IP theft commission: US needs to take strong action

A new report says China is responsible for more than half of the $300 billion in IP theft from the US each year

The U.S. government should bar foreign companies that repeatedly steal or use stolen U.S. intellectual property from selling their products in the country, a new report recommended.

About US$300 billion worth of intellectual property is stolen from the U.S. every year, with 50 to 80 percent of the theft coming from China, according to the report, released Wednesday by the Commission on the Theft of American Intellectual Property, a bipartisan group of former government officials and business representatives.

The U.S. government needs to take a series of strong measures to protect U.S. IP because current measures are ineffective, commission members said. The U.S. needs to make it much more costly for nations to encourage IP theft and for companies to engage in it, said Jon Huntsman, co-chairman of the commission and former U.S. ambassador to China and Republican presidential candidate.

Chinese industrial polices focused on acquiring science and technology "encourage IP theft," Huntsman said during a press conference.

Representatives of the Chinese Embassy in Washington, D.C., didn't immediately return emails seeking comment about the commission report.

The commission recommended that U.S. policymakers make it easier for the U.S. International Trade Commission to quickly block counterfeit goods from entering the U.S. The USITC's so-called 337 process, allowing companies to file patent infringement complaints, should move quicker, the report said. That recommendation may be controversial because some patent experts have complained that companies have been able in recent years to abuse the process.

The commission also called on policymakers to allow the U.S. Treasury to block foreign companies that "repeatedly use or benefit from" the theft of U.S. IP from using the U.S. banking system, effectively locking them out of the U.S. market. And agencies considering whether foreign companies should be able to invest in the U.S. or trade on U.S. stock exchanges should look at their IP theft records when making those decisions, the report said.

"We are trying to force foreign companies to choose between access to the U.S. market and stealing American intellectual property," said Dennis Blair, commission co-chairman and former director of national intelligence for U.S. President Barack Obama. "You can't have both."

The commission also recommends that Congress give more green cards, or permanent resident cards, to foreign workers trained in science or technology who want to move to the U.S. The report further recommends that Congress increase funding for law enforcement agencies investigating IP theft and amend the Economic Espionage Act to allow private companies to file lawsuits for trade-secret theft.

U.S. companies need to spend more to protect their IP, by building networks with "world-class," around-the-clock cybesecurity, Blair added. "You don't just order a firewall, plug it in, and go home on the weekend."

If shorter-term measures don't work, the U.S. government should consider "aggressive" counterattacks against cyberthieves, the report said. The commission also recommended that Congress consider withholding U.S. funding to the World Health Organization and consider Congress impose a tariff on all Chinese products equal to 150 percent of the U.S. losses from Chinese IP theft if other measures don't work.

Craig Barrett, former chairman and CEO at Intel, called those longer-term ideas the "nuclear option," but said they are worth exploring if other efforts don't work.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags intellectual propertylegalintelgovernmentcraig barrettDennis BlairtradeU.S. International Trade CommissionJon HuntsmanCommission on the Theft of American Intellectual Property

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Grant Gross

IDG News Service

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