Intellectual property (IP) theft is a crime that hurts everyone – including businesses, workers and consumers. It has a particularly devastating impact on manufacturing in the U.S. Stolen technology, pirated software and a variety of other IP theft across the globe costs manufacturers millions and undermines the principles of free enterprise and competition.

The National Association of Attorneys General weighed in on the subject of IP theft this week in a letter to the Federal Trade Commission (FTC) and Director of the Bureau of Competition.  They note that one in six private sector jobs are dependent on the U.S. manufacturing base and the Association is seeking assistance from the FTC in addressing IP theft.  Their research turned up several egregious examples of manufacturers suffering due to IP theft, including:

• “A California-based apparel manufacturer must compete with an Indian manufacturer that steals over $14 million in software;
• A Washington-based paper mill must compete with a Mexican paper manufacturer that uses over $10 million in stolen software;
• An Indiana-based parts manufacturer must face a Chinese competitor that steals over $5.2 million in software.”

The NAM is a leader in the fight against IP theft and it’s good to see a number of states involved and demanding more federal leadership on this issue.

Yesterday was a good day for manufacturers as the House of Representatives overwhelmingly passed H.R. 1249, the America Invents Act, which will make the first meaningful reforms for the U.S. Patent and Trademark Office (USPTO) in nearly sixty years. “No longer will American inventors be forced to protect the technologies of today with the tools of the past,” stated Representative Lamar Smith (R-TX), Chairman of the House Judiciary Committee.

Additionally, as reported in Politico:

“The legislation switches America to a first-to-file from a first-to-invent nation, expands the ‘prior art’ that can be used to challenge a patent and sets up a new regime to challenge patents at the patent office. In all, the legislation is designed to make patent approval swifter and make it easier to weed out low-quality patents.”

Passage will not only help with the creation of jobs, but it will also help save jobs. This legislation will give manufacturers in the U.S. the competitive advantage they need for future investments that will achieve the technological breakthroughs and groundbreaking innovation manufacturers in the U.S are known for.

Today’s coverage of the passage of H.R. 1249

• Politico: Patent law rewrite clears House
• The Hill: Controversial patent reform bill approved by House
• National Journal: Industry, Universities Praises Passage of House Patent Bill
• CNN: Patent reform is finally on its way

Click here to see Brian Raymond, Director of Technology and Economic Policy at the National Association of Manufacturers discuss the importance of patent reform and the America Invents Act.

The House of Representatives is scheduled to consider H.R. 1249, The America Invents Act, on the Floor this week. There are a number of provisions in the bill that are important to manufacturers who leverage their intellectual property to help solidify their global leadership position in innovation and job growth.

The NAM and its member companies believe that the centerpiece of an effective intellectual property protection regime is an adequately staffed, efficiently operated, fully funded U.S. Patent and Trademark Office that processes patent and trademark applications in a high-quality and expeditious fashion.

The America Invents Act addresses a problem that has plagued the U.S. Patent and Trademark Office (USPTO) for many years: inadequate resources to address the ever-increasing number of patent applications. The lack of resources to review applications has led to a significant backlog at the USPTO.  This has caused manufacturers who rely on innovative new ideas and processes to wait to bring their products to market.

The NAM signed a letter to House Leadership urging support for the section of the pending legislation that would end the diversion of user fees collected from patent applicants by the USTPO.  The provision would allow the USPTO to use these resources to invest in tools that would help eliminate the backlog of patent applications. The letter was signed by more than 150 companies, organizations, and universities. 

Visit the NAM Intellectual Property policy website for more information on this and other technology issues important to manufacturers.

Brian Raymond is the Director of Technology and Domestic Economic Policy at the NAM

The Senate Judiciary Committee unanimously approved the PROTECT IP Act today with a bipartisan voice vote.  Manufacturers across the country are applauding this broad consensus and support of legislation that brings the shutting down of websites that sell stolen and counterfeit intellectual property one step closer to reality. 

All manufacturing sectors depend on the Internet to facilitate transactions among suppliers, vendors and customers. Unscrupulous actors online are threatening the growth of these businesses and the jobs they create. It was encouraging to see both Republicans and Democrats unite behind an issue so critical to protecting manufacturers. 

We believe this unanimous support by the Senate Judiciary Committee should send a strong message to members of the House and Senate that Intellectual Property theft and rogue websites that result in job losses are unacceptable.

The next stop for this legislation is the Senate floor. Manufacturers are optimistic that the Senate will take swift action to pass this legislation and urge the House to follow suit.

Read the full letter of support for the PROTECT IP Act that went to Senate, which the NAM signed onto, joining with nearly 200 other companies.

From AP, “US-China talks end with wide differences remaining,” reporting on the conclusion of the U.S.-China Strategic and Economic Dialogue:

After two days of talks, the two sides announced a range of modest agreements aimed at increasing sales opportunities for U.S. companies in China. But there was no breakthrough on a key U.S. demand – letting China’s currency rise in value at a faster rate against the dollar. The currency issue gained new urgency in the view of American manufacturers with release of a Chinese government report showing that China’s trade surplus with the world had surged in April.

The yuan has appreciated about 5 percent since the government unfroze the currency last June, but it remains seriously undervalued — by as much as 40 percent, by some estimates.

U.S. manufacturers expressed disappointment at the outcome of the latest talks, saying the small achievements will do little to lower a U.S. trade deficit that hit an all-time high of $273 billion last year.

“This is the Chinese year of the hare but when it comes to fixing their currency, intellectual property theft and investment protectionism, it has been the year of the tortoise,” said Frank Vargo, vice president for international affairs at the National Association of Manufacturers.

The People’s Daily, the official Communist Party organ, hailed the talks, cheering, “China, U.S. co-op in promoting transformation of economic development pattern has significance for future.” The paper also editorializes, “China-U.S. dialogue requires pragmatism.”

And from Xinhua, the official press agency of the government of the People’s Republic of China:

• “China’s investment in US to expand in future”
• “Clinton says US, China have built trust through dialogues”
• “China, US could further strengthen financial cooperation: PBOC governor”
• “Experts say stronger yuan mainly due to dollar depreciation, warn of “hot money” influx“

The average consumer probably associates Chinese counterfeiting with fake luxury watches, high fashion, purses, luggage and maybe DVDs, but the attacks against U.S. goods, company reputations and intellectual property go far beyond that.

Today’s Wall Street Journal has an excellent article on the threat posed to Zippo, the U.S. manufacturer of the iconic lighters, by “rippos,” the bogus lighters produced in China. Zippo’s single factory in Bradford, Penn., produces 12 million lighters a year — about the same number as the fake ones churned out by Chinese companies.

And with Zippo providing a lifetime guarantee to repair the lighters it produced, the counterfeits represent a burning problem.

From “The Lighter Side of Counterfeiting Puts Zippo in a Fix” [subscription]:

BRADFORD, Pa.—”Always works—or we fix it” has, with minor tinkering, been a Zippo lighter slogan since 1937. “It is a profound statement of quality,” says Greg Booth, Zippo Manufacturing Co.’s chief executive. It also means Zippo has to fix a lot of lighters.

The task falls to three “clinics”—two abroad and one here in Zippo’s hometown—that fix more than 100,000 lighters a year. Quite a few Zippos get mangled when they slip out of pockets into the mechanism of recliners. One was ingested (but not digested) by a pig. Usually, a new screw or spring will put it back in working order.

Fulfilling the forever guarantee would pose little challenge, in fact, if a huge number of Zippos didn’t happen to be rippos.

The Journal highlights the work of one Zippo veteran whose job it is to spot the counterfeits, an increasingly difficult task as the quality of the fakes improves.

Despite the article’s amusing observations, the problem is not funny. Neither is it a new one. The local paper, The Bradford Era, reported on the Chinese counterfeiting in August, 2004, “Counterfeiting of Zippo lighters in China affecting Bradford,” tied to a company visit by a Commerce Department official. The Bush Administration worked hard on the issue, and the Obama Administration is as well. (continue reading…)

The U.S. Trade Representative is holding a special 301 Review public hearing today at the USITC to examine trade and the protection of intellectual property rights. (Agenda) The National Association of Manufacturers submitted comments. Excerpt:

The NAM emphasizes to the Special 301 Sub-committee that IPR protection and enforcement is an issue for virtually all our members. Manufacturing, yes manufacturing, is as dependent on intellectual property like patents, trademarks, trade secrets, trade dress and copyright as copyright-based industries that receive considerably more attention. Counterfeiting and piracy are existential threats to manufacturers, the people they employ, and the consumers who come in contact with their products and services.

Theft is theft no matter if it is called three-syllable words like “counterfeit” or “piracy”. The trade in fake products supplants legitimate markets, steals our workers’ jobs and puts American and other consumers needlessly at risk as counterfeit pharmaceuticals, unsafe products and even hazardous materials are put into the stream of commerce on a daily basis.

It is simply amazing what products and trademarks counterfeiters and pirates are so willing to steal. While most people are familiar with the counterfeiting of luxury brands because of the cachet that can command premium prices, counterfeiters are willing to engage in criminal activities by selling everyday items such as circuit breakers, extension cords, batteries, fireplace tools, golf clubs, kitchenware, toothpaste, cigarettes windshields – the list can go on and on. Even semiconductor chips that can be used in guidance systems for America’s defense have been counterfeited and found in the United States.

As this nation looks to our economic recovery, it is important to note that IPR theft is an impediment to that recovery. Markets once lost through counterfeiting and/or damaged brands are not readily and easily recovered.

Can we now finally put to rest the specious and political claim that the U.S. Supreme Court is a pro-business court?

On Tuesday, the Court handed down an 8-0 opinion [here] in FCC v. AT&T, Inc, holding that corporations cannot make use of personal privacy exception under the Freedom of Information Act to protect company information obtained by law enforcement. As the NAM Manufacturing Law Center’s entry on the case explains:

An exemption in the Freedom of Information Act (FOIA) applies to records or information compiled for law enforcement purposes, “but only to the extent that the production of such law enforcement records or information . . . could reasonably be expected to constitute an unwarranted invasion of personal privacy.” AT&T turned over records to the FCC in connection with an investigation of some bills, and a trade association [CompTel] representing some of its competitors sought all the records. In this suit to prevent the FCC from releasing the records, the Third Circuit held that a corporation is included in the statute’s definition of a “person” and thus has personal privacy interests protected from disclosure by Exemption 7(C) of FOIA.

The National Association of Manufacturers filed an amicus brief [available here] on December 15, 2010, arguing that corporations enjoy easily recognizable privacy interests other than those involving financial or trade secrets, and the government’s investigative powers should not be used to serve private ends, or to cause harm or embarrassment unrelated to proper investigative purposes. Billions of private messages should not become available for public display merely because a business entity is swept up in a government investigation, either as a target, a victim, or a source of information. A wide range of in-house communications, in the hands of a competitor or a third party, including the press or trial lawyers, could be deployed to harm the company, its shareholders and employees. It is improper and abusive for the government’s broad investigative power to be used to serve private ends and cause private injury. (continue reading…)

The Senate Judiciary Committee holds a business meeting Thursday on S. 23, the Patent Reform Act.

By chance, we spotted this 1967 coverage of the issue.

The patents committee of the National Association of Manufacturers (NAM) has thrown its full support to the broad objectives of the Report of the Presidents Commission on the Patent System. At a meeting in New York City, the committee also indicated that it would welcome an opportunity to assist in the legislative resolution of the issues presented in the report (C& EN, Dec. 12, 1966, page 27).

Under the chairmanship of Frederic O. Hess, president of Selas Corp. Of America, the association’s patents committee applauded the efforts of the President’s commission to propose constructive improvements of the patent system. The recommendations are part of an interrelated and coherent plan to counter the obsolescence of the current patent system, a situation created by industry by the many new products it makes, Mr. Hess said. (continue reading…)

The announcement at the completion of the 21st annual meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT) on Wednesday highlighted progress on a number of major priorities for manufacturers. (U.S. Trade Representative news release, fact sheet)

A new system of ongoing working group engagement appears to have paid off in commitments on the part of China in areas that the National Association of Manufacturers has long emphasized. In one of the most important issues for U.S. companies, intellectual property (IP) protection, there is potentially significant progress for producers in the wind turbine, pharmaceutical, and software industries. China’s commitment not to discriminate against American IP in deciding what products or companies get preferences for government contracts could have significant impact for NAM members selling in the Chinese market.

In addition, the agreement to revise the major equipment catalogue (which governs what products qualify for special treatment in government purchases) and not to use it to discriminate against imports or provide export subsidies, is similarly a positive signal that China will play by the rules of the international trading system that has benefitted it so significantly.

China also made commitments that could further open their markets to U.S. industrial and telecommunications equipment, and agreed to accelerate the process of joining the WTO Government Procurement Agreement. This agreement has been a priority for the NAM as a way to open the door to billions of dollars in purchases by Chinese government entities.

All of this is good news. But long term, it all hinges on China’s implementation of these commitments.

(continue reading…)