Page:Special 301 Report 2006.pdf/5

 Global Scope of Counterfeiting and Piracy

Global IPR theft and trade in fakes and pirated materials have continued to grow, threatening innovative and creative economies around the world. Counterfeiting has developed from a localized industry concentrated on the copying of high-end designer goods into a massive, sophisticated global business involving the manufacturing and sale of counterfeit versions of a vast array of products, including soaps, shampoos, razors, batteries, cigarettes, alcoholic beverages, golf clubs, automobile parts, motorcycles, medicines, and health care products, to name a few. Counterfeiting of such a broad range of products on a global scale affects more than just the companies that produce legitimate products. While it has a direct impact on the sales and profits of those companies, counterfeits also hurt the consumers who waste their money and sometimes put themselves at risk by purchasing fake goods. It also hurts the countries concerned by decreasing tax revenues and deterring investments. Counterfeiters generally pay neither taxes nor duties, and counterfeiters often do not comply with basic manufacturing standards for the health and safety of workers or product quality and performance. Piracy of copyright products in digital, print (e.g., books, journals, and other printed materials), and other analog formats (including movies, music, business software, entertainment software, and books), as well as counterfeiting of all types of trademarked products, have grown rapidly because these illegal activities offer enormous profits and little risk for the criminal element of society. Criminals can enter into the counterfeiting and pirating business with little capital investment, and even if caught and charged with a crime, the penalties actually imposed in many countries are so low that they offer no deterrent.

Counterfeit Pharmaceuticals

The manufacture and distribution of counterfeit pharmaceuticals is an increasing problem that poses special concerns because of its health and safety risks. The United States notes its concern with the proliferation of counterfeit pharmaceutical manufacturing in China and Russia, and the sale and distribution of counterfeit pharmaceuticals in many countries.

The global scope of piracy and counterfeiting requires stronger and more effective border enforcement to stop the import, export, and transit of pirated and counterfeit goods. Through bilateral consultations and our FTAs, USTR works to maximize the deterrent effect of remedies, including requirements that pirated and counterfeit products, as well as the equipment used to make them, are seized and destroyed. The economic damage caused by counterfeiting to the legitimate companies whose products are counterfeited is enormous.

Notorious Markets

Global piracy and counterfeiting thrive in part due to large marketplaces that deal in infringing goods. Information reviewed in this year's Special 301 process points to the following virtual and physical markets as examples of marketplaces that have been the subject of enforcement action, or may merit further investigation for possible IPR infringements, or both. The list represents a selective summary of information reviewed during the Special 301 process; it is not a finding of violations of law.