Posts Tagged: "ip theft"

On September 13, the U.S. Chamber of Commerce’s Global Innovation Policy Center (GIPC) announced that it had joined with 30 other signatories to publish a framework of intellectual property principles designed to maintain America’s global lead in innovation. Supported by a coalition of well-recognized individuals and trade organizations long supporting greater certainty in patent rights, the framework of IP principles is intended to serve as a guidebook for policymakers who want to address genuine issues currently facing the nation’s IP system.

Intellectual property (IP) theft has severe consequences for U.S. business, and many companies—particularly small businesses—can feel overwhelmed at the seemingly insurmountable task of stopping IP theft that occurs overseas. Introduced by Senators Tammy Baldwin (D-WI) and John Cornyn (R-TX) earlier this summer, the American IP Defense and Enforcement Advancement Act, or the “American IDEA Act,” promises to protect U.S. businesses against international IP theft. It is not to be confused with the Inventor Diversity for Economic Advancement (IDEA) Act, which aims to improve demographic data-gathering efforts at the U.S. Patent and Trademark Office (USPTO).

“The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help,” said President Ronald Reagan during a press conference on August 12, 1986. This is one of President Reagan’s most often quoted quips, and for a reason. The Government can certainly help people in times of need, but it can also be a scary bureaucracy, particularly when it shows up unannounced and uninvited. Fast forward 31 years and the 12 most terrifying words in the English language for any business should be: “I’m from China, and my company would like to partner with yours.”

Russian businesses now hold the key to pilfering, producing and profiting from western technologies. As of Monday, March 7, the Russian government has legalized intellectual property (IP) theft. With this move, businesses in Russia can now violate IP rights, as they no longer need to compensate patent holders from “unfriendly countries.” The list of “unfriendly countries” includes the United States, Canada, Australia, Switzerland, Norway, Iceland, the United Kingdom, Japan, South Korea, New Zealand, Singapore, Taiwan and all 27 European Union (EU) member countries. Russia has faced growing isolation from the Western world following President Vladmir Putin’s invasion of Ukraine. The United States, EU member countries and others recently initiated sanctions against Russia and have enacted crippling trade limitations. Currently, Russia is sufficiently meeting its supply and demand needs for agriculture, energy and natural resources. However, Russia’s isolation and growing lack of skilled producers have led to a stark decrease in technological production and innovation.

Senators Thom Tillis (R-NC), Ted Cruz (R-TX), Kelly Loeffler (R-GA), and Marco Rubio (R-FL) have introduced a bill titled the Protecting America from Spies Act, which targets individuals who have committed or may in the future commit U.S. intellectual property theft. The legislation comes soon after reports of Chinese and Russian attempts to steal COVID-19 related IP and research in the race to a vaccine to end the pandemic. On July 22, the Department of State ordered the Chinese Consulate in Houston to close, citing evidence of “espionage and intellectual property theft.”

Societies are always most vulnerable in times of crisis. Right now, America is in the midst of the COVID-19 outbreak, subsequent economic devastation, and justified nationwide protests for social and criminal justice reform—perhaps an unprecedented level of unrest. As such, it is also perhaps more important than ever for us to demonstrate our ability to unite, cooperate, and innovate. Fortunately, through the improved protection of our intellectual property (IP), America has an opportunity to do exactly that. COVID-19 has demonstrated the equal importance of encouraging and protecting America’s innovators. Worldwide manufacturing shutdowns, part of the global effort to slow the spread, exposed our country’s reliance on China for many of our basic necessities and raw materials. America often generates the ideas of tomorrow. But, until we can generate the ensuing products as well, independence from China will be impossible. This reliance, and lack of investment in domestic production, is proving to have serious consequences.

Intangible assets today make up nearly 84% of enterprise value for companies listed on the S&P 500. This material growth in intellectual property as an asset on U.S. company balance sheets has placed increased demands on the office of General Counsel. Protecting intangible assets against computer theft and pursuing litigation against wrongdoers has become a major and timely concern, especially in the context of an increasingly virtual world due to the global pandemic. A recent brazen and sophisticated computer intrusion into the records of over 145 million Americans launched from computer hackers based in China led to criminal prosecutions under the Computer Fraud and Abuse Act (CFAA).

Yesterday, U.S. Senators Thom Tillis (R-NC), Richard Blumenthal (D-CT), John Cornyn (R-TX), and Ben Sasse (R-NE) sent a letter to Federal Bureau of Investigation (FBI) Director Christopher Wray and Cybersecurity and Infrastructure Security Agency (CISA) Director Christopher Krebs regarding a notice issued last week by their agencies alerting American companies and research institutions about attempted attacks by hackers affiliated with the Chinese government.  According to the notice, these hackers “have been observed attempting to identify and illicitly obtain valuable …. (IP) and public health data related to vaccines, treatments, and testing from networks and personnel affiliated with COVID-19-related research.”

Cybersecurity is a concern for any business operating in the digital age, but companies with strong intellectual property divisions have some very specific security issues to handle. A recent conference on the subject of Chinese theft of American IP featured comments from Federal Bureau of Investigations (FBI) Director Christopher Wray, who remarked that the FBI has been investigating about 1,000 alleged cases of IP theft from Chinese actors since the China Initiative was launched by the U.S. Department of Justice (DoJ) in late 2018. Statistics provided by the FBI at that conference showed that technology theft cases involving China grew rapidly between 2008 and 2012, after which a steady rise has continued through 2020.

This week in Other Barks & Bites: a series of bills introduced into Congress aim to improve prospects for minority inventors, eliminate compulsory copyright licenses in broadcast TV and reduce patent challenges against generic drugmakers; the Federal Circuit decides that there is no functionality in the aesthetic appeal of a design patent; FBI Director Wray testifies on about 1,000 IP theft probes pointing back to Chinese entities; France is the first EU country to adopt the Copyright Directive; Alphabet and Amazon beat revenue expectations; UKIPO discusses potential IP rights exhaustion in the event of a no-deal Brexit; and IP law associations ask the Supreme Court to rule against USPTO in Peter v. Nantkwest.

A high ranking Chinese official has announced that the Chinese government rejected a request from the United States to end its subsidization of industries identified by the Made in China 2025 initiative. These key industry sectors are areas where technological development is very important and as such, they’ve been at the center of allegations over the forced transfer of patented technologies to Chinese domestic firms as well as outright theft of trade secrets. The Chinese government has responded to concerns over the Made in China initiative with one senior economic official defending the program as open to foreign and private companies according to a report by Hong Kong’s English daily The Standard.

Conservative leaders wrote the White House applauding this initiative, based on the property rights implications of IP expropriation. These conservative leaders note that China is hardly the only country that steals American IP, and such IP theft imposes significant costs to our economy, impairs American competitiveness and compromises our innovative future… The letter reads in part: “The 301 investigation represents a good first step toward asserting rules-based accountability and recommitting to an American IP-based competition policy. However, trade enforcement is only one pillar of an American economic competitiveness plan.”

President Donald Trump has signed a memo at the White House which authorized the U.S. Trade Representative (USTR) to make an inquiry into the alleged theft of American intellectual property which is believed to be aided by the Chinese federal government. Although there are concerns that the statement could increase tensions with China just as the U.S. government is seeking more cooperation from China on issues surrounding North Korea, the recent Trump memo comes in response to the $600 billion American intellectual property owners lose each year, a majority of which is due to Chinese tech transfer policies.