Preventing IP Theft

We need to develop more robust mechanisms to prevent IP theft from hurting Australian manufacturers. By Melissa McIntosh MP

As the global Coronavirus pandemic rebalances our focus on Australian manufacturing and the jobs of the future, we must ensure the checks and balances are in place so the hardworking manufacturers in my region of Western Sydney and right across our nation, aren’t cheated out of the game by global Intellectual Property (IP) theft.

There are many factors that are going to contribute to how successful we will be in rebooting Australian manufacturing. One of the more understated of these as we lift the game on manufacturing, and advanced manufacturing in particular, is how we protect the IP of Australian businesses through good policymaking, without stunting innovation, growth and capability. In order to develop effective IP policies unique to our country’s experience post-Coronavirus we also need to have a clear view on the current state of play. Global research on IP theft is telling us there’s a problem.

Yet in Australia, we can’t see how big it is. The reason being, whether it’s through illegal acquisition and reproduction of a company’s physical product, counterfeiting a brand or via cyber theft, the size of the problem of IP infringement, and the financial and reputational impact, are not effectively measured and reported. In effect, we just don’t know.

The last report into criminal prosecutions related to IP theft released by the Australian Institute of Criminology (AIC) was in 2008, and it’s difficult to find comprehensive information across all jurisdictions on how many people are actually taking the perpetrators of IP theft to court.

There’s also inconsistent frequency and depth of reporting by Australian Border Force on product seizures and Notices of Objections at our borders. The latest readily available, publicly released figures on counterfeit goods seized was in 2014-15. 

Finally, reporting of the cost of IP theft to businesses in Australia is fragmented. The Australian Criminal Intelligence Commission links it in with other illicit commodities, while the AIC makes estimates across various industries. There is no reliable and consistent industry-led calculation of the cost and financial impact that reveals the true extent of the challenge.

With a gap in data of this size, and the potential risk for Australian businesses so great, now is time for an Australian Government-led review into the extent of IP theft in Australia, with collaboration from business, industry, research institutions and state governments. Here, the question must be asked – are we even collecting the right information for the time? Secondly, we need to reform IP infringement reporting requirements, so that we have consistent and regular data.

These two activities are essential in developing a framework for more cohesive IP policies, and to provide a stronger force field around the Australian made brand; steps we are going to need to take if we are serious in encouraging manufacturers to innovate and invest particularly in advanced manufacturing capability, where the financial and reputation stakes are high, but where we also have the potential for our greatest success.

Why is it so important we deal with this issue now? In simple terms, IP theft is when a patent, trademark, copyright or registered design is used without permission, and local manufacturers are reporting IP theft by foreign competitors is happening with increasing intensity.

One Western Sydney manufacturer not only experienced IP theft of their product, but their whole brand, when a Chinese-based company successfully passed off a counterfeit product as one of the Australian manufacturer’s products. It wasn’t until the counterfeit product was found to be faulty and the Australian manufacturer was contacted to fix the issue, that anyone was alerted to the infringement. It’s not only the cost of lost business but the cost of brand damage when IP theft takes place.

Global data supports this, showing that IP theft is significantly on the rise, and the cost to countries is in the hundreds of billions. The OECD’s Trends in Trade in Counterfeit and Pirated Goods 2019 report states that in 2016, 3.3% of world trade was in fake goods, up from 2.5% in 2013, and the global cost was USD 509 billion.

The OECD report also found the highest number of counterfeit shipments being seized were from China, which exported 47% of the fake goods traded worldwide in 2016 at a value of USD 239 billion. Of the fake goods traded globally, 35% were electrical machinery and electronics.

If international reports are showing it is happening globally, there could be little doubt it is happening here in Australia. You just have to speak with the local manufacturers who are telling us their backs are against the wall. We have now entered a world where we must not only listen to their concerns but address them seriously.

The picture of IP infringement in Australia is like a 1,000-piece puzzle. The very first move in bringing all the pieces together is getting the data right, if we are to have any chance at protecting Australian businesses and Australian jobs from foreign theft, as we enter a new era of manufacturing.

Melissa McIntosh MP is the Federal Member for Lindsay.