U.S. companies may be losing between $43 billion and $61 billion in worldwide sales because foreign competitors are unfairly copying or stealing U.S. "intellectual property," a study by the International Trade Commission has concluded.
U.S. Trade Representative Clayton K. Yeutter released the study yesterday as the Reagan adminstration sought to advance its position before a new set of trade talks begins next week in Geneva. At issue are such creative products as computer designs and software, technological processes, chemical formulas, music, movies, books, trademarks and designer labels.
Yeutter told a news conference that piracy or unfair use of such property is an intolerable abuse. "I see no difference at all between stealing the patent for a product and stealing the product itself," he said. " ... Thievery is thievery." Protection will benefit foreign countries as well as the United States, he said.
Many foreign countries, however, feel that piracy -- or, as is often the issue, relatively loose protection for foreign intellectual property -- can be a legitimate means of transfering wealth and learning from the industrialized world, creating jobs and lowering the cost of development technology.
American companies that responded to an ITC questionnaire cited Taiwan most frequently as an offender and claimed losses of $753 million in 1986 due to its actions. Mexico ($533 million), South Korea ($496 million) and Brazil ($426 million) were next.
For 1986, 193 companies said losses due to inadequate protection totaled about $23.8 billion, or about 2.7 percent of total sales in which intellectual property figures. Included in that were losses of $6.2 billion in exports of goods and services, $2 billion in royalties, and $9.5 billion of sales of goods and services imported into the United States.
Officials said that if unsurveyed American companies were factored in, and their loss rates were assumed to be one quarter of those of the surveyed firms, total U.S. losses would ring up at about $43 billion. At a one-half rate, they said, it would be $61 billion, with the actual figure probably lying between these two.
However, estimates of this sort are highly speculative. Because pirated products typically sell for a fraction of the originals' price, it is difficult to estimate what sales would be if only genuine articles were available.
As the U.S. foreign trade figures have slipped deeper into deficit, protection of intellectual property has emerged as an increasingly important issue. Many export sectors in which the United States continues to do well -- technology, computers and software, movies and music, books and pharmaceuticals -- depend to a large degree on such protection.
Motion Picture Association of America President Jack Valenti, appearing with Yeutter yesterday, called piracy the "toxic waste" of the U.S. film industry. "It's a global war and we are fighting it on all fronts," he said. He said that U.S. companies suffer losses of $230 million in Japan alone due to home-video piracy.
Most countries now have laws on the books for the protection of intellectual property. But the U.S. government and companies often contend that such laws are not strict enough or are enforced loosely or not at all.
At U.S. insistence, methods of tightening protection are being discussed in the Geneva-based agency that polices world trade, the General Agreement on Tariffs and Trade (GATT).
The United States is also taking concerted action with individual countries. It feels it has made important progress with many of them, including two of the countries cited as prime offenders for 1986, South Korea and Taiwan.