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IPEC's FY16 Annual Report on Intellectual Property Enforcement

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IPEC's FY16 Annual Report on Intellectual Property Enforcement EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON , 0 . C . 20503 OFFICE OF THE U . S . INTELLECTUAL PROPERTY ENFORCEMENT COORDINATOR January 12, 201 7 The Honorable Charles Grassley Chairman Committee on the Judiciary United States Senate Washington, DC 20510 Dear Mr. Chairman: Enclosed is the third and final Annual Report that I have the pleasure of submitting to Congress as the Intellectual Property Enforcement Coordinator (IPEC) pursuant to Section 304 of the PRO IP Act of2008 (15 U.S.C. § 8114). The Annual Report focuses on the intellectual property enforcement (and related) activities of the Federal Government during Fiscal Year (FY) 2016, and in particular, represents my office's closing report on the implementation of the 2013 Joint Strategic Plan on Intellectual Property Enforcement during its third and final year. As you are aware, a primary focus of my tenure as the IPEC has been the strategic-planning process in connection with the preparation and delivery of the Nations' next 3-year Joint Strategic Plan. On December 9, 2016, I submitted to Congress the new Joint Strategic Plan on Intellectual Property Enforcement (for FY 2017-2019), entitled "Supporting Innovation, Creativity & Enterprise: Charting a Path Ahead." The new three-year strategic plan is posted for public access on the website ofthe White House, pursuant to the PRO IP Act, at: As we turn to implementing the Nation's new strategic plan, the enclosed Annual Report provides us with an opportunity to examine and reflect upon the breadth of activities that the U.S. Government has undertaken during the past fiscal year, to ensure that the United States remains a global leader in protecting innovation, creativity, and enterprise. While there is always more work to be done, as reflected in greater detail in the 2017-2019 Joint Strategic Plan, the accomplishments identified in the Annual Report should make us all proud of the dedicated efforts of the U.S. Government to protect U.S. intellectual property (IP) rights. This work is the product ofjoint efforts within the Executive and Legislative branches, as well as by way of partnerships between Federal agencies, State and local governments, private industry, trade associations, civil society, and foreign governments. Our creative and innovative communities that rely on IP protection occupy an important role in our cultural and economic lives, directly supporting over 27 million U.S. jobs and more than 50 percent of our exports. The protection of IP from unlawful misappropriation and exploitation is about supporting the rule of law and fair competition in world markets, promoting jobs, opening new markets for U.S. goods and services, and fostering innovation and investments in research and development. It is also about standing up for our values at home and abroad. Trade in counterfeit goods, for example, compromises the integrity ofdomestic and global supply chains, threatens public health and safety, and undermines a number of additional national interests. It has been an honor to serve as the IPEC, and I extend my deep appreciation for the Committee's steadfast support for curbing IP-related illicit activities. Ifyou or your staff have any questions, please do not hesitate to contact our Office of Legislative Affairs at (202) 395-4790. Daniel H. Marti Intellectual Property Enforcement Coordinator Enclosure 2 Identical Letter Sent to: The Honorable Bob GoodJatte The Honorable John Conyers, Jr. The Ilonorable Charles Grassley The Honorable Dianne Feinstein The Honorable Rodney Frelinghuysen The Honorable Nita Lewey The Honorable Thad Cochran The Honorable Patrick Leahy 3 2016 U.S. INTELLECTUAL PROPERTY ENFORCEMENT COORDINATOR ANNUAL REPORT ON INTELLECTUAL PROPERTY ENFORCEMENT JANUARY 2017 ANNUAL REPORT FOR FISCAL YEAR 2016 UNDER SECTION 304 OF THE PRO IP ACT OF 2008 (15 U.S.C. § 8114) INTRODUCTION In June 2013, the Administration issued a three-year Joint Strategic Plan, reaffirming the Administration’s continued efforts to elevate intellectual property enforcement issues across the U.S. Government and internationally. This Annual Report covers Fiscal Year (FY) 2016, and represents the third and final report on the intellectual property enforcement (and related) activities of the Federal Government under the last year of the 2013-2016 Joint Strategic Plan on Intellectual Property Enforcement. On December 9, 2016, Intellectual Property Enforcement Coordinator Danny Marti delivered to Congress the new Joint Strategic Plan on Intellectual Property Enforcement (for FY 2017-2019), titled: “Supporting Innovation, Creativity & Enterprise: Charting a Path Ahead.” The new strategic plan is posted for public access on the website of the White House, pursuant to the PRO IP Act of 2008, at: https://www.whitehouse.gov/sites/default/files/omb/IPEC/2016jointstrategicplan.pdf. As we turn to the Nation’s new three-year strategic plan, this Annual Report for FY 2016 provides an opportunity to examine and reflect upon the breadth of activities the U.S. Government has undertaken over the past fiscal year to ensure that the United States remains a global leader in protecting innovation, creativity, and enterprise. The FY 2016 Annual Report provides a detailed description of the efforts Federal departments and agencies have undertaken in support of an effective intellectual property rights environment, and is organized pursuant to the 26 action items set forth in the 2013 Joint Strategic Plan. While there is more work to be done, as reflected in greater detail in the 2017-2019 Joint Strategic Plan, the accomplishments identified in this report represent the coordinated efforts of the U.S. Government to protect U.S. intellectual property rights. This work is the product of joint efforts within the Executive Branch as well as partnerships between Federal agencies, state and local governments, private industry, trade associations, civil society, and foreign governments. The U.S. creative and innovative communities that rely on intellectual property protection occupy an important role in our cultural and economic lives: supporting 40 million U.S. jobs, more than 50 percent of our exports. (See No. 25, below.) The protection of intellectual property from unlawful misappropriation and exploitation is about supporting the rule of law 1 and fair competition in world markets, promoting jobs, opening new markets for U.S. goods and services, and fostering innovation and investments in research and development. The FY 2016 Annual Report reflects the Administration’s commitment to standing up for our values at home and abroad. Trade in counterfeit goods compromises the integrity of domestic and global supply chains, threatens public health and safety, and undermines a number of additional important national interests. Leading By Example 1. Secure the U.S. Government Supply Chain Against Counterfeits Counterfeiting is a significant challenge that can impair supply chains across the Federal Government, with particularly significant consequences for the Department of Defense (DoD) supply chain, by negatively affecting missions, the reliability of weapon systems, the safety of the warfighter, and the integrity of sensitive data and secure networks. There have been a number of meaningful interagency efforts to address the threat posed by counterfeit goods entering the U.S. Government supply chain. The risks created for the U.S. Government when acquiring products or services from sellers with inadequate integrity, security, resilience, and quality assurance controls are significant both from a national security and mission assurance perspective as well as from an economic standpoint due to the increased costs to American taxpayers. The goal is to reduce the risk of counterfeits entering the supply chain; quickly and collectively address those that do enter the supply chain; and strengthen remedies against those who provide counterfeit items to the U.S. Government. To that end, Federal buyers need better visibility into and understanding of (1) how the products, services, and solutions they buy are developed, integrated and deployed, and (2) the processes, procedures, and practices used to ensure the integrity, security, resilience, and quality of those products and services. Acquisition and Supply Chain Security Acquisition Rulemakings by the Department of Defense To address the avoidance of counterfeit electronic parts, DoD on August 2, 2016, published a final Defense Federal Acquisition Regulation Supplement (DFARS) rule 2014-D005, Detection and Avoidance of Counterfeit Electronic Parts—Further Implementation (81 FR 50635). The rule established requirements that DoD contractors and subcontractors shall acquire electronic parts from trusted suppliers (except in limited circumstances). A related DFARS Case is being developed: 2015-D020, DoD Use of Trusted Suppliers for Electronic Parts. The purpose of this rulemaking is to establish qualification requirements pursuant to which DoD may identify trusted suppliers. (The status of “open” DFARS cases is available at http://www.acq.osd.mil/dpap/dars/opencases/dfarscasenum/dfars.pdf.) 2 In addition, on August 30, 2016, DoD published a final Defense Federal Acquisition Regulation Supplement (DFARS) rule 2016-D010, Costs Related to Counterfeit Electronic Parts (81 FR 59510). The final rule implemented a statutory provision and took action on the proposed rule that DoD published on March 25, 2016 (81 FR 17055). As DoD explained in the final rule, “[t]he objective of this rule
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