Client Alert

The Commission on the Theft of American Intellectual Property’s 2017 Update to the IP Commission Report

March 10, 2017

By

Anand B Patel,

& Jeff A. Pade

The Commission on the Theft of American Intellectual Property, an independent and bipartisan initiative of leading Americans from the private and public sectors, recently issued an update to its 2013 Report on IP theft.[1] The Update emphasizes China’s role as the world’s principal IP infringer, and whose goods account for 87% of counterfeit goods seized coming into the United States.[2] Indeed, the Update criticizes China’s “industrial policies that include maximizing the acquisition of foreign technology and information.”[3]

The past several years have seen a response by the U.S. government to counteract some of those concerns, including the codification of several new laws directly addressing U.S.’s ability to subvert IP theft and focusing the administration on such theft.[4] Indeed, just a year after the Commission’s original Report, five Chinese officers were indicted for economic espionage.[5] Although there has been some progress, the U.S. response to a rise in IP theft has been limited and uneven, and implementation remains a major challenge. For instance, the annual cost to the U.S. economy of IP theft is estimated to have grown to at least $225 billion and may even approach $600 billion annually,[6] the majority of which is at the expense of countries in the Asia-Pacific region, particularly, China.[7] And even if indictments by the Department of Justice do move forward, enforcement of protections and punishments remain difficult.[8]

Like the original Report, the Update again mentions IP infringement as a concern when doing business in China.[9] While China has taken certain steps appeared to tackle growing IP theft concerns, to some the initiatives appear to be geared more toward fostering stronger IP-intensive industries in China than developing the rule of law.[10] If anything, Chinese plans for domestic growth now prioritize Chinese interests over all others, including through the usage of “zero-sum tactics,” including the overt and covert theft of IP.[11] Given that internal focus, the Update recommends that the new U.S. administration make IP theft a core issue as “perhaps the single best way to correct the problems in the Sino-U.S. relationship.”[12]

[1] The 2017 Update to the IP Commission Report (“Update”) is available at http://www.ipcommission.org/report/IP\_Commission\_Report\_Update\_2017.pdf. The 2013 IP Commission Report is available at http://www.ipcommission.org/report/IP\_Commission\_Report\_052213.pdf.

[2] Update at 3.

[3] Id. at 2-3.

[4] See 50 U.S.C. § 1708 (requiring the president to issue a report on economic cyberespionage and on

actions taken by the executive branch against those who are stealing American IP through cyber

means; providing the president the power to sanction foreign entities); Defend Trade Secrets Act of 2016, Pub. L. No. 114-153, 130 Stat. 376.

[5] Update at 4-5.

[6] Id. at 4.

[7] Id. at 8-13.

[8] Id. at 8.

[9] Id. at 13-14.

[10] Id. at 14.

[11] Id. at 15.

[12] Id. at 16.