NCF Anti-Counterfeiting and Piracy Summit Day 2: Opening Remarks by Thomas J. Donohue President & CEO, U.S.

Chamber of Commerce International Hall of Flags September 29, 2006

Good morning, ladies and gentlemen. My name is Tom Donohue, and I’m president and CEO of the U.S. Chamber of Commerce. Thank you for joining us on the second day of our anti-counterfeiting and piracy summit. We had a great discussion yesterday on all different aspects of our anti-counterfeiting and piracy efforts— enforcement, global engagement, public-private partnerships, and technology. Today, we’ll continue some of that conversation with Attorney General Gonzales, NBC’s Bob Wright, and several heads of associations.

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Before we get into the program, I’d like to take just a few minutes to tell you about the Chamber’s global anticounterfeiting and piracy initiative. We started it two years ago because our members asked us to. They told us that counterfeiting and piracy were destroying jobs, taking a big bite out of their bottom line, and damaging their company’s name and reputation. Few, if any, companies wanted to publicly stick their necks out on this issue for obvious reasons, and so the Chamber accepted the challenge. The objective of the Chamber and its 195-member Coalition Against Counterfeiting and Piracy is simple: to make the world a miserable place for counterfeiters and pirates. We have more than 20 staff at the Chamber working aggressively with members of the Coalition to implement a coordinated global strategy.

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First, we’re educating businesses, lawmakers, law enforcement officials, and consumers. One piece of this program is our Capitol Hill outreach. A couple of years ago we conducted a survey of Hill staffers to gauge their awareness of counterfeiting and piracy. The results were very discouraging. Most of the respondents hardly had a clue as to the impact of counterfeiting and piracy on the economy, health, and safety, and very few considered cracking down on these crimes as a national priority. But we’ve changed quite a few attitudes since then. Last spring over a week’s time, we held more than 40 meetings on the Hill, including a briefing with Senator Hatch and Commerce Secretary Gutierrez.

We followed that up in June with our Anti-Counterfeiting and Piracy Awareness Week, which included more meetings and briefings with Hill staff and with Los
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Angeles law enforcement officials and also a multi-media ad campaign. We’re now expanding beyond the Beltway. This month the Chamber began a series of counterfeiting and piracy education workshops around the country. Our goal is to enlist businesses at the grassroots level and empower them with tools to protect their products and secure their supply chains. Just yesterday, the Chamber released a supply chain tool kit that provides U.S. businesses with innovative techniques for protecting their brands and their customers. The second part of our strategy is to better measure the perceptions and economic impact of counterfeiting and piracy globally. The data that is available is weak and inadequate – we need to measure the problem in real terms: how it affects small business, local jobs, and tax revenue.
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Later in this program, Bob Wright of NBC and GE will share with us the results of a new independent study on the economic impact of motion picture piracy. We applaud these efforts, and similar studies will remain a key part of our strategy. The third component of our initiative is to toughen existing laws, increase enforcement, and disrupt the flow of illegal goods into the legitimate supply chain. This year, with the Chamber’s support, the president signed into law the Stop Counterfeiting in Manufactured Goods Act, which closed loopholes that allowed counterfeiters to avoid prosecution in spite of having clearly profited from illegal activities. We are also working on the Hill to increase resources for law enforcement to fight this problem.

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Already we’re seeing positive results from our efforts. It is clear that counterfeiting and piracy is becoming a priority for lawmakers and our partners in law enforcement. A few weeks ago, officials captured and convicted a prominent IP criminal who pirated $20 million in copyrighted software. He got six years in prison and a $4.1 million fine. In a separate case, two other criminals were found guilty of trafficking and importing a variety of counterfeit products, including electrical cords, batteries, and clothing. They got seven years. These are serious sentences for serious crimes.

To help round up more of these criminals, the Chamber has a program in New York and Los Angeles in which it has brought together all levels of law enforcement –
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local, state, federal, and international - to share resources and information about cases. The Chamber has even hired its own investigators in these two cities to expose counterfeiters and to help build a legal case against them. What our investigators have found confirms our worst fears – organized criminal networks are at work making dangerous and defective products such as fake cancer drugs and brake pads made of sawdust. We are confident that our investigations will soon lead to high-profile prosecutions.

Finally, let me give you some highlights of our work overseas with our international members, American Chambers of Commerce, and foreign government officials.
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We have specific education and training programs in countries where counterfeiting is really big business China, Brazil, India, Russia, and Korea. Two days ago, we released our annual assessment of China’s compliance with its WTO commitments, and once again, intellectual property protection is at the forefront of our report. There remain large gaps in China’s criminal enforcement regime, and penalties for counterfeiters and pirates amount to a slap on the wrist. We’re working with various groups to educate Chinese officials and help them with enforcement. In Brazil, we’ve helped produce meaningful data on the impact of counterfeiting and piracy.

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Our research there showed that piracy in just three sectors – clothing, sports footwear, and toys–deprives Brazil of at least $5.5 billion in tax revenues annually. We’re conducting a second round of studies in that country as well as studies in Argentina, Guatemala, El Salvador, Costa Rica, India, Russia, and China. We’ve discovered in Brazil that attitudes toward IP theft are formed at quite a young age, so our strategy is to highlight these crimes in primary, secondary, and university education. We also hold a seat on Brazil’s National Anti-Piracy Council, which is helping the government identify intellectual property reform priorities.

In India, the Chamber’s U.S.-India Business Council helped pass legislation that provides for product patents in drugs, agricultural products and embedded software.

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In November, it will conduct IPR training for senior Indian police officials and in December will conduct a seminar on securing the pharmaceutical supply chain. In Russia, we’ve measured consumer perceptions of the government’s handling of IPR and are bringing together leading consumer rights groups and Russian officials to discuss IP reform challenges, including loopholes in the customs code and regulations. In Korea, the U.S.-Korea Business Council is working to ensure that the free trade agreement currently under negotiation includes strong intellectual property rights provisions.

All of this is to say that cooperation from our trading partners is vital to our success in getting a handle on this problem, and the Chamber will continue to engage the international community like only it can.

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Our comprehensive initiative is moving forward, and the early results are encouraging. However, we cannot underestimate the size of the challenge before us. Counterfeiting and piracy are sophisticated businesses. These criminals are smart and slippery and have vast resources. But if consumers, businesses, and the government work together, we can make their life miserable. I’d like to express the Chamber’s appreciation for two individuals in particular who have been instrumental in the fight against counterfeiting and piracy.

First, I’d like to recognize Paul Fox, chairman of the Coalition Against Counterfeiting and Piracy, for his work as director of global external relations at the Gillette Company.

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Both Gillette’s and Paul’s commitment to our initiative has been essential to its success in the past year. On behalf of the Chamber, thank you Paul and Gillette for your hard work. I’d also like to acknowledge Arif Alikhan, who is vice chairman of the Department of Justice’s Task Force on Intellectual Property and also deputy director of the National Intellectual Property Law Enforcement Coordination Council. His work has been instrumental in our enforcement programs in Los Angeles and New York City. Arif is leaving the Department of Justice to serve as deputy mayor of Los Angeles. We look work forward to working with him on our programs in that city. I’d like to invite these two gentlemen up to the stage to receive a certificate of recognition.

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It’s now my privilege to introduce our first speaker… another leader who is using his authority and the resources of his office to make life miserable for counterfeiters and pirates. Attorney General Alberto Gonzales is at the forefront of the federal government’s most aggressive effort yet to prevent intellectual property violations. The Attorney General is a key cog in the Administration’s Strategy Targeting Organized Piracy, or STOP – a comprehensive effort that has brought together nine federal agencies. Through this initiative, the Administration has expanded computer hacking and intellectual property units in U.S. Attorney's offices all across the country. It is posting specially trained prosecutors and FBI agents at American embassies in Asia and Eastern Europe.

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It’s working with other nations and the World Trade Organization to promote strong intellectual property laws around the globe. And it’s working closely with our coalition to raise awareness of counterfeiting and piracy so we can help stop fraud before it starts. Prior to becoming Attorney General in February of 2005, Alberto Gonzales was counsel to President Bush. Before that, he served as a justice on the Texas Supreme Court, as secretary of state for Texas, and as a partner in the Houston office of law firm Vinson & Elkins. Ladies and gentlemen, please join me in welcoming Attorney General Gonzales.

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