Intellectual Property: National Enforcement Strategy Needs
Stronger Leadership and More Accountability (12-APR-07,
GAO-07-710T).
U.S. government efforts to protect and enforce intellectual
property (IP) rights domestically and overseas are crucial to
preventing billions of dollars in losses to U.S. industry and IP
rights owners and to avoiding health and safety risks resulting
from the trade in counterfeit and pirated goods. IP protection
and enforcement cut across a wide range of U.S. agencies and a
coordinating structure has evolved to address coordination
issues. First, Congress created the interagency National
Intellectual Property Rights Law Enforcement Coordination Council
(NIPLECC) in 1999. Later, in October 2004, the Bush
administration initiated the Strategy Targeting Organized Piracy
(STOP). GAO's testimony focuses on (1) the effectiveness of
NIPLECC and STOP as a coordinating structure to guide and manage
U.S. government efforts; and (2) the extent to which STOP meets
the criteria for an effective national strategy. This statement
is based on GAO's November 2006 report (GAO-07-74), which
included an assessment of STOP using criteria previously
developed by GAO. In this report, we recommended that head of
NIPLECC, called the IP Coordinator, in consultation with the
National Security Council and relevant agencies (1) clarify in
the STOP strategy how NIPLECC will carry out its oversight and
accountability roles and (2) take steps to ensure that STOP fully
addresses the characteristics of a national strategy. The IP
Coordinator concurred with our recommendations.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-710T
ACCNO: A68108
TITLE: Intellectual Property: National Enforcement Strategy
Needs Stronger Leadership and More Accountability
DATE: 04/12/2007
SUBJECT: Accountability
Intellectual property
Interagency relations
International trade regulation
Law enforcement
National policies
Performance measures
Program evaluation
Program management
Risk management
Strategic planning
Trade policies
Policies and procedures
Program implementation
Strategy Targeting Organized Piracy
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GAO-07-710T
* [1]Summary
* [2]Background
* [3]Lack of Leadership and Permanence Hampers Effectiveness and
* [4]NIPLECC and STOP Originated Under Different Authorities
* [5]IP Enforcement Coordinating Structure Lacks Clear Leadership
* [6]Improvements Needed to Achieve an Effective National IP Enfo
* [7]Current IP Enforcement Structure Does Not Meet All the Chara
* [8]GAO Recommended Actions to Improve IP Leadership and Account
* [9]Conclusions
* [10]Contacts and Acknowledgments
* [11]GAO's Mission
* [12]Obtaining Copies of GAO Reports and Testimony
* [13]Order by Mail or Phone
* [14]To Report Fraud, Waste, and Abuse in Federal Programs
* [15]Congressional Relations
* [16]Public Affairs
Testimony
Before the Committee on Banking, Housing and Urban Affairs, Subcommittee
on Security and International Trade and Finance, United States Senate
United States Government Accountability Office
GAO
For Release on Delivery Expected at 2:00 p.m. EDT
April 12, 2007
INTELLECTUAL PROPERTY
National Enforcement Strategy Needs Stronger Leadership and More
Accountability
Statement of Loren Yager, Director
International Affairs and Trade
GAO-07-710T
Mr. Chairman and Members of the Subcommittee:
Thank you for the opportunity to appear before the subcommittee to discuss
our work on U.S. efforts to protect U.S. intellectual property (IP)
rights. We appreciate the opportunity to further contribute to this
discussion within the Congress. U.S. government efforts to protect and
enforce intellectual property rights domestically and overseas are crucial
to preventing billions of dollars in losses to U.S. industry and IP rights
owners and addressing health and safety risks resulting from the trade in
counterfeit and pirated goods. IP protection and enforcement cut across a
wide range of U.S. agencies and functions, as well as those of foreign
governments, making coordination among all parties essential. Many of
these efforts are coordinated through the interagency National
Intellectual Property Law Enforcement Coordination Council (NIPLECC),
created by Congress in 1999, and the Strategy for Targeting Organized
Piracy (STOP) initiated by the White House in 2004. While NIPLECC is a
coordinating council, STOP is a strategy coordinated by the National
Security Council.
In my statement today, I will address two topics on IP enforcement: (1)
the effectiveness of NIPLECC and STOP as a coordinating structure to guide
and manage U.S. government efforts; and (2) the extent to which STOP meets
the criteria for an effective national strategy. I am aware, Mr. Chairman,
that you have co-sponsored proposed legislation to address some of the
shortcomings of the current coordinating structure which impede effective
IP enforcement and coordination.1 In my statement today I will include
some observations on how the proposed legislation addresses key weaknesses
we have identified in our past work on IP enforcement.
1In February 2007, Senators Evan Bayh and George Voinovich, through the
Congressional Committee on the Judiciary, submitted proposed legislation
in Senate Bill 522, titled the "Intellectual Property Rights Enforcement
Act". The bill aims to "safeguard the economic health of the United States
and the health and safety of United States citizens by improving the
management, coordination, and effectiveness of domestic and international
intellectual property rights enforcement...."
To address these issues, I have drawn on completed GAO studies,2
particularly a report that we completed on STOP and NIPLECC last fall. We
examined NIPLECC and STOP official documents and reviewed the legislative
history of NIPLECC. Our November 2006 study assessed the extent to which
STOP serves as a national strategy for combating trade in counterfeit and
pirated goods by using the six desirable characteristics of an effective
national strategy developed in previous GAO work.3 GAO has used this
methodology to assess and report on the administration's strategies
relating to combating terrorism, restructuring DOD's global force posture,
and rebuilding Iraq.4 National strategies with these desirable
characteristics offer policymakers and implementing agencies a management
tool that can help ensure accountability and more effective results. I
should also mention that we have a number of other studies soon to be
published that are also related to IP enforcement. These include (1) a
study that we have completed for Senator Voinovich focusing on IP
enforcement at the U.S. border, and (2) additional work on a Customs and
Border Protection (CBP) program called the "in-bond system" that allows
goods to transit the United States and enter U.S. commerce at a port other
than the port of arrival. In conducting the GAO studies, we have performed
work at multiple U.S. agency headquarters in Washington, D.C., and at U.S.
ports of entry and agency field offices. In addition, we met with
representatives from multiple industry associations and companies that are
affected by IP violations, such as manufacturing, entertainment, luxury
goods, and pharmaceutical industries. We also met with the head of
NIPLECC, the IP Coordinator, to obtain information on steps taken to
implement the recommendations presented in our November 2006 study. We
also examined the March 2007 STOP document -- the most current strategy
document. All work was conducted in accordance with generally accepted
government auditing standards.
2See GAO, Intellectual Property: Strategy Targeting Organized Piracy
(STOP) Requires Changes for Long-term Success, [17]GAO-07-74 (Washington,
D.C.: November 2006). GAO, Intellectual Property: Initial Observations on
the STOP Initiative and U.S. Border Efforts to Reduce Piracy,
[18]GAO-06-1004T (Washington, D.C.: July 26, 2006). GAO, Intellectual
Property: U.S. Efforts Have Contributed to Strengthened Laws Overseas, but
Challenges Remain, [19]GAO-04-912 (Washington, D.C.: Sept. 8, 2004).
3GAO, Combating Terrorism: Evaluation of Selected Characteristics in
National Strategies Related to Terrorism, [20]GAO-04-408T (Washington,
D.C.: Feb. 3, 2004).
4GAO, Defense Management: Comprehensive Strategy and Annual Reporting Are
Needed to Measure Progress and Costs of DOD's Global Posture
Restructuring, [21]GAO-06-852 , (Washington, D.C.: Sept. 13, 2006); and
Rebuilding Iraq: More Comprehensive National Strategy Needed to Help
Achieve U.S. Goals, [22]GAO-06-788 (Washington, D.C.: June 28, 2006).
Summary
The current coordinating structure for U.S. protection and enforcement of
intellectual property rights lacks clear leadership and permanence,
hampering the effectiveness and long-term viability of such coordination.
Created in 1999 to serve as the central coordinating structure for IP
enforcement across federal agencies, NIPLECC has struggled to define its
purpose, retains an image of inactivity within the private sector, and
continues to have leadership problems despite enhancements made by
Congress in December 2004 to strengthen its role.5 In addition, in July
2006, Senate appropriators expressed concern about the lack of information
provided by NIPLECC on its progress. In contrast, the presidential
initiative called STOP, which is led by the National Security Council, has
a positive image compared to NIPLECC, but lacks permanence since its
authority and influence could disappear after the current administration
leaves office. Many agency officials said that STOP has increased
attention to IP issues within their agencies and the private sector, as
well as abroad, and attribute that to the fact that STOP came out of the
White House, thereby lending it more authority and influence. While
NIPLECC adopted STOP as its strategy for protecting IP overseas in
February 2006, its commitment to implementing STOP as a successful
strategy remains unclear, creating challenges for accountability and
long-term viability. For instance, although NIPLECC's most recent annual
report describes many STOP activities, it does not explain how the NIPLECC
principals plan to carry out their oversight responsibilities mandated by
Congress to help ensure a successful implementation of the strategy. In
addition, the STOP strategy document has not been revised to mention
NIPLECC's oversight role.
STOP is a first step toward an integrated national strategy to protect and
enforce U.S. intellectual property rights, and it has energized agency
efforts. However, we found that STOP's potential as a national strategy is
limited because it does not fully address important characteristics of an
effective national strategy. For example, its performance measures lack
baselines and targets to assess how well the activities are being
implemented. In addition, the strategy lacks a risk management framework
and a discussion of current or future costs - important elements to
effectively balance the threats from counterfeit products with the
resources available. Although STOP identifies organizational roles and
responsibilities with respect to individual agencies' STOP activities, it
does not specify who will provide oversight and accountability among the
agencies carrying out the strategy. While individual agency documents
include some key elements of an effective national strategy, they have not
been incorporated into the STOP documents. This lack of integration
underscores the strategy's limited usefulness as a management tool for
effective oversight and accountability by Congress as well as the private
sector and consumers who STOP aims to protect.
5In December 2004, Congress augmented NIPLECC's capabilities in the
Consolidated Appropriations Act of 2005. The act called for NIPLECC to (1)
establish policies, objectives, and priorities concerning international IP
protection and enforcement; (2) promulgate a strategy for protecting
American IP overseas; and (3) coordinate and oversee implementation of the
policies, objectives, and priorities and overall strategy for protecting
American IP overseas by agencies with IP responsibilities. The act
appropriated $2 million for NIPLECC's expenses through the end of fiscal
year 2006. It also created the position of the Coordinator for
International Intellectual Property Enforcement, also known as the "IP
Coordinator," to head NIPLECC.
In our November 2006 report on this subject, we made two recommendations
to clarify NIPLECC's oversight role with regard to STOP and improve STOP's
effectiveness as a planning tool and its usefulness to Congress: First, we
recommended that the head of NIPLECC, called the IP Coordinator, in
consultation with the National Security Council and the six STOP agencies,
clarify in the STOP strategy how NIPLECC will carry out its oversight and
accountability responsibilities in implementing STOP as its strategy.
Second, we recommended that the IP Coordinator, in consultation with the
National Security Council and the six STOP agencies, take steps to ensure
that STOP fully addresses the characteristics of an effective national
strategy.
In its response to our recommendations, the IP Coordinator said his office
planned to review them and identify opportunities for improvement based on
those recommendations, where appropriate. Our discussions with the IP
Coordinator, in preparation for this testimony, indicated that NIPLECC has
taken some steps to address GAO's recommendations, such as working with
the Office of Management and Budget (OMB) to understand agencies'
priorities and resources related to IP enforcement. The proposed
legislation at the forefront of discussion today proposes changes that
address weaknesses we found in the current coordinating structure. The
proposed legislation eliminates NIPLECC and creates a new coordinating
structure called the Intellectual Property Enforcement Network, with
leadership emanating from the White House under the auspices of the Office
of Management and Budget. Although past congressional action also required
NIPLECC to develop a strategic plan, the current legislation requires the
new coordinating structure to prepare a strategic plan that addresses key
elements of an effective national strategic plan, building in mechanisms
for accountability and oversight. These changes are consistent with the
key findings of our report.
Background
Intellectual property is an important component of the U.S. economy, and
the United States is an acknowledged global leader in its creation.
However, the legal protection of intellectual property varies greatly
around the world, and several countries are havens for the production of
counterfeit and pirated goods. Technology has facilitated the manufacture
and distribution of counterfeit and pirated products, resulting in a
global illicit market that competes with genuine products and complicates
detection and actions against violations. High profits and low risk have
drawn in organized criminal networks, with possible links to terrorist
financing. The public is often not aware of the issues and consequences
surrounding IP theft. Industry groups suggest that counterfeiting and
piracy are on the rise and that a broader range of products, from auto
parts to razor blades, and from vital medicines to infant formula, are
subject to counterfeit production. Counterfeit products raise serious
public health and safety concerns, and the annual losses that companies
face from IP violations are substantial.
Given the increasing threats to America's economy, health, and safety,
U.S. government agencies have undertaken numerous efforts to protect and
enforce intellectual property rights, and a structure to coordinate these
IP enforcement efforts evolved. In 1999, Congress created the interagency
National Intellectual Property Law Enforcement Coordination Council
(NIPLECC) as a mechanism to coordinate U.S. efforts to protect and enforce
IP rights in the United States and overseas.6 In October 2004, the Bush
Administration announced the Strategy Targeting Organized Piracy (STOP) to
"smash criminal networks that traffic in fakes, stop trade in pirated and
counterfeit goods at America's borders, block bogus goods around the
world, and help small businesses secure and enforce their rights in
overseas markets." Although both NIPLECC and STOP were created to improve
the United States' IP enforcement and protection efforts, they were
established under different authorities - NIPLECC as a congressional
mandate and STOP as a presidential initiative led by the White House under
the auspices of the National Security Council. Table 1 compares NIPLECC
and STOP.
6NIPLECC was established under Section 653 of the Treasury and General
Government Appropriations Act, 2000 (Pub. L. No.106-58), 15 U.S.C. 1128.
Table 1: Comparison of Features of NIPLECC and STOP
Features NIPLECC STOP
Origin Congressional mandate, September White House
1999 initiative, October
2004
Leadership o Coordinator for o National Security
International Intellectual Council
Property Enforcement (IP
Coordinator)
o Co-Chairs from USPTO and
Justice report to Coordinator
Dedicated funding $2 million (for fiscal years 2005 None
and 2006)
$900,000 (for fiscal years 2007)
Dedicated staff As of October 2006: Seven (IP None
Coordinator, 4 staff members and
2 detailees)
As of April 2007: Five (IP
Coordinator, 4 staff members and
1 detailee)
Meetings Quarterly Monthly
Source: GAO.
STOP and NIPLECC share similar goals, including coordination of IP
protection and enforcement, and involve nearly the same agencies.
NIPLECC's membership is designated by statute and includes specific
positions by agencies, whereas agencies that participate in STOP overlap
with NIPLECC members, but do not designate any specific positions. (See
figure 1.)
Figure 1: Primary U.S. Government Agencies and Entities Supporting U.S.
Intellectual Property Rights
Note: NIPLECC is required to consult with the Register of Copyrights on
copyright law enforcement matters. Immigration and Customs Enforcement,
while not an original member, was reported as a member of NIPLECC in the
council's fifth annual report issued in September 2006.
Lack of Leadership and Permanence Hampers Effectiveness and Long-Term Viability
of IP Enforcement Coordinating Structure
The U.S. government has a coordinating structure for IP enforcement, but
the structure's effectiveness is hampered by a lack of clear leadership
and permanence, and despite some progress, it has not been developed in a
manner that makes it effective and viable for the long term. NIPLECC and
STOP form the central coordinating structure for IP enforcement across
federal agencies. However, NIPLECC continues to have problems in providing
leadership despite enhancements made by Congress, and STOP's authority and
influence, which result from its status as a presidential initiative,
could disappear after the current administration leaves office. While the
current IP enforcement coordinating structure has contributed to some
progress - particularly in increasing attention to IP enforcement
domestically and abroad through STOP - NIPLECC's commitment to
implementing STOP as a strategy remains unclear, creating a challenge for
effective accountability and the long-term viability of IP enforcement.
NIPLECC and STOP Originated Under Different Authorities
In 1999, Congress created NIPLECC to coordinate domestic and international
intellectual property law enforcement among U.S. federal and foreign
entities. The council's membership is designated by statute and includes
six federal agencies. The Commissioner of Patents and Trademarks (USPTO)
and Assistant Attorney General, Criminal Division from the Department of
Justice serve as NIPLECC's co-chairs. NIPLECC's authorizing legislation
included no specific dollar amount for funding or staff. Congress also
required NIPLECC to report its coordination efforts annually to the
President and various Congressional committees.7
Our September 2004 report noted that NIPLECC had struggled to define its
purpose, had little discernible impact, and had not undertaken any
independent activities, according to interviews with both industry
officials and officials from its member agencies, and as evidenced by
NIPLECC's own annual reports.8 From 1999 through the end of 2004, NIPLECC
produced three annual reports that did little more than provide a
compilation of individual agency activities. We also concluded in our 2004
report that if Congress wished to maintain NIPLECC and take action to
increase its effectiveness, it should consider reviewing the council's
authority, operating structure, membership, and mission.
Congress addressed NIPLECC's lack of activity and unclear mission in the
2005 Consolidated Appropriations Act in December 2004. The act called for
NIPLECC to (1) establish policies, objectives, and priorities concerning
international IP protection and enforcement; (2) promulgate a strategy for
protecting American IP overseas; and (3) coordinate and oversee
implementation of the policies, objectives, and priorities and overall
strategy for protecting American IP overseas by agencies with IP
responsibilities. It also created the position of the Coordinator for
International Intellectual Property Enforcement, also known as the "IP
Coordinator," to head NIPLECC. The IP Coordinator is appointed by the
President and may not serve in any other position in the federal
government. The co-chairs for NIPLECC are required to report to the IP
Coordinator.
7NIPLECC is required to report annually to Committees on Appropriations
and on the Judiciary of the Senate and the House of Representatives.
8 [23]GAO-04-912 .
Unlike NIPLECC, STOP from its beginning has been characterized by a high
level of active coordination and visibility. In October 2004, the
President launched STOP, an initiative led by the White House under the
auspices of the National Security Council, to target cross-border trade in
tangible goods and strengthen U.S. government and industry IP enforcement
actions. STOP members are the same agencies that house NIPLECC members,
except that STOP includes the Food and Drug Administration. According to a
high-level official who participated in the formation of STOP, the
initiative was intended to protect American innovation, competitiveness,
and economic growth. It stemmed from the recognition that U.S. companies
needed protection from increasingly complex and sophisticated criminal
counterfeiting and piracy. As part of STOP, agencies began holding
meetings, both at working levels and higher, to coordinate agency efforts
to tackle the problem.
STOP is viewed as energizing U.S. IP protection and enforcement efforts
and is generally praised by agency officials and industry representatives.
The IP Coordinator stated in congressional testimony that STOP has built
an expansive interagency process that provides the foundation for U.S.
government efforts to fight global piracy. Several agency officials
participating in STOP said that it gave them the opportunity to share
ideas and support common goals. Many agency officials with whom we spoke
said that STOP had brought increased attention to IP issues within their
agencies and the private sector, as well as abroad, and attributed that to
the fact that STOP came out of the White House, thereby lending it more
authority and influence. One agency official pointed out that IP was now
on the President's agenda at major summits such as the G8 and European
Union summits.9 In addition, most private sector representatives with whom
we spoke agreed that STOP was an effective communication mechanism between
business and U.S. agencies on IP issues, particularly through the
Coalition Against Counterfeiting and Piracy (CACP), a cross-industry group
created by a joint initiative of the Chamber of Commerce and the National
Association of Manufacturers.
9The G8 is an annual summit that involves nine countries, including
Canada, France, Germany, Italy, Japan, the United Kingdom, Russia, and the
United States. The European Commission President is also a G8 member.
IP Enforcement Coordinating Structure Lacks Clear Leadership and Permanence
The structure that has evolved to coordinate U.S. efforts to protect and
enforce IP rights, NIPLECC and STOP, lacks clear leadership and
permanence. Our November 2006 report noted that, despite the re-energized
focus on IP enforcement as a result of STOP, the ambiguities surrounding
NIPLECC's implementation of STOP as a strategy create challenges for the
long-term viability of a coordinated federal IP enforcement approach.
While NIPLECC adopted STOP as its strategy for protecting IP overseas in
February 2006, its commitment to implementing STOP as a successful
strategy remains unclear. For instance, it is not clear how NIPLECC will
provide a leadership role in implementing STOP. While NIPLECC's most
recent annual report describes many STOP activities and the IP
Coordinator's direct involvement in them, it does not explain how the
NIPLECC principals and the IP Coordinator plan to carry out their
oversight responsibilities mandated by Congress to help ensure successful
implementation of the strategy. In addition, while the current STOP
strategy document (March 2007) states that the NIPLECC annual report
provides details on interagency collaboration to achieve STOP goals, STOP
does not mention NIPLECC's oversight role or articulate a framework for
oversight and accountability among the STOP agencies carrying out the
strategy.
Although Congress enhanced NIPLECC's powers through the Consolidated
Appropriations Act of 2005, we found that NIPLECC retains an image of
inactivity within some of the private sector. For example, representatives
of almost half of the 16 private sector groups with whom we spoke
expressed the opinion that NIPLECC was inactive or a nonplayer. In
addition, representatives from 10 of these groups were unclear about
NIPLEC's role, and many said that they were unclear about the difference
between NIPLECC and STOP. In July 2006, Senate appropriators expressed
concern about the lack of information provided to Congress by NIPLECC on
its progress.
In contrast with NIPLECC, agency officials and members of the private
sector attribute STOP's effectiveness to its status as a White House
initiative and its resulting authority and influence. However, it lacks
permanence since it is a presidential initiative and may disappear after
the current administration leaves office. Furthermore, while agency
officials we interviewed generally considered STOP to be the U.S.
government's IP strategy, NIPLECC officials have sent mixed signals about
effectively implementing STOP. One official representing NIPLECC said that
the STOP strategy should have goals and objectives, including metrics to
measure progress about which the IP Coordinator should report. However, a
NIPLECC representative from another agency told us that this document was
a fact sheet that accounted for administration efforts rather than a
strategy. Similarly, a NIPLECC representative from a third agency was
skeptical about whether STOP should be assessed as NIPLECC's strategy.
Finally, the IP Coordinator stated in March 2006 congressional testimony
that STOP is NIPLECC's strategy; however, he also told us that STOP was
never meant to be an institutional method for reporting priorities and
metrics to the President or Congress, or to manage resources.
Improvements Needed to Achieve an Effective National IP Enforcement Strategy
STOP is a first step toward an integrated national strategy for IP
protection and enforcement and has energized agency efforts. However, we
found that STOP's potential as a national strategy is limited because it
does not fully address important characteristics that we believe would
improve the likelihood of its long-term effectiveness and ensure
accountability. We found that some strategy documents belonging to
individual STOP agencies supplemented some of the characteristics not
fully addressed in STOP; however, the fact that they have not been
systematically incorporated into STOP limits its usefulness as an
integrated strategy to guide policy and decision makers in allocating
resources and balancing priorities, and does not inform the private sector
and consumers that it aims to protect.
Current IP Enforcement Structure Does Not Meet All the Characteristics of an
Effective National Strategic Plan
While national strategies are not required by executive or legislative
mandate to address a single, consistent set of characteristics, GAO has
identified six desirable characteristics of an effective national
strategy. It is important that a national strategy contain these
characteristics because they enable implementers of the strategy to
effectively shape policies, programs, priorities, resource allocations,
and standards so that federal departments and other stakeholders can
achieve the desired results. National strategies provide policymakers and
implementing agencies with a planning tool that can help ensure
accountability and effectiveness.
We found that STOP partially addresses five of the six characteristics and
their key elements. Figure 2 provides the results of our analysis and
indicates the extent to which STOP addresses the desirable characteristics
of an effective national strategy.10
10For full details of GAO's analysis of characteristics of an effective
national strategy, see [24]GAO-07-74 .
Figure 2: Extent to Which STOP Addresses GAO's Desirable Characteristics
of an Effective National Strategy
STOP addresses goals and activities but lacks important elements for
assessing performance.
o Although STOP identifies five main goals,11 it does not
consistently articulate their objectives and is missing key
elements related to assessing performance such as priorities,
milestones, and a process for monitoring and reporting on
progress. For example, under its goal of pursuing criminal
enterprises, STOP clearly lists objectives such as increasing
criminal prosecutions, improving international enforcement, and
strengthening laws. Whereas STOP does not articulate clear
objectives for its goal of working closely and creatively with
U.S. industry. Also, STOP activities include implementing a new
risk model to target high-risk cargo but do not specify time
frames for its completion. Although STOP cites output-related
performance measures12--such as the USPTO STOP hotline receiving
over 950 calls during fiscal year 2005 and a 45 percent increase
in the number of copyright and trademark cases filed from fiscal
year 2004 to fiscal year 2005--these figures are presented without
any baselines or targets to facilitate the assessment of how well
the program is being carried out. In addition, STOP cites
outcome-related performance measures for only few of many
activities included in the strategy.13
STOP does not address elements relevant to resources, investments,
or risk management, limiting the ability of decision makers to
determine necessary resources, manage them, and shift them with
changing conditions.
o STOP does not identify current or future costs of implementing
the strategy, such as those related to investigating and
prosecuting IP-related crime or conducting IP training and
technical assistance, nor does it identify the sources or types of
resources required. While the strategy states that "American
businesses lose $200 to $250 billion a year to pirated and
counterfeit goods," it does not provide a detailed discussion of
the economic threat to U.S. businesses. Further it does not
discuss other risks such as potential threats to consumer health
and safety from counterfeited products or discuss how resources
will be allocated given these risks.
STOP partially addresses organizational roles, responsibilities,
and coordination but lacks a framework for oversight or
integration.
o STOP does identify lead, support, and partner roles for specific
activities. For example, it identifies the White House as leading
STOP and indicates partnering roles among agencies, such as the
joint role of the Department of Homeland Security's Immigration
and Customs Enforcement (ICE) and the Department of Justice's FBI
in running the National Intellectual Property Rights (IPR) Center.
However, STOP does not discuss a process or framework for
oversight and accountability among the agencies carrying out the
strategy. Although STOP discusses specific instances of
coordination among member agencies, it lacks a clear and detailed
discussion of how overall coordination occurs. For instance, there
is no mention of STOP meetings, objectives, or agendas.
11STOP's goals are to: (1) empower American innovators to better protect
their rights at home and abroad; (2) increase efforts to seize counterfeit
goods at our borders; (3) pursue criminal enterprises involved in piracy
and counterfeiting; (4) work closely and creatively with U.S. industry;
and (5) aggressively engage our trading partners to join our efforts.
12An "output measure" records the actual level of activity or whether the
effort was realized and can assess how well a program is being carried
out.
13An "outcome measure" assesses the actual results, effects, or impact of
an activity compared with its intended purpose.
o We found that the STOP strategy does not consistently articulate
how, as a national strategy, it relates to the strategies, goals,
and objectives of federal agencies that participate in STOP. For
example, under its goal of pursuing criminal enterprises, STOP
does not discuss how the objectives of the Department of Justice's
task force might be linked to the goals and objectives found in
other agency IP enforcement strategies such as the Department of
Homeland Security's ICE and CBP. It is important that STOP not
only reflect individual agencies' priorities and objectives but
also integrate them in a comprehensive manner, enhancing
collaboration among the agencies and providing a more complete
picture to policy makers with oversight responsibilities. While
some of these elements of a national strategy are addressed in
individual agency documents, the absence of clear linkages and the
need to consult multiple agency documents underscores the
strategy's lack of integration and limits the usefulness of STOP
as a management tool for long-term effective oversight and
accountability.
GAO Recommended Actions to Improve IP Leadership and Accountability
Among U.S. Agencies
In our November 2006 report on this subject, we made two
recommendations to clarify NIPLECC's oversight role with regard to
STOP and improve STOP's effectiveness as a planning tool and its
usefulness to Congress. We recommended that the IP Coordinator, in
consultation with the National Security Council and the six STOP
agencies, clarify in the STOP strategy how NIPLECC will carry out
its oversight and accountability responsibilities in implementing
STOP as its strategy. In addition, we recommended that the IP
Coordinator, in consultation with the National Security Council
and the six STOP agencies, take steps to ensure that STOP fully
addresses the six characteristics of a national strategy.
We provided the agencies that participate in STOP and NIPLECC with
a draft of the report for their review and comment and received
written comments from the U.S. Coordinator for International
Property Enforcement (IP Coordinator). In his comments, the IP
Coordinator concurred with our recommendations, stating that his
office planned to identify opportunities for improvement based on
those recommendations. Our discussions with the IP Coordinator, in
preparation for this testimony, indicated that the Office of the
U.S. Coordinator for International Property Enforcement has taken
some steps to address GAO's recommendations. For example, the IP
Coordinator has been working with the Office of Management and
Budget (OMB) to understand agencies' priorities and resources
related to IP enforcement. In addition, the council has been
coordinating with the Department of State and USPTO to examine the
U.S.'s training portfolio and identify areas where capacity
building and more training is needed overseas. The IP Coordinator
stated that no steps have been taken with regard to changing the
accountability framework under NIPLECC since, he believes, this is
addressed through regular reporting to Congress via annual reports
and testifying at hearings, and meetings with federal agencies
involved in IP enforcement and the private sector.
The Intellectual Property Rights Enforcement Act under discussion
today proposed by Senators Bayh and Voinovich recommends changes
that may help address weaknesses we found in the current
coordinating structure and the national IP enforcement strategy as
well as improve coordination with private sector and international
counterparts.
The legislation eliminates NIPLECC and creates a new entity called
the Intellectual Property Enforcement Network (IPEN), to
coordinate domestic and international IP enforcement efforts among
U.S. agencies. The membership of IPEN involves most of the same
agencies that are currently members for NIPLECC, and like NIPLECC,
has an Intellectual Property Enforcement Coordinate appointed by
the President. A clear difference between IPEN and NIPLECC,
however, is that the leadership emanates from the White House.
Under IPEN, the Deputy Director for Management of the Office of
Management and Budget would serve as the chairperson for the
network. While GAO does not have an opinion on whether OMB is the
appropriate agency to coordinate IP enforcement and protection, we
believe it is important to note that IPEN retains the authority
and leadership most valued under STOP-- the role of the White
House in providing leadership and authority.
The legislation addresses weaknesses we identified in the current
national strategy by requiring the development of a strategic plan
within 6 months from the date the bill is enacted, and updated
every 2 years following. The requirements of the strategic plan,
as laid out in the bill, include performance measures and risk
analysis along with other key elements for oversight and
accountability that we have identified as important to an
effective national strategic plan.
Conclusions
The challenges of IP piracy are enormous and will require the
sustained and coordinated efforts of U.S. agencies, their foreign
counterparts, and industry representatives to be successful. As we
pointed out Mr. Chairman, NIPLECC's persistent difficulties create
doubts about its ability to carry out its mandate - that of
bringing together multiple agencies to successfully implement an
integrated strategy for IP protection and enforcement that
represents the coordinated efforts of all relevant parties. STOP
has brought attention and energy to IP efforts within the U.S.
government, however, as a presidential initiative, STOP lacks
permanence beyond the current administration. This poses
challenges to its long-term effectiveness because STOP depends
upon White House support. In addition, STOP does not fully address
the desirable characteristics of an effective national strategy
that we believe would improve the likelihood of its long-term
viability and ensure accountability. This limits its usefulness as
a management tool for effective oversight and accountability by
Congress as well as the private sector and consumers who STOP aims
to protect. As we have pointed out, the Intellectual Property
Rights Enforcement Act under discussion today addresses key
shortcomings of the current IP coordinating structure that we have
identified, including establishing a clearer leadership and
framework for accountability.
Mr. Chairman, this concludes my prepared statement. I would be
pleased to respond to any questions you or other members of the
subcommittee may have at this time.
Contacts and Acknowledgments
Should you have any questions about this testimony, please contact
Loren Yager at (202) 512-4347 or yagerl@gao.gov . Other major
contributors to this testimony were Christine Broderick, Adrienne
Spahr, Nina Pfieffer, Shirley Brothwell, and Jasminee Persaud.
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Highlights of [33]GAO-07-710T , a testimony before the Committee on
Banking, Housing and Urban Affairs, Subcommittee on Security and
International Trade and Finance, United States Senate
April 12, 2007
INTELLECTUAL PROPERTY
National Enforcement Strategy Needs Stronger Leadership and More
Accountability
U.S. government efforts to protect and enforce intellectual property (IP)
rights domestically and overseas are crucial to preventing billions of
dollars in losses to U.S. industry and IP rights owners and to avoiding
health and safety risks resulting from the trade in counterfeit and
pirated goods. IP protection and enforcement cut across a wide range of
U.S. agencies and a coordinating structure has evolved to address
coordination issues. First, Congress created the interagency National
Intellectual Property Rights Law Enforcement Coordination Council
(NIPLECC) in 1999. Later, in October 2004, the Bush administration
initiated the Strategy Targeting Organized Piracy (STOP).
GAO's testimony focuses on (1) the effectiveness of NIPLECC and STOP as a
coordinating structure to guide and manage U.S. government efforts; and
(2) the extent to which STOP meets the criteria for an effective national
strategy. This statement is based on GAO's November 2006 report
(GAO-07-74), which included an assessment of STOP using criteria
previously developed by GAO. In this report, we recommended that head of
NIPLECC, called the IP Coordinator, in consultation with the National
Security Council and relevant agencies (1) clarify in the STOP strategy
how NIPLECC will carry out its oversight and accountability roles and (2)
take steps to ensure that STOP fully addresses the characteristics of a
national strategy. The IP Coordinator concurred with our recommendations.
The current coordinating structure that has evolved for protecting and
enforcing U.S. intellectual property rights lacks leadership and
permanence, presenting challenges for effective and viable coordination
for the long term. NIPLECC has struggled to define its purpose and retains
an image of inactivity among the private sector. It continues to have
leadership problems despite enhancements made by Congress in December 2004
to strengthen its role. In contrast, the presidential initiative called
STOP, which is led by the National Security Council, has a positive image
compared to NIPLECC, but lacks permanence since its authority and
influence could disappear after the current administration leaves office.
While NIPLECC adopted STOP in February 2006 as its strategy for protecting
IP overseas, its commitment to implementing STOP as a an effective
national strategy remains unclear, creating challenges for accountability
and long-term viability.
While STOP has energized agency efforts for protecting and enforcing
intellectual property, its potential as a national strategy is limited
since it does not fully address the desirable characteristics of an
effective national strategy. For example, its performance measures lack
baselines and targets to assess how well the activities are being
implemented. In addition, STOP is missing key elements such as a
discussion of risk management and designation of oversight responsibility.
For instance, the strategy lacks a discussion of current or future costs,
the types or sources of investments needed to target organized piracy, and
processes to effectively balance the threats from counterfeit products
with the resources available. While STOP partially addresses
organizational roles and responsibilities, it does not discuss a framework
for accountability among the STOP agencies, such as designating
responsibility for oversight. Agency documents clarify some of the key
elements of an effective national strategy that were not incorporated into
STOP directly; however, the need to consult multiple documents underscores
the strategy's lack of integration and limited usefulness as a management
tool for effective oversight and accountability.
References
Visible links
17. http://www.gao.gov/cgi-bin/getrpt?GAO-07-74
18. http://www.gao.gov/cgi-bin/getrpt?GAO-06-1004T
19. http://www.gao.gov/cgi-bin/getrpt?GAO-04-912
20. http://www.gao.gov/cgi-bin/getrpt?GAO-04-408T
21. http://www.gao.gov/cgi-bin/getrpt?GAO-06-852
22. http://www.gao.gov/cgi-bin/getrpt?GAO-06-788
23. http://www.gao.gov/cgi-bin/getrpt?GAO-04-912
24. http://www.gao.gov/cgi-bin/getrpt?GAO-07-74
33. http://www.gao.gov/cgi-bin/getrpt?GAO-07-710T
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