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Report: Asian Counterfeits Hurting U.S. Companies

Theft of intellectual property is estimated to cost the American economy $250 billion a year in lost sales, jobs and tax revenue, according to the U.S. Patent and Trademark Office.

COLUMBUS, Ohio (AP) — Counterfeit clothes, jewelry and other merchandise remain widely available to U.S. shoppers despite crackdown efforts in recent years, and Asia-based networks that traffic in fake goods continue to cost Ohio companies millions of dollars each year, a newspaper reported.
The counterfeit industries in China, Hong Kong, Taiwan and Thailand thrive because of lax enforcement of anti-counterfeiting laws and governments that continue to look the other way as U.S. products are copied illegally, The Columbus Dispatch reported this week in a three-part investigation.
Theft of intellectual property is estimated to cost the American economy $250 billion a year in lost sales, jobs and tax revenue, according to the U.S. Patent and Trademark Office.
In 11 Cleveland-area raids over the last year, 15 people were jailed and company and local officials seized $20 million worth of suspected fakes, said Tim Richissin, a Cleveland police sergeant and private investigator who monitors counterfeiters.
Many of the copycat goods at one Columbus mini-mall are driven to Ohio from New York City, said Kelly Morse, Midwest regional director of PICA Corp., a Columbus brand-protection and security firm.
Items at one Columbus convenience store, including designer clothing, were on sale for less than half of department store versions, The Dispatch said.
Viagra, baby formula, airplane parts and computer software are the products manufactured and exported from China. In some cases, factories producing legitimate products make fakes during after hours, the newspaper said.
In the southern Chinese manufacturing city of Guangzhou, a woman at a market sold hooded Abercrombie & Fitch T-shirts for $8 each.
''If you think it's real, it's real,'' she told the newspaper through an interpreter. ''If you think it's fake, it's fake.''
Last year, U.S. customs agents seized twice as many counterfeit goods at American ports as in 2005, with nearly 90 percent coming from China and Hong Kong.
Ohio companies Procter & Gamble and Abercrombie & Fitch are among the U.S. companies taking an active role in investigating Asian counterfeiting.
Abercrombie has a dozen people working full time on brand protection in Hong Kong and at its headquarters in the Columbus suburb of New Albany. Lawyers and private investigators around the world also assist the company in the effort. Last year, they conducted investigations in 57 countries.
The company's biggest bust was the 2005 seizure in a Chinese warehouse of 298,000 pairs of fake Abercrombie jeans worth $20 million. But two years later, the company is still fighting with Chinese authorities. Abercrombie wants the pants destroyed, but the Chinese want to remove the labels and resell them, The Dispatch said.
''First you fight the bad guys, then you fight the good guys,'' said John Carriero, Abercrombie's director of brand protection.
Ohio State University law professor Daniel C.K. Chow spent two years in China leading anti-counterfeiting efforts for Cincinnati-based Procter & Gamble. Because tens of millions of Chinese depend on fake goods for their livelihood, local officials ignore or even profit from the trade, he said.
''Part of the risk of investing overseas is that some of your technology is going to get stolen,'' he said. ''China has unprecedented access to the world's technology, and it's the leading counterfeiter in the world. That's not a coincidence.''
To cut production costs, Ohio Art Co. shifted the assembly of its Etch A Sketch drawing tablets and Betty Spaghetty dolls from Bryan, Ohio, to Shenzhen, China, seven years ago. Counterfeiting has increased since then, The Dispatch said.
Some people argue it makes no difference where goods are made. The same computer software that enables designers and engineers to quickly create new products lets counterfeiters make fast fakes based on a few digital photographs.
''These guys will come to your home country, see what you're making, and simply come back here and copy it,'' said Jack Clode, a Hong Kong-based private investigator with Kroll Inc.
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