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Before the Committee on Government Reform: 
House of Representatives: 

United States Government Accountability Office: 


For Release on Delivery Expected at 10: 00 a.m. EDT: 
Thursday, September 23, 2004: 


U.S. Efforts Have Contributed to Strengthened Laws Overseas, but 
Challenges Remain: 

Statement of Loren Yager: 
Director, International Affairs and Trade: 


GAO Highlights: 

Highlights of GAO-04-1093T, a testimony before the Committee on 
Government Reform, House of Representatives: 

Why GAO Did This Study: 

Although the U.S. government provides broad protection for intellectual 
property, intellectual property protection in parts of the world is 
inadequate. As a result, U.S. goods are subject to piracy and 
counterfeiting in many countries. A number of U.S. agencies are engaged 
in efforts to improve protection of U.S. intellectual property abroad. 
This testimony, based on a recent GAO report, describes U.S agencies’ 
efforts, the mechanisms used to coordinate these efforts, and the 
impact of these efforts and the challenges they face.

What GAO Found: 

U.S. agencies undertake policy initiatives, training and assistance 
activities, and law enforcement actions in an effort to improve 
protection of U.S. intellectual property abroad. Policy initiatives 
include assessing global intellectual property challenges and 
identifying countries with the most significant problems—an annual 
interagency process known as the “Special 301” review—and negotiating 
agreements that address intellectual property. In addition, many 
agencies engage in training and assistance activities, such as 
providing training for foreign officials. Finally, a small number of 
agencies carry out law enforcement actions, such as criminal 
investigations involving foreign parties and seizures of counterfeit 

Agencies use several mechanisms to coordinate their efforts, although 
the mechanisms’ usefulness varies.  Formal interagency meetings—part of 
the U.S. government’s annual Special 301 review—allow agencies to 
discuss intellectual property policy concerns and are seen by 
government and industry sources as rigorous and effective. However, the 
National Intellectual Property Law Enforcement Coordination Council, 
established to coordinate domestic and international intellectual 
property law enforcement, has struggled to find a clear mission, has 
undertaken few activities, and is generally viewed as having little 

U.S. efforts have contributed to strengthened intellectual property 
legislation overseas, but enforcement in many countries remains weak, 
and further U.S. efforts face significant challenges. For example, 
competing U.S. policy objectives take precedence over protecting 
intellectual property in certain regions. Further, other countries’ 
domestic policy objectives can affect their “political will” to address 
U.S. concerns. Finally, many economic factors, as well as the 
involvement of organized crime, hinder U.S. and foreign governments’ 
efforts to protect U.S. intellectual property abroad.

[See PDF for image]

Source: GAO: 

[End of figure]

What GAO Recommends: 

GAO is not recommending executive action. However, the Congress may 
wish to review the National Intellectual Property Law Enforcement 
Coordination Council’s authority, operating structure, membership, and 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Loren Yager at (202) 
512-4128 or

Mr. Chairman and Members of the Committee: 

Thank you for the opportunity to discuss our work on U.S. efforts to 
protect U.S. intellectual property rights (IPR) overseas and our recent 
report on this topic.[Footnote 1] As you know, the United States 
dominates the creation and export of intellectual property--creations 
of the mind. The U.S. government provides broad protection for 
intellectual property through means such as copyrights, patents, and 
trademarks. However, protection of intellectual property in many parts 
of the world is inadequate. As a result, U.S. goods are subject to 
substantial counterfeiting and piracy in many countries.

The U.S. government, through numerous agencies, is seeking better 
intellectual property protection overseas. To understand more fully how 
U.S. agencies have performed in this regard, you asked us to identify 
and review their activities. This testimony addresses (1) the specific 
efforts of U.S. agencies to improve intellectual property protection in 
other nations, (2) the means used to coordinate these efforts, and (3) 
challenges facing the enforcement efforts abroad.

To address these issues, we analyzed key U.S. government reports and 
documents from eight federal agencies and two offices. In addition to 
meeting with federal officials, we met with officials from key 
intellectual property industry groups and reviewed reports they had 
prepared. We also conducted field work in four countries where serious 
problems regarding the protection of intellectual property have been 
reported (Brazil, China, Russia, and Ukraine) and met with U.S. embassy 
and foreign government officials as well as representatives of U.S. 
companies and industry groups operating in those countries. We 
conducted our work from June 2003 through July 2004, in accordance with 
generally accepted government auditing standards.


U.S. agencies' efforts to improve protection of U.S. intellectual 
property in foreign nations fall into three categories--policy 
initiatives, training and assistance activities, and law enforcement 
actions. The Office of the U.S. Trade Representative (USTR) leads U.S. 
policy initiatives with an annual assessment known as the "Special 301" 
review, which results in an annual report detailing global intellectual 
property challenges and identifying countries with the most significant 
problems. This report involves input from many U.S. agencies and 
industry. In addition to conducting policy initiatives, most agencies 
involved in intellectual property issues overseas also engage in 
training and assistance activities. Further, although counterterrorism 
is the overriding U.S. law enforcement concern, U.S. agencies such as 
the Departments of Justice and Homeland Security conduct law 
enforcement activities regarding IPR.

Several mechanisms exist to coordinate U.S. agencies' efforts to 
protect U.S. intellectual property overseas, although the level of 
activity and usefulness of these mechanisms vary. For example, on the 
policy side, formal interagency meetings are required each year as part 
of the U.S. government's annual Special 301 review. Government and 
industry sources view this effort as effective and thorough. 
Conversely, the National Intellectual Property Law Enforcement 
Coordination Council,[Footnote 2] which was established to coordinate 
domestic and international intellectual property law enforcement among 
U.S. federal and foreign entities, has struggled to find a clear 
mission, has undertaken few activities, and is perceived by officials 
from the private sector and some U.S. agencies as having little impact.

U.S. efforts have contributed to strengthened foreign IPR laws, but 
enforcement overseas remains weak and U.S. efforts face numerous 
challenges. For example, competing U.S. policy objectives may take 
priority over protecting intellectual property in certain countries. In 
addition, the impact of U.S. activities overseas is affected by 
countries' domestic policy objectives and economic interests, which may 
complement or conflict with U.S. objectives. Further, economic factors, 
as well as the involvement of organized crime, pose additional 
challenges to U.S. and foreign governments' enforcement efforts, even 
in countries where the political will for protecting intellectual 
property exists. These economic factors include low barriers to 
producing counterfeit or pirated goods, potential high profits for 
producers of such goods, and large price differentials between 
legitimate and counterfeit products for consumers.


Intellectual property is an important component of the U.S. economy, 
and the United States is an acknowledged global leader in the creation 
of intellectual property. However, industries estimate that annual 
losses stemming from violations of intellectual property rights 
overseas are substantial. Further, counterfeiting of products such as 
pharmaceuticals and food items fuels public health and safety concerns. 
USTR's Special 301 reports on the adequacy and effectiveness of 
intellectual property protection around the world demonstrate that, 
from a U.S. perspective, intellectual property protection is weak in 
developed as well as developing countries and that the willingness of 
countries to address intellectual property issues varies greatly.

Eight federal agencies, as well as the Federal Bureau of Investigation 
(FBI) and the U.S. Patent and Trademark Office (USPTO), undertake the 
primary U.S. government activities to protect and enforce U.S. 
intellectual property rights overseas. The agencies are the Departments 
of Commerce, State, Justice, and Homeland Security; USTR; the Copyright 
Office; the U.S. Agency for International Development (USAID); and the 
U.S. International Trade Commission.[Footnote 3]

U.S. Agencies Undertake Three Types of IPR Efforts: 

The efforts of U.S. agencies to protect U.S. intellectual property 
overseas fall into three general categories--policy initiatives, 
training and technical assistance, and U.S. law enforcement actions.

Policy Initiatives: 

U.S. policy initiatives to increase intellectual property protection 
around the world are primarily led by USTR, in coordination with the 
Departments of State and Commerce, USPTO, and the Copyright Office, 
among other agencies. A centerpiece of policy activities is the annual 
Special 301 process.[Footnote 4] "Special 301" refers to certain 
provisions of the Trade Act of 1974, as amended, that require USTR to 
annually identify foreign countries that deny adequate and effective 
protection of intellectual property rights or fair and equitable market 
access for U.S. persons who rely on intellectual property protection. 
USTR identifies these countries with substantial assistance from 
industry and U.S. agencies and publishes the results of its reviews in 
an annual report. Once a pool of such countries has been determined, 
the USTR, in coordination with other agencies, is required to decide 
which, if any, of these countries should be designated as a Priority 
Foreign Country (PFC).[Footnote 5] If a trading partner is identified 
as a PFC, USTR must decide within 30 days whether to initiate an 
investigation of those acts, policies, and practices that were the 
basis for identifying the country as a PFC. Such an investigation can 
lead to actions such as negotiating separate intellectual property 
understandings or agreements between the United States and the PFC or 
implementing trade sanctions against the PFC if no satisfactory outcome 
is reached.

Between 1994 and 2004, the U.S. government designated three countries 
as PFCs--China, Paraguay, and Ukraine--as a result of intellectual 
property reviews. The U.S. government negotiated separate bilateral 
intellectual property agreements with China and Paraguay to address IPR 
problems. These agreements are subject to annual monitoring, with 
progress cited in each year's Special 301 report. Ukraine, where 
optical media piracy was prevalent, was designated a PFC in 2001. The 
United States and Ukraine found no mutual solution to the IPR problems, 
and in January 2002, the U.S. government imposed trade sanctions in the 
form of prohibitive tariffs (100 percent) aimed at stopping $75 million 
worth of certain imports from Ukraine over time.

Training and Technical Assistance: 

In addition, most of the agencies involved in efforts to promote or 
protect IPR overseas engage in some training or technical assistance 
activities. Key activities to develop and promote enhanced IPR 
protection in foreign countries are undertaken by the Departments of 
Commerce, Homeland Security, Justice, and State; the FBI; USPTO; the 
Copyright Office; and USAID. Training events sponsored by U.S. agencies 
to promote the enforcement of intellectual property rights have 
included enforcement programs for foreign police and customs officials, 
workshops on legal reform, and joint government-industry events. 
According to a State Department official, U.S. government agencies have 
conducted intellectual property training for a number of countries 
concerning bilateral and multilateral intellectual property 
commitments, including enforcement, during the past few years. For 
example, intellectual property training was conducted by numerous 
agencies over the last year in Poland, China, Morocco, Italy, Jordan, 
Turkey, and Mexico.

U.S. Law Enforcement Efforts: 

A small number of agencies are involved in enforcing U.S. intellectual 
property laws, and the nature of these activities differs from other 
U.S. government actions related to intellectual property protection. 
Working in an environment where counterterrorism is the central 
priority, the FBI and the Departments of Justice and Homeland Security 
take actions that include engaging in multicountry investigations 
involving intellectual property violations and seizing goods that 
violate intellectual property rights at U.S. ports of entry. For 
example, the Department of Justice has an office that directly 
addresses international IPR problems.[Footnote 6] Justice has been 
involved with international investigation and prosecution efforts and, 
according to a Justice official, has become more aggressive in recent 
years. For instance, Justice and the FBI recently coordinated an 
undercover IPR investigation, with the involvement of several foreign 
law enforcement agencies. The investigation focused on individuals and 
organizations, known as "warez" release groups, which specialize in the 
Internet distribution of pirated materials. In April 2004, these 
investigations resulted in 120 simultaneous searches worldwide (80 in 
the United States) by law enforcement entities from 10 foreign 
countries[Footnote 7] and the United States in an effort known as 
"Operation Fastlink." 

Although investigations can result in international actions such as 
those cited above, FBI officials told us that they cannot determine the 
number of past or present IPR cases with an international component 
because they do not track or categorize cases according to this factor. 
Department of Homeland Security (DHS) officials emphasized that their 
investigations include an international component when counterfeit 
goods are brought into the United States. However, DHS does not track 
cases by a specific foreign connection. The overall number of IPR-
oriented investigations that have been pursued by foreign authorities 
as a result of DHS efforts is unknown.

DHS does track seizures of goods that violate IPR and reports seizures 
that totaled more than $90 million in fiscal year 2003. Seizures of 
IPR-infringing goods have involved imports primarily from Asia. In 
fiscal year 2003, goods from China accounted for about two-thirds of 
the value of all IPR seizures, many of which were shipments of 
cigarettes.[Footnote 8] Other seized goods from Asia that year 
originated in Hong Kong and Korea. A DHS official pointed out that 
providing protection against IPR-infringing imported goods for some 
U.S. companies--particularly entertainment companies--can be 
difficult, because companies often fail to record their trademarks and 
copyrights with DHS.[Footnote 9]

Several Mechanisms Coordinate IPR Efforts, but Their Usefulness Varies: 

Several interagency mechanisms exist to coordinate overseas 
intellectual property policy initiatives, development and assistance 
activities, and law enforcement efforts, although these mechanisms' 
level of activity and usefulness varies.

Formal Interagency Coordination on Trade Policy: 

According to government and industry officials, an interagency trade 
policy mechanism established by the Congress in 1962 to assist USTR has 
operated effectively in reviewing IPR issues. The mechanism, which 
consists of tiers of committees as well as numerous subcommittees, 
constitutes the principle means for developing and coordinating U.S. 
government positions on international trade, including IPR. A 
specialized subcommittee is central to conducting the Special 301 
review and determining the results of the review.

This interagency process is rigorous and effective, according to U.S. 
government and industry officials. A Commerce official told us that the 
Special 301 review is one of the best tools for interagency 
coordination in the government, while a Copyright Office official noted 
that coordination during the review is frequent and effective. A 
representative for copyright industries also told us that the process 
works well and is a solid interagency effort.

National Intellectual Property Law Enforcement Coordination Council: 

The National Intellectual Property Law Enforcement Coordination Council 
(NIPLECC), created by the Congress in 1999 to coordinate domestic and 
international intellectual property law enforcement among U.S. federal 
and foreign entities, seems to have had little impact. NIPLECC consists 
of (1) the Under Secretary of Commerce for Intellectual Property and 
Director of the United States Patent and Trademark Office; (2) the 
Assistant Attorney General, Criminal Division; (3) the Under Secretary 
of State for Economic and Agricultural Affairs; (4) the Deputy United 
States Trade Representative; (5) the Commissioner of Customs; and (6) 
the Under Secretary of Commerce for International Trade.[Footnote 10] 
NIPLECC's authorizing legislation did not include the FBI as a member 
of NIPLECC, despite its pivotal role in law enforcement. However, 
according to representatives of the FBI, USPTO, and Justice, the FBI 
should be a member. USPTO and Justice cochair NIPLECC, which has no 
independent staff or budget. In the council's nearly 4 years of 
existence, its primary output has been three annual reports to the 
Congress, which are required by statute.

According to interviews with industry officials and officials from its 
member agencies, and as evidenced by its own legislation and reports, 
NIPLECC continues to struggle to define its purpose and has had little 
discernable impact. Indeed, officials from more than half of the member 
agencies offered criticisms of NIPLECC, remarking that it is unfocused, 
ineffective, and "unwieldy." In official comments to the council's 2003 
annual report, major IPR industry associations expressed a sense that 
NIPLECC is not undertaking any independent activities or effecting any 
impact. One industry association representative stated that law 
enforcement needs to be made more central to U.S. IPR efforts and said 
that although he believes the council was created to deal with this 
issue, it has "totally failed." The lack of communication regarding 
enforcement results in part from complications such as concerns 
regarding the sharing of sensitive law enforcement information and from 
the different missions of the various agencies involved in intellectual 
property actions overseas. According to an official from USPTO, NIPLECC 
is hampered primarily by its lack of independent staff and funding. 
According to a USTR official, NIPLECC needs to define a clear role in 
coordinating government policy. A Justice official stressed that, when 
considering coordination, it is important to avoid creating an 
additional layer of bureaucracy that may detract from efforts devoted 
to each agency's primary mission.

Despite its difficulties thus far, we heard some positive comments 
regarding NIPLECC. For example, an official from USPTO noted that the 
IPR training database Web site resulted from NIPLECC efforts. Further, 
an official from the State Department commented that NIPLECC has had 
some "trickle-down" effects, such as helping to prioritize the funding 
and development of the intellectual property database at the State 
Department. Although the agency officials that constitute NIPLECC's 
membership meet infrequently and NIPLECC has undertaken few concrete 
activities, this official noted that NIPLECC provides the only forum 
for bringing enforcement, policy, and foreign affairs agencies together 
at a high level to discuss intellectual property issues. A USPTO 
official stated that NIPLECC has potential but needs to be 

Other Coordination Mechanisms: 

Other coordination mechanisms include the National International 
Property Rights Coordination Center (IPR Center) and informal 
coordination.[Footnote 11] The IPR Center in Washington, D.C., a joint 
effort between DHS and the FBI, began limited operations in 2000. 
According to a DHS official, the coordination between DHS, the FBI, and 
industry and trade associations makes the IPR Center unique. The IPR 
Center is intended to serve as a focal point for the collection of 
intelligence involving copyright and trademark infringement, signal 
theft, and theft of trade secrets. However, the center is not widely 
used by industry. An FBI official associated with the IPR Center 
estimated that about 10 percent of all FBI industry referrals come 
through the center rather than going directly to FBI field offices. DHS 
officials noted that "industry is not knocking the door down" and that 
the IPR Center is perceived as underutilized.

Policy agency officials noted the importance of informal but regular 
communication among staff at the various agencies involved in the 
promotion or protection of intellectual property overseas. Several 
officials at various policy-oriented agencies, such as USTR and the 
Department of Commerce, noted that the intellectual property community 
was small and that all involved were very familiar with the relevant 
policy officials at other agencies in Washington, D.C. Further, State 
Department officials at U.S. embassies regularly communicate with 
agencies in Washington, D.C., regarding IPR matters and U.S. government 
actions. Agency officials noted that this type of coordination is 
central to pursuing U.S. intellectual property goals overseas.

Although communication between policy and law enforcement agencies can 
occur through forums such as the NIPLECC, these agencies do not 
systematically share specific information about law enforcement 
activities. According to an FBI official, once a criminal investigation 
begins, case information stays within the law enforcement agencies and 
is not shared. A Justice official emphasized that criminal law 
enforcement is fundamentally different from the activities of policy 
agencies and that restrictions exist on Justice's ability to share 
investigative information, even with other U.S. agencies.

Enforcement Overseas Remains Weak and Challenges Remain: 

U.S. efforts have contributed to strengthened foreign IPR laws, but 
enforcement overseas remains weak. The impact of U.S. activities is 
challenged by numerous factors. Industry representatives report that 
the situation may be worsening overall for some intellectual property 

Weak Enforcement Overseas: 

The efforts of U.S. agencies have contributed to the establishment of 
strengthened intellectual property legislation in many foreign 
countries, however, the enforcement of intellectual property rights 
remains weak in many countries, and U.S. government and industry 
sources note that improving enforcement overseas is now a key priority. 
USTR's most recent Special 301 report states that "although several 
countries have taken positive steps to improve their IPR regimes, the 
lack of IPR protection and enforcement continues to be a global 
problem." For example, although the Chinese government has improved its 
statutory IPR regime, USTR remains concerned about enforcement in that 
country. According to USTR, counterfeiting and piracy remain rampant in 
China and increasing amounts of counterfeit and pirated products are 
being exported from China.

Although U.S. law enforcement does undertake international cooperative 
activities to enforce intellectual property rights overseas, executing 
these efforts can prove difficult. For example, according to DHS and 
Justice officials, U.S. efforts to investigate IPR violations overseas 
are complicated by a lack of jurisdiction as well as by the fact that 
U.S. officials must convince foreign officials to take action. Further, 
a DHS official noted that in some cases, activities defined as criminal 
in the United States are not viewed as an infringement by other 
countries and that U.S. law enforcement agencies can therefore do 

Challenges to U.S. Efforts: 

In addition, U.S. efforts confront numerous challenges. Because 
intellectual property protection is one of many U.S. government 
objectives pursued overseas, it is viewed internally in the context of 
broader U.S. foreign policy objectives that may receive higher priority 
at certain times in certain countries. Industry officials with whom we 
met noted, for example, their belief that policy priorities related to 
national security were limiting the extent to which the United States 
undertook activities or applied diplomatic pressure related to IPR 
issues in some countries. Further, the impact of U.S. activities is 
affected by a country's own domestic policy objectives and economic 
interests, which may complement or conflict with U.S. objectives. U.S. 
efforts are more likely to be effective in encouraging government 
action or achieving impact in a foreign country where support for 
intellectual property protection exists. It is difficult for the U.S. 
government to achieve impact in locations where foreign governments 
lack the "political will" to enact IPR protections.

Many economic factors complicate and challenge U.S. and foreign 
governments' efforts, even in countries with the political will to 
protect intellectual property. These factors include low barriers to 
entering the counterfeiting and piracy business and potentially high 
profits for producers. In addition, the low prices of counterfeit 
products are attractive to consumers. The economic incentives can be 
especially acute in countries where people have limited income. 
Technological advances allowing for high-quality inexpensive and 
accessible reproduction and distribution in some industries have 
exacerbated the problem. Moreover, many government and industry 
officials believe that the chances of getting caught for counterfeiting 
and piracy, as well as the penalties when caught, are too low. The 
increasing involvement of organized crime in the production and 
distribution of pirated products further complicates enforcement 
efforts. Federal and foreign law enforcement officials have linked 
intellectual property crime to national and transnational organized 
criminal operations. Further, like other criminals, terrorists can 
trade any commodity in an illegal fashion, as evidenced by their 
reported involvement in trading a variety of counterfeit and other 
goods.[Footnote 12]

Many of these challenges are evident in the optical media industry, 
which includes music, movies, software, and games. Even in countries 
where interests exist to protect domestic industries, such as the 
domestic music industry in Brazil or the domestic movie industry in 
China, economic and law enforcement challenges can be difficult to 
overcome. For example, the cost of reproduction technology and copying 
digital media is low, making piracy an attractive employment 
opportunity, especially in a country where formal employment is hard to 
obtain. The huge price differentials between pirated CDs and legitimate 
copies also create incentives on the consumer side. For example, when 
we visited a market in Brazil, we observed that the price for a 
legitimate DVD was approximately ten times the price for a pirated DVD. 
Even if consumers are willing to pay extra to purchase the legitimate 
product, they may not do so if the price differences are too great for 
similar products. Further, the potentially high profit makes optical 
media piracy an attractive venture for organized criminal groups. 
Industry and government officials have noted criminal involvement in 
optical media piracy and the resulting law enforcement challenges. 
Recent technological advances have also exacerbated optical media 
piracy. The mobility of the equipment makes it easy to transport it to 
another location, further complicating enforcement efforts. Likewise, 
the Internet provides a means to transmit and sell illegal software or 
music on a global scale. According to an industry representative, the 
ability of Internet pirates to hide their identities or operate from 
remote jurisdictions often makes it difficult for IPR holders to find 
them and hold them accountable.

Industry Concerns: 

Despite improvements such as strengthened foreign IPR legislation, 
international IPR protection may be worsening overall for some 
intellectual property sectors. For example, according to copyright 
industry estimates, losses due to piracy grew markedly in recent years. 
The entertainment and business software sectors, for example, which are 
very supportive of USTR and other agencies, face an environment in 
which their optical media products are increasingly easy to reproduce, 
and digitized products can be distributed around the world quickly and 
easily via the Internet. According to an intellectual property 
association representative, counterfeiting trademarks has also become 
more pervasive in recent years. Counterfeiting affects more than just 
luxury goods; it also affects various industrial goods.


The U.S. government has demonstrated a commitment to addressing IPR 
issues in foreign countries using multiple agencies. However, law 
enforcement actions are more restricted than other U.S. activities, 
owing to factors such as a lack of jurisdiction overseas to enforce 
U.S. law. Several IPR coordination mechanisms exist, with the 
interagency coordination that occurs during the Special 301 process 
standing out as the most significant and active. Conversely, the 
mechanism for coordinating intellectual property law enforcement, 
NIPLECC, has accomplished little that is concrete. Currently, there is 
a lack of compelling information to demonstrate a unique role for this 
group, bringing into question its effectiveness. In addition, it does 
not include the FBI, a primary law enforcement agency. Members, 
including NIPLECC leadership, have repeatedly acknowledged that the 
group continues to struggle to find an appropriate mission.

The effects of U.S. actions are most evident in strengthened foreign 
IPR legislation. U.S. efforts are now focused on enforcement, since 
effective enforcement is often the weak link in intellectual property 
protection overseas and the situation may be deteriorating for some 
industries. As agencies continue to pursue IPR improvements overseas, 
they will face daunting challenges. These challenges include the need 
to create political will overseas, recent technological advancements 
that facilitate the production and distribution of counterfeit and 
pirated goods, and powerful economic incentives for both producers and 
consumers, particularly in developing countries. Further, as the U.S. 
government focuses increasingly on enforcement, it will face different 
and complex factors, such as organized crime, that may prove quite 
difficult to address.

With a broad mandate under its authorizing legislation, NIPLECC has 
struggled to establish its purpose and unique role. If the Congress 
wishes to maintain NIPLECC and take action to increase its 
effectiveness, the Congress may wish to consider reviewing the 
council's authority, operating structure, membership, and mission. Such 
considerations could help NIPLECC identify appropriate activities and 
operate more effectively to coordinate intellectual property law 
enforcement issues.

Mr. Chairman, this concludes my prepared statement. I would be pleased 
to respond to any questions that you or other members of the committee 
may have at this time.

Contacts and Acknowledgments: 

Should you have any questions about this testimony, please contact me 
by e-mail at or Emil Friberg at We can 
also be reached at (202) 512-4128 and (202) 512-8990, respectively. 
Other major contributors to this testimony were Leslie Holen, Ming 
Chen, and Sharla Draemel.


[1] GAO, Intellectual Property:  U.S. Efforts Have Contributed to 
Strengthened Laws Overseas, but Challenges Remain, GAO-04-912 
(Washington, D.C.:  Sept. 8, 2004).

[2] NIPLECC was mandated under Section 653 of the Treasury and General 
Government Appropriations Act, 2000, Public Law 106-58 (15 U.S.C. 

[3] Although the FBI is part of the Department of Justice and the USPTO 
is part of the Department of Commerce, their roles will be discussed 
separately because of their distinct responsibilities.

[4] Other policy actions include:  use of trade preference programs for 
developing countries that require IPR protection, such as the 
Generalized System of Preferences; negotiation of agreements that 
address intellectual property; participation in international 
organizations that address IPR issues; and, diplomatic efforts with 
foreign governments.

[5] PFCs are those countries that (1) have the most onerous and 
egregious acts, policies, and practices with the greatest adverse 
impact (actual or potential) on the relevant U.S. products and (2) are 
not engaged in good-faith negotiations or making significant progress 
in negotiations to address these problems.

[6] The Computer Crime and Intellectual Property Section (CCIPS) 
addresses intellectual property issues (copyright, trademark, and trade 
secrets) within the Department of Justice's Criminal Division. In April 
2004, CCIPS appointed an International Coordinator for Intellectual 

[7] These foreign countries were Belgium, Denmark, France, Germany, 
Hungary, Israel, the Netherlands, Singapore, Sweden, and Great Britain 
and Northern Ireland. According to a Justice official, law enforcement 
officials in Spain subsequently took action against related targets in 
that country.

[8] For information on cigarette smuggling, see GAO, Cigarette 
Smuggling:  Federal Law Enforcement Efforts and Seizures Increasing, 
GAO-04-641 (Washington, D.C.:  May 28, 2004). 

[9] A DHS official noted that the Trade Secrets Act (18 U.S.C. 1905) 
precludes sharing information about specific imports, even where there 
is criminal activity. The Trade Secrets Act makes it a criminal offense 
for an employee of the United States, or one of its agencies, to 
disclose trade secrets and certain other forms of confidential 
commercial and financial information except where such disclosure is 
"authorized by law."

[10] NIPLECC is also required to consult with the Register of 
Copyrights on law enforcement matters relating to copyright and related 
rights and matters.

[11] Another coordination mechanism is the IPR Training Coordination 
Group, led by the State Department. This voluntary, working-level group 
comprises representatives of U.S. agencies and industry associations 
involved in IPR programs and training and technical assistance efforts 
overseas or for foreign officials.

[12] See GAO, Terrorist Financing:  U.S. Agencies Should Systematically 
Assess Terrorists' Use of Alternative Financing Mechanisms, GAO-04-163 
(Washington, D.C.:  Nov. 14, 2003).