Remarks delivered at the “IP in PA: Keystone for Success” event
Director of the U.S. Patent and Trademark Office Andrei Iancu
October 21, 2019
As prepared for delivery
Good morning everyone, and thank you Caren (Yeamans) for that kind introduction.
Thank you to the entire team here at Fanatics for hosting us, and to the U.S. Chamber’s Global Innovation Policy Center for co-sponsoring today’s event. In particular, special thanks to Frank Cullen for his tireless efforts to bring events like this together, and for his strong support for intellectual property rights. It’s an honor to be here with all of you at this marvelous facility.
Cicero, who served as the consul of the Roman Republic in the first century B.C. once said: “True glory takes root, and even spreads; but all false pretenses, like flowers, fall to the ground...No counterfeit can last long.” And yet, some do.
Cicero spoke these words 2100 years ago. They were meant to speak about people and leaders, but they apply equally well to products today. Counterfeit products may not last long, but they are a scourge on our modern economy.
Made possible by new technology, the global availability of goods and services has undoubtedly benefited humanity. However, it has also presented challenges—such as a surge in the illegal production and sale of counterfeit merchandise.
Take, for instance, the prolific sale of fake jerseys of this year’s NBA champions, which fell apart after a couple of washes and ended up tossed in the trash “like flowers falling to the ground” (in Cicero’s words). The volume and reach of fakes such as these is staggering, and should be concerning to all Americans.
Sports merchandise is particularly vulnerable. And, despite working with the Department of Homeland Security and other agencies to protect their intellectual property, the efforts of professional sports teams and other companies are hindered by easily accessible fakes and the consumers willing to buy them. Today, many e-commerce sites, some with the words “cheap” and “China” in their very names, don’t even pretend anymore.
But it is not just online marketplaces. In recent enforcement investigations at the NBA Finals in Oakland and Toronto from June 7 through June 13, the Department of Homeland Security seized nearly 1,600 counterfeit items—ranging from jerseys, to T-shirts, hats, trendy cell-phone cases, and even tickets! That’s 1,600 items, in two cities, in North America, in one week.
And while this is a striking number, sports merchandise accounts for only a small portion of counterfeits. Counterfeiters trade on the goodwill and brand reputations of lawful companies in almost every industry, to the detriment and peril of consumers and the United States economy. The Organization for Economic Co-operation and Development estimates the value of trade in counterfeit and pirated goods to be approximately $500 billion per year worldwide. And about 20% of these counterfeit products infringe on rights belonging to Americans.
This, by the way, is not a victimless offense. Counterfeit goods directly hurt individuals, and their impact extends well beyond economics. Counterfeit products that are ingested, used on the skin, or are given to children can endanger health and safety.
An investigation by the FDA’s Forensic Chemistry Center, for example, found that 60% of suspected counterfeit contact lenses were contaminated with microbial bacteria that could lead to painful infections of the cornea and potentially loss of vision or blindness. There are also examples of exploding counterfeit lithium batteries that have led to intense fires, third-degree burns, and severe property damage.
And some counterfeiters also support organized crime syndicates, human trafficking, and terrorist groups. The United Nations Commission on Crime Prevention and Criminal Justice recently reported that counterfeiting is now the second largest source of income worldwide for all forms of criminal activities.
This administration is focused on combating this persistent problem through a variety of means. In April, the White House issued a presidential “Memorandum on Combating Trafficking in Counterfeit and Pirated Goods,” which requires relevant federal agencies to analyze how “online third-party marketplaces and third-party intermediaries are used to facilitate the importation” of such goods, and to develop a coordinated strategy to address the problem.
The presidential memorandum calls for a report to be submitted to the White House by the end of October. Among other things, the report will include a range of recommendations, both voluntary actions by the private sector and action by the U.S. government. We at the USPTO have a leading role in this effort, and have been working with other government agencies, and with industry, to address the various issues.
Many of these efforts are meant to increase the protections for IP, and subsequent enforcement actions. It goes towards decreasing the supply of fakes. But we must also work on the demand side, so that fewer people buy fakes in the first place.
In other words, it is of course critically important that we take action to choke the supply of counterfeit goods through coordinated and effective enforcement activities against suppliers and distributors of fakes. But at the same time, we must also find ways to reduce consumer demand for such products through educational efforts that teach the personal dangers of buying counterfeits and the negative impact they have on jobs and our economy. If the demand for fakes dries up, so, too, will their supply.
A recent study by the International Trademark Association (INTA) revealed that 93% of Generation Z “have a lot of respect for people’s ideas and creations,” and that 87% believe that intellectual property rights are at least as important as physical property rights. And yet, the same study reveals that 79% of Gen Zers have purchased counterfeit products in the past year. We must do more to bridge this gap between respect for IP and the personal purchasing habits of consumers.
The USPTO plays a central role in such educational efforts. In May, for example, we launched a nationwide, multi-year public awareness campaign with the National Crime Prevention Council in a joint effort using McGruff the Crime Dog to raise public awareness about the harmful impacts of counterfeits.
We also recently conducted a video contest, which enabled the public to create original videos with crisp anti-counterfeiting messages. And in June, we held a forum with the McCarthy Institute to address the challenges facing brand owners and how public and private organizations can help to fight the menace of pirated goods. We also work with the National Association of Attorneys General to hold intellectual property and consumer protection training workshops around the country.
We hold other educational programs throughout the year, such as a Trademark Expo. Last year, our keynote speaker was Kareem Abdul-Jabbar. In an interview with the USPTO at that time, Kareem said, “My name, image, and likeness are things that have enabled me to make a living. So you have to protect that.” Athletes like Kareem, and other known personalities, can reach a wider audience and can make a difference advancing the message that IP is important.
So the USPTO is actively working on many fronts to raise awareness. But government cannot do it alone.
Industry plays a critical role, and it must step up to help combat both the supply and the demand for fakes. Among other things, a large-scale, coordinated and sustained campaign to educate the public on the importance of IP, the importance of respecting IP, and on how to recognize and avoid fakes, would go a long way towards addressing this issue.
For example, online marketplaces could prominently display messages warning customers about the dangers of counterfeits and urging them to respect intellectual property rights. And brand owners could coordinate with their trade associations to educate the public through PR campaigns in print and electronic media outlets.
Working together, we can make a real difference. The administration stands ready to work with industry to help reduce both the supply and demand for fakes.
Another big part of the administration’s economic growth strategy is rebalancing trade, with our eyes carefully trained on IP protection and enforcement. That’s why we’re working so hard to implement the U.S.-Mexico-Canada Agreement, or USMCA, which is the largest trade deal in American history.
It eliminates many practices and trade barriers that have long hindered U.S. companies’ access to the Mexican and Canadian markets, while preserving Mexico and Canada as the largest export markets for U.S. products.
The agreement’s chapter on Intellectual Property includes the most comprehensive IP provisions of any U.S. trade agreement. And in particular, it includes tough enforcement provisions against counterfeiting and piracy. Indeed, among other provisions, there are new tools for customs officials to use to impede the flow of counterfeit goods and fakes through our borders.
It also establishes the strongest standards of any US trade agreement for the protection of trade secrets against misappropriation, as well as a minimum term of copyright protection closer to U.S. law. Additionally, the USMCA includes enhanced protections for well-known marks, and also requires an electronic trademarks system, neither of which were included under NAFTA. And so much more.
We look forward to Congress passing legislation to ratify the USMCA.
Cicero was right that counterfeits do not last long. But they will not go away on their own. I look forward to working together to protect the intellectual property that is so important to this vibrant industry.
The continued respect and enhanced protection of intellectual property, both domestic and internationally, will strengthen all American companies, increase employment, and pave the way for a sustained era of strong economic growth.
Thank you again for hosting us today.