REMARKS BY AMBASSADOR MEL SEMBLER

AT IPR CONFERENCE

Perugia, April 6, 2005

 

Good afternoon.

It is my pleasure to welcome all of you to Perugia for this important retreat on intellectual property and criminal law. This is the latest in a series of workshops on IPR law that the embassy has sponsored, and we intend to continue to host these programs, together with industry associations.

As many of you know, my tenure as the United States ambassador to Italy is about to come to an end. I am very proud to say that our two countries enjoy an excellent dialogue on intellectual property rights, and I consider the progress we have made in improving IPR protection a highlight of my three-and-a-half years here.

Only a few months after I arrived in Rome, I held a reception at my residence for many key Italian officials in charge of intellectual property protection. Several of the people in this room were present that evening.

From there grew several joint initiatives to improve cooperation on IPR issues, including this series of legal workshops. We held our first retreat in this very hotel in 2003 and then had another highly successful event last year in Montecatini.

While the previous workshops dealt primarily in civil legal aspects of intellectual property, over these next three days we want to focus more closely on the criminal prosecution of IPR-related crimes.

In Italy, as in most countries, the enforcement of intellectual property remains primarily within the realm of civil law. Copyright, patent, and trademark holders have primary responsibility for policing those rights and for taking action against those who violate them.

But the use of civil law and civil penalties is not always enough. In the United States, we have found that criminal penalties, that is, jail sentences, are necessary to create a deterrent for would-be pirates and counterfeiters.

It is no secret that the U.S. government is encouraging many countries, including Italy, to be more aggressive in imposing criminal penalties on those who steal the intellectual property of others.

Of course, it is neither just nor practical to imprison every person who downloads a song or purchases a fake rolex watch on a street corner. At the same time, people who operate illegal dvd and cd factories are perpetrating an act of theft amounting to millions of euros.

In the most extreme cases, IPR crime threatens the health and safety of the general public. Perhaps the most tragic case yet occurred in china last year, when the sale of fake milk formula led to the malnutrition deaths of over a dozen babies. These kinds of cases are not limited to developing countries. In 2001, a man was sentenced to nearly four years in prison for selling counterfeit baby formula in California; though, fortunately, no deaths occurred.

Clearly, there is a point where justice demands that a counterfeiter face prison for his actions. The United States over the past decade has toughened its criminal intellectual property statutes. In 1997, the United States congress passed the "no electronic theft act," which made internet piracy a crime even when such piracy was not done for profit. The law also increased penalties for repeat offenders.

Here in Italy, the trend is also towards increasing criminal sanctions.

The passage of the anti-piracy law in 2000 made copyright infringement a crime punishable by up to four years in prison. Last year, parliament passed the so-called "Urbani decree" which criminalizes most unauthorized file sharing over the internet. I note, however, that the Urbani bill is not without controversy; and some interest groups believe the legislation's criminal provision is too broad.

While is up to Italy to decide the details of its own laws, I do believe that Italy is coming to the same conclusions that we have in the United States, that criminal penalties are a necessary tool in the protection of intellectual property.

Criminalization of IPR violations, however, is not necessarily popular. In both Italy and the United States, we are struggling with a public perception that IPR theft is not a "real crime" deserving of real punishment.

For most members of the public, the street vendors who sell pirated and counterfeit goods do not seem particularly menacing.

It is true that, at an individual level, purchasing a pirated piece of software or downloading a song may not seem like a big deal. But the cumulative effect of these transactions is devastating.

I could talk all day about the economic damage our two countries are suffering.

Suffice it to say that in china, for every underground factory producing fake Callaway golf clubs or Nike shoes, there is another factory turning out knock-offs of Prada bags and Armani sunglasses. The street vendors I see on Rome’s sidewalks display bootleg Italian films alongside the latest Hollywood offering. As two G-7 economies, the United States and Italy are among the world's biggest producers of intellectual property, and we are both suffering huge losses.

But what is more germane for our discussion here, however, is the danger this trade poses to law-and-order and national security.

In Italy, the trade in counterfeit and pirated goods is providing a growing revenue stream for organized crime groups. As you will hear from some of the Italian experts here, crime gangs control much of the production and distribution of what is being sold at street-level. The low probability of going to jail for trafficking in fake goods is certainly an attraction.

Indeed, no other line of illegal business produces narcotics-like profits at traffic-ticket risk.

The world customs organization estimates the total trade in counterfeit products in 2003 exceeded 500 billion dollars, so this is a huge pool of money that criminal groups can access.

The trade in fake goods is truly global in scale. Indeed, Italian ports such as Genoa and Naples have joined New York as major transshipment points for pirated and counterfeit goods, much of it, as I have mentioned, produced in china. However, we simply cannot credibly demand that developing countries such as China do more to protect our intellectual property when we ourselves do not stop the sale of counterfeit and pirated goods on our street corners.

I don't need to remind this group that the Italian and American legal systems have significant differences. However, we have a great deal to learn from each other as we are facing many of the same difficulties with respect to IPR. It is in this spirit that the embassy is hosting this retreat.

We hope to encourage a vigorous debate, to exchange best practices, and to offer a chance to learn from each other's experiences.

One of the sessions tomorrow will be devoted to internet piracy, which is a relatively new phenomenon, but presents an array of technical and legal challenges for law enforcement in both of our countries. The trans-national nature of internet piracy means that international cooperation on IPR cases is even more essential.

Although I will be leaving my position as ambassador in just a few weeks, the embassy is committed to continuing this productive dialogue on IPR issues.

We strive to make these programs useful and insightful for both the Italian and American participants. We also hope to include even more Italian officials, judges, and prosecutors — both at the national and regional level — in future events.

I want to conclude my remarks by thanking all of you for participating. We've been very pleased with the turnout this year.

This retreat represents a large time commitment for all of you, particularly for our guests joining us from the United States, and I appreciate your presence here.

I'd also like to thank our industry association co-sponsors, not only for supporting this event, but also for their help with many of our IPR outreach efforts over the years. Without the help of these groups, we would not be able to assemble all of you together in this magnificent location.

With that I wish all of you a great set of meetings and an enjoyable time here in Perugia.

Thank you.