Consumers, legitimate producers, and governments are all harmed by rampant trademark counterfeiting and copyright piracy. Consumers may be harmed by fraudulent and potentially dangerous products including fake medicines, auto and airplane parts, as well as through fake semiconductors that may cause critical equipment to fail. Producers face the risk of diminished profits and loss of reputation when consumers who may purchase fake products and governments may lose tax revenue and may find it more difficult to attract investment. Infringers generally pay no taxes or duties, and often disregard basic standards for worker health and safety and product quality and performance. Industry reports trends in counterfeiting and piracy that include:
- Sustained growth in the piracy of copyrighted products in virtually all formats, as well as counterfeiting of trademarked goods. The involvement of criminal enterprises continues to rise, often because piracy and counterfeiting offer enormous profits and little risk. Such enterprises require little up-front capital investment, and even when they are detected and prosecuted, the penalties imposed on them in many countries are very low and therefore offer little or no deterrence against further infringements. Instead, the penalties are viewed merely as a cost of doing business.
- Continued growth in the online sale of pirated and counterfeit hard goods that will soon surpass the volume of such goods sold by street vendors and in other physical markets. Enforcement authorities, unfortunately, face difficulties in responding to this trend. Online advertisements for the sale of illicit physical goods that are delivered through express mail shipments or by small consignments are found in many places.
- A continued increase in the use of legitimate courier services to deliver infringing goods, making it more difficult for enforcement officials to detect these goods.
- An increase in the practice of shipping of counterfeit products separately from labels and packaging in order to evade enforcement efforts. For example, infringers in Canada reportedly sell fake certificates of authenticity for illicit software programs. There are also reports of the importation of packaging, labels, and other components separate from the infringing good into Vietnam for assembly and further distribution.
- The emergence of Media Box piracy, whereby "boxes," often with capability to play high definition content, are loaded with large quantities of pirated works. These boxes may be sold with preloaded content, but can later have new content uploaded for a relatively low fee. Boxes may be purchased online, with the user's chosen content, and delivered via postal service, or may have online capabilities allowing consumers to download infringing content from the Internet or through downloadable apps. This problem has been reported in China, Indonesia, Malaysia, Taiwan, Thailand, and Vietnam.
The United States continues to urge stronger and more effective criminal and border enforcement to stop the manufacture, import, export, transit, and distribution of pirated and counterfeit goods. USTR engages extensively with its trading partners through bilateral consultations, FTAs, and international organizations, to ensure that penalties have deterrent effects, and include significant monetary fines and meaningful sentences of imprisonment. Additionally, important elements of
19
