IP theft from China 'rampant' in US; report urges stronger action

A new US report is pressing the American government and industry to get proactive on stopping intellectual property (IP) theft as it singles out China as the biggest culprit.

The IP commission report, coming as an update three years after its first report on the issue, says that the stealing of intellectual property in the US is "one of the most pressing issues of economic and national security facing our country," and that it is "our unanimous opinion that the issue has not received the sustained presidential focus and strong policy attention that it requires."

It says despite the recommendations in its first report, both the government and American industry have been guilty of being too defensive and limited in its reaction to IP theft, and that it needs a stronger, proactive stance if it is to "stem the loss of the lifeblood of American entrepreneurship."

The commissioners of the report include Jon Huntsman, Jr., the former US ambassador to China, Slade Gorton, a former US senator, and Dennis Blair, co-chair of the Commission on the Theft of American Intellectual Property.

The report's authors say the latest and most reliable data (coming out from the OECD and EUPIO) suggests that in 2015, the U.S. imported counterfeit and pirated tangible goods valued between $58bn and $118bn, while counterfeit and pirated tangible US goods worth around $85bn were sold that year across the globe. The cost to the American economy is conservatively estimated by the authors to be around $29bn.

The report is clear who the principal offender is: China. "IP theft by thousands of Chinese actors continues to be rampant, and the US constantly buys its own and other states' inventions from Chinese infringers," the report states.

It found that China (including Hong Kong) accounts for a staggering 87 per cent of counterfeit goods seized coming into the US.

The report says the country is doing this both directly through conventional means, as well as via cyber means. These include, the report says, "coercive activities" by the state designed to force outright IP transfer or give Chinese entities "a better position from which to acquire or steal American IP."

There have been some notable advances under President Barack Obama's former administration, including the signing of the Defend Trade Secrets Act of 2016 as well as the Cybersecurity National Action Plan, but the authors say more needs to be done.

This includes a wide-range of specific recommendations, such as developing a program that encourages technological innovation to improve the ability to detect counterfeit goods, as well as setting up IP "centres of excellence" on a regional basis within China and other priority countries and telling the Federal Trade Commission to obtain meaningful sanctions against foreign companies using stolen IP.

The authors conclude that the "scourge of IP theft and cyberespionage likely continues to cost the US economy hundreds of billions of dollars a year despite improved laws and regulations," and that its recommendations "remain ripe for implementation, and we hope that the new Congress and administration will examine them early in 2017."