10 September 2007
Expert Discusses Intellectual Property Rights
USINFO Webchat transcript, September 10
Armando Irizarry, counsel for intellectual property at the Federal Trade Commission in Washington, answered questions on intellectual property rights and competition law in a September 10 USINFO Webchat.
Following is the transcript:
(begin transcript)
U.S. DEPARTMENT OF STATE
Bureau of International Information Programs
USINFO Webchat Transcript
Federal Trade Commission and Intellectual Property Rights
Guest: Armando Irizarry
Date: September 10, 2007
Time: 9 a.m. EDT (1300 GMT)
Armando Irizarry: Hi. My name is Armando Irizarry and I am Counsel for Intellectual Property at the Federal Trade Commission in Washington, D.C. I am happy to be participating in this web chat today.
Armando Irizarry: Before I continue, I would like to make the usual caveat that the opinions I express are my own and do not necessarily represent the opinions of the Federal Trade Commission or any of its commissioners.
Question [Abraham_Lincoln]: I understand that the rule of law is one of very important principles of democracy, under which people’s freedoms and business prosperity can be ensured. And, intellectual property laws are an important part of the rule of law that will protect people’s innovations and thereby promote businesses. Unfortunately, however, in some countries, intellectual property laws are not adequately executed. Thus, I was wondering what are effective measures to ensure that the people of such countries should have proper understanding on intellectual property laws. Should civil litigations for damages be promoted? Should criminal charges and punishments be implemented? Should an independent and professional judiciary be established? I would appreciate it if you would kindly provide your advice.
Answer [Armando Irizarry]: There are several parts to your question. I think people in such countries should become aware of the benefits that respecting intellectual property of others brings to their countries. These benefits include promoting creativity and innovation in the people to find solutions to their problems and to offer better products and services.
Awareness may be achieved by public campaigns and also through the educational process, from primary schools through universities. A young child understands very easily when his or her idea or work of art is being copied.
In addition to awareness, it is important to be able to find adequate redress for infringement of one’s IP rights. That includes civil law suits were injunctions against infringement and damages may be awarded. In many instances, civil enforcement should be enough. However, when the infringement is purposeful, with knowledge of the infringement, and for financial gain, it is sometimes necessary to apply criminal sanctions. That is the case with counterfeiting and piracy, where in many instances those who are behind the massive copying of products illegally are criminal organizations also involved in other types of crimes.
Moderator: Participants in today's webchat may be interested in the U.S. State Department's online publication "Focus on Intellectual Property Rights" available free in English and Spanish.
Q [Kuba]: Dear Sir, in recent weeks the number of defective Chinese products in US is increasing. Given the continued problems, how does US intend to protect its consumers against fraudulent products. I think this is part of a larger issue with China: IPR is not respected and [the results] can be harmful.
A [Armando Irizarry]: The US is in constant talks with China at various levels to address the issues of IP violations. While some of the problems discovered recently, like lead paint in toys, are not IP violations, they are nonetheless very serious. Regarding IP, China has made some progress in implementing IP laws and applying them in their courts. Another encouraging sign is that Chinese businesspeople themselves are more and more recognizing the value and importance of IP. This awareness should contribute to improving the IP counterfeiting and piracy situation in China. Nonetheless, counterfeiting and piracy of IP is still a serious problem there.
Q [Chat Participant]: I am interested in the concept of protecting folklore and other traditional expressions through the use of IPR laws. Does your office work on this? If yes, please explain this. As I understand, in the United States, native groups may register their traditions to be protected under law? Example_music; dance.
A [Armando Irizarry]: My office does not directly work with this. In many instances, existing IP laws can provide adequate protection to folklore and traditional expressions. My office has provided assistance in the protection of such expressions by providing consumer awareness. That has been the case with Alaska native art. Where we have provided brochures to make consumers aware of how to distinguish the real native art from fakes.
Q [Kuba]: One additional question, with regard to entertainment. CD and Films are easy to copy, what does FTC IPR do to control this? In former USSR's republics CDs are available of most US films BEFORE they are available in US? How to stop this?
A [Armando Irizarry]: The FTC focuses on consumer harm. Other agencies, especially the U.S. Department of Justice, actively prosecute criminals involve in CD, film, software, and other forms of piracy. The FTC joins this effort by lending its resources. I have participated in several workshops on IP crimes abroad.
Q [Marek]: hello. Today's internet is full of youtube, my space, and other user-driven sites that enable people to upload content freely. What challenges or concerns do you see with respect to property right protection especially for video and audio content? NAPSTER was a case in which the site was forced to change, but technology moves very quick and a new site can emerge quickly.
A [Armando Irizarry]: You are right that technology moves very quickly. In the case of Napster, the U.S. Supreme Court found that file sharing system was found to violate the copyrights laws. After that, music distribution companies and others, including Napster, have used technology legally to distribute music much cheaper to the consumers. This is an example of how here in the U.S. we can use our court system to help define the respective rights and liabilities of the parties affected and involved in the new technologies. In the case of youtube (or a similar service), right now there is a billion dollar lawsuit pending. We'll see how that progresses in the court. It is important to remember that in deciding these cases, we seek to balance the concept of "fair use" with the legitimate protection of the copyrights.
Moderator: Dear participants, We see your questions coming in. Thank you. There is no need to send in your question more than once.
Q [gtw]: The Unocal matter involved misbehavior (hiding ownership of IP) during a regulatory proceeding in contrast to the cases of Dell and Rambus concerning misbehavior during the setting of private sector standards. There are very many "patent policies" by standards developers to address the latter. What are the considerations that regulators should take concerning patents that may be essential to meet a regulation? What are considerations in advising regulators concerning "patent policies" that might be (or have been) included in a regulatory proceeding? Are there any such "patent policies" in the current regulatory structure for the US?
A [Armando Irizarry]: In Unocal, Dell, and Rambus, the respondents all acquired power in the marketplace through some type of deceptive conduct involving patents, and there was ensuing consumer harm arising from that conduct. For example, in Unocal, royalties of around 5 cents/gallon of gasoline would most likely have passed directly to consumers.
The FTC does not seek to dictate to standard setting organizations the disclosure policies regarding IP. We have expressed opinions on some matters, for example, that ex-ante discussions would be evaluated under the rule of reason. The U.S. Department of Justice, Antitrust Division, has also provided guidance through business review letters. One recent one was to the "VITA" standard setting organization.
Q [Marek]: Can you comment on the status of the case of "allofmp3.com" the Russian mp3 site?
A [Armando Irizarry]: I'm not familiar with this case.
Moderator: Welcome to those of you just joining us. Our guest speaker continues to review your incoming questions.
Q [Dugie]: Good morning. I'd be interested in your thoughts on how effective efforts by the recording industry, in the US and abroad, have been in fighting piracy on- and offline.
A [Armando Irizarry]: The efforts, both of the industry and of the U.S., have had some success, but the problem is very big and serious, and more has to be done. In the U.S., both through cases such as Napster, private lawsuits, and criminal prosecution, we have put out of business (and sometimes into prison) many companies and people involved in piracy. We have passed laws that prohibit conduct, for example, recording movies in the movie theater, and have created awareness about the problem of piracy. The U.S. Department of Justice has piracy as a top priority and is aggressively prosecuting cases.
We also see some progress abroad. Governments are becoming more aware that this is a problem, and private international groups representing the affected industries are assisting in creating awareness and education and other support.
One problem with piracy is that it can move focus very easily, from shop to shop in one city, to moving from country to country. Thus, we need to work very hard to keep on their tracks.
Q [Dugie]: What prompted you to hold this webchat now? Is there a particular issue the FTC is focusing on with regard to intellectual property and trade law? Is there any regulatory action in the pipeline in this area?
A [Armando Irizarry]: The U.S. Department of State invited me to hold this chat. The interest of the FTC in IP stems from the importance IP has to trade and to consumer welfare. For a long time, the FTC has been investigating potentially anticompetitive conduct involving IP law. One example of that is the standard-setting cases, and the cases involving pharmaceutical companies. As part of its mission, the FTC also holds workshops and prepares reports that assist in setting national policy. That was the case with the IP workshop held in 2002, and the ensuing IP reports of 2003 and 2007. These reports have been influential in the patent reform policy debate that is currently going on in the U.S.
Q [Carlos Tellez]: Good Morning, Can you comment something about the biological diversity?
A [Armando Irizarry]: Biological diversity, in my view, is a matter that may be protected for the most part through general principles of IP law, especially patent law. The concept of biodiversity is broad, but the general principle that something that is in public use or exists in nature cannot become the property of one party should apply to that concept as well.
Moderator: The U.S. Department of State's Bureau of International Information programs holds frequent webchats on a variety of issues. A list of upcoming chats can be found at: http://usinfo.state.gov/usinfo/USINFO/Products/Webchats/upcoming.html.
Q [Abraham_Lincoln]: Thank you for your answer. Let me ask yet another question. I think one of major reasons for some developing countries’ reluctance in intellectual property laws is that they believe the laws are disadvantageous for them because they have to pay expensive royalties to foreign businesses that have patents, copy rights, and so on. Therefore, compromise might work if foreign businesses would try to set up joint ventures with local indigenous businesses of those countries in such areas as licensed production, distribution, research & development, and so on. In this case, local businesses would share the benefits and, accordingly, would cooperate to solicit their national governments and judiciaries to properly implement intellectual property laws for their own business interests? I would appreciate it if you would kindly provide your advice.
A [Armando Irizarry]: I agree that if local companies are involved in business involving IP, there would be more awareness and recognition of IP rights. Many times that happens when the company having the IP starts making business in the country. If things go well for the company because there is IP protection, the company expands and gets more engaged in the local business community, and others locally figure out how to do business with them or to compete with them. The whole process generated economic activity, jobs, etc.
But, if the moment a company enters a market with an IP-protected product, it faces unfair competition from pirated and counterfeit goods, then it cannot compete adequately and leaves the market, or just makes minimum investment in the country. That is why the IP protection has to be in place, both to promote innovation locally, as well as investment to allow companies to make business. If the companies that make IP-protected products are not protected, they don't sell their products, and the consumers end up being hurt because in many instances the products available to them are inferior.
Q [Dugie]: You've raised an interesting question. The House just passed the Patent Reform Act, but there's a lot of opposition to it, including from the White House. Is there anything in the current version that you disagree with? What impact, if any, would the bill in its current form have on US trade and consumer welfare?
A [Armando Irizarry]: I hope that if some patent reform bill is enacted, it leads to better quality patents. Procedurally, I think there is consensus that there should be some kind of post-grant opposition review. These measures should help address some of the concerns about excessive patent litigation that some groups raise. Such measures should make our marketplaces more competitive.
Armando Irizarry: That is all the time I have. Thank you very much for your insightful questions. IP has been instrumental in the economic development of the United States since its founding more than 200 years ago. We hope others see the value of IP and how it can foster competition, innovation, and economic development and growth in their respective countries.
Moderator: We wish to thank Armando Irizarry for joining us today. The webchat is now closed. Please visit our USINFO Webchat Station homepage for more information on upcoming events and a transcript of today’s discussion (posted within one business day).
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(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)
