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Intellectual Property Theft: Part Two

counterfeit valvesIn Part One of our two part series on Intellectual Property Theft, we summarized some recent developments in protection of intellectual property rights. Unfortunately, with every new measure taken to stop counterfeiting and patent and trademark infringements comes a new breed of pirates intent on capitalizing on the efforts of others.

In fact, according to recent information released by the ARC Advisory Group, as much as 10% of all goods and services sold worldwide are counterfeit. The cost to holders of intellectual property rights is almost incalculable. Thus, governments are adding regulations and signing agreements at a frantic pace, attempting to stem the tide of theft.

The Interagency Trade Enforcement Center

As was promised in his State of the Union address, President Obama recently signed an Executive Order establishing The Interagency Trade Enforcement Center, which is charged with monitoring and enforcing domestic trade laws and protecting U.S. rights under international trade agreements. This center was established within the Office of the United States Trade Representative (USTR) and will coordinate matters relating to enforcement of U.S. trade rights under international trade agreements and enforcement of domestic trade laws among USTR and the Department of State, the Department of the Treasury, the Department of Justice, the Department of Agriculture, the Department of Commerce, the Department of Homeland Security, the Office of the Director of National Intelligence and any other agencies that may at some point need to be involved.

While this is an admirable step toward protecting intellectual property rights of American manufacturers and rights holders, the success of any domestic effort depends largely on the cooperation of countries with which we do business. As is well known in the valve world, countries like China seem to do little more than PR exercises when confronted with evidence that companies within its borders, in fact, government entities, are guilty of intellectual property theft.

Chinese IPR Protection Agenda

An item titled “China releases IPR protection agenda” in the June 2012 newsletter of international law firm MMLC Group highlights this fact. “The General Office of the State Council released a work agenda policy announcement concerning the protection of intellectual property rights and a crackdown on the production and sale of counterfeit good. The agenda mentions campaigns to be carried out to ensure the protection for trademark rights, copyright, patent rights and online shopping sites, as well as efforts to fight the counterfeiting of cosmetics, medicine, agricultural production materials and auto components. It is hoped that that this announcement is backed up by action by its administrative authorities, given that counterfeiting has been on the rise during the last several years.”

It remains to be seen if this is any more than a political exercise, but other mechanisms are coming into place. New trade agreements are also constantly being negotiated, and in each one of those are stipulations for enforcement of intellectual property rights. The one most recently in the news is the Trans Pacific Partnership (TPP), comprised of The United States, Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam. These countries alone are a combined market of 658 million people worth $20.5 trillion annually. Japan, Canada and Mexico are also expected to get on board. The TPP also has built in mechanisms to allow other nations to join after its ratification.

Trans Pacific Partnership

tppThe TPP covers a much broader range of issues than other trade agreements. While two of the TPP's 26 chapters have to do with trade, the rest are focused on corporate rights. Among those, of course, are intellectual property rights. According to legal counsel for VMA, the Intellectual Property chapter of the TPP is a new development that could potentially create stronger enforcement tools to respond to counterfeiting among the TPP countries. Several countries are proposing that the U.S. IPR proposal be replaced with the Anti-Counterfeiting Trade Agreement (ACTA), which provides greater flexibilities, but has been criticized by business groups as being too weak. However, both the U.S. proposal and ACTA would require countries to provide for criminal procedures and penalties at least in cases of willful counterfeiting of trademarks and copyright piracy on a “commercial scale.”

Meetings for the TPP are being held as this article is being written. Any important developments regarding intellectual property rights and trade issues arising from those meetings will be shared in a future Web Feature.

Cyber Crimes

IP theft is also being battled through laws and regulations concerning the reporting of cyber crimes. The U.S. Securities and Exchange Commission regulatory agency wants companies to inform investors of cybercrimes. The rationale is that, when public companies are victimized by cyber criminals and sensitive information including patent and trademark materials is compromised, investors have a right to know. While the regulations proposed by Sen. Jay Rockefeller (D-WV) are geared toward investors, this could be seen as another way of tracking and perhaps protecting anyone dealing with the victims of these cybercrimes.

Utilizing Technology

While many governments are doing whatever they can to curb the proliferation of intellectual property theft, the bottom line remains that the owners of patents, trademarks and copyrights must protect their own property. In Part One of this series, RFID tags, engraving, inventory control and good corporate relationships were all discussed, but as technology changes, other, less conventional, methods could also be employed.

You Tube

You Tube has even been employed to warn potential victims of counterfeit products, including the valves in a commercial vehicle. While this may seem somewhat unorthodox, with 800 million unique users and over 3 billion hours of video being watched each month on the popular site, it can be a powerful vehicle through which warnings of counterfeit products can be shared. It can also be a way for manufacturers to reach out to their customers and potential customers to warn them if they are aware of possible infringements or counterfeit products.

bendixvalves

Laser Technology

Laser etching has of course been around for some time, but laser technology is constantly changing, making it adaptable to more products and materials.

A relatively new laser technology has been developed which enables easy identification of original and spare sealing components with an eye to preventing reverse engineering. The technology marks elastomer components, such as seals, diaphragms and elastomer composite parts, with an anti-fraud designation that is invisible to the naked eye. This identification contains key product information, including an item description, model number, dimensions, material, date of manufacture and serial numbers, for reliable traceability, as well as counterfeiting protection. This particular system by Simrit consists of a laser marker with coding software and a reader which interprets the code located on the part.

Vigilance

Despite the best efforts of governments, trade organizations and individual corporations, the fact is that intellectual property theft is not going away. By being vigilant, constantly communicating with suppliers and end users and embracing technological advances that can make counterfeiting more difficult, losses can at the very least be minimized.

In this week’s QuickRead newsletter for VMA members, Editor-In-Chief Judy Tibbs brought attention to a suspicious website, www.sinervalve.com (in the U.S.) and www.sinervalve.net (in China) which showed photos of valves that appeared to come directly from VMA member websites. Because a member read the notification, and looked through the website, he was able to put “Siner Valve” on notice, demanding that at least the photos be removed.

Valve Magazine will continue monitoring this situation and encourages readers to do the same.

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