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Hearing of Subcommittee on Courts, the Internet, & Intellectual Property of the House Judiciary Committee - International Piracy:Intellectual Property


Location: Washington, DC

Hearing of Subcommittee on Courts, the Internet, & Intellectual Property of the House Judiciary Committee - International Piracy:Intellectual Property


REP. ZOE LOFGREN (D-CA): Thank you, Mr. Chairman. I do appreciate this hearing. And I think that we perhaps have the potential of accomplishing something, and I give you credit for that.

Often times those of us who follow these issues tend to focus on the -- actually the relatively small area where there is disagreement where in the DMCA we're arguing about the technology mandate, and freedom, and first amendment issue instead of focusing on the issue where there is no disagreement where you have vast piracy, and we should have an effective enforcement regime.

And so, I was actually wanting to follow up, Dr. Yager, on your report on the 1 percent penalty collection, because, you know, we're not doing a very good job actually of inspecting. That's something that most people don't realize.

And the gentleman from North Carolina is correct. I mean, it not only has IP issues, there are national security issues involved with that. But even for this small amount we inspect to assess the penalties and then not collect them, I mean, is really counterproductive.

What recommendations do you have? I mean, this is not a new thing. I mean, your prior reports identified a similar issue.

MR. YAGER: Well, I think one of the things that we noticed, and this also gets back to Mr. Watt's question that the Department of Homeland Security, its primary mission, obviously, is protecting the homeland and trying to ensure that no weapons of mass destruction get through the U.S. ports.

But one of the things that we have observed is that they have some very important what are now called legacy functions, and that is collecting trade revenue. For example, where there are tariffs for countervailing duties. It's protecting against drugs entering the United States, protecting against intellectual property that comes into United States.

In the series of reports that we've done, whether it's on IP, or whether it's in customs revenue, or another one called an in-bond system, we're finding that DHS has not found a good balance between their new function and their existing legacy functions.

Some of those functions are not getting the kind of attention that is necessary.

It not only creates weaknesses and problems in the IP area, but also in fact it also has a relationship to even performing the security function, because we found that one program allows goods to come into the United States and not officially enter until they get to a domestic port somewhere in the interior. We found that that program actually makes it more difficult for CBP to screen even for weapons of mass destruction.

So, I think, Mr. Watt's point -- your question are on target in that DHS needs to find the ability to not just perform their primary function but to also spend time and make sure they are performing these legacy functions because these legacy functions are quite important.

REP. LOFGREN: Well, I wouldn't call the -- I wouldn't refer them as legacy functions, because I actually voted against the creation of the Department of Homeland Security although it looks better in that respect. But the department was tasked with not just a security measure but taking over the entire function of the customs bureau and the like.

Now, wouldn't it be true that with this level of performance by the Department of Homeland Security our ability even to adequately impose countervailing tariffs would be in doubt.

MR. YAGER: We're actually currently performing work on the issue of their ability to collect countervailing duties. One of the problems that we have is that, the duties are finally assessed, sometimes years after the goods have entered. In some cases the deposits that have been made are not sufficient and therefore you can't collect the full amount of the duty.

So there certainly is a -- there is a number of issues at Customs and Border Protection where they can be doing a better job enforcing U.S. trade laws. Again, finding that balance between their primary mission and these other missions is something that we've commented on in a number of reports. And we think they can do better on these issues.

REP. LOFGREN: Have you done a look at the impact that this failure has had on the value of patents in the United States?

MR. YAGER: We haven't looked at that specifically. One thing I think where we do have industry specific information, we look at the kinds of seizures that they have made over the past five years or so. And I think there has been a lot in the area of garment, and footwear, and clothing. I mean, the dominant category are those kinds of products.

REP. LOFGREN: So it's trademark infringements?

MR. YAGER: Yes, in many cases though where you would expect to see a much higher level of seizures, for example, with pharmaceutical products and things of that nature where they are really health a safety issue, the percent of overall seizures in those areas is quite low, about 1 or 2 percent.

So I think there certainly are opportunities to take a hard look as we've recommended for CBP. They made that a priority area. But ultimately we haven't seen the results of demonstrating or indicating that that priority actually affects what people do at the border.

REP. LOFGREN: Mr. Chairman I think that this is -- I hope that we can follow up on this aspect. I serve on the homeland security committee and unfortunately have the opportunity on a regular basis to find dysfunction in virtually every element of the department.

But this is one that, you know, actually is within our jurisdiction here, and maybe we could -- you know, the customs inspectors, I think have, in the whole customs function, has really been treated shabbily in the whole department. And I think the morale among the employees is low as a consequence. And it's perhaps something that we could pursue further. And I think it's an area where we'd broad agreement here on the committee if we could get some changes.

MR. YAGER: If I could just make one quick answer. We certainly found a lot of people in customs -- when we visited ports, we visited ports all over the United States. There is many people who are very dedicated to this mission. It's a very tough mission because the movement on ports is relentless, the amount of goods coming in, train, truck, ship, they have a very hard job. They do need support. And some of them don't feel like they are getting that support.

REP. LOFGREN: Well, I'm glad you mentioned that, because I certainly would not want my criticisms to be directed at the people who are trying -- under trying circumstances. But the problem has been in the department, a lack of leadership, a lack of organization and structure that dedicated -- actually successfully implement. And this is still another example of that.

I -- my time is up, I know Mr. Chairman. I thank you for this hearing and this opportunity.


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