In China, police raid a remote warehouse basement and seize more than 300 million pirated DVDs. In India, sellers in outdoor bazaars daily offer knockoffs of Gucci handbags and Rolex watches starting at about $1 apiece. Malaysia launches a crackdown on counterfeit computer software, at a time when officials estimate that almost two-thirds of that country's software is pirated, compared to a rate of about one-third worldwide. Even fake Viagra is sold in overseas bazaars.
A far less visible, but very real, practice is the reverse engineering and trademark infringement of industrial products such as pumps, a problem that not only robs manufacturers of revenue, but can create hazards when substandard equipment is unknowingly used in the field.
"Right now, the worst area for knockoff products is probably China," says Brian Carpenter, director of marketing for Fairchild Industrial Products Company, with headquarters in Winston-Salem, NC. "In India, by contrast, companies are very busy due to some political changes that are making the country a lot more business-friendly, but the economy is booming so fast that manufacturers are struggling to keep up with demand. So there's not as much of a need for knockoffs.
"China is expanding as well, but duplicating existing business products is a much more intense problem there, due to its scale and to some of the historically cultural ways of doing business there."
The result can be pump equipment that's risky for the end user in the field, according to Carpenter: "Typically, copied equipment comes without the research and development that supported the original manufacturer's product line. Those issues can range from material selection and strength, to certain intricate design aspects that are easy to overlook.
"Much of the time, customers are not aware they're buying a duplicated product. This unknowingly exposes them to warranty and product liability issues when something goes wrong. One common problem is buying a knockoff pump that's been incorporated into a larger machine that ships to the customer. That opens a whole new can of worms."
"There are enforcement mechanisms, but they're more difficult if you're a smaller company without the resources or networks," says Dennis Carder, treasurer of Weir Specialty Pumps in Salt Lake City. "The best a company can do is try to identify countries where those copies might be manufactured, and target their efforts to registering names and patents there. In the more developed industrialized countries, it can be difficult to give them enough specifics for protection but not enough that you're actually showing them how to go and knock your product off."
"At a time when everyone seems to be outsourcing in China," adds Weir's vice-president of product engineering Tom Angle, "you want to think about not producing too many different parts in a given location, but rather spreading them around."
However, a major effort to streamline the international protection of designs and patents took on new life in November when the United States, reluctant for years to join 20 other nations who are members, did an about-face on the issue. Known as the Geneva Act of the Hague Agreement Industrial Design Protection Treaty, the treaty's stated aim is to "promote the ability of U.S. design owners to protect their industrial designs by allowing them to obtain multinational design protection through a single deposit procedure . . . with a single standardized application in English at either the U.S. Patent and Trademark Office (PTO) or at the International Bureau of the World Intellectual Property Organization (WIPO)," compared to the traditional system that required separate registration in each country.
Patent attorney and professor William T. Fryer, III of the University of Baltimore School of Law says the potentially important development received little fanfare, even in the industry. Fryer, who has operated the website www.fryer.com since 1997 that serves as an information center on industrial design protection worldwide, writes that "The U.S. needs to be a member of this treaty, to function effectively in the international business community," but as recently as a year ago he predicted that "the U.S. will not be a member based on the present level of effort being put forth to obtain ratification."
The new November momentum, with President Bush transmitting the Act to the Senate with a letter urging "early and favorable consideration," resulted from many factors, Fryer says, ranging from "efforts by WIPO and the United Nations to educate people on the subject," to major support from the American Bar Association, whose intellectual property section sent the President what Fryer calls a "very pointed and specific" letter supporting the treaty.
But even such important efforts as the Geneva Act seem unlikely to halt the current problem in its more blatant forms any time soon, says Weir's Tom Angle: "It's one thing to have people copy what you've done, but when they actually reproduce your literature without your name on it - and sometimes, with your name on it - that's really crossing the line.
"But if you're doing business in a place like China you have to assume that people are going to knock off your products at some point. We need to remind ourselves that, at the end of the day, it's your company's application, knowledge, and experience that really differentiate you in the market."
Even so, Fairchild's Brian Carpenter believes we may be beginning to see long-term progress on the enforcement aspect. He lists China as a particular example:
"For years, what typically happened in China is that cases would go into sort of a black hole. Years would pass with no court date, and there seemed to be no serious interest on the part of the Chinese government and the associated judicial and legal communities in pursuing it. Once in a while, a case would come down in favor of the patent holder, who would then be left with little or no remedy. Maybe a very limited injunctive remedy, but typically no remedy in terms of damages for the infringing products sold.
"But I believe some of those attitudes are changing. Certainly in the past couple of years, cases have come down in favor of General Motors, Lego, Viagra, and others that, in the past, would have been decided in favor of a Chinese entity. So I believe the government and legal community are recognizing that they have to do a better job enforcing intellectual property rights."
Dale Short is a freelance writer in Birmingham, AL.
Pumps and Systems, February 2007