Transfer Pricing Associates

IP under attack in new ways

post Friday May 31, 2013

The growing number of attacks and infringements on intellectual property are clearly not decreasing or going away anytime soon. In today’s increasingly global economy that has been strongly driven by innovative technology and intellectual property, the importance of protecting and developing intellectual property has never been greater. There have been a wide range of ideas and potential solutions, but largely there have been few domestic changes within the United States to prevent certain types of the IP theft that has dramatically increased.

In a recent report from the Commission on the Theft of American Intellectual Property, it is estimated that losses from the theft of American intellectual property amounts to roughly $300 billion dollars. This staggering number creates concern for American companies who seek to innovate but are seeing valuable gains from their creative assets being undermined, with very little recourse available.  The Commission on the Theft of American Intellectual Property is a private initiative led by John Huntsman, former US ambassador to China, and Dennis Blair, former director of national intelligence for President Barack Obama. The report also estimates that somewhere between half and 80% of the IP perpetrators are Chinese. The report goes further and explains that other major violators of IP are from India, Venezuela and Russia.

Most firms that have suffered from the theft of IP have been slow to respond. There are a variety of reasons that companies have either not enacted preventive measures or have been less than swift in recourse. One major cause of the ineffective or non-existent responses is complicated laws and potential repercussions for firms seeking to operate in Chinese markets. The report from Admiral Blair explained that the legal punishments for companies seeking to protect their IP could be damaging. Victims that attempt to protect their IP via self-destructing files or other electronic countermeasures could face prosecution if they damage or harm the computers that are hosted in America. Changing the laws could result in a firestorm of controversy and push back, but clearly reform is needed in order to protect companies. It is clear that today IP is under attack, and the importance of protecting valuable intangible assets must be a high priority for firms working to be competitive in today’s market.

Source:The Economist
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