Who should protect intellectual property rights?
On Second thought' By Dietmar Jost
Infringement of intellectual property rights (IPR) is a serious crime with growing dimensions. In 2005 the Organization for Economic Cooperation and Development estimated that international trade in counterfeits and pirated products was nearly $200 billion.
Besides the economic dimensions of this crime, there are severe safety and health risks associated with IPR infringing products, such as fake medicine, food, beverages, personal care products, spare parts or electrical goods. These counterfeits and pirated goods are not produced and tested to the safety and quality standards and regulations as the genuine products. Increasingly, criminal networks merge and pack counterfeits with their genuine counterparts, which presents specific challenges to the management and security of the supply chains of the genuine products.
According to the European Commission, customs authorities of the 27 EU member states seized 176 million IPR-infringing products and articles in 2008, a 126 percent increase compared to 2007. Of these articles, 99 percent were found in commercial shipments. Tourists, travelers and non-commercial shipments accounted for only 1 percent of the problem. Most seized articles were found in postal and air shipments; road and sea transport were used less often.
U.S. Customs and Border Protection and Immigration and Customs Enforcement (ICE) reported similar figures for 2008. The domestic value of the goods seized by CBP for IPR violations increased 38 percent to $272.7 million in 2008, from $196.7 million in 2007.
For some years IPR protection has been a top priority for governments and international organizations such as G7, World Trade Organization and World Intellectual Property Organization. Governments of highly industrialized countries are concerned about the competitiveness of their economies, built predominantly on intellectual property and innovation created by their industries.
Although the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) is meant to provide a multilateral instrument to protect IPR, the governments of the G7 countries (France, Canada, Germany, Italy, Japan, the United Kingdom and United States), as well as the European Union, Australia, Korea, Mexico, Morocco, New Zealand, Singapore and Switzerland, felt a more effective multilateral framework was required. In 2007, these countries launched negotiations for an anti-counterfeiting trade agreement (ACTA) to achieve improvements in:
' Border measures such as seizures and exchanging key shipment data with rights holders.
' Enforcement measures and enforcement practices, in particular the sharing of best practices.
' International cooperation.
At first glance, it is obvious that the main responsibility of protecting IPR is on the rights holders themselves. In addition, law enforcement authorities, such as customs, have to enforce health, safety and security regulations in international trade.
But what about those players in international trade that connect the demand and the supply sides, that move international trade and manage global supply chains? So far, the ACTA agreement will address the role and responsibility of third-party service providers only for protecting IPR of digital media, but not for protecting IPR of physical goods along international logistics chains.
Increasingly, however, the transport and logistics industry is confronted with demands from both the rights holders and governments, in particular where the service providers act as the declarant or the importer.
Clearly, from a legal standpoint the transport industry shouldn't be required as a matter of course to employ the expertise to detect counterfeits or pirated goods, which sometimes is even difficult for the rights holders. Nor should the transport industry be required to inspect every shipment prior to acceptance. On the other hand, protecting IPR can be a service that logistics service providers provide as part of their warehousing, supply chain management and other 3PL and 4PL service offerings.
Either way, there are a few measures that can be taken, or in cases where the service provider is seeking the status of an authorized economic operator (AEO) need to be taken, as part of a holistic risk management strategy for better trade compliance, including IPR protection:
' Know your customer. Accepting shipments from a customer, in particular first-time customers, without some form of verification and risk assessment can potentially harm the corporate level of compliance. For those companies seeking AEO certification, this aspect is particularily important, as procedures for the verification of shipment data is a dedicated admission criteria.
' Cooperate with rights holders. Rights holders observe the market of counterfeits and pirated goods and have knowledge about the manufacturers, suppliers and shippers involved in IPR infringements. Cooperation with IPR rights holders can provide access to such information, which in turn can help transport companies to avoid accepting shipments from those parties.
' Train your staff. Raising awareness among staff of the potential risk involved in IPR infringement ' both to public health and corporate image ' will help reduce transport companies' exposure to this trade risk.
When in doubt, companies should take advantage of the right to inspect the goods and take samples prior to the preparation and submission of the goods declaration, a right, which all contracting parties to the revised Kyoto Convention of the World Customs Organization (64 countries, including the European Union and United States) have to provide to importers and customs brokers.