Print PDF

Practice Areas

Restrict U.S. Market Access for Countries Stealing Intellectual Property, Report Urges

Wednesday, May 29, 2013
Sandler, Travis & Rosenberg Trade Report

A private-sector group is urging the federal government to take a series of measures to restrict access to the U.S. market for goods from countries deemed guilty of stealing U.S. intellectual property. These proposals could find some resonance among lawmakers becoming increasingly concerned about IP theft.

The report from the Commission on the Theft of American Intellectual Property, which bills itself as “an independent and bipartisan initiative” made up of seven individuals who have previously held senior posts in government, business and academia, argues that the U.S. is losing “hundreds of billions of dollars per year” to IP theft. These losses not only cost U.S. jobs but also undermine “both the means and the incentive for entrepreneurs to innovate.” The report names China as “the world’s largest source of IP theft” but adds that Russia, India and others are also important actors, all suffering from common problems such as “poor legal environments for IPR, protectionist industrial policies, and a sense that IP theft is justified by a playing field that benefits developed countries.” Concluding that the existing U.S. approach of “hectoring governments and prosecuting individuals has been utterly inadequate to deal with the problem,” the report recommends the following steps be taken (among others) in an effort to impose sufficiently high costs that “state and corporate behavior and attitudes that support such theft are fundamentally changed.”

Short Term

- provide statutory responsibility and authority to the secretary of commerce to serve as the principal official to manage all aspects of IP protection, which the commission anticipates will result in “a robust set of responses”

- strengthen the International Trade Commission’s section 337 process so that imports suspected of containing or benefitting from IP theft based on probable cause would be impounded, with importers given an opportunity to prove otherwise during the subsequent investigation

- empower the secretary of the treasury, on the recommendation of the secretary of commerce, to deny the use of the U.S. banking system to foreign companies that repeatedly use or benefit from the theft of U.S. IP

- consider the degree of protection afforded to U.S. companies’ IP a criterion for approving major foreign investments in the U.S. under the Committee on Foreign Investment in the U.S. process

- require the Securities and Exchange Commission to judge whether companies’ use of stolen IP is a material condition that ought to be publicly reported

- greatly expand the number of green cards available to foreign students who earn science, technology, engineering and mathematics degrees in U.S. universities and who have a job offer in their field upon graduation, thus allowing them to remain in the U.S. instead of returning to their home countries where their IP knowledge could be used to “compete with American companies”

Medium Term

- amend the Economic Espionage Act to allow individuals or companies to sue for damages due to IP theft

- make the Court of Appeals for the Federal Circuit, which has accumulated the most expertise of any appellate court on IP issues, the appellate court for all actions under the EEA

- instruct the Federal Trade Commission to obtain meaningful sanctions against foreign companies using stolen IP

- assess U.S. ambassadors overseas on their protection of IP, similar to the way they are now assessed on promoting trade and exports, and raise the rank of IP attachés in countries in which theft is the most serious

Long Term

- build institutions in priority countries that contribute toward a rule of law environment in ways that protect IP

- develop a program (e.g., a prize competition) that encourages technological innovation to improve the ability to detect counterfeit goods

- ensure that top U.S. officials from all agencies push to move China, in particular, beyond a policy of indigenous innovation toward becoming a self-innovating economy

- develop IP centers of excellence on a regional basis within China and other priority countries to show local and provincial leaders that protecting IP can enhance inward foreign investment

To get news like this in your inbox daily, subscribe to the Sandler, Travis & Rosenberg Trade Report.

Customs & International Headlines