Government Responses

January 2020
The President’s April 3, 2019, Memorandum on Combating Trafficking in Counterfeit and Pirated Goods calls prompt attention to illicit trade that erodes U.S. economic competitiveness and catalyzes compounding threats to national security and public safety.

Counterfeiting is no longer confined to street-corners and flea markets. The problem has intensified to staggering levels, as shown by a recent Organisation for Economic Cooperation and Development (OECD) report, which details a 154 percent increase in counterfeits traded internationally — from $200 billion in 2005 to $509 billion in 2016. Similar information collected by the U.S. Department of Homeland Security (DHS) between 2000 and 2018 shows that seizures of infringing goods at U.S. borders have increased 10-fold, from 3,244 seizures per year to 33,810.

Relevant to the President’s inquiry into the linkages between e-commerce and counterfeiting, OECD reports that “E-commerce platforms represent ideal storefronts for counterfeits and provide powerful platform[s] for counterfeiters and pirates to engage large numbers of potential consumers.” Similarly, the U.S. Government Accountability Office (GAO) found that e-commerce has contributed to a shift in the sale of counterfeit goods in the United States, with consumers increasingly purchasing goods online and counterfeiters producing a wider variety of goods that may be sold on websites alongside authentic products.


April 2019
Commercial-scale copyright piracy and trademark counterfeiting cause significant financial losses for U.S. right holders and legitimate businesses, undermine critical U.S. comparative advantages in innovation and creativity to the detriment of American workers, and pose significant risks to consumer health and safety. The Notorious Markets List (List) highlights prominent and illustrative examples of online and physical marketplaces that reportedly engage in and facilitate substantial piracy and counterfeiting. A goal of the List is to motivate appropriate action by the private sector and governments to reduce piracy and counterfeiting.

The Office of the United States Trade Representative (USTR) highlights the following marketplaces because they exemplify global counterfeiting and piracy concerns and because the scale of infringing activity in these marketplaces can cause significant harm to U.S. intellectual property (IP) owners, consumers, legitimate online platforms, and the economy. Some of the identified markets reportedly host a combination of legitimate and unauthorized activities. Others openly or reportedly exist solely to engage in or facilitate unauthorized activity.


April 2019
DOD plans to spend about $1.66 trillion to develop its current portfolio of major weapon systems. Potential adversaries have developed advanced cyber-espionage and cyber-attack capabilities that target DOD systems. Cybersecurity—the process of protecting information and information systems—can reduce the likelihood that attackers are able to access our systems and limit the damage if they do. GAO was asked to review the state of DOD weapon systems cybersecurity. This report addresses (1) factors that contribute to the current state of DOD weapon systems’ cybersecurity, (2) vulnerabilities in weapons that are under development, and (3) steps DOD is taking to develop more cyber resilient weapon systems. To do this work, GAO analyzed weapon systems cybersecurity test reports, policies, and guidance. GAO interviewed officials from key defense organizations with weapon systems cybersecurity responsibilities as well as program officials from a nongeneralizable sample of nine major defense acquisition program offices.


April 2019
Infringement of IPR through the illegal importation and distribution of counterfeit goods harms the U.S. economy and can threaten the health and safety of U.S. consumers. CBP leads IPR enforcement at U.S. ports of entry by detecting and seizing counterfeit goods that enter the United States. CBP works with ICE, which investigates IPR violations and builds cases for prosecution. GAO was asked to review CBP’s and ICE’s IPR enforcement at U.S. borders. In this report, GAO examines (1) what is known about counterfeit goods entering the United States and the challenges they present, (2) efforts CBP and ICE have undertaken to enhance IPR enforcement and the extent to which they have assessed the results, and (3) the extent of CBP’s and ICE’s collaboration on IPR enforcement and ways they coordinate with the private sector. GAO reviewed agency data and documents, interviewed agency officials, and conducted field work at port locations selected on the basis of factors such as the volume of IPR seizures and variety of modes of transportation at each location. GAO also conducted undercover purchases of commonly counterfeited consumer goods on popular consumer websites, using investigative tools and techniques.


April 2019
DOD has an extensive network of suppliers that provide millions of parts needed to sustain its weapon systems. Some parts are provided by a single source of supply (e.g., one manufacturing facility), and if that single source were no longer able to provide the part, DOD could face challenges in maintaining systems. Senate Report 114-49 directed DOD to report on risks associated with single sources of supply. DOD completed its report in October 2016. House Report 114-102, accompanying a bill for the National Defense Authorization Act for Fiscal Year 2016, included a provision that GAO review single sources of supply for major defense acquisition programs. This report evaluates the extent to which (1) DOD's 2016 report addressed the direction in the Senate report and (2) DOD’s weapon systems program offices have information for identifying and managing single source of supply risks. GAO reviewed DOD policy and procedures, analyzed DOD’s report, and interviewed officials from a non-generalizable selection sample of nine program offices.


April 2019
The "Counterfeit Materiel Process Guidebook" is a follow-on effort to underscore the critical importance of counterfeit materiel prevention. The purpose of the guidebook is to equip DON activities with a practical tool for implementing a risk-based counterfeit materiel prevention program and provide implementing guidance to address the requirements delineated in the DON policy. Through a risk-based approach, DON activities will be able to apply engineering and sustainment principles for selection, assessment, and procurement of materiel; and mitigate the risk of counterfeit materiel plaguing our supply chain. The continual practical application of these principles minimize risks while ensure that additional resources are not expended for items or applications that are of lower risk. The guidebook demonstrates our continuous focus on counterfeit materiel prevention and serves as a practical hands-on tool for all functional communities to combat the risks and impacts of counterfeit materiel on our weapon systems.


April 2019
The DOD supply chain is vulnerable to the risk of counterfeit parts, which have the potential to delay missions and ultimately endanger service members. To effectively identify and mitigate this risk, DOD began requiring its agencies in 2013 and its contractors in 2014, to report data on suspect counterfeit parts. A Senate report included a provision for GAO to review DOD’s efforts to secure its supply chain from counterfeit parts. This report examines, among other things, (1) the use of GIDEP to report counterfeits, (2) GIDEP’s effectiveness as an early warning system, and (3)DOD’s assessment of defense contractors’ systems for detecting and avoiding counterfeits. GAO analyzed data from GIDEP for fiscal years 2011 through 2015; reviewed DOD policies, procedures, and documents; and met with agency officials and seven selected contractors based on dollar value from contracts that included a new counterfeit clause.


April 2019
On September 18, 2015, US Customs and Border Protection published a final rule regarding the disclosure of information about goods suspected to bear counterfeit trademarks or trade names. This rule finalizes an interim rule issued April 24, 2012 and is an amendment to the Code of Federal Regulations(19 CFR parts 133 and 151). In order to provide businesses the opportunity to make adjustments to their practices, the CBP has set the effective date for the final rule at 30 days from the date of publication in the Federal Register.


April 2019
In July 2011 the UK Ministry of Defence formed a Counterfeit Awareness Working Group (CAWG) to assess whether or not counterfeit components had been incorporated in aircraft or military equipment manufactured in the United Kingdom.

In July 2014 the UK MOD released Defence Standard 05-135 – Avoidance of Counterfeit Materiel Issue 1. This Defence Standard defines the arrangements that a supplier is required to establish to demonstrate that they are actively planning and managing the risk of counterfeit materiel in their supply chain to prevent delivery of such materiel to the MOD.

In July 2015 the Working Group produced the Counterfeit Avoidance Maturity Model. This support document is intended for auditors assessing compliance with the requirements of DEF-STAN-05-135.


April 2019
On July 13, 2015 (80 FR 40087) the U.S. Nuclear Regulatory Commission (NRC) released Regulatory Issue Summary (RIS) 2015-08, “Oversight of Counterfeit, Fraudulent, and Suspect Items in the Nuclear Industry.” This RIS is intended to heighten awareness of existing NRC regulations and how they apply to the nuclear industry stakeholders’ oversight of counterfeit, fraudulent, and suspect items (CFSI). This RIS is addressed to all NRC’s licensees and certificate holders, Agreement State radiation control program directors, and state liaison officers, as well as addressees’ contractors and vendors.


April 2019
On July 6, 2015, DCMA issued Instruction 1205 that provides the framework the government will use to assess compliance with DFARS 252.246-7007 (May 2014), which requires certain contractors to design and deploy systems to avoid and detect counterfeit electronic parts. The instruction assigns roles and responsibilities for DCMA functions, establishes a risk-based approach that will drive the types of oversight and surveillance contractors can generally expect, and details the reporting that may occur if counterfeit materials or suspected counterfeit materials are identified.


April 2019
Continuity of operations at DOD installations is vital to supporting the department's missions, and the disruption of utility services—such as electricity and potable water, among others—can threaten this support. House Report 113-446 included a provision that GAO review DOD's and the military services' actions to ensure mission capability in the event of disruptions to utility services. This report addresses (1) whether threats and hazards have caused utility disruptions on DOD installations and, if so, what impacts they have had; (2) the extent to which DOD's collection and reporting on utility disruptions is comprehensive and accurate; and (3) the extent to which DOD has taken actions and developed and implemented guidance to mitigate risks to operations at its installations in the event of utility disruption. For this review, GAO evaluated DOD guidance and policies, interviewed appropriate officials, and visited or contacted 20 installations within and outside the continental United States, selected based on criteria to include those experiencing multiple disruptions, disruptions of more than one type of utility, and each military service.


April 2019
The Secretary of the Navy issues SECNAV Instruction 4855.20 to establish Department of the Navy (DON) policy to prevent the introduction of counterfeit materiel into DON systems. It applies to all phases of life cycle management, from identifying an operational requirement, introducing an item into the supply chain, system operations and maintenance, through phase out and retirement. This instruction applies to all DON organizations. It applies to all phases of life cycle management, from identifying an operational requirement, introducing an item into the supply chain, system operations and maintenance, through phase out and retirement.


April 2019
The 2015 Situation Report on Counterfeiting in the European Union is a joint project between Europol and the Office for Harmonization in the Internal Market.

The aim of this report is to inform the public, industry and other stakeholders, as well as policy makers and practitioners at EU and national level, about the current situation of criminal networks that are active in the production and distribution of counterfeited goods in the territory of the EU. This document will provide information on routes, entry points, criminal modus operandi and current activities of law enforcement and the private sector. The report will also show links between counterfeiting and other crime areas, using various case studies provided by EU Member States and private stakeholders.


April 2019
Why GAO Did This Study

Federal facilities contain building and access control systems—computers that monitor and control building operations such as elevators, electrical power, and heating, ventilation, and air conditioning—that are increasingly being connected to other information systems and the Internet. The increased connectivity heightens their vulnerability to cyber attacks, which could compromise security measures, hamper agencies’ ability to carry out their missions, or cause physical harm to the facilities or their occupants.

GAO’s objective was to examine the extent to which DHS and other stakeholders are prepared to address cyber risk to building and access control systems in federal facilities. GAO reviewed DHS’s and other stakeholders’ authorities to protect federal facilities from cyber attacks; visited selected FPS-protected facilities to determine what stakeholders were doing to address cyber risks to these systems; and interviewed experts about the cyber vulnerability of building and access control systems and related issues. GAO also reviewed GSA’s security assessment process and a sample of reports.


April 2019
The Special 301 Report is the result of an annual review of the state of intellectual property rights (IPR) protection and enforcement in U.S. trading partners around world, which the Office of the United States Trade Representative (USTR) conducts pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (19 U.S.C. § 2242).

This Report reflects the Administration’s continued resolve to encourage and maintain adequate and effective IPR protection and enforcement worldwide. It identifies a wide range of concerns, including: (a) the deterioration in IPR protection, enforcement, and market access for persons relying on IPR in a number of trading partners; (b) reported inadequacies in trade secret protection in China, India, and elsewhere, as well as an increasing incidence of trade secret misappropriation; (c) troubling “indigenous innovation” policies that may unfairly disadvantage U.S. rights holders in China; (d) the continuing challenges of copyright piracy over the Internet in countries such as Brazil, China, India, and Russia; (e) market access barriers, including nontransparent, discriminatory or otherwise trade-restrictive measures, that appear to impede access to healthcare; and (f) other ongoing, systemic IPR enforcement issues in many trading partners around the world.


April 2019
Trademark counterfeiting and copyright piracy on a commercial scale cause significant financial losses for rights holders and legitimate businesses, undermine critical U.S. comparative advantages in innovation and creativity to the detriment of American workers, and can pose significant risks to consumer health and safety. The Notorious Markets List ("List") identifies select online and physical marketplaces that reportedly engage in and facilitate substantial piracy and counterfeiting.

The Office of the United States Trade Representative ("USTR") has developed this List under the auspices of the annual Special 301 process, taking into account public comments solicited by USTR through the Federal Register and the input of other Federal agencies. The List identifies marketplaces that have been the subject of enforcement actions or that may merit further investigation for possible intellectual property rights ("IPR") infringements. These markets have been selected for inclusion both because they exemplify concerns about trademark counterfeiting and copyright piracy on a global basis and because the scale and popularity of these marketplaces can cause economic harm to U.S. and other IPR holders. They may also pose health and safety risks to consumers as well as provide inadequate safeguards for consumer privacy and security.


April 2019
The Department of Defense and the General Services Administration have prepared this report to the President in accordance with Executive Order 13636. The report provides a path forward to aligning Federal cybersecurity risk management and acquisition processes. The report provides strategic guidelines for addressing relevant issues, suggesting how challenges might be resolved, and identifying important considerations for the implementation of the recommendations. The ultimate goal of the recommendations is strengthening the cyber resilience of the Federal government by improving management of the people, processes, and technology affected by the Federal Acquisition System.


April 2019
Air Force Pamphlet 63-113 provides Program Managers (PM) with recommended protection planning activities for the integrated management of systems security risks. Risks to Air Force systems’ advanced technology and mission-critical functionality can come from foreign intelligence services, design vulnerability, supply chain compromise, cyber or advanced persistent threats, or battlefield loss at any point in the system’s life cycle. This pamphlet provides the procedures for the identification and protection of Critical Program Information (CPI) and critical components.


April 2019
DOD Instruction 4140.67 establishes integrated DoD policy and develops implementing guidance in appropriate issuances; maintains DoD enterprise focus on counterfeit materiel risk reduction as the designated office of primary responsibility for coordinating the development and implementation of an integrated DoD enterprise anti-counterfeit strategy; develops acquisition and procurement policies, procedures, regulations, and guidance to prevent, detect, remediate, and seek restitution for the procurement and delivery of counterfeit materiel; develops and implements workforce education and training programs to deter, detect, analyze, report, and manage the disposition of counterfeit materiel; ensures collaboration and consultation with other federal agencies and international coalition partners on anti-counterfeit measures; coordinates with DoD Components to establish a risk-based approach to identify materiel susceptible to counterfeiting and to procure authentic materiel; avoids establishing DoD-unique anti-counterfeiting procedures; and identifies and establishes standardized guidelines for contractors to employ in their processes for the detection and avoidance of counterfeit materiel into the DoD supply chain.


April 2019
During the Senate’s consideration of the National Defense Authorization Act for Fiscal Year 2012, Chairman Carl Levin and Ranking Member John McCain offered an amendment to stop the importation of counterfeit electronic parts into the United States, address weaknesses in the defense supply chain, and to promote the adoption of aggressive counterfeit avoidance practices by DOD and the defense industry. The amendment was adopted in the Senate and a revised version was included in the final bill signed by President Barack Obama on December 31, 2011. The Committee’s findings, described in this report, are stark evidence of the importance of the reforms contained in that law.


April 2019
DOD SUPPLY CHAIN
Suspect Counterfeit Electronic Parts Can Be Found on Internet Purchasing Platforms


What GAO Found

Suspect counterfeit and bogus—part numbers that are not associated with any authentic parts—military-grade electronic parts can be found on Internet purchasing platforms, as none of the 16 parts vendors provided to GAO were legitimate. “Suspect counterfeit,” which applies to the first two categories of parts that were tested, is the strongest term used by an independent testing lab, signifying a potential violation of intellectual property rights, copyrights, or trademark laws, or misrepresentation to defraud or deceive. After submitting requests for quotes on both platforms, GAO received responses from 396 vendors, of which 334 were located in China; 25 in the United States; and 37 in other countries, including the United Kingdom and Japan. Of the 16 parts purchased, vendors usually responded within a day. GAO selected the first of any vendor among those offering the lowest prices that provided enough information to purchase a given part, generally within 2 weeks. Under GAO’s selection methodology, all 16 parts were provided by vendors in China.


April 2019
INTELLECTUAL PROPERTY
Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods


In October 2008, Congress passed the Prioritizing Resources and Organization for Intellectual Property Act of 2008 (PRO-IP Act), to improve the effectiveness of U.S. government efforts to protect intellectual property (IP) rights such as copyrights, patents, and trademarks. The act also directed GAO to provide information on the quantification of the impacts of counterfeit and pirated goods. GAO (1) examined existing research on the effects of counterfeiting and piracy on consumers, industries, government, and the U.S. economy; and (2) identified insights gained from efforts to quantify the effects of counterfeiting and piracy on the U.S. economy. GAO interviewed officials and subject matter experts from U.S. government agencies, industry associations, nongovernmental organizations, and academic institutions, and reviewed literature and studies quantifying or discussing the economic impacts of counterfeiting and piracy on the U.S. economy, industry, government, and consumers. GAO is making no recommendations in this report.


April 2019
DEFENSE SUPPLIER BASE
DOD Should Leverage Ongoing Initiatives in Developing Its Program to Mitigate Risk of Counterfeit Parts


Counterfeit parts--generally those whose sources knowingly misrepresent the parts' identity or pedigree--have the potential to seriously disrupt the Department of Defense (DOD) supply chain, delay missions, and affect the integrity of weapon systems. Almost anything is at risk of being counterfeited, from fasteners used on aircraft to electronics used on missile guidance systems. Further, there can be many sources of counterfeit parts as DOD draws from a large network of global suppliers. Based on a congressional request, GAO examined (1) DOD's knowledge of counterfeit parts in its supply chain, (2) DOD processes to detect and prevent counterfeit parts, and (3) commercial initiatives to mitigate the risk of counterfeit parts. GAO's findings are based on an examination of DOD regulations, guidance, and databases used to track deficient parts, as well as a Department of Commerce study on counterfeit parts; interviews with Commerce, DOD, and commercial-sector officials at selected locations; and a review of planned and existing efforts for counterfeit-part mitigation.


April 2019
Defense Industrial Base Assessment Counterfeit Electronics Report

Defense Industrial Base Assessment Counterfeit Electronics report was released by the U.S. Dept. of Commerce, the Bureau of Industry and Security (BIS), and the Office of Technology Evaluation (OTE).