	Background

Intellectual property, for which the U.S. government provides broad  protection through means such as copyrights, patents, and trademarks,  plays a significant role in the U.S. economy, and the United States is an  acknowledged leader in its creation. Intellectual  Property Rights Coordinator, industries that relied on IP protection were  estimated to account for over half of all U.S. exports, represented 40  percent of U.S. economic growth, and employed about 18 million  Americans in 2006. However, the economic benefits that copyrights,  trademarks, and patents bring are threatened by the fact that legal  protection of IP varies greatly around the world, and several countries are  havens for the production of counterfeit and pirated goods. Although the public is often not aware  of the issues and consequences surrounding IP theft, counterfeit products  raise serious public health and safety concerns, and the annual losses that  companies face from IP violations are substantial. Eight federal agencies as well as entities within them undertake a wide  range of activities in support of protecting IP rights, as shown in figure 1. Intellectual Property Increasingly at Risk As Firms Operate Globally and Economic Incentives and Technology Facilitate IP Theft, Which is Exacerbated by Weak Enforcement

U.S. intellectual property is increasingly at risk of theft as U.S. firms  become more integrated into the world economy and the production of  more sophisticated processes and investments move overseas. High  profits and technological advances have also increased the risk of IP  infringements by making counterfeiting and piracy progressively attractive  and easy, while the deterrents, such as penalties and other measures, fail  to keep pace. The seriousness of these risks has been exacerbated by  weak enforcement in some countries, particularly China, whose  enforcement problems has persisted despite U.S. efforts. U.S. Efforts to Coordinate IP Activities and Enforce Laws at the Border Need Improvement

While the U.S. faces significant obstacles when trying to ensure effective  IP protection abroad, it also faces some significant challenges in  coordinating domestic efforts and ensuring that this issue remains a  priority. The large number of agencies involved in IP protection issues  (see figure 1) demonstrates the cross-cutting nature of the issue and the  importance of coordination. However, in our recent report on the law  enforcement coordinating council, we found that the effectiveness and the  long-term viability of the coordinating structure is uncertain. Another  challenge is that each of these agencies have multiple missions, and within  the agencies it may be a challenge to ensure that IP enforcement gets  sufficient priority. Our report on the efforts of CBP to interdict counterfeit  goods at the border found that the bulk of CBP’s enforcement outcomes in  recent years have been generated by pockets of activity within certain  modes of transport and product types as well as among a limited number  of port locations. Despite recent increases in seizure outcomes, CBP lacks  an approach to further improve border enforcement outcomes, and has  been focused on efforts that have produced limited results, while not  taking the initiative to understand and address the variations among ports. Although CBP has reported increases in the number and value of IP  seizures, our analysis found that the bulk of these seizures have been  generated by a limited number of ports and that recent increases in seizure  actions can be attributed to a growing number of small-value seizures  made from air-based modes.
Why GAO Did This Study

Intellectual property plays a significant role in the U.S. economy, and the United States is an acknowledged leader in its creation. Industries that relied on IP protection were estimated to account for over half of all U.S. exports and employed about 18 million Americans in 2006. However, legal protection of IP varies greatly around the world, and several countries are havens for the production of counterfeit and pirated goods. Counterfeit products raise serious public health and safety concerns, and the annual losses that companies face from IP violations are substantial. Eight federal agencies undertake a wide range of activities in support of protecting IP rights, and two mechanisms coordinate protection efforts: the National Intellectual Property Law Enforcement Coordination Council (NIPLECC) and the Strategy for Targeting Organized Piracy (STOP). GAO was asked to address: (1) the nature of the risks that U.S. corporations face in protecting IP, particularly in countries such as China, and (2) U.S. methods for implementing and coordinating domestic IP enforcement activities. This testimony is based on issued GAO reports that focused on IP protection and related trade matters.

What GAO Found

U.S. intellectual property is increasingly at risk of theft as U.S. firms become more integrated into the world economy and the production of more sophisticated processes and investments move overseas. High profits and technological advances have also increased the risk of IP infringements by making counterfeiting and piracy more attractive and easy to conduct. At the same time, deterrents such as penalties and other measures have failed to keep pace. The seriousness of these risks has been exacerbated by weak enforcement in some countries, particularly China. While the U.S. faces significant obstacles when trying to ensure effective IP protection abroad, it also faces serious challenges in coordinating domestic efforts and ensuring that IP protection remains a priority. The large number of federal agencies involved, due to the cross-cutting nature of IP protection, makes coordination particularly important. However, GAO's recent report on coordinating mechanisms for federal IP protection, we found that the effectiveness and long-term viability of the coordinating structure is uncertain. In addition, each of the agencies involved in IP has multiple missions, and it is a challenge to ensure that IP enforcement is a sufficiently high priority. GAO's report on the efforts of the Customs and Border Patrol (CBP) to interdict counterfeit goods at the border found that the bulk of CBP's enforcement outcomes in recent years have been generated by pockets of activity within certain modes of transport and product types as well as among a limited number of port locations. While the number of seizure actions has increased, this growth can be attributed to a growing number of small-value seizures made from air-based modes. CBP lacks an approach to further improve border enforcement outcomes; it has been focused on efforts that have produced limited results, while not taking the initiative to understand and address the variations among ports.