Thanks to one of the less-noticed provisions of the Trade Act passed by Congress in its final week, Washington law offices are now asking their clients to come up with a list of horribles involving overseas pirating of what attorneys call "intellectual property" -- inventions and creations that in this country are protected by the patent, trademark and copyright laws.
In fact, such protections often are absent from the laws in other countries, particularly countries that are only emerging into an industrialized economy. Taiwan, for instance, is not a member of the international copyright convention, so it is hard to do anything about printers there who copy current best sellers and offer them to tourists at a fraction of the price charged by the U.S. publisher, who pays royalties to the author.
Other countries refuse to recognize any chemical compound as a patentable product, opening the way for copycat versions of herbicides and fertilizers that can be sold throughout the Third World in competition with the U.S. chemical company that came up with the discovery in the first place. Many nations refuse to recognize that a design can be a trademark, so, for instance, other cola drinks can -- with impunity -- be sold in bottles looking very much like the famous one Earl Dean designed in 1913 for Coca-Cola.
But Washington is going to get tougher about such appropriation of U.S. ideas. One of the key components of the Trade Act is the extension for 8 1/2 years of the generalized system of preferences (GSP), under which importers can bring into the United States various categories of products made in poorer countries without paying any duties. It is up to the White House to decide what goods and which countries qualify, but Congress decreed that "poorer" means that the per capita income must be below $8,500 a year.
And the lawmakers also insisted that in deciding which countries should be eligible for the special treatment, the administration should look at how well they are protecting intellectual property.
That's the reason for the current search for examples of specific problems, particularly in countries like Taiwan, Korea, and Brazil, that make extensive use of the GSP advantage. "U.S. firms will not get the maximum benefits of the act unless they aggressively push the administration to exercise the power granted to it," the Alexandria law firm Burns, Doane, Swecker & Mathis warned in a memo to the companies it advises on trade matters.
In early 1985, the U.S. Trade Representative, the arm of the White House that handles such negotiations, will start asking for complaints from companies about poor protection of intellectual property. Priority will be given to those complaints that can show that the pirated commerce really stole sales from American firms, especially when companies can document that jobs were lost because of the lost sales. The new law sets Jan. 4, 1987, as the date when the president must report on just how well the countries taking advantage of GSP have responded to the pressure.
But that doesn't mean nothing will happen for the next two years. The whole idea behind the USTR roundup of alleged infringements -- and public hearings that may come in the spring -- is to have ammunition with which to go after the major Third World governments to get them to tighten up their intellectual property-protection policies. The assumption is that, while taking its GSP status away from a nation might not help anyone, the threat of such an action might lead to some major reforms.
The typing of GSP and intellectual property protection is just part of a bigger change that was evident in Congress this year. "There's been an interesting change in the way we conduct foreign policy," notes Burns, Doane partner David I. Wilson. "The economic issues have become much more important, and these changes in the law are part of that."
Made clear that U.S. sellers of services who are hurt by foreign trade policies can get help from Washington, as manufacturers can.
Made it a felony to import merchandise that is a fake version of a brand-name product -- something that has been a problem for makers of everything from aircraft parts to knit shirts.
Created a new form of intellectual property protection to cover computer chips, in an effort to stem Asian copies of U.S. breakthroughs.
Gave the president power to take retaliatory action against countries that allow egregious expropriation of intellectual property.
Clearly, the law is noticing the fact that it is no longer the big factories that propel the economy, and that as the service sector grows, ideas are as valuable a resource as are raw materials and manpower and energy. That may say more about the speed with which the law recognized things than it does about the importance of ideas, which were never insignificant.