American Chamber of Commerce in New Zealand Inc - Article on The Report of the Commission on the Theft of American Intellectual Property

Article on The Report of the Commission on the Theft of American Intellectual Property

02 Aug 2013 10:34 AM | Mike Hearn (Administrator)

By BM, IPR Enforcement, NZ music industry

This article highlights the Report of the Commission on the Theft of American Intellectual Property, published on behalf of The Commission on the Theft of American Intellectual Property by the National Bureau of Asian Research, May 2013.

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, academe, and politics^1.

The three purposes of the Commission² are to:

· Document and assess the causes, scale, and other major dimensions of international intellectual property theft as they affect the United States

· Document and assess the role of China in international intellectual property theft

· Propose appropriate U.S. policy responses that would mitigate ongoing and future damage and obtain greater enforcement of intellectual property rights by China and other infringers

The report was written by several leading Americans from a wide range of industries and experience³; from the two co-chairs; Admiral (Rtd.) Dennis C. Blair and Jon M. Hunstman Jr, Slade Gorton (former U.S. Senator, the State of Washington), Craig R. Barrett (former CEO Intel Corporation) to Michael K. Young (President of the University of Washington).

The article was written to publically highlight the contemporary issues facing the United States of America (USA) in relation to the widespread theft of American intellectual property (IP) of an estimated value of hundreds of billions of dollar (US) per year⁴.

The USA has been the significant leader in the development, support and commercialisation of IP since the Industrial Revolution but has recently noticed substantial financial losses from IP theft across all sectors (public/private) but significantly from technology and defense IP.

While the Report clearly identifies the Peoples’ Republic of China (PRC) as the current primary infringer, other emerging economic powers such as Russia, India and other weak Intellectual Property Rights (IPR) environments are also contributing to the overall impact.

The question was asked; why does China stand out⁵? As China is funding a staggeringly comprehensive national development program, a large portion of new capabilities and technologies has been rapidly secured through the legal purchase, licencing and support of foreign IP. Unfortunately the current IPR environment in China and that of general attitudes to foreign IP (significantly American) have led to the well-documented instances of transfer by direct theft, espionage and/or counterfeiting of physical goods. Foreign IP is extremely difficult to protect and to seek enforcement against within the Chinese legal framework, which is heavily biased towards Chinese companies and local IP.

"The Commission regards changing the cost-benefit calculus for foreign entities that steal American intellectual property to be its principal policy focus⁶", this means changing the underlying conditions that allow unchecked IP theft to be profitable. The view is held that it must become so unprofitable to potential IP thieves not just in monetary terms but from the denial of potential access to US markets, finances, international trade programs etc.

The Commission also stated three sets of recommendations that are based on future timeframes and escalating commitment both internally of and externally to the USA and the wider global community⁷.

Short-term measures, including:

· Designate the national security advisor as the principal policy coordinator for all actions on the protection of American IP

· Strengthen the International Trade Commission's 337 process to sequester goods containing stolen IP

· Increase Department of Justice and Federal Bureau of Investigation resources to investigate and prosecute cases of trade-secret theft, especially those enabled by cyber means

Medium-term measures, including:

· Amend the Economic Espionage Act (EEA) to provide a federal private right of action for trade-secret theft

· Instruct the Federal trade Commission (FTC) to obtain meaningful sanctions against foreign companies using stolen IP

· Strengthen American diplomatic priorities in the protection of American IP

Long-term measures, including:

· Build institutions in priority countries that contribute towards a "rule of law" environment in ways that protect IP

· Develop a program that encourages technological innovation to improve the ability to detect counterfeit goods

· Develop IP "centers of excellence" on a regional basis within China and other priority countries

While these measures are by no means limited to those above or cast in stone, this report articulates a need for the USA and its’ key trading partners to seriously consider systemic changes to reduce and mitigate the effects of IP theft beyond specific legislation and industry-focused programs.

IP underpins all manufacturing, all devices, and all things; from medicines, household white goods, automotive parts, battlefield communications systems, environmental control hardware, IT software, recorded music etc., and will only increase in strategic importance as the global economy becomes more interconnected, utilised and competitive.

Whether we like it or not, the future of New Zealand from an economic/security perspective is inexorably linked to the United States of America and the Peoples’ Republic of China; as both as serious foreign investors in our nation, their internal markets have been targeted for increased access by NZ developed products/services and both are the Pacific region powerbrokers.

Any efforts on behalf of the United States of America to protect their IP can only be beneficial for New Zealand both directly from an internal IPR compliance perspective and as an end-consumer market, both now and well into the future.