Mr. Chairman and
Members of the Subcommittee:
Thank you for this
opportunity to appear before you to discuss the United States Patent and
Trademark Office’s (USPTO) role in the protection of intellectual
property. As Under Secretary of Commerce
for Intellectual Property and Director of the USPTO, I am very concerned about
protecting the rights of U.S. intellectual property owners abroad and appreciate
the attention you are bringing to this important topic.
Mr. Chairman, you
have long appreciated the economic importance of intellectual property to our
economy. Thanks to your leadership, the
Dulles Corridor has become a high-tech haven and a catalyst for economic opportunity
throughout the region. In fact, U.S. News and World Report has even
dubbed the State of Virginia “The Silicon Dominion."
As we see first-hand
here in Northern Virginia, intellectual property (IP) – including patents,
trademarks, and copyrights – has become increasingly vital to our nation’s
economic competitiveness, our standard of living, and our global security. In fact, according to the International
Intellectual Property Alliance, IP industries represent the largest single
sector of the American economy -- almost 5% of Gross Domestic Product (GDP) –
and employ over 4 million Americans.
Copyright industries, for example, are creating jobs at three times the
rate of the rest of the U.S. economy.
As the importance of
IP assets in our global economy has increased, so too have the USPTO’s
activities in the international arena.
Indeed, in addition to the examination and issuance of patents and
trademarks, USPTO works to promote protection of the intellectual property of American
innovators on both the domestic and international levels.
Under the American
Inventors Protection Act of 1999 (P.L. 106-113), the USPTO is directed to
advise the President, through the Secretary of Commerce, and all Federal
agencies, on national and international intellectual property policy issues
including intellectual property protection in other countries. USPTO is also authorized by the AIPA to
provide guidance, conduct programs and studies and otherwise interact with
foreign intellectual property offices and international intergovernmental
organizations on matters involving the protection of intellectual property.
In
keeping with this directive, the USPTO continues to be active in a number of
different venues to streamline and
strengthen protection for patents, trademarks, and copyrights abroad. Through our Office of Legislative and
International Affairs, we: (1) help negotiate and work with Congress to
implement international IP treaties; (2) provide technical assistance to
foreign governments that are looking to develop or improve their IP laws and
systems; (3) train foreign IP officials on IP enforcement; (4) draft/review IP
sections in bilateral investment treaties and trade agreements; (5) advise the
Office of the U.S. Trade Representative (USTR) on intellectual property issues
in the World Trade Organization; and (6) work with USTR and industry on the
annual review of IP protection and enforcement under the Special 301 provisions
of the Trade Act of 1974. The USPTO also
serves as co-chair of the National Intellectual Property Law Enforcement
Coordination Council, which coordinates domestic and international IP law
enforcement among federal and foreign entities.
Our
goal in the international arena is to move toward greater consistency in
intellectual property protection around the world. Just as the Framers of the Constitution
created standard intellectual property rules for the nation, we are working to
develop consistent rules for the rest of the world.
In
the patents area, we are striving for
uniform treatment of patent applications and patent grants worldwide, which
will reduce costs for American patent owners in obtaining and preserving their
IP rights abroad. Today, the cost to
U.S. companies and inventors of applying for and obtaining separate patents in
individual countries is often prohibitive.
Therefore, USPTO is leading efforts to reform the Patent Cooperation
Treaty, which implements the concept of a single international patent
application. To help cut procedural red
tape, we are preparing proposed legislation for the implementation and
ratification of the recently negotiated Patent Law Treaty. We also are in the early stages of
discussions at the World Intellectual Property Organization (WIPO) regarding
possibilities for a more rationalized
worldwide patent system that would allow inventors to receive
international protection by filing a single patent application.
In
the Trademark area, we are working with Congress with respect to implementation
of international IP agreements such as the Madrid Protocol. Once ratified by the Senate, the Madrid
Protocol will enable a U.S. trademark owner to have his mark protected in a
number of countries by simply filing one application at our Office, in one
language, with one set of fees in U.S. dollars.
It truly represents one-stop
shopping, cutting costly and time-consuming red tape. A streamlined system for filing for
trademark registration in other countries would help all U.S. businesses,
especially small and medium-sized businesses that have a hard time affording to
file separate trademark applications country-by-country.
With
respect to copyrights, we continue to work to bring copyright law in line with
the digital age. Back in 1996, we led
efforts to adopt the two WIPO “Internet treaties” -- the WIPO Copyright Treaty
(WCT) and the WIPO Performers and Phonograms Treaty (WPPT). The WCT and the WPPT establish important new
international norms related to the right to make a work available to the public
through interactive media. They also
provide for the protection of copyright management information and
technological measures used to protect copyrighted works. The United States has made the entry into
force of these treaties one of our top IP priorities, and we are very pleased
that the WCT entered into force last month and that the WPPT will do so on May
20, 2002.
As might be expected,
a significant part of our international efforts at the USPTO are devoted to
strengthening IP enforcement abroad and combating IP piracy. With the growing importance of intellectual
property assets, the need for enforcement of these rights abroad has increased
substantially. For example, IP
protection is critical for U.S. exports, with more than 50 percent of our
exports now dependent on some form of IP protection.
When the IP
provisions of Article I, Section 8 of the Constitution were adopted, the
Barbary Pirates were menacing U.S. and European merchant ships in the
Mediterranean. Today, our nation faces
piracy of a different sort: the illegal
duplication of software, music, DVDs, and other digitized information. This piracy comes with a high price. Last year U.S. copyright industries reported
losses of nearly $22 billion due to piracy overseas. According to the Business Software Alliance,
software piracy alone cost the U.S. economy over 118,000 jobs and $5.7 billion
in wage losses in the year 2000. By
2008, those numbers will rise to 175,000 lost jobs, $7.3 billion in lost wages
and $1.6 billion in lost tax revenues.
Because American IP
owners compete in a global marketplace, we need to expand our efforts to
promote IP protection internationally.
We need to make sure that American IP owners have sufficient legal tools
to fight piracy. We also need to provide
technical assistance to foreign entities on drafting and implementing effective
IP laws and training on enforcement of IP rights. The USPTO has a dedicated team of
professionals in our Office of Legislative and International Affairs doing just
that.
The
World Trade Organization’s (WTO) Trade-Related Aspects of Intellectual Property
Rights Agreement (TRIPs) sets minimum standards of protection for the various
forms of intellectual property and requires WTO members to provide for
“effective enforcement” of intellectual property rights. The TRIPs Agreement incorporates a dispute
settlement procedure that allows a member to resolve WTO violations. TRIPs also includes detailed provisions on
civil, criminal and border enforcement measures designed to protect the owners
of intellectual property rights. Over the last several years, the USPTO has
assisted countries around the world to establish adequate enforcement
mechanisms to meet their obligations under the TRIPs agreement. In bilateral negotiations, USPTO is working
closely with USTR to seek assurances from our trading partners of even higher
levels of intellectual property enforcement than those set forth in TRIPs.
The
USPTO conducts an array of enforcement training programs in the United States
and abroad to improve the environment for intellectual property enforcement. Let me briefly highlight just a few of the
enforcement training activities we have recently undertaken.
In
cooperation with the WIPO, USPTO conducts a semi-annual “Academy of Enforcement
of Intellectual Property Rights,” which has provided training for customs,
judicial and law enforcement officials from countries ranging from Albania to
Zimbabwe. For instance, in October 2001,
USPTO attorneys conducted a one-week IP enforcement program to train IP enforcement
officials from Nigeria, Ethiopia, Egypt, and various Central American countries
on how best to develop an enforcement system that is TRIPs-compliant. Our next program will take place next month
in Arlington and provide foreign officials with a comprehensive program for
developing a TRIPs-compliant and effective IP enforcement regime.
In
November 2001, we conducted two technical assistance programs in Hanoi and Ho
Chi Minh City, Vietnam, on the enforcement of IP rights. The program, cosponsored with the Vietnam
National Office of Industrial Property, focused on compliance with the
enforcement provisions of the Bilateral Trade Agreement and the TRIPs
Agreement. In December 2001, USPTO
developed and conducted a technical assistance program for 16 Russian
government officials on specific problems in implementing the enforcement
obligations in TRIPs.
As
you know all too well, Mr. Chairman, one of the areas of greatest concern with
respect to IP piracy is Asia, particularly China. The risks of increased piracy
mount on a daily basis with rapidly increasing Internet penetration,
Napster-like file exchange systems, and involvement of organized crime. Yet, despite WTO commitments, there is little
evidence of any prosecutions of Chinese citizens for criminal copyright
theft. Even Deng Xiaoping’s daughter had
her biography of her father pirated by the Chinese press.
As
in many countries, some of the most avid consumers and unwitting accomplices of
piracy in China are young people. For
example, the vast majority of chemistry students are likely to be using pirated
copies of such basic academic journals as Chemical Abstracts
International. Shockingly, only eight
legal copies of this journal were sold in China last year.
China
has made some important improvements in the past year, with city governments in
Beijing and Shanghai taking the lead in insuring they use legal software
products and the closing of a major manufacturer of pirated academic
journals. Still, many areas remain
essentially “one copy” jurisdictions where only one legitimate copy may be
purchased and the rest are reproduced illegally.
With China's WTO accession, the number of fora for an
exchange of views on IP matters has increased significantly. In particular, the TRIPS Council at the WTO
provides additional opportunities to raise issues on a multilateral, as opposed
to a bilateral, basis. We also are
undertaking a number of other initiatives.
In January of 2002, USPTO participated with USTR, the
Department of Commerce (DOC), the State Department and the Copyright Office in
a delegation to China focusing on IP-related issues. Earlier this month, in conjunction with the
Departments of Commerce and State, the USPTO conducted an IP enforcement
program in China geared towards prosecutors and customs officials. The programs, conducted by a USPTO
enforcement specialist who speaks fluent Mandarin, were held in Nanjing and
Dalian, two cities where rampant counterfeiting and piracy problems are
developing. This is the third such
program, and a fourth is planned for this September. We have also worked closely with
non-governmental organizations, such as the Quality Brand Protection Committee,
U.S. Information Technology Organization, as well as organizations such as the
Business Software Alliance and the Motion Picture Association that are on the
ground in China.
Intellectual Property issues are on the agenda for DOC
Secretary Evans, who is currently in China meeting his counterparts as part of
the Joint Committee on Commerce and Trade.
The Secretary has personally assured me of his intent to raise piracy
issues and concerns during his visit.
The USPTO also hopes to host members of China's IP judiciary at a
conference on specialized IP courts this August.
One of the crucial budgetary issues in this area, which our
budget provides for, is funding for staff to address China-related IP
issues. Both the Japan Patent Office and
European Patent Office have full-time staff on site in China. The EPO office is especially well-funded, and
has engaged in a variety of technical assistance IP projects, including
projects directed to antipiracy, anticounterfeiting, and legislative
drafting.
Lastly,
let me say a few words about the National Intellectual Property Law Enforcement
Coordination Council (NIPLECC) and the domestic front in the battle against IP
piracy. Created by Congress in 1999,
NIPLECC helps to coordinate and enhance enforcement training activities across
a broad range of federal agencies.
Co-chaired by the USPTO Director and the Assistant Attorney General for
the Criminal Division, NIPLECC also consists of the Under Secretary of State
for Economic, Business and Agricultural Affairs, the Deputy United States Trade
Representative, the Commissioner of Customs, and the Under Secretary of
Commerce for International Trade
As
co-chair of the NIPLECC, I am planning to focus more attention on facilitating
enforcement efforts among federal agencies.
The Council needs to be far more active in this regard. During my tenure at the USPTO, I will be
working with my colleagues on NIPLECC to enhance the Council’s activities and
to enhance cooperation and partnerships among the other members.
Mr. Chairman, the
demands on USPTO’s expertise in the international arena have grown dramatically
in the last few years. As we look to the
future, these demands most assuredly will increase, alongside our obligations
to meeting our core patent and trademark examination functions.
As you know,
President Bush and Secretary Evans are firmly committed to ensuring that the
USPTO has the resources it needs to protect American innovators. Their FY 2003 budget proposal for the USPTO
is a powerful testament to that commitment.
I am hopeful, Mr.
Chairman, that with your support, as well as the support of the other
distinguished members of the Subcommittee, the USPTO will be able to do even
more to provide American intellectual property with the protection it requires
in today’s high-tech, globalized world.