U.S. Working With China on Intellectual Property Rights

U.S. Attorney General Eric Holder is visiting Beijing this week to discuss how China -- a hotbed for counterfeit goods and piracy -- can better coordinate its efforts with the U.S. to stop intellectual property rights violations.

On Wednesday, Holder held talks on the issue with senior Chinese officials in the country's capital, according to China's state-controlled media. Earlier in the week, the Attorney General spoke in Hong Kong, stressing the need for countries to prevent violations of intellectual property rights. Such abuses have caused businesses to lose billions at the expense of piracy, while consumers have been put at risk by unknowingly using shoddy counterfeit goods, Holder said.

"For too long, these illegal activities have been perceived as 'business as usual.' But not any more," Holder said on Monday.

Tech product manufacturers are a major victim of these intellectual property rights offenses. Piracy of music, movies and software is rampant in China, where bootleg copies can be easily found and sold on street corners.

About 79 percent of the software used on computers in China is pirated, according to a 2009 report from the Business Software Alliance and IDC. This marks a 7 percent decrease from 2005.

The commercial value of pirated software in China, at $7.5 billion, is second only to that in the U.S., where it was $8.3 billion, according to the BSA and IDC.

At the same time, more of these illegal counterfeiting activities are going online, said Christian Murck, the president of the American Chamber of Commerce in China. Arrests have already been made of people creating virtual companies so that customers can buy counterfeit goods online. Often they will source their fake goods from manufacturers in China, but then warehouse and distribute them using middle men in different parts of the world.

"One of the things that has happened in recent years is that counterfeiting has become a globalized industry," Murck said. "There are typically multiple parties involved, so if you close down one piece, you don't necessarily disrupt the chain."

To effectively shut down these operations, cross-country efforts at strengthening global enforcement like Holder's visit to China are crucial, he added.

Coinciding with Holder's visit, China announced it will launch a new national campaign to crack down on intellectual property rights violations. The campaign will take aim at the production and distribution of pirated goods such as DVDs and software products. Violations relating to registered trademarks and patents will also be targeted. The campaign will last for half a year.

These government-backed crack-downs have been effective in the past, Murck said. But while China has stepped up its enforcement over the years, much more still needs to be done, he added.

Murck pointed to how China's limit on the number of foreign films entering the country has restricted consumers access to popular movies and essentially fueled DVD piracy. This could change if the limits were relaxed. China should also consider instituting an auditing system to ensure that all state-owned enterprises in the country use software that is licensed, he said.

"I think the penalties are still too low and the chances of being caught are too low to deter (intellectual property rights) infringement," he said of China's policies. "But we are making progress."

Subscribe to the Business Brief Newsletter

Comments