and the Recording Industry Association of America (RIAA).
Other examples of public diplomacy efforts include:
-- Sponsoring officials from developing countries to travel to the United States as part of the State Department's International Visitors Program to study intellectual property protection in the United States. As part of their program agendas, these officials receive specific training from such agencies as USPTO, the U.S. Customs Service, the Copyright Office, and the Department of Justice.
-- Sending intellectual property experts abroad. Two weeks ago, our Consulate General in Chengdu, China sponsored two experts from USPTO and the Department of Justice, both fluent in Chinese, for a three-day visit to southwestern China. The public affairs office reported these officials combined "steadfast advocacy of USG policies with a sensitive understanding of the concerns of their audiences," and made it possible for often skeptical audiences of university faculty and students, as well as government officials, to consider the American point of view.
-- Hosting our widely appreciated WorldNet interactive videoconferences, which enable intellectual property experts to reach broad public and private sector audiences in several countries at the same time.
-- Creating an intellectual property web site for foreign audiences which includes key reports, international agreements, links to relevant U.S. Government web sites, fact sheets, and original articles on current intellectual property issues. Its URL or Web address is: http://usinfo.state.gov/topical/econ/ipr.
Success Stories
Our embassies and consulates have used educational outreach, reporting and analysis, and frequent interventions with foreign government officials to help advance our intellectual property interests overseas. Following are several examples:
In Hong Kong, persistent efforts on the part of Consulate General officers paid off when authorities passed an effective optical disk law, shut down pirating production lines and drove pirating distributors out of business.
In Singapore, Embassy interventions convinced the local authorities to shut down "night markets" which sold pirated merchandise.
In Greece, Ambassadorial pressure in a sustained campaign played a key role in convincing the government to pass tougher enforcement laws. As a result, losses from audiovisual piracy -- specifically TV stations showing movies without paying royalties -- have declined from $100 million to near zero.
In the United Arab Emirates, repeated representations by the Ambassador resulted in successful raids on stores selling pirated computer software. The Ambassador received the Department's Charles E. Cobb Award for helping the UAE government and the Pharmaceutical Research and Manufacturers of America (PhRMA) reach agreement, ending UAE piracy of U.S. pharmaceutical products. In Slovenia, embassy interventions, using Special 301 as leverage, convinced the government to pass legislation protecting test data submitted to obtain marketing approval for pharmaceuticals.
In Paraguay, embassy efforts helped convince the government to accede to both of the WIPO Copyright Treaties. The officer who led this effort received the Department's Charles E. Cobb, Jr. Award for Initiative and Success in Trade Development.
In South Africa, Embassy initiatives led to the founding of a group representing all intellectual property industries and companies in the country. The group has developed ways for customs agents at remote borders to better identify counterfeit goods.
In Argentina, PhRMA honored the Deputy Chief of Mission for his outstanding support in advocating for effective intellectual property protection for pharmaceutical products.
Conclusion
Intellectual property rights are critical to continued U.S. economic success, and the Department of State plays a critical role in championing U.S. intellectual property rights abroad. The Department of State's contribution to intellectual property protection rests in large part on our ability and commitment to work with all relevant parties, public and private, both here and overseas. We embrace this broad responsibility and the opportunity to contribute to the development of "knowledge-based" economies, in which the expression of creative ideas is encouraged and rewarded.
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