‘They are stealing our intellectual property’…is a consistent refrain of U.S. administrations and echoed throughout the media, in my view, more so since the…

• formation of the WTO (World Trade Organization) on January 1, 1995, whose purpose is to provide (a.) legal ground rules for international commerce, (b.) implementation and monitoring of multilateral trade agreements, (c.) dispute settlement, and (d.) supporting development and building trade capacity, and not so coincidentally, the WTO was following by the…
• Economic Espionage Act (U.S. Pub.L.104–294, 110 Stat. 3488), enacted in October 1996. The EEA focuses primarily on theft – misappropriation of U.S. company trade secrets, intellectual property, and other forms of proprietary intangible assets by state-sponsored foreign entities when the initiating acts-behaviors occur in the U.S. .

Interestingly, I was asked to serve on a conference panel…with the EEA’s lead FBI Supervisory Special Agents and others representing the U.S. intelligence community. This conference (panel discussion) was billed as the FBI’s initial public explanation of the EEA and its enforcement.

I have been consistently engaged in safeguarding businesses intellectual property…and proprietary intangible assets, i.e., intellectual and structural capital especially since the early 1990’s.  My professional interest, investigative research, and work in this business-critical arena evolved initially during my 20+ year career in academia (primarily at Southern Illinois University – Carbondale) and continues to influence my current work as an intangible asset strategist and risk specialist (and, author, researcher, speaker, and trainer).

‘They’re stealing our intellectual property’ is a phrase of political choice…despite, what I have concluded are widespread misunderstandings – misconceptions about IP. The phrase ‘they’re stealing our intellectual property’presumably provides context for citizens and rationale for relevant entities of the U.S. government to investigate, register complaints for damages with the WTO, seek sanctions under the EEA, and/or independently impose trade sanctions upon a non-complying country, i.e., signatory to the WTO and/or its principles.

At present, the country of political choice…insofar as identifying and vilifying as ‘they’re stealing our intellectual property’ is China, and there is good reason. To be sure, China is a long time, egregious, and ‘in your face’ non-complier in terms of respecting the legal safeguards of registered intellectual property and rights there to appertaining.

But, let there be no mistake…

• business transactions today are routinely conducted in a go hard, go fast, go global, winner-take-all manner with the manufacturing and transaction negotiation environment being aggressively and predatorially competitive!   
• there have been, and there remain, numerous other countries and variously state-sponsored entities globally, some obvious and some, not-so-obvious, which have premeditatively chosen to seek their own ‘shortest and least expensive path’ toward economic and competitive advantage expansion!
• this includes stealthily accessing and misappropriating intellectual property and proprietary intangible assets, especially intellectual and structural capital developed and held predominantly by U.S. companies and universities!

Reader’s, let’s be very frank on this matter…

• numerous other countries have supported, mounted, and engaged in similar (state sponsored) activities, i.e., variations of what China has – is doing, for essentially the same reasons, and to the same end, but most have done not quite as brazenly as China.

• for example, if Company A seeks opportunities to conduct business in-with China, collaboratively, independently, or contractually, as part of a supply chain, with the presumptive aspiration that doing so will permit exposure of their products and services to 1.3+ billion potential consumers, it’s gonna be on China’s terms, hard stop!

• that said, there are large numbers (hundreds, thousands) of U.S. businesses which are awaiting, or have already negotiated and lucratively engaged in some manner of business transaction, technology transfer, or supply chain component with counterparts in China; it important for readers to recognize there are obvious economic – competitive advantage reasons for doing so, hard stop!

The global phenomena of economic espionage represent issues…which I have devoted 20+ years of investigative research, writing, publishing, and public speaking, including trips to China, UK, and Germany to better understand how, why, when, and why economic espionage consistently occurs.

Respectfully, my experiences in this arena, have led me to conclude…as noted above, that a substantial percentage of U.S. citizens, as well as business leadership, who are operationally unfamiliar with…

• intellectual properties, i.e., patents, trademarks, trade secrets, and copyrights.
• to be sure, there is no shortage of (conventional) assumptions – perspectives available,
• but the level of misunderstanding and misconception about IP, routinely outweighs, in my judgement, the legal and operational realities of IP.

To moderate and perhaps counter some of the misunderstandings about IP, is to recognize the…

• irreversible economic fact, that today, and for the foreseeable future, 80+% of most company’s value, sources of revenue, competitiveness, and sustainability lie in – emerge directly from intangible assets, primarily, intellectual and structural capital and intellectual properties.

Is it feasible for more Americans to achieve even minimal familiarity with either?…Perhaps not. I suspect though, if more citizens were familiar with key legal, operational, technology transfer, and business realities of intellectual property, there would be more clarity to what the issues really are in the current mashup between the U.S. and China and, I suspect other countries in the future whose trade practices are deemed to run afoul with this administration. After all, this administration is frequently characterized as being very transactional, presumably preferring individual country trade agreements over multi-lateral agreements.

Readers can be assured I am not naively advocating the world stop spinning for a day…so U.S. citizenry can be exposed to an online tutorial regarding the development, rights, enforcements, and how to effectively safeguard intellectual properties and businesses proprietary  intangible assets throughout transaction negotiations and execution and the FBI’s current application of the EEA.

Absent that hypothetical, while it would be nice…business leaders alike are obliged to seek-secure the relevant level of operational familiarity with their IP rights and enforcements, in addition to effectively using experienced legal counsel.

The key requisites to politically maximizing – taking appropriate actions against… state-sponsored entities that violate WTO principles of trade and/or provisions of the EEA, insofar as imposing trade sanctions, etc., through my lens there should (must) be… 

• evidence of specific and distinguishable bad actors and their practices, i.e., collusion among state sponsored entities to variously support and engage in that type and level of bad acting, ala economic – competitive advantage espionage, coupled with
• tangible – quantifiable, albeit (dollar amounts) best guesstimates of economic – competitive advantage losses – harm to U.S. businesses during – following a specific engagement and/or period of time, i.e., the misappropriation of ‘targeted’ knowledge and know-how, intellectual and structural capital embedded in (comprise) whatever products, services, and/or technologies were misappropriated.

…the above, please note, are obliged to be conveyed not merely as glib, unvalidated generalizations or politically expedient accusations, rather descriptions of specific adverse and perhaps irreparable economic and competitive advantage losses and undermining!

So yes, with respect to China…it, and numerous other countries have indeed been bad (trade) actors that not infrequently engage in some variation of violating our economic espionage laws, on various levels, against U.S. companies.

That is, Chinese entities or their subterfuges…with frequency, acquire and/or reverse engineer certain targeted knowledge and products, which a U.S. company may legitimately hold an issued patent, copyright, trademark, or designates as a trade secret (by meeting the six requisites of trade secrecy).

Again, make no mistake, such acts, will include the…illegal acquisition and integration of extraordinarily valuable, advanced, and ‘game changing’ technology and knowhow which, in numerous instances, has rendered China to be on par with, or excede current U.S. capabilities. At minimum, ‘stealing our intellectual property’ may provide relevant sectors of China’s R&D or industry specific ‘shop floors’ with not insignificant near-term competitive advantages which are challenging and very expensive to quickly overcome or counter.

More to come on these important topics….

Michael D. Moberly  St. Louis May 15, 2019 [email protected] the ‘Business Intangible Asset Blog’ since May 2006, 650+ published (long form) blog posts, ‘where one’s attention span, business realities, intangible assets, and solutions converge’.

Readers are invited to explore other posts, video, position papers, and books at https://kpstrat.com/blog