Medical Device Daily Washington Editor
WASHINGTON — Congressional hearings on intellectual property always draw a roomful, and yesterday's hearing in the Senate Judiciary Committee was no exception. This time, however, the interest was not in obtaining and keeping a patent, but in keeping others from pirating patented items.
Attendees who were looking for impending action, however, were surely disappointed, as the hearing adjourned with little more than an acknowledgement that the federal government's efforts to combat IP piracy are in need of a revamp.
The committee chairman, Sen. Patrick Leahy (D-Vermont), said, "I don't think there's a dispute that our nation is in economic and political turmoil," citing gasoline prices and the mortgage crunch as examples of the forces roiling the economy. However, he said that IP piracy "has reached unprecedented levels," costing the economy "at least $200 billion dollars and 750,000 jobs a year."
Acknowledging that "We're deep into a presidential election year," Leahy insisted that the IP piracy issue "should have no partisan element whatsoever." He pointed out that piracy – albeit trademark piracy – was the source of imported toothpaste with lead content and a host of other problems, including those engendered by counterfeit drugs.
"I've been troubled by reports from the Government Accountability Office that have shown the ineffectiveness of current enforcement strategies," Leahy said in reference to a June 17 GAO report. He also pointed out that the government in mainland China, "which allows some of the most rampant theft of intellectual property in the world," is suddenly attuned to the issue, thanks to "infringement of their Olympic copyrights."
Sen. Orrin Hatch (R-Utah), the ranking committee member, said "without meaningful enforcement" of IP rights, the economy and individuals will suffer.
"This is a global problem and the solution will require a commitment" across government branches, he said, reminding those in attendance that "any meaningful solution will need to take an integrated approach" incorporating domestic and overseas governments.
Hatch also said that he is working on a bill that would "provide our government with the tools necessary to combat this very real and growing threat to our economy." However, he declined to offer details.
Loren Yager, PhD, director of the Office of International Affairs and Trade at GAO, gave an overview of a five-year review of the federal government's IP enforcement work, saying that "the [enforcement] challenges involved ... are significant." He also said that "the need for greater leadership and permanence" in the federal government's enforcement efforts is acute.
"The current coordinating structure lacks permanence" because that effort is a combination of two executive branch offices, one of which is the National Intellectual Property Law Enforcement Coordinating Council (NIPLECC). Yager said NIPLECC, which Congress authorized in 1999, "has struggled to define its purpose and retains an image of inactivity in the private sector."
The second leg of the anti-piracy effort is administered by the National Security Council via a program titled "Strategy Targeting Organized Piracy" (STOP). The Bush administration put STOP into force in 2004, with a more focused effort to inspect incoming products shipped by firms with records of piracy, among other things.
"In contrast [with NIPLECC], STOP has a positive image but lacks permanence," Yager said, because it is an executive branch program of informal nature and because the STOP approach has not been adopted by NIPLECC.
He recommended more coordination between federal agencies, which typically do not put much effort into tracking patent piracy, but acknowledged that "while IP enforcement is not the highest priority" for many agencies, such work "has become an important focus" over the past couple of years.
Yager cited a potential for improvement in data collection and analysis by a number of federal agencies, assuming greater adoption of STOP methodology, but acknowledged that enforcement has gone up in the first few years of this decade.
Still, "some agencies lack the ability to analyze and report" piracy, he said, remarking that "a few field offices are driving most of the" activity for some of the agencies involved.
Mike Rose, VP of supply chain technology at Johnson & Johnson (J&J; New Brunswick, New Jersey), said in his prepared testimony that according to the World Health Organization (Geneva, Switzerland), as much as half the pharmaceuticals available in some nations are counterfeit, but he also said "medical devices are not immune to counterfeiting" and that J&J subsidiaries "have experienced counterfeiting."
He said, "we believe there should be one national authority" to enforce patent laws in the U.S. Rose also asserted that "we must acknowledge that lack of international enforcement" is a problem.
Still, raids on bricks-and-mortar establishments will not do the trick. "The Internet has become the marketplace of choice" for counterfeiters, he said, and "seizures of bogus medicines jumped 24%" in 2007 over the previous year.
"One area of special focus is product pedigrees," Rose said, but this effort has advanced more in connection with pharmaceuticals than for devices. He said, however, that roughly 30 states are using their own standards for pedigree verification. "We believe legislative efforts" should go toward a national standard, Rose said. "The federal government can and should take the lead" on development of standards for medical device and drug pedigrees, he added.
In response to a question by Leahy, Rose said "we believe that STOP added some momentum and some energy" to federal efforts, partly because of better outreach to the private sector and because "some fairly vigorous support from the White House."
"It got some attention internally in the U.S., but also abroad," he commented, but he pointed out that STOP is not a formal program and "might go away when this administration leaves."
Medical Device Daily asked Leahy why U.S. trade negotiators have been less than aggressive with China on trade issues. His initial response was that "it's the war in Iraq," but when pressed on the dollars held by China, he allowed that "their holdings of U.S. currency gives them great leverage" in trade negotiations.