When Eagles & Dragons Hunt Pirates: US and China Join Forces to Crack Down on Counterfeiting

When Eagles & Dragons Hunt Pirates: US and China Join Forces to Crack Down on Counterfeiting

The United States and China have joined forces in a combined operation to crack down on counterfeit goods, seizing more than 243,000 counterfeit electronic products, including popular consumer items made by Apple, Samsung, Dr. Dre and Blackberry.

U.S. Customs and Border Protection (CBP) said the month-long operation was the biggest bilateral customs enforcement effort ever conducted by the United States. It focused on seizures of goods in ports as they were exported from China or imported into the United States.

The operation fulfilled a commitment between CBP and the General Administration of Customs, People’s Republic of China (GACC) to produce tangible Intellectual Property Rights (IPR) enforcement results by the Fifth Strategic & Economic Dialogue (S&ED). At the S&ED last month, CBP and GACC committed to further cooperation on IPR enforcement, including additional joint operations.

A Global Problem

China is the primary source of counterfeit and pirated goods in the United States and accounts for 72 percent of all seizures relating to intellectual property rights. Theft of intellectual property rights is estimated to cost U.S. businesses $320 billion a year, equivalent to the annual value of U.S. exports to Asia.

The two countries agreed in recent high-level talks that they would work together to try to stem the large quantities of counterfeit goods flowing between China and the United States. Although the operation resulted in only one arrest of a U.S. citizen, U.S. officials said they see it as a sign that the Beijing government is finally acting on their complaints of Chinese theft of intellectual property.

“The theft of intellectual property is a global problem and cross-border efforts are needed to fight it. CBP looks forward to a continued partnership with the People’s Republic of China General Administration of Customs in confronting this critical trade issue,” said CBP Acting Commissioner Thomas S. Winkowski. “Robust enforcement of intellectual property rights allows innovators and creators – whether in a small start-up or an international corporation – to profit from their efforts, and gives consumers confidence in the products they buy."

A Bilateral Solution

China's Vice Minister of the General Administration of China Customs, Zou Zhiwu, said both countries need to work together to effectively curb the movement of counterfeit products.

"IPR infringement is a global issue involving not only the process of production and export, but also that of import and circulation," he said. "Enforcement agencies around the world should work more closely to crack down (on) these illegal activities."

The operation spanned locations in both countries. The main U.S. ports involved were Anchorage, Cincinnati, Los Angeles and Newark. Meanwhile, Beijing, Guangzhou, Shanghai and Shenzhen were the primary ports in China under the scope of the operation.

"The fight against criminal counterfeiters overseas presents a great deal of challenges to U.S. law enforcement," said Daniel Ragsdale, deputy director of Immigration and Customs Enforcement. "But it is a fight we are committed to, and through the international partnerships we forge with foreign customs and law enforcement agencies, we are making an impact."

The Signs of a Growing Regime

As has previously been reported on this blog, with a reputation for producing counterfeits and knockoffs, Canadians have rarely looked to China for leadership in innovation and invention. Nevertheless, as an ever-growing giant on the world’s economic stage, China has been taking steps to remedy this deficiency.

In 2011, the People’s Republic of China (PRC) State Intellectual Property Office (SIPO) published its National Patent Develop Strategy (2011-2020) (the Strategy), a document containing tactics to significantly increase the nation’s patent production. The Strategy aims to reach 2 million patent filings per year by 2015 and to double both domestic and overseas applications.  The Strategy outlined approaches to achieve this; one such suggestion was to increase patent examination and approval efficiency by cutting down wait times to as little as 3 months, doubling the number of patent examiners to over 9000, enhancing the benefits of utilizing patents, and protecting the rights of patent holders by improving patent law and regulations.

China's intellectual property system is relatively young compared to other developed countries (its first intellectual property law only coming into force in 1985).  During the 1990s, the country's system was heavily influenced by the German approach to intellectual property protection.  This recent bilateral operation is particularly interesting because it suggests that SIPO may begin taking cues from the USPTO as it continues to implement its ten-year strategy.

In light of last Friday's resignation of Victoria Espinel (U.S. President Barack Obama's Intellectual Property Chief), it will be interesting to see how the next administrator will direct the relationship between the U.S. and China and how that relationship will affect the development of China's intellectual property regime.

Beatrice Sze is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School. In the fall of 2013 she will be spending a semester at Hong Kong University studying the intellectual property and commercial laws of China.