Counterfeiters

Floor Speech

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Mr. GRASSLEY. Madam President.

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Mr. GRASSLEY. Today I am here to discuss the critical need to protect American businesses and consumers from the dangers of counterfeits, particularly counterfeit goods sold online.

Counterfeits do incredible damage to our country's economic competitiveness. They harm intellectual property right holders and the reputation of online marketplaces, undermine the integrity of our supply chains, and even threaten the health and safety of consumers. So it is Congress's responsibility to use its oversight and legislative authority to identify ways to prevent these illicit goods from entering our borders.

Over the past year, I have worked with the Finance Committee Ranking Member Wyden to investigate how counterfeiters use e-commerce to sell their phony goods to consumers. Last week, we concluded our investigation and issued a report detailing our findings.

Based on the information presented to Senator Wyden and this Senator by right holders, trade associations, e-commerce platforms, and common carriers, we made five findings in this report, and we identified two legislative recommendations for Congress in this report. I believe these recommendations will enhance existing efforts within the Federal Government to prevent the sale of counterfeits online.

I will talk briefly about our findings today, and I look forward to working with my colleagues--both Republican and Democrat--to identify additional areas for congressional action.

As chairman of the Senate Finance Committee, I recognize the value of intellectual property rights and their impacts on society and the economy. Intellectual property rights allow businesses to generate new ideas and develop creative solutions to everyday problems that can make our lives healthier, safer, and more productive. I also understand businesses and innovators rely on those rights to help drive and recoup their investments.

In my own State of Iowa, intellectual property represents more than $14.4 billion in annual exports for the State, more than 94,000 jobs, and supports more than 2,000 small businesses with less than 500 employees. However, counterfeits are increasingly threatening these achievements and the hard work of the people that innovate. It has been estimated that international trade for counterfeit goods in 2016 accounted for $509 billion of world trade.

Counterfeits are found in both physical and online marketplaces, and almost every industry is affected. Scam artists target electronics, automotive parts, and even children's toys, to rip-off consumers and to make a profit. Counterfeits can also harm consumers. Many consumers do not know that counterfeits can be dangerous and that some have been found to contain lead, excessive small parts, and even unsafe chemicals.

In 2018, the Government Accountability Office--or GAO, as we know it around Washington--examined how e-commerce marketplaces are further enabling the sale of counterfeits. GAO found that counterfeiters use online marketplaces to sell fakes to consumers because they can hide their identity by using false or incomplete names. Counterfeiters also post legitimate photos or fake reviews for their products, which makes it harder for consumers to determine whether they are buying a legitimate or fake good.

The Grassley-Wyden investigation showed that the breadth and variety of goods sold online makes it nearly impossible to prevent the sale of all counterfeits. Right holders also told us that their enforcement efforts are hindered in part because the U.S. Customs and Border Protection shares very limited--and often heavily redacted--importation information with these right holders. But right holders need importation information to identify counterfeit sellers and report suspected counterfeit listings.

Counterfeits also pose a threat to e-commerce and to common carriers. Counterfeits smear the reputation of e-commerce and threaten the integrity of the common carrier supply chain network. As such, these parties are critical partners in the fight against the sale of counterfeit goods. However, Customs and Border Protection does not have the authority to share importation information with these parties when it identifies a counterfeit at our border.

During our investigation, these parties told us that this information would give them the ability to better protect our country's intellectual property and allow them to remove more counterfeit listings and block counterfeit sellers. We must look at this problem holistically and with the understanding that right holders, e-commerce platforms, and common carriers are critical partners in the fight against the sale of counterfeit goods and those counterfeit goods being sold online. By sharing more importation information, these parties can better protect the intellectual property rights of our innovators, as well as the health and safety of e-commerce consumers.

Our investigation is but a first step. I will continue to use my oversight authority to look for innovative solutions to protect intellectual property right holders and consumers from the negative effects of counterfeits.

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