Protecting intellectual property in global supply chains

The theft of trade secrets represents a significant loss to individual companies and the global economy, raising barriers for businesses that compete fairly and harming efforts to create jobs and stimulate growth.

According to the Organization for Economic Cooperation and Development, in 2008, the total worldwide economic value of counterfeit and pirated materials was US$ 650 billion. By 2015, the global value of counterfeit and pirated products is estimated to rise as high as US$ 1.77 trillion.

While government regulation will continue to be essential to protecting intellectual property (IP), the private sector can play a powerful role in driving responsible business practices and bridging regulatory gaps where adequate laws do not exist or enforcement is weak. Industry-led initiatives can help embed responsible business practices in global supply chains and in markets, creating a fairer, more predictable, rules-based operating environment where investment and growth can flourish.

Global supply chains represent tremendous opportunity for strengthening governance and developing trusted networks to better protect IP. And in fact, many companies are already engaging their supply chains and business networks to drive improvements in other areas, including labour, health and safety, environment and quality assurance, through the use of supplier codes of conduct, training and capacity building.

By harnessing the power of global supply chains and building upon the practical experience and advancements in supply chain management made over the past two decades, companies can leverage existing processes and management systems to ensure respect for IP rights.

The goal of business should be to protect its own IP, as well as the IP of those with whom it deals, through management systems and processes – including IP-related policies, an IP “compliance” team, risk assessment and training – that are ingrained in the company’s DNA, and that can be measured and improved over time and with changing circumstances. To ensure their effectiveness and to demonstrate commitment to protect IP, businesses must monitor and improve these IP management systems on a continual basis. Credible and scalable tools, resources and training can build capacity within the supply chain, by embedding responsible business processes and creating a culture of compliance. These efforts will go far towards fostering fair competition.

The G8 Camp David Declaration was a welcome step towards better IP protection. It emphasizes the vital link between protecting IP rights and ensuring the continued strength of the global economy, and the need for governments to encourage and promote private sector-led action as an important complement to government regulation and enforcement in this area.

One area in which governments can have a big impact is government procurement, and given the prevalence of IP theft, it is essential that governments take measures to address IP risks in their own supply chains. Businesses that bid on and receive government contracts should be encouraged to adopt and implement policies and procedures to manage the use and protection of IP, and to ensure greater traceability in their supply chains by knowing and being able to document their upstream suppliers. Governments can foster greater cooperation, coordination and accountability among all parties to the contract and should engage with its suppliers on a regular basis to share leading practices and help them mitigate risk, improve quality and manage costs.

Government, business and NGO efforts to educate, train and provide technical assistance are critically important to encouraging a global culture of IP compliance as well. Multistakeholder outreach – either through existing or new programs – should be designed to increase awareness and understanding of applicable IP laws and regulations, and build capacity within the private sector.

Leslie Benton is Vice-President for Advocacy and Stakeholder Engagement at CREATe.org – The Center for Responsible Enterprise and Trade.

Photo: Containers are stacked under cranes at a container terminal in Khalifa Port in Taweelah, Abu Dhabi. REUTERS/Stringer