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Remarks by Ambassador Miriam Sapiro at the St. Petersburg International Economic Forum

“Intellectual Property Protections in the Digital Age”

Remarks by Ambassador Miriam Sapiro
Deputy U.S. Trade Representative

St. Petersburg International Economic Forum
St. Petersburg
June 18, 2011

*As Prepared for Delivery*

"Thank you, Igor. I am so pleased to be with all of you at this year’s St. Petersburg International Economic Forum. This morning’s topic is a timely one: how the pace of technology is affecting our ability, and our means, of protecting intellectual property. I have been asked to provide a few overview remarks to get us started, and then look forward to a stimulating discussion.

"Before I begin, however, I do want to briefly touch on a topic you may have heard a lot about over the last few days: Russia’s WTO accession. We have had several productive meetings with the Government here in St. Petersburg, in which we consistently have underlined our unwavering support for Russia’s accession. This is the single highest priority in our economic relationship with Russia. However, as we get closer to the finish line, some of the toughest issues remain that we need to finish – such as those related to measures inconsistent with the WTO’s Sanitary and Phytosanitary (SPS) Agreement and the agreement on Trade Related Investment Measures (TRIMS). Let me be clear: our teams are working hard in support of Russia’s efforts to complete accession this year. Only Russia, however, can make the final decisions needed to complete the process.

"Intellectual property rights (IPR) are one important element of the WTO Rules, and joining the WTO, and adopting the laws necessary to meet its requirements, will help Russia create an environment conducive to growth and investment. Indeed, IP rights are a fundamental feature of a modern competitive economy, particularly the type of innovative economy envisioned by President Medvedev. They create the framework in which creativity and innovation can thrive, providing a critical incentive for creating the books our authors write, the songs our bands sing, the choreography Russia’s famous ballets perform, the new technologies our engineers create and the new medicines our scientists invent. As these examples demonstrate, this framework benefits not just U.S. exporters of IP-intensive goods, but Russian artists, Russian scientists, Russian programmers and Russian engineers.

"That means that IPR infringement deprives us of all of these important benefits. A failure to enforce IPR only rewards those who seek to gain from the hard work, creativity and innovation of others. IP theft is no less illegal than the theft of tangible property.

"IPR protection and enforcement in the online environment is all the more vital to promoting innovation and boosting competiveness. Such measures not only protect creative rights, but also create attractive circumstances for foreign investment, economic development, and jobs. Indeed, IPR protection is essential for countries to compete in the Internet era. If, as President Medvedev said at Davos, Russia’s “task is to turn into a more attractive place for the best minds in the world,” I can think of no better means of doing so than enforcing IP rights.

"Internet penetration in Russia today reportedly exceeds 40% of the population, or 60 million people. And in 2009 Russia’s Internet economy was estimated to be worth $19 billion, with annual growth estimates ranging from 22% to 33%. IPR protection and enforcement is critical to sustaining this growth. Without it, the Internet economy, including emerging cloud-based services, will be a lost opportunity.

"I am a strong believer that IP can and must be protected in the Digital Age. This requires a strong legal foundation; supported by dedicated government resources; and vigorous and sustained enforcement actions. Allow me to make several observations:

"First, changes to domestic legislation are necessary where piracy over the Internet has not yet been addressed successfully. Legislation should provide for secondary liability – in other words, liability for those authorizing or contributing to infringing activity – for online service providers under certain circumstances. Offering services with the object of promoting copyright infringement, for example, should be clearly prohibited in law.

"Of course, we have our own challenges in the United States with piracy over the Internet, and recognize there is more than one way to address this issue. But we have found that a strong legal foundation that targets infringement online is paramount.

"I would note that creative commons licenses and content platforms have not been able to address infringement. Some content platform proposals – for music, for instance – could require rights holders to license their music to a single entity responsible for all licensing of that content for an entire country. We would have concerns about an approach that does not truly address the problem.

"The problem of online infringement is not with licensing, where legitimate providers seek authorization from rights holders. Instead, the core concern is with unlicensed content, where infringers consciously avoid authorization from rights holders. A new licensing scheme run by a middleman is not likely to change the situation. Rather, we need in every country clear laws prohibiting the offering of services with the object of promoting copyright infringement, and dedicated government resources to ensure vigorous and sustained enforcement actions against infringing websites.

"The second pillar of IPR protection in the Digital Age is a law enforcement apparatus that can transform protections in law into enforcement in practice. Governments must equip their law enforcement authorities with sufficient resources, personnel, expertise and support to target Internet piracy effectively. Where they do not already exist, dedicated units should be created for this purpose.

"Third, with a strong legal framework and dedicated law enforcement in place, takedowns of websites providing access to infringing content is essential. Governments should initiate criminal investigations and request deterrent-level sanctions against operators of illegal Internet sites consistent with existing law. In doing so, law enforcement authorities also should consult with rights holders to target priority infringing websites. In Russia, for example, numerous pay-per-download websites as well as cyberlockers, BitTorrent sites and unauthorized music services continue to operate.

"Finally, while important, international coordination is no substitute for strong national laws and domestic enforcement. All members of the G8 – including Russia and the United States – recently acknowledged “the need to have national laws and frameworks for improved enforcement.” International agreements such as the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the World Intellectual Property Organization (WIPO) Internet Treaties, and the Anti-Counterfeiting Trade Agreement (ACTA) all can play a significant role in advancing IPR protection and enforcement. National governments also can work together, for instance, through mutual legal assistance treaties (MLATs), to go after servers of IPR infringing websites that move from one jurisdiction to the next. Nevertheless, IPR is territorial, and therefore its protection requires a robust national response.

"Skolkovo, a place our moderator knows well, provides a perfect example of where IP-related legal reform and vigorous enforcement are essential to harnessing the full potential of the Digital Age. Skolkovo has been called Russia’s “Silicon Valley,” a high-technology zone designed to attract innovative companies and research institutions in five areas: energy, information technology (IT), telecommunications, biomedicine and nuclear technologies. However if the vision of Skolkovo is to be realized, the right IPR foundation must be laid.

"Thank you."