World Intellectual Property Day

Robert D. Hormats
Under Secretary for Economic, Energy and Agricultural Affairs 
U.S. Chamber of Commerce
Washington, DC
April 26, 2010

As prepared for delivery

Thank you, Myron, for that wonderful introduction and, Mark, for your very thoughtful analysis of the economic benefits of promoting the development of intellectual property. I’m delighted to join all of you on World Intellectual Property Day to highlight the important role that creativity, innovation, and entrepreneurship play in fueling our economy and strengthening our most successful businesses. And what better place to do so than at the U.S. Chamber of Commerce--one of the largest and most prominent advocacy organizations for American business.

This is the 10th anniversary of World IP Day. And over the last decade the growth of the knowledge-based economy has been steady and impressive. IP-intensive industries have consistently created jobs during good economic times and down economic times. And these creative industries are expected to grow faster in the years to come.

This spirit of entrepreneurship--the willingness to take risks and start new ventures--is one of our nation’s greatest strengths. It has led to new technology, new research, new means of production, and new jobs. I understand that the report released by the Chamber this morning confirms just that. That’s good news for those who create. And that’s good for those who consume. Since each of us falls into or both of these categories at any given time, it’s safe to say that's good for our country.

That’s why it is so important to create an environment where intellectual property is protected--both at home and abroad. Since I began serving in this position, I’ve met with representatives from a wide spectrum of interested parties -- from CEOs to labor union leaders, in small companies and large. And one lesson rings clear from all my conversations: protecting intellectual property rights is critical to our economic future.

You are all aware of the challenges we face:

  • We know that the average Internet user can stream an illegal movie in fewer than four clicks of a mouse;
  • Theft and piracy of music recordings costs thousands of lost jobs and nearly $2 billion in lost wages to U.S. workers (according to the Institute for Policy Innovation);
  • Reverse engineering of American goods in foreign markets harms our companies and erodes confidence in trade;
  • According to the White House’s Cyberspace Policy Review, losses from intellectual property theft in 2008 alone were estimated to be as high as $1 trillion; and
  • Perhaps most troubling, cheap counterfeit medicines that are readily available in every country in the world often result in treatment failure or even death.

There are also reports that link piracy to organized criminal networks of drug traffickers and even terrorist groups, so this is very serious business. It is not just a few people pirating DVDs in their cellars, or a few knockoff watches being sold in a bazaar. This issue has enormous implications for our most innovative companies, the health and safety of a great many people in the U.S. and elsewhere, our overall economy, and our national security.

The problem becomes more serious every year, so we have our work cut out for us. Along with many others in the federal government, I see this as a very high and a very urgent policy priority. When it comes to protecting intellectual property, we can’t afford to wait or to back down.

American workers deserve to benefit from their own labor. American companies deserve to benefit from their investments in capital, innovation and human resources. And American researchers, scientists and entrepreneurs deserve to benefit from their enormous efforts. Many innovators take enormous risks and should be able to enjoy the returns when their risks lead to success. For all these reasons, this is a priority for me, and it is a priority for the Obama Administration.

At the State Department, we are developing a coordinated and global framework for intellectual property protection and enforcement. Our Foreign Service and Civil Service officers at our embassies and consulates have a long history of advocating for U.S. business interests overseas. They work day-in and day-out with foreign governments to support and enforce intellectual property rights around the world.

In light of the concerns we hear from many companies and many sectors, we at State are stepping up our efforts to protect intellectual property; so are other agencies. But this must also be a global effort. When trademark, copyright, or patents are violated, in any country, we all lose: entrepreneurs are less inclined to take risks; the incentive to create quality products is diminished; and opportunities to create higher-wage jobs fade away.

That means nations must work together and dramatically improve the quality and breadth of their laws and regulations protecting IP and, importantly, their enforcement. While the United States is a world leader in innovation, we do not have a monopoly on it. So we should not bear all the responsibility for protecting it. The knowledge-based economy expands across all borders and employs workers of all nationalities. Developed economies seek access to foreign markets for their innovative goods. And emerging economies seek to develop their own innovative goods and services; they also have an interest in IP protection.

IP protection is necessary for the cross-cutting collaborative innovation that we are increasingly seeing. Firms in different countries are establishing "innovation networks": networks of companies, researchers, designers, programmers, and academics to design new wares and valuable services. Every day new products are being designed that have roots in different companies and different countries. Countries that fail to protect IP risk cutting themselves and their companies off from this process.

And this new trend towards "innovative networks" helps expand common ground, so that those who create and those who consume should be more united in standing up to counterfeiters. Whether you live in Shanghai or Silicon Valley, Abu Dhabi or Bombay, you have a stake in this fight.

In fact, this year’s World IP Day theme, "Innovation--Linking the World," affirms the role that intellectual property plays in fostering global progress as well as the responsibility we share in protecting it.

As many of you know, I traveled to China and Vietnam a few weeks ago and had a series of discussions with my counterparts about broadening our economic relationship. The trip also gave me an opportunity to raise a number of concerns shared by American businesses working with and in China--concerns that I take very seriously, as should we all.

These relate to China’s policy of "indigenous innovation," in addition to lax enforcement of intellectual property rights. And, more broadly, "industrial policies" of various kinds aim to benefit Chinese companies at the expense of foreign companies or limit the access of foreign companies to China’s market. These practices threaten to harm our most competitive and innovative sectors. While some progress on “indigenous innovation” has been made, much more progress needs to take place to address our deep concerns. And broader understandings and changes are also needed to eliminate restrictive or harmful practices regarding IP.

Progress on such matters is not only in the interest of our companies--it is also in the interest of China’s companies. It is in their interest for their government to respect--and protect--intellectual property rights. Their companies are fast developing new copyrights, patents, and trademarks. These firms want protection for their intellectual property too--and their access to foreign markets may be jeopardized if foreign companies do not receive fair treatment in China.

This should not be a matter of the U.S. versus China. It is a matter where both governments should see strong IP protection and fair market and procurement access as in the long-term common interest. We want China to treat American and other foreign companies doing business in China fairly and give them equal access to the Chinese market and Chinese government procurement; just as China wants its companies selling abroad to be treated fairly in the United States and other international markets.

We are sending a similar message to all of our trade and investment partners, not just China. We are stepping up our efforts on all fronts. Plenty of other countries are violators as well, including a number of industrialized countries.

Under President Obama, this Administration is supporting a host of new programs to safeguard intellectual property rights. We’re working to train judges, prosecutors, and customs officials who often work on the frontlines to prevent counterfeiting and enforce IPR.

We’ve also launched a new "Campaign Against Counterfeit Medicines" here at the State Department, under my colleague Jose Fernandez. And we are working closely on a joint strategy with the Food and Drug Administration, under the energetic leadership of Dr. Peggy Hamburg, to address this serious matter around the world. Our embassies will collaborate with drug manufacturers and retailers of other legitimate health products to highlight the public health threat posed by counterfeit drugs.

I am also working very closely with the Administration’s dynamic new Intellectual Property Enforcement Coordinator, Victoria Espinel. Ms. Espinel will soon issue a new IPR Enforcement Coordination strategy. We are giving her enthusiastic support. And I look forward to continued collaboration with her office, the Office of the Trade Representative, the Commerce Department, and the Patent and Trademark Office, in addition to other U.S. agencies, to promote and protect U.S. IPR interests overseas.

When violations or infringements do occur, we will respond. Where our intellectual property rights need enforcement, we will act. We will not hesitate to pursue legal remedies when necessary. But we prefer to work these matters out in a cooperative way and to create a mutually reinforcing global framework to share the burden of toughening laws and improving enforcement with all stakeholders.

This is important work. All of us in the Obama Administration are committed to seeing it through. This is part of our broader mission to ensure that our international economic policy and our foreign policy support the aspirations of the American people for good jobs, secure futures, and growing opportunities for ourselves and our children.

We want Americans to be able to compete vigorously and fairly in international markets. We know that our success in doing so will be essential to the future prospects of our nation’s economy.