USTR Report – Online Counterfeiting Surges

The Office of the United States Trade Representative has issued its annual “Special 301″ report which reviews the “state of intellectual property rights (IPR) protection and enforcement in trading partners around world.”  Among the report’s findings was that the continued growth of the ” online sale of pirated and counterfeit hard goods that will soon surpass the volume of such goods sold by street vendors and in other physical markets.”  As the report was issued, the U.S. government seized 10 more sites allegedly involved in counterfeiting bringing the total to 761 domains seized since June 2010.  This included seizing  more than $1.46 million from three sites engaging in online sales of counterfeit sportswear made in China.

Under the report, the USTR selects countries for its “priority watchlist” which includes Algeria, Argentina, Canada, Chile, China, India, Indonesia, Israel, Pakistan, Russia, Thailand, Ukraine and Venezuela.  The priority watchlist is unchanged from 2011 except for the addition of Ukraine.

On China and Russia, the report stated:

A wide spectrum of U.S. rights holders reports serious obstacles to effective protection and enforcement of all forms of IPR in China, including patents, trademarks, copyrights, trade secrets, and protection of pharmaceutical test data. Compounding these obstacles is the troubling direction that China’s policies in the IPR area have taken recently. These policies include China’s efforts to link eligibility for government preferences to the national origin of the IPR in products. In addition, many companies are concerned that Chinese government agencies are inappropriately using market access and investment approvals as a means to compel foreign firms to license or sell their IPR to domestic Chinese entities. Further, for many industries, sales  of IP-intensive goods and services in China remain disproportionately low when compared to sales in similar markets that provide stronger environments for IPR protection and more open market access. These concerns, coupled with the size of China both as a consumer marketplace as well as a globally significant producer of a wide array of products, mean that China’s protection and enforcement of IPR must remain key priorities for U.S. trade policy.

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The United States urges Russia to take additional steps to improve the protection and enforcement of IPR in Russia, especially with respect to piracy over the Internet and enforcement generally. Regarding piracy over the Internet, the United States advocates both further legal reform and enhanced enforcement efforts. The United States encourages Russia to address the problems of websites hosting infringing material and of services that are intended to promote the infringement of copyright by enacting legislation that includes, among other things, appropriate liability standards and requirements for notice and takedown that provide for the swift removal of infringing content. The United States urges Russia to engage in takedown and  enforcement actions against infringing sites, including services affiliated with social networking sites such as vKontakte and odnoklassniki.ru.

With respect to Canada, the report noted that:

The United States also continues to urge Canada to strengthen its border enforcement efforts, including by providing customs officials with ex officio authority to take action against the importation, exportation, and transshipment of pirated or counterfeit goods.”

The United States remains concerned about the availability of rights of appeal in Canada’s administrative process for reviewing the regulatory approval of pharmaceutical products, as well as limitations in Canada’s trademark regime.

More InfoFeds seize more domain names of sites accused of selling counterfeits, Computer World; Canada failing to sufficiently protect IP rights, US report says, Outlaw;  Report: Online Counterfeit Sales To Overtake Street Vendors, National Journal. Feds Shutter Fake Sportswear Sites, Portfolio.  See also Mark Monitor’s Seven Best Practices for Fighting Counterfeit Sales Online