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US Fights Product Piracy

Intellectual property theft has cost the U.S. economy some $250 billion, according to some estimates, and more than 700,000 American jobs. But product counterfeiting also hurts those who buy the fakes because they are often of poor quality and, in the case of pirated pharmaceuticals, can be dangerous. U.S. government officials say they are doing all they can to stop intellectual property theft, especially in China where much of the counterfeit goods are made. We have more from VOA's Bill Rodgers in this final of four reports focusing on the problem.

Wes Fritz, who helps oversee the production line at a small chemical company in Pennsylvania, is angry over Chinese counterfeiting. "I think we could be making a lot more money if we didn't have to compete with the Chinese, with all that counterfeiting. I think our company would be a lot bigger, we'd have a lot more production going out, we'd have a lot more employees working here."

The Guy Chemical company - which makes silicone products for export - has seen its sales suffer from the pirating. Owner Guy Berkebile is frustrated. "What is fueling the sale of these counterfeit materials is that they are of inferior quality and that they are coming out of a country that has lower production costs than what we have here in the U.S."

Demand is high because buyers in many parts of the world want to pay less for brand-name products, even if they are fake. But this can be risky when it involves counterfeit pharmaceuticals or medical devices such as meshes used in surgical procedures.

While fakes are made in many countries, most pirated products are manufactured in China -- from DVD's to golf clubs. About two-thirds of the counterfeit goods seized by U.S. authorities come from China.

Chris Israel, who coordinates the U.S. government's intellectual property enforcement, says China is not doing enough to stop the pirating. "We often fail to see a strong deterrent in the current environment in China when it comes to intellectual property, in violations there. There just is not swift and efficient deterrent and justice brought against those who engage in this type of activity. And that's where we need to see a significant amount of progress."

The Bush administration recently introduced legislation to strengthen intellectual property rights enforcement and impose stiffer prison sentences against those convicted of certain types of counterfeiting. And it filed a formal complaint against China in April before the World Trade Organization.

But at Ohio-based U.S. Chemical and Plastics, which also has seen its sales drop markedly over the past three years because of counterfeiting, national accounts manager John Franken wants Washington to do more. He says, "We have to play hardball: our government, versus the Chinese government, play hardball with them and not allow them to do it."

China has cracked down on counterfeiters, destroying pirated goods at highly publicized events. Chinese officials say the government is very firm in opposing intellectual property theft by Chinese enterprises.

While these actions are welcome, U.S. officials, such as Chris Israel, acknowledge there are no quick fixes. "This isn't a problem that is going away soon. Clearly in a lot of cases we can't act fast enough and there's no limit to the things we can and should be doing. But I can tell you what we have been focused on here at the national level, the federal level of the United States, is making sure all the assets and the tools that the federal government has are working effectively."

Yet intellectual property theft will likely continue until it begins affecting companies in countries where the fakes are made. Peter Baranay heads ABRO Industries, whose products and even corporate identity have been victimized by a Chinese counterfeiter. "The Chinese will begin to take intellectual property seriously when their own companies are being violated, and that will come relatively quickly but right now it hasn't."

But that is little comfort for Wes Fritz and other assembly line workers who fear their jobs are at risk from intellectual property theft.