The Theft of IP: An Economic and National Security Threat

Cyber espionage damages the economy and national security, and the White House, the private sector, and Congress must each play a role to address the threat. This was the assessment offered by Representative Henry Waxman (D-CA) at the beginning of this week’s hearing on Cyber Espionage and the Theft of U.S. Intellectual Property and Technology held by the House Energy and Commerce Subcommittee on Oversight and Investigations. 

The Theft of American Intellectual Property Commission, which was represented at the hearing by former Senator Slade Gordon, found that the theft of intellectual property (IP) costs the U.S. economy $300 billion a year, which translates into 2.1 million lost jobs

How can the government make an impact on the theft of IP? Witnesses said one way is for the U.S. government to persuade foreign governments that have few repercussions for hackers to institute stricter cyber espionage laws.  The U.S., Western Europe, and Japan, for example, impose serious penalties on hackers, which has led them to operate in countries that lack controls – countries such as Brazil, Nigeria, Russia, and China.

As for the private sector’s role, witnesses testified that businesses need to protect themselves by raising their own security standards. Too many companies expose themselves by choosing easy-to-guess passwords or failing to install adequate security technology.  According James Lewis, Director of the Technology and Public Policy Program at the Center for Strategic and International Studies, 80-90 percent of successful cyber attacks are not very sophisticated. By pooling funds to purchase security systems in bulk and strengthening password-protected accounts, businesses can begin to reduce the theft of IP, Lewis said. 

Susan Offutt, Chief Economist, Applied Research and Methods, at the Government Accountability Office, pointed out that one-third of U.S. businesses rely heavily on intellectual property, an indication of the risk IP theft poses to the economy. Clearly, the threat of IP theft is a large one, and one whose form continues to shift as hackers create new techniques and technologies for stealing from unsuspecting victims. 

Although Rep. Waxman complained that Congress had offered no good legislative solutions to IP theft, Rep. Bill Johnson  (R-OH) noted that even one great piece of legislation would not do the trick if Congress stops there. Instead, he said, Congress has a daily obligation to consider and reevaluate how best to protect the nation and its citizens. 

Cybersquatting is a similarly serious and changing problem as cybersquatting techniques for duping unsuspecting victims continue to evolve and change. And just as Congress and the private sector must be nimble in combatting IP theft, they must also ensure that legal remedies are adequate to counter evolving cybersquatting schemes. This is precisely the reason CADNA advocates for legislation that will actually deter the practice of cybersquatting by imposing higher penalties.

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