In anticipation of this week's US-China summit, Congressman Howard L. Berman (CA-28) sent a letter today to Mr. Gary Locke, the Secretary of the U.S. Department of Commerce, urging him and the entire Obama Administration to keep economic discussions focused on securing the Chinese Government's full cooperation in putting an end to the continued theft of American intellectual property. Committee on the Judiciary Chairman, Congressman Lamar Smith, joined Congressman Berman in signing this letter to the Administration.
"The rampant counterfeiting and piracy in China is unacceptable, and its impact on California's economy and businesses is staggering," said Congressman Berman upon sending the letter. "The Obama Administration must focus its economic discussions with China this week on preventing the theft of American intellectual property in order to preserve American innovation and spur job creation."
Included in the letter to Secretary Locke was a direct request that he and the Administration provide an update following this week's summit on the timetable and affirmative steps that President Hu agrees to take to fully implement China's obligations and finally crack down on the theft of American intellectual property.
China has long served as the as the epicenter of global piracy and counterfeiting. Intellectual property theft is often accomplished online through the instant digital delivery of an unlicensed song, film, book, game, or software program or through the physical delivery of counterfeit goods exported to consumers or illicit distributors around the world.
January 18, 2011
The Honorable Gary Locke
Secretary of Commerce
U.S. Department of Commerce
1401 Constitution Avenue, N.W.
Washington, D.C. 20230
Dear Mr. Secretary,
In connection with Chinese President Hu Jintao's visit this week, we understand you and other U.S. officials are meeting with senior Chinese officials and business leaders. While there are many important bilateral and multilateral economic and commercial concerns that need to be addressed, in our opinion there is none more important to preserving American innovation and spurring job creation than preventing the continued theft of American intellectual property.
We urge you and other U.S. officials to communicate the seriousness of purpose that we, the Congress of the United States and the American people, have in regard to these long-standing concerns.
America's competitive advantage lies in fostering an environment that rewards creativity and innovation, securing the protection of the works and inventions that result and facilitating the export of valuable goods and services designed or produced here to customers around the globe. For too long, this advantage has been systematically undermined by Chinese government policies and practices that deny access to Chinese markets and prevent U.S. companies from being able to enforce effectively their intellectual property rights.
As two examples of the former, U.S. technology and software companies have recently faced the specter of "indigenous innovation" policies being applied in a manner to preclude them from being able to compete in the sale of goods to government agencies and organizations in China, while legitimate businesses and distributors continue to face unjustified market access restrictions on the import and distribution of copyrighted works. This latter policy is in place despite the fact the U.S. in 2009 challenged successfully Chinese restrictions at the World Trade Organization (WTO). The deadline for compliance with this ruling is in March 2011.
We urge you to stress in your conversations with President Hu the importance of China meeting this deadline and complying in a manner that truly complies with the spirit as well as the letter of the WTO ruling. China's action in this regard will not only signal its willingness to comply with international rules but also provide an early indication of its intent to honor its recent intellectual property commitments made at the U.S. - China Joint Commission on Commerce and Trade (JCCT).
The scope of counterfeiting and piracy in China is staggering. Whether the theft is accomplished online through the instant digital delivery of an unlicensed song, film, book, game, or software program or through the physical delivery of bogus goods exported to innocent consumers or illicit distributors around the world, the impact on American industry is almost beyond comprehension. Its ill effects translate into countless lost American jobs and affect almost every manufacturing sector - from the manufacture of apparel to auto parts, golf clubs to guitars and pharmaceuticals to semiconductors.
While the piracy and counterfeiting activity attributable to China has often been the subject of high-level discussion with Chinese officials and the numbers are painful to recite, we cannot relent in our determination to challenge their representatives to reject the status quo. China's population of 1.3 billion is increasingly connected and technologically sophisticated. The presence of more than 350 million broadband connections and more than 750 million mobile users demonstrates that China is no longer a developing economy.
The size of the Chinese economy, which is expanding at 9% a year, is second only to that of the United States. Despite this phenomenal growth, music piracy in China stubbornly persists at a rate of 90% in physical products and an even more appalling 99% in digital form. Nearly a decade after joining the WTO, the rate of software piracy on personal computers was recently estimated to be 79%, which reflects a commercial misappropriation of unlicensed software whose value approaches $7.6 billion. The persistence of these issues when the United States is suffering from nearly double-digit unemployment and China is the second largest and fastest growing economy in the world is, in a single word, intolerable.
As mentioned previously, we acknowledge the recent assurances received at the December 2010 JCCT in relation to U.S. technology and software products. We will monitor closely the efforts of the Chinese government to honor these commitments. We welcome your public recognition that these new commitments are "only a first step" that "must be turned into concrete action with results" and look forward to working with you to ensure these new promises are fulfilled.
Finally, we note that many U.S. creators and innovators continue to face instances in which the law on the books appears adequate but law enforcement efforts have been sorely lacking. Websites such as Baidu and Sogou are reportedly responsible for the vast majority of illegal music downloads in China, but little has been done to address substantively the concerns of U.S. and foreign rights-owners. This situation will be brought under control only when our governments demonstrate sustained political will and Chinese courts and authorities begin to enforce and apply the law in an equitable and appropriate fashion.
We note and are encouraged, in so far as it goes, by the Chinese National Copyright Administration's announcement this week of new regulations to enhance respect for online intellectual property rights. We also observe, however, that high-profile public pronouncements that precede government-to-government discussions are de rigueur. In the end, no one, not us, not U.S. and foreign rights-holders, not Chinese citizens, will be persuaded by temporary campaigns that are not backed by permanent reforms in the judicial and administrative systems that govern intellectual property rights.
In sum, rampant piracy and counterfeiting have gravely injured the American economy - in terms of lost jobs and the systematic theft of American innovation. China, regrettably, has long served as the epicenter of global piracy and counterfeiting. This activity is inconsistent with China's own long-term interests in promoting innovation, the rule of law and the development of domestic markets and in violation of numerous agreements, understandings, assurances and international treaties that China has voluntarily entered into.
The future prosperity of China and the ability of the United States to engage its government on a constructive basis must be predicated on measurable and meaningful results. Soon after the conclusion of the upcoming state meetings, we look forward to coordinating with you to receive an update on the timetable and affirmative steps that President Hu has agreed to take to address our concerns and fully implement China's obligations.
Howard L. Berman