Up to $600 Billion in American intellectual property stolen annually

Up to $600 Billion in American intellectual property stolen annually.

Originally published in Homeland Security Newswire on 6 March 2017.

 

The theft of American intellectual property (IP) remains a systemic threat to the U.S. economy, inflicting an estimated cost that exceeds $225 billion in counterfeit goods, pirated software, and theft of trade secrets and could be as high as $600 billion annually. China remains the world’s principal IP infringer, driven by an industrial policy that continues to prioritize both acquisition and development of science and technology.

The theft of American intellectual property (IP) remains a systemic threat to the U.S.economy, inflicting an estimated cost thatexceeds $225 billion in counterfeit goods, pirated software, and theft of trade secrets and could be as high as $600 billion annually, according to a 2017 update to The IP Commission Report. The bipartisan, independent Commission on the Theft of Intellectual Property (IP Commission) assesses that China remains the world’s principal IP infringer, driven by an industrial policy that continues to prioritize both acquisition and development of science and technology. And while the previous administration and Congress have enhanced the policy mechanisms to mitigate the theft of IP, much remains to be implemented.

Co-chair Admiral Dennis Blair, former Director of National Intelligence, states that “the massive theft of American IP — from companies and universities across the country, from U.S. labs to defense contractors, from banks to software companies — threatens our nation’s security as well as vitality. This report is just the latest reminder of its scale and critical importance.”

Though the complexity of IP theft is better understood today than in 2013 when the IP Commission released its landmark report, the 2017 update finds that implementation challenges remain. Some of the 2013 report’s key recommendations were realized by the previous administration and Congress. Significant actions include the creation of a private right of action for trade secret owners through the Defend Trade Secrets Act of 2016 and passage of Section 1637 of the 2015 National Defense Authorization Act, which allows the president to sanction individuals responsible for cyberespionage.

Yet these tools have not been fully utilized. To date, no individuals have been sanctioned for IP theft. And many key recommendations to encourage and protect American IP as outlined in the report remain unexercised.

IP theft undermines our nation’s innovation ecosystem and ultimately our productivity, prosperity and global competitiveness,” said Commissioner Deborah L. Wince-Smith, President and CEO of the U.S.Council on Competitiveness. “It is imperative that the new administration utilize its policy tools to stem the billions of dollars our economy loses every year to IP theft.”

The IP Commission Report provides recommendations aimed to curb IP theft and safeguard the competitive advantages of U.S. firms, including the following:

  1. Authorize the secretary of commerce to serve as the principal official to manage all aspects of IP protection
  2. Block foreign companies that repeatedly use or benefit from the theft of American IP from accessing the U.S. banking system
  3. Consider U.S. companies’ policy of protecting IP as a criterion for approving major foreign investments in the U.S. under the CFIUS process
  4. Establish in the private, nonprofit sector a rating system on levels of IP legal protection by nations, including China
  5. Support U.S. companies and technology that can both identify and recover IP stolen through cyber means

Co-chair Governor Jon Huntsman, Jr. states, “The vast, illicit transfer of American innovation is one of the most significant economic issues impacting U.S. competitiveness that the nation has not fully addressed. It looks to be, must be, a top priority of the new administration.”

The Commission on the Theft of American Intellectual Property is an independent and bipartisan initiative of leading Americans from the private sector, public service in national security and foreign affairs, academia, and politics.

Read more in The Theft of American Intellectual Property: Reassessment of the Challenge and United States Policy.