By Steve Tepp

Today, the Office of the U.S. Trade Representative released its Special 301 Out of Cycle Review of Notorious Markets. The Chamber and GIPC commend USTR’s recognition of the pervasive problem of counterfeiting and piracy, especially as it relates to the online market.

USTR opens the report saying that “globally copyright piracy on a commercial scale and trademark counterfeiting continue to thrive, in part because of the presence of marketplaces that deal in goods and services that infringe intellectual property rights (IPR)… The scale and popularity of these markets can cause economic harm to U.S. and other IP right holders. In addition, products sold at these markets may pose possible health and safety risks to consumers.”

This latest review of Notorious Markets reinforces the urgent and imminent need for legislation to combat the worst-of-the-worst online IP thieves. The U.S. is the biggest economy in the world and, not coincidentally, is also the world leader in producing intellectual property. This combination attracts the attention of sophisticated foreign counterfeiters and pirates whose only motivation is to fill their own pockets with U.S. dollars at the expense of consumer health and American jobs.

So what can we do about it? Education of consumers is a critical component, and today's announcement adds to the substantial government and private sector efforts to bring to the public's attention the problem and harm from counterfeiting and piracy. Unfortunately, in the context of criminals, education alone is not enough. In an ideal world, every country would have an effective set of IP laws, and would enforce those laws. This is a critical part of USTR's mission and we know that there are smart, hard-working people there who devote incredible efforts toward the goal of improved global IP protection. We appreciate and thank the dedicated people at USTR. But the reality is that these efforts can take years. And we simply do not believe that American jobs and consumer safety should be sacrificed while we wait for other countries to get to where they should be.

That is why we need rogue sites legislation now — to give our courts the ability to cut off foreign criminals from the U.S. marketplace. The Senate’s PROTECT IP Act and the House’s Stop Online Piracy Act provide reasonable and effective means in which to update the IP enforcement toolkit. That is why they have support from over 400 companies and associations from every State in the Union and over 60 sectors of the American economy.

Identifying the notorious online markets, like today’s USTR report, is just the first step in the process. In order for this to mean anything, we must provide effective enforcement and take a bite out of global IP theft.

By Mark Elliot

Yesterday, Senator Feinstein (CA), joined by Senator Sessions (AL), Schumer (NY), and Cornyn (TX), introduced the Online Pharmacy Safety Act (S. 2002). This important bill will promote public health and safety and improves patient access to safe online pharmacies by establishing a registry of legitimate online pharmacies, and by defining “valid prescription” for purposes of the Federal Food, Drug and Cosmetic Act. Earlier today, the Chamber sent a letter applauding the introduction of this important consumer safety bill.

The introduction of this bill marks another important step forward in the effort to protect consumers for rogue websites. Rogue pharmacies—run by sophisticated criminal networks—often have the “look and feel” of legitimate pharmacies. Many even claim to be endorsed by government agencies—even displaying phony licenses. These illegal pharmacies accept credit cards and some even offer online “support.” But these false insignia of legitimacy far too often fool consumers into purchasing potentially deadly counterfeit medicine. 

Once enacted, S. 2002 will provide consumers with a registry of safe legitimate online pharmacies. This information will help consumers identify safe and convenient places to purchase their prescription drugs.

When coupled with the rogue sites legislation moving through both the House and the Senate—SOPA (H.R. 3261) and the PROTECT IP ACT (S. 968) respectively—the Online Pharmacy Safety Act goes a long way towards making the Internet a safer, more vibrant marketplace.

We thank Senators Feinstein, Sessions, Schumer, and Cornyn for their leadership on this important issue.

by Mark Elliot

Yesterday, the FightOnlineTheft coalition, which consists of a variety of voices from both industry and labor, took their show of support for rogue sites legislation directly to the House Judiciary Committee.

In the presence of Chairman Lamar Smith, Representatives Bob Goodlatte (R-VA), Marsha Blackburn (R-TN), and Steve Chabot (R-OH), representatives from a huge array of companies and associations one-by-one discussed how rogue sites specifically affect their jobs, businesses, and consumer’s wellbeing and expressed the absolute necessity for enactment of rogue sites legislation, like the PROTECT IP and Stop Online Piracy Act.

This event demonstrated the broad and far-reaching coalition behind PROTECT IP and SOPA. Booths displayed counterfeit goods ranging from baseball hats to jeans to DVDs to extension cords to pharmaceuticals to language learning software to cigarettes to golf balls, while nearly 20 speakers hailed from the AFL-CIO, Harley Davidson, Directors Guild of America, Alliance for Safe Online Pharmacies, Discovery Institute, Sheet Metal Workers' International Association and Underwriters Laboratories, just to name a few. Those in the room represented just a small fraction of the nearly 400 companies and associations from every state in the nation, 60+ industries, scores of labor organizations, and dozens of elected officials who have called on Congress to do something about the online theft of intellectual property.

In his opening remarks to a room packed with Hill staff, representatives, and loads of counterfeit goods, the GIPC’s President and CEO, David Hirschmann, dubbed the House Judiciary as the “Jobs Committee,” which was the prevailing sentiment expressed by those in the room.

Rosetta Stone, a Virginia-based language learning software company with nearly 1,000 employees, said that “at a time when the U.S. economy— and U.S. jobs— are increasingly dependent on ideas and innovation, it is essential that protections be put in place against theft and piracy so that the Internet will not be a safe haven for foreign counterfeiters who deceive American consumers and steal American jobs.”

While jobs are threatened on one hand, benefits for workers are at risk of being cut as well. Labor representatives expressed concern about how rogue sites can steal from their pensions. More specifically, Mark Walpole, a camera assistant and member of IATSE Local #600 said that “my entire family’s health insurance, and my retirement, is solely based on the number of hours I can work in a year. Decreased reinvestment from studios means decreased quality of life for me, and my family.”

"Counterfeits kill jobs,” said Jack Stohlman of Eli Lilly, “but they can also kill people. Today, there are thousands of fake online pharmacies advertising drugs on the Internet that pose a real danger to Americans. It is time to address this unchecked crime against public health."

Jobs. Businesses. Health. What’s next for rogue sites to target? Online counterfeiting and piracy takes from companies, takes from employees, takes from consumers, but gives nothing of any value. We thank Chairman Smith and members of the House Judiciary for proactively tackling the issue of mass theft of intellectual property head-on with the Stop Online Piracy Act.

We believe that this overwhelming chorus of support for rogue sites legislation, combined with the recently released Managers Amendment to H.R. 3261, will help bring this much-needed legislation to the finish line and will help ensure that the preservation and creation of American jobs remain a focal point of the 112th Congress.

Cross-posted from the Global Intellectual Property Center's blog.

By Steve Tepp

Question: How many stores in your town exclusively sell illegal items, such as counterfeit goods or pirated music or movies? 

Most of you would answer, “well, none!” It is likely that at most, all you could think is a stall on that corner which seems to disappear every now and then. The truth is, this type of enterprise—the type that sells ripped off intellectual property—is absolutely not tolerated in the brick-and-mortar world. Why? Because it’s a criminal endeavor, a black market full of shoddy products that are not only harmful to consumers, but also undermine the integrity of well-respected brands. If your local pharmacy sold prescription drugs that were not genuine and possibly laced with heavy metals, rat poisoning, or arsenic, for example, how long would its doors be open? Not long. Why do we allow exactly these types of stores—selling anything from the dangerous, fake pharmaceuticals to counterfeit holiday lights to knock-off sneakers—to exist totally unchecked in the online space? 

The harm from these rogue sites is getting a lot of attention. The Better Business Bureau wrote in a letter to congress that rogue sites “often run by criminals who purvey shoddy fakes that can in many cases endanger consumers’ health and safety.”

The National Consumers League, in a letter of its own, says that “rogue websites harm consumers. Sometimes the harm is blatant, such as sites peddling counterfeit pharmaceuticals that can injure or even kill consumers.Other times the harms are subtler, as sites purporting to sell discount clothing, footwear, or other consumer goods pass off low-quality, counterfeit items as legitimate.” NCL goes on to note that “consumers are not the only ones hurt by rogue websites. These sites also harm U.S. workers whose creations… are stolen, and the revenues that could have been used to pay higher wages or create more jobs are instead diverted to enlarge the coffers of criminal enterprises.”

It really can’t be boiled down more simply than this. The widespread theft of intellectual property by rogue sites is harmful to all sectors of the economy and consumers of all sizes, types, and ages. Every day, hundreds if not thousands of online counterfeiters and pirates are stealing American property and distributing illegal goods to unsuspecting consumers. This type of criminal activity would simply not stand if this store were on your street corner. But because rogue sites are often operated entirely outside the United States, beyond the reach of our enforcement authorities, they continue to laugh all the way to the bank.

This is why we urgently need legislation empowering enforcement agencies to cut off foreign rogue sites from the U.S. marketplace – to protect American consumers and preserve American jobs.

by Tom Collamore

Today there was a really important hearing on Capitol Hill regarding the issue of rogue websites. As the testimony before the House Judiciary Committee shows, rogue websites have absolutely no place in the legitimate market: they do not follow laws, they do not pay taxes, they do not adhere to safety standards, and they do not innovate. Really, rogue sites contribute nothing, but manage to take a lot from those who do. Businesses lose $135 billion annually to counterfeiting via rogue websites. Rogue sites are second only to Facebook in terms of Internet traffic, with nearly 53 billion site visits per year – that is nearly 9 visits per every man woman and child on this earth.  Not to mention, 19 million American jobs hinge on the very industries that operators of rogue sites target. 

That’s why there is such a broad and deep coalition of more than 350 companies, trade associations, and professional organizations asking Congress for help against the theft of jobs by rogue sites.

The problem of counterfeiting and piracy over the Internet is so massive, so widespread, that it should not—in fact, cannot—be ignored. This is a point that we all can agree on. It’s gratifying that everyone recognizes the need to tackle online theft of intellectual property, but we need more than just talking points.

There has been a great deal of discussion of rogue sites legislation that relates to copyright issues.  Lost in that discussion is the reality that rogue sites threaten consumer safety by offering dangerously defective and deceptive goods. Consumers are all too often duped into purchasing dangerously illicit products—such as counterfeit prescriptions and electric appliances—from well-designed, legitimate-looking rogue sites that skirt international consumer safety standards.

While consumer health and safety is being undermined on one front, jobs in our most creative and innovative industries are being attacked on the other. The counterfeiting and piracy perpetuated by rogue sites stifles innovation by undercutting the investments in making the newest cancer drug, or latest “it” movie, or most innovative home technology.

The U.S. Chamber will always stand against criminals and on the side of American businesses and jobs. In pursuing the effort to reduce online counterfeiting and piracy, we have been and will always talk to those who have reasonable questions or concerns.  Our goal is achieving a law that is both effective and commercially reasonable.