Counterfeiters Cost U.S. up to $600 Billion a Year
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, according to a 2017 update to The IP Commission Report.
The bipartisan, independent Commission on the Theft of Intellectual Property (IP Commission) said 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, said 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 found 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, the Commission said, 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.
The IP Commission Report provides recommendations aimed to curb IP theft and safeguard the competitive advantages of U.S. firms, including:
- authorize the secretary of commerce to serve as the principal official to manage all aspects of IP protection
- block foreign companies that repeatedly use or benefit from the theft of American IP from accessing the U.S. banking system
- consider U.S. companies’ policy of protecting IP as a criterion for approving major foreign investments in the U.S. under the CFIUS process
- establish in the private, nonprofit sector a rating system on levels of IP legal protection by nations, including China
- support U.S. companies and technology that can both identify and recover IP stolen through cyber means