Counterfeit sales and online piracy harm consumers and stifle innovation.

A recent U.S. government report found counterfeit trade fuels organized crime and hinders economic development. Additionally, sales of fraudulent auto parts, semiconductors and toys threaten consumer safety.

The U.S. tracks violations of intellectual property rights and identifies fraudulent sales in more than 100 countries. The U.S. Trade Representative’s 2021 Special 301 Report details how effective governments are at protecting patents and copyrighted material.

The People’s Republic of China (PRC) is the leading source of counterfeit and pirated goods worldwide, according to the report. PRC officials do not take steps to curb the widespread manufacture, domestic sale and export of counterfeit goods.

The report noted that a high volume of counterfeit COVID-19 testing kits, personal protective equipment and disinfectants from the PRC were sold during 2020. Counterfeit sales on the PRC’s’s e-commerce market, the world’s largest, continued as online transactions increased during the pandemic.

Intellectual property is a major trade component. It accounted for $842 billion worth of U.S. merchandise in 2014, equal to 52% of U.S. exports. The report allows businesses and copyright owners to determine whether a country protects intellectual property rights and prevents illegal distribution of licensed material.

Illustration of glowing light bulb in nest (State Dept./D. Thompson)

In Venezuela, counterfeit goods are easily available, and the report noted widespread use of unlicensed software. The country ranked last in intellectual property protections for the seventh consecutive year, according to a 2019 World Economic Forum analysis.

The report includes a watch list of countries where IP protections are considered ineffective. The U.S. works with trading partners on the watch list to improve intellectual property measures and promote transparency.

Russia implemented an anti-piracy law in 2017, but movies, books and video games are still distributed there illegally. Prominent online platforms provide access to pirated movies and television shows. Trade officials report that combating video game piracy is a major challenge in Russia.

Taiwan, the United Arab Emirates, Peru and Brazil reported progress in addressing intellectual property protection.

A recent amendment to Taiwan’s Trade Secrets Act led to a major conviction. A court there found three semiconductor company employees guilty of stealing trade secrets from a U.S. company, which in turn helped a state-owned PRC company develop semiconductor chips. Taiwanese officials worked with U.S. investigators and prosecutors on the case.

The UAE took steps to improve intellectual property protection of pharmaceutical products and limit the movement of counterfeit goods through Dubai Customs.

Officials in Peru seized pirated goods in two markets known for sales of counterfeit apparel and took action against local websites that provided unauthorized access to copyrighted music and films.

Brazil is working with the U.S. and the United Kingdom to combat online piracy by taking over commercial websites that distribute copyrighted material illegally.

Intellectual property rights incentivize our creators, manufacturers, and innovators to invent new products and technologies,” said Ambassador Katherine Tai, the U.S. trade representative.