Definition
I have written several articles on Education. A list of links have been provided at bottom of this article for your convenience. This article will, however address different aspects on education.
Intellectual Property is a work or invention that is the result of creativity, such as a manuscript or a design, to which one has rights. In simpler words it refers to the ownership of intangible and non-physical goods. This includes ideas, names, designs, symbols, artwork, writings, and other creations.
Basically speaking, intellectual property rights are a common type of legal IP protection for those who create. These rights, however, have actually contributed enormously to the world, in particular economically. Many companies in a variety of industries rely on the enforcement of their patents, trademarks, and copyrights, while consumers can also be assured of quality when they purchasing IP-backed products.
The Importance of Intellectual Property Rights
The purpose of intellectual property rights is to encourage new creations, including technology, artwork, and inventions, that might increase economic growth. Intellectual property rights increase the incentives for individuals to continue to produce things that further create job opportunities and new technologies, while enabling our world to improve and evolve even faster.
According to The U.S. Chamber of Commerce’s Global Innovation Policy Center:
- Intellectual Property Creates and Supports High-Paying Jobs
IP-intensive industries employ over 45 million Americans and hundreds of millions of other people worldwide. The average worker in an IP-industry also earns about 46% more than his or her counterpart in a non-IP industry.
- Intellectual Property Drives Economic Growth and Competitiveness
America’s IP is worth approximately US$6.6 trillion, which is more than the nominal GDP of any other country in the world. IP-intensive industries account for over 1/3– or 38.2%– of total U.S. GDP. 52% of all U.S. merchandise exports are related to IP, and this amounts to nearly US$842 billion.
Types of Intellectual Property Rights
Patent
A patent is used to prevent an invention from being created, sold, or used by another party without permission. Patents are the most common type of intellectual property rights that come to people’s minds when they think of intellectual property rights protection. A Patent Owner has every right to commercialize his/her/its patent, including buying and selling the patent or granting a license to the invention to any third party under mutually agreed terms.
There are three different categories that patents can fall under:
- Utility: A utility patent protects the creation of a new or improved product, process, composition of matter, or machine that is useful.
- Design: A design patent protects the ornamental design on a useful item.
- Plant: A plant patent protects new kinds of plants produced by cuttings or other nonsexual means.
Trademark
Trademarks are another familiar type of intellectual property rights protection. A trademark is a distinctive sign which allows consumers to easily identify the particular goods or services that a company provides. Some examples include McDonald’s golden arch, the Facebook logo, and so on. A trademark can come in the form of text, a phrase, symbol, sound, smell, and/or color scheme. Unlike patents, a trademark can protect a set or class of products or services, instead of just one product or process.
Copyright
Copyright does not protect ideas. Rather, it only covers “tangible” forms of creations and original work–for example, art, music, architectural drawings, or even software codes. The copyright owner has the exclusive right to sell, publish, and/or reproduce any literary, musical, dramatic, artistic, or architectural work created by the author.
Trade Secret
Trade secrets are the secrets of a business. They are proprietary systems, formulas, strategies, or other information that is confidential and is not meant for unauthorized commercial use by others. This is a critical form of protection that can help businesses to gain a competitive advantage.
Although intellectual property rights protection may seem to provide a minimum amount of protection, when they are utilized wisely, they can maximize the benefit and value of a creation and enable world-changing technology to be developed, protected, and monetized.
5 reasons corporate counsel gets blindsided by IP theft
Since they’ve been around for over 20 years, it’s clear that the conventional, policy-based data loss prevention (DLP) and Cloud Access Security Broker (CASB) tools won’t protect IP on their own. Yet many companies continue using these tools as the foundation of their IP protection strategy. Here are five reasons that relying on policy-based tools alone will ultimately leave you with the familiar frustration of cleaning up after the parade:
1. Traditional security tools were designed for compliance—not IP protection
Traditional policy-based security tools like DLP and CASB were originally built to address compliance requirements for regulated data like protected health information, credit card numbers, credit card numbers, etc. These tools rely on rigid rules to protect highly structured data types that are relatively easy to define, locate and build authorized-use policies around.
But now, many organizations are using these tools to protect IP—and IP rarely fits inside neat, tidy boxes like structured data. For example, IP may exist as a Word or Excel doc, or a CAD file. But a company doesn’t need to protect all Word documents—so how do they define which ones are valuable?
This takes them down the exhausting, expensive path of data classification. But because IP is constantly emerging and evolving, data classification becomes a never-ending task — and, let’s face it, you end up leaving new IP unprotected.
And that’s not the biggest problem: Businesses can’t simply lock down IP. In most organizations, the most valuable IP exists as living, breathing files that need to be edited, iterated, shared and advanced (think of source code, design files, go-to-market strategies, etc.). Limiting collaboration and innovation is a more serious risk to the business than valuable data leaving the organization—especially if you can quickly detect, investigate and respond to data theft.
2. Lacking visibility into off-network activity
Most traditional security tools are built to work within the relative digital perimeter of a LAN or VPN. This has been increasingly problematic for years with gradually growing remote work forces and cloud-based productivity and collaboration tools. But with well over half the workforce now working remotely—and only 10% consistently using a VPN—off-network activity is now an immense blind spot for many organizations. Security teams cannot monitor most day-to-day employee activities (even those involving movement of IP).
3. No way to parse Mirror IT
You probably know about the risks of shadow IT—unsanctioned app usage has become an even bigger problem as employees figure out new ways of working in this “next” normal. Savvy security teams are using leading CASB tools to help block unapproved sites and limit the usage of unsanctioned web-based apps. But there’s a less-well-known problem called “Mirror IT”: situations where employees have both personal and professional accounts for apps like Gmail, Google Drive or Slack.
In these cases, CASB won’t help—after all, these are sanctioned sites and apps. And while DLP can tell you that a user moved a file on Google Drive, it can’t make the all-important distinction of whether that file moved to a personal or professional Google Drive account.
Smart security teams can piece together this answer, but that takes time—all while a potentially valuable file may be exposed. With remote workers living their socially distanced professional and personal lives via many of the same apps, this data security blind spot—and resulting slow investigation—is a growing risk.
4. Policy-based tools are difficult to fully apply
We’ve already talked about why conventional policy-based tools struggle with the unstructured data that makes up most IP today. But there is a more fundamental problem with the policy-based approach: You need to tell policy-based tools what to look for—what data, what users and what actions.
In the modern enterprise, in collaboration culture, these “whats” are evolving daily. This makes building effective policies incredibly complicated, and a never-ending challenge. So, it’s no surprise that a recent Forrester survey found that most companies with policy-based tools aren’t fully using their tools’ capabilities because they’re too difficult to build and administer.
Instead, most companies are only focusing their policy-based tools on users they see as the highest risk. Unfortunately, risks don’t always come from where you expect—and you can’t think of everything.
This limited approach leaves you exposed to all the risks you did not predict—which, if we’re honest with ourselves, is an awful lot of them. Worse yet: policy-based tools don’t know when they’ve been “beaten.” So, when a risk does go undetected by a policy-based tool, security and legal don’t find out about it until (much) later. Sound familiar?
5. Conventional tools look for exfiltration—but not infiltration
All of the problems we’ve covered so far focus on data exfiltration. But legal teams know that data infiltration and the risk of contamination of your own IP presents a major risk as well—not to mention a big headache for legal teams. If someone steals IP from a former employer and brings it to your company, you will need to ensure the IP is removed from your own systems and products. Here again, conventional security tools like DLP and CASB provide no assistance. The data actions that trigger alerts/blocking come from data leaving the company; they’re not designed to monitor or alert on new data coming into the company.
New ways of working require new data security strategies
The current reshaping of “normal” in modern workplaces presents major opportunities to reimagine and redefine everything from when and where we work, to how we protect and support work, wherever it’s happening.
Legal teams have the chance to partner with security, HR and other stakeholders to determine what risk looks like in the new world of work. It’s clear that, for almost every organization, this new landscape will be more cloud-based, collaborative and faster moving.
Businesses need to reexamine data security strategies to make sure they’re considering the way we work today—and not limited by tools designed for the way we worked before. This means considering all users (not just the ones someone thinks are risky), all files (not just the files you flagged months ago), and all the ways users move data today.
Remote work trend amplifies IP risks, legal frustrations
Collaboration culture has been increasing IP risk for the last decade, but that risk took a sharp upturn in the first half of 2020. Well over half of U.S. knowledge workers are now working remotely—and experts predict many will remain remote as the future of work is reimagined.
These remote workers are connecting, collaborating, sharing and working in new ways. But legal and security teams know all too well that employee ingenuity and adaptability also increase the risk of workarounds and other risky behaviors.
Intellectual property theft (IP theft) refers to the robbing of people or companies of their ideas, inventions, and creative expressions (i.e., their IP). There are four main types of IP, including trade secrets, trademarks, copyrights, and patents. IP can include everything from proprietary products and parts, to movies, music, web content, business processes, and software. The World Intellectual Property Organization defines IP as “creations of the mind,” such as inventions, literary and artistic works, symbols, names, images and designs used in commerce.
Common Intellectual Property Theft Scenarios
IP theft can result in serious economic damage, loss of competitive edge, and decreased business growth. In fact, the total theft of U.S. trade secrets accounts for anywhere from $180 billion to $540 billion per year, according to the Commission on the Theft of American Intellectual Property.
IP theft impacting large, global enterprises tend to dominate the media headlines, while equally debilitating instances of IP theft affecting smaller companies often go unreported. With the risk of IP theft high for companies of all sizes and industries, it’s important to be well-versed in IP theft tactics to better protect critical assets and long-term business health. Common IP theft scenarios include:
Human Error: Any time a well-intentioned employee loses a device with company data on it, accidentally sends files containing trade secrets outside the company network, or inadvertently shares confidential data with unauthorized parties, IP theft can easily and quickly occur. For example, back in 2017, an Apple engineer brought his daughter to work, during which time she captured footage via her blog of the unreleased iPhone X, employee-only QR codes, and a notes app with code names of unreleased Apple products.
Hacking: By using spear phishing techniques to inject themselves into company networks, malicious actors can steal large volumes of IP and other confidential business and technological information. For example, for nearly 10 years a hacking group called the Advanced Persistent Threat 10 (APT 10) targeted the networks of more than 45 technology companies and U.S. government agencies in an effort to steal sensitive information and data pertaining to a variety of new and developing technologies. The hackers also targeted these companies’ managed service providers and their customer networks.
Access Exploitation: By exploiting their access to sensitive files, disgruntled employees can steal trade secrets and share them with competitors or criminals. For example, last year it was discovered that former employees at biotechnology company GlaxoSmithKline stole trade secrets to benefit a Chinese pharmaceutical company by emailing confidential files and transferring proprietary data via electronic storage devices.
Intellectual Property Theft Prevention Best Practices
Catching and prosecuting IP thieves is very difficult, and attempting to repossess stolen IP is even more challenging. To keep IP safe, consider adhering to the following six best practices:
Identify Your IP: Everyone in an organization can work to protect IP if they understand what exactly needs to be protected and from whom. Ensure corporate leadership is regularly communicating with departments such as HR, marketing, sales, legal, product, and R&D to adequately protect IP.
Locate Your IP: If you don’t know where your IP resides, you can’t protect it by putting proper policies and procedures into place. Look beyond core IT systems and processes, such as printers, copiers, scanners, and fax machines. Cloud applications and file-sharing services will also often house IP, as will employees’ personal devices. Lastly, don’t forget about third-party systems, as IP is typically shared with partners, suppliers, and customers.
Conduct a Risk and Cost-Benefit Analysis: Outline all of your organization’s assets to determine what IP loss would cause the most harm and which of those assets are most at risk of being stolen. By evaluating these two factors together, organizations can prioritize their IP and objectively identify where to spend their protective efforts and capital.
Label Your Most Valuable Assets: It may seem simple, but placing a banner or label on any information that’s confidential or proprietary is critical. Should an organization end up in court attempting to prove IP theft, for instance, they’ll need to show that they made it clear that the data in question was clearly labeled as confidential and protected.
Educate Employees: Humans — even well-intentioned ones — are often the weakest link in the security chain. Prioritize educating all employees so they fully comprehend how they can expose IP, even unintentionally. In particular, make sure they understand the risks of accidental IP breaches as a result of using external email platforms, file sharing services, collaboration tools like Google Docs or Dropbox, cloud resources such as S3 buckets and chat apps like Slack or WhatsApp.
Identify the Security Gaps: Thinking like an attacker is often the most productive way to protect IP as it can reveal hidden or unforeseen security gaps. For example, after assuming a hacker’s viewpoint, perhaps it’s discovered that additional security needs to be applied to traditionally overlooked components such as phone contacts, recycling bins, conference room phones or TVs or even (physical) office entry points.
Combatting Intellectual Property Theft Requires Artificial Intelligence and Automation
Cybersecurity tools are excellent at identifying noisy, malware-based attacks. However, with more nuanced attacks like IP theft, bad actors have adapted, resorting to non-malware techniques in an effort to go undetected. By relying on tools that already exist within an environment, abusing insider credentials, taking advantage of insecure, non-traditional devices, and/or using legitimate sites for command and control, attackers are able to enter secure networks and steal valuable assets without being noticed. This means organizations’ security teams must now be able to detect malicious intent that easily blends in with business-justified activities — a task too tedious and challenging for most security analysts.
To realistically stay ahead of the ever-present risk of IP theft, organizations need to leverage real-world threat hunting expertise via technology like the Awake Security Platform. By applying artificial intelligence to bring human knowledge to all customers, instantly analyzing billions of communications to discover every device, user, and application on a network, and automating all threat hunting and investigation, Awake offers the invaluable ability to detect malicious intent and identify IP theft performed by both internal and external actors.
Countries the U.S. Sees as Threat to Patents and IP:
Intellectual property infringement, including patent violations, trademark counterfeiting, copyright piracy, and trade secret theft brings significant financial losses for both individuals and businesses and is a United States government concern. IP infringement can compromise the country’s competitive advantage in innovation and creativity.
“In its most pernicious forms, IP infringement endangers the public, such as through exposure to health and safety risks from counterfeit products such as semiconductors, automobile parts, apparel, footwear, toys, and medicines,” says the Office of the United States Trade Representative, which warns that 11 countries raise top concerns about IP protection.
Here are the countries on the U.S. 2019 Priority Watch List for posing trade barriers to American companies and products due to their intellectual property laws.
China
China went through a government reorganization that included intellectual property responsibilities of various agencies. The country proposed revisions of laws and regulations but despite the effort, “China failed to make fundamental structural changes to strengthen IP protection and enforcement, open China’s market to foreign investment, allow the market a decisive role in allocating resources, and refrain from government interference in private sector technology transfer decisions,” says the Office of the United States Trade Representative.
Indonesia
U.S. trade officials say American rights holders struggle with inadequate and non-effective intellectual property protection and enforcement in Indonesia, as well as having fair market access. Washington sees Indonesia as an IP protection threat primarily because of widespread piracy and counterfeiting in the Southeast Asian country, and for not having effective enforcement against counterfeiting.
India
The fastest-growing large economy in the world, India is also one of the most challenging when it comes to intellectual rights protection, according to Washington. “In particular, India has yet to take steps to address long-standing patent issues that affect innovative industries,” say the authors of the Trade Representative report.
U.S. companies spanning across various industries are concerned about narrow patent standards in India, as well as threats of compulsory licensing and patent revocations and very broad criteria for issuing licenses and revocations in the country. In addition, “patent applicants face costly and time-consuming patent opposition hurdles, long timelines for receiving patents, and excessive reporting requirements,” according to the report.
Algeria
The U.S. government considers Algeria to still struggle with granting “fair and equitable market access for U.S. intellectual property (IP) right holders in Algeria, notably for pharmaceutical and medical device manufacturers,” the Trade Representative report says. In addition, Algeria has banned imports on a large number of pharmaceutical products and medical devices to favor local products. This, the U.S. government adds, “remains a trade matter of serious concern.”
Kuwait
Since 2016, Kuwait has made progress in establishing effective copyright and related rights laws. Yet the U.S. government warns that “necessary steps still remain for Kuwait’s copyright regime in light of international commitments, including with respect to the term of protection; limitations on the amount of work reproduced; enforcement, remedies and damages; and definitions.”
Intellectual property rights holders in Kuwait struggle with the difficulty in having Kuwaiti government officials remove illicit physical goods from the country’s market. A lack of transparency in administrative and criminal proceedings is also an issue.
Saudi Arabia
Saudi Arabia took a spot on the U.S. 2019 priority watch list because, the report says, of a deterioration in intellectual property protection for innovative pharmaceutical products. In addition, the nation raises “long outstanding concerns regarding enforcement against counterfeit and pirated goods within the country.”
Russia
Ongoing challenges and concerns about intellectual property protection and enforcement in Russia include “continued copyright infringement, trademark counterfeiting, and the existence of non-transparent procedures governing the operation of collective management organizations,” says the Office of the United States Trade Representative.
U.S. trade officials are concerned about IP enforcement in Russia having decreased throughout the past decade. Additionally, Russian enforcement agencies don’t have enough staff, expertise, and political motivation to make progress in this field, say U.S. trade officials.
Ukraine
Ukraine has made some progress with intellectual property safeguards, but “concerns remain,” says the U.S. government. Trade officials in Washington say the Eastern European country has an unfair, opaque system that oversees the collection and distribution of royalties to right holders.
U.S. trade officials also say Ukraine practices the widespread use of unlicensed software in its government agencies and has failed to implement effective ways to tackle online copyright infringement.
Argentina
U.S. trade officials blame Argentina for deficiencies in its legal framework for patents and broad limitations on patent-eligible subject matter.
“Pursuant to a highly problematic 2012 Joint Resolution establishing guidelines for the examination of patents, Argentina rejects patent applications for categories of pharmaceutical inventions that are eligible for patentability in other jurisdictions, including in the United States,” say the authors of the U.S. trade report.
Chile
U.S. trade officials salute Chile’s efforts to implement certain intellectual property obligations under the United States-Chile Free Trade Agreement. However, American trade officials still express concern about the implementation of other IP provisions of the free trade pact.
“Chile took a step forward in passing legislation establishing criminal penalties for the importation, commercialization, and distribution of decoding devices used for the theft of encrypted program carrying satellite signals,” says the Office of the United States Trade Representative.
Venezuela
The U.S. trade officials say Venezuela lacks effective intellectual property protection and enforcement. “Venezuela’s reinstatement several years ago of its 1955 Industrial Property Law, which falls below the standards in international trade agreements and treaties that Venezuela subsequently ratified, has created significant uncertainty and deterred investments related to innovation and IP protection in recent years,” the Office of the United States Trade Representative concludes.
Examples of Chinese IP theft:
Industrial espionage has been going on for centuries, but experts agree China’s espionage campaign is on a different scale from anything we’ve seen in history.
It has been going on at least since the 1990s and there is no sign it is letting up. Targets include an incredibly broad range of US companies, embracing civilian as well as military technology, with a special focus on the telecom and Internet sector. In 2009, National Security Agency Director General Keith Alexander called Chinese IP theft “the greatest transfer of wealth in history.” He put the value of cyber-theft of US trade secrets and intellectual property (IP) at a stunning $250 billion a year and called it “our future disappearing in front of us.”
Rather than describe general trends (such as Chinese military officers whose job consists of hacking American companies from 9 to 5 daily, 5 days a week), we thought it would be more evocative to describe ten of the most flagrant cases of IP theft. They range across many industries. What they have in common is that these cases involve gains for Chinese companies—even when the industrial spies are caught and imprisoned. For the US victim companies, they involve loss of markets, loss of jobs, and even loss of life.
1. The Wind Turbine Case
A decade ago, American Superconductor Corporation (AMSC) was a high-tech, high-growth software success story. Spun out of MIT and headquartered in Ayer, Massachusetts, AMSC developed world-class technology for software to control the wind turbines.
In 2005, the Chinese government made wind power and large-scale wind farms a key strategic objective for China. AMSC partnered with a Chinese maker of the wind turbine hardware, Sinovel, to sell into the Chinese market. AMSC sales rose rapidly into the hundreds of millions of dollars. In 2011, AMSC discovered that Sinovel had an illegal copy of the entire AMSC software code on one of their windmills. AMSC launched an investigation and found that a Serbian engineer working at their Austrian development facility, Dejan Karabasevic, had stolen the full software code and turned it over to Sinovel. An investigation by the Austrian police found that Karabasevic had agreed to provide the software in exchange for $1.7 million in cash, an apartment, and the services of call girls. Karabasevic was convicted and served a year in an Austrian prison.
In 2011, AMSC filed the largest-ever IP theft case in a Chinese court, seeking $1.2 billion compensation for their losses. Sinovel cancelled all its business with AMSC and refused to pay the $800 million it owed AMSC. As a result, AMSC had to lay off 600 employees at its Massachusetts headquarters (over 60% of its workforce), its stock market capitalization fell by half, and the company went into survival mode. The China case has gone nowhere. However, the US government filed a criminal case in 2013 charging Sinovel, two Chinese Sinovel executives, and Karabasevic with charges including conspiracy to commit trade secret theft. In 2018, the company and three individuals were convicted. But all are out of the reach of US justice.
Today, Sinovel still uses stolen AMSC software to power its wind turbines. It is the world’s number two, and China’s number one, provider of wind turbines. AMSC estimates that 20% of the wind turbines deployed in China today use illegal AMSC software.
2. The Oreo White Case
In 2014, federal prosecutors launched an industrial espionage case by showing the jury an Oreo, the famous Nabisco cookie. The white Oreo cream filling uses the chemical titanium dioxide (TiO2) to achieve that brilliant white color. Automotive paint and hundreds of other industrial products use TiO2, making it a highly valuable chemical. American manufacturer Dupont has long had a world-leading proprietary multi-stage process for producing titanium dioxide. In 2012, chemical engineer Walter Liew was charged with secretly conspiring to steal Dupont technology over the course of 14 years for the benefit of Chinese chemical manufacturers.
According to a detailed report in Bloomberg Business Week, in 1991, Liew met senior Chinese Communist Party official Luo Gan, who thanked him for being a “patriotic overseas Chinese” and began to send him “directives” describing China’s industrial aims. Liew was born in Malaysia of Chinese parentage, moved to the US to study at University of Oklahoma in the early 1980s, and became a US citizen in the 1990s. According to federal prosecutors, “with Mr. Luo’s directives to Mr. Liew, so began a 20-year course of conduct of lying, cheating, and stealing.”
In 1997, Liew found two retired disgruntled American Dupont engineers, Tim Spitler and Robert Maegerle. He won their confidence through charm and gifts. They provided him with information, sketches, and blueprints of Dupont’s titanium dioxide facilities and processes. In 2004, Liew used this information to win a series of contracts totaling $28 million from China’s Pangang Group to build a TiO2 production facility.
In 2012, Dupont found out about Liew’s activities and called the FBI. The conspirators were arrested. In his interrogation, Tim Spitler admitted to receiving a $15,000 payment from Liew. Shortly after, he committed suicide. In 2014, Liew was convicted and sentenced to 15 years for economic espionage, possession of trade secrets, and tax fraud. Maegerle got two and a half years for conspiring to sell trade secrets. Liew’s wife Christina got probation for evidence tampering.
3. The Motorola Case
On February 28, 2007, a Motorola engineer named Hanjuan Jin was stopped by customs agents at O’Hare Airport. They searched her and found she had $30,000 in cash, a carry-on bag full of Motorola documents marked “confidential and proprietary,” and a one-way ticket for Beijing. She was arrested.
Jin was a successful engineer working on Motorola’s cellular technology at a time when Motorola was one of the world’s top wireless companies (and a substantial supplier to the Pentagon). Investigations revealed that after eight years with Motorola, Jin had in 2006 taken medical leave, gone to China, and in violation of the terms of her Motorola employment, pursued a job with Sun Kaisens, a Chinese telecom company that does work for the Chinese military. In 2007, she returned to Chicago and resumed work briefly for Motorola, during which time she was seen leaving the office with shopping bags full of documents in the evenings. Born in China, Jin had gone to the US where she received a master’s degree in physics from Notre Dame, and obtained US citizenship.
In 2012, she was sentenced to four years in prison and a fine of $20,000. At the trial, the judge said: “The most important thing this country can do is protect its trade secrets.”
4. The Iowa Seed Corn Case
In 2014, six Chinese nationals were arrested for attempting to steal genetically modified corn seeds from Dupont and Monsanto experimental farms in Iowa. The conspirators were employed by Chinese conglomerate DBN and its corn seed subsidiary, Kings Nower Seed. The Chinese government puts a high priority on agricultural development to feed its large and growing population.
One of the six conspirators, Mo Yun, was the wife of the founder of DBN, and a second, Mo Hailong aka Robert Mo, was her brother. The US prosecutors charged the conspirators with stealing samples of the “parent” seeds that produced the genetically modified seeds and attempting to smuggle them to China, including one attempt that involved hiding the seeds in a bag of microwave popcorn. Monsanto said it has spent billions of dollars developing advanced corn seed.
In 2016, Mo Hailong was sentenced to 36 months in federal prison. The government also confiscated two farms, one in Iowa and the other in Illinois, purchased by the conspirators. It’s unclear what happened to the other five conspirators.
5. The Tappy the Robot Case
When a telecom company allows engineers from its suppliers into its carefully guarded testing labs, those engineers are expected to obey all the rules laid down by their customer. Two engineers from Chinese supplier Huawei used a 2014 visit to T-Mobile’s labs in Seattle to steal information and even a piece of confidential T-Mobile equipment, Tappy the Robot. T-Mobile used Tappy’s fast-moving fingers to test the performance of the smartphones it sold. Not only did they take photos of Tappy, the Huawei engineers stole one of his fingertips.
Huawei apologized and said it fired the two engineers. However T-Mobile pursued its case and in 2017 a Seattle jury decided that Huawei misappropriated T-Mobile trade secrets and awarded the wireless operator damages of $4.8 million.
Huawei has a long track record in intellectual property theft. In 2004 Cisco Systems, the market leader in routers, took Huawei to court for stealing its core router software code and using it in Huawei routers. The case was settled confidentially. More recently, when Huawei public statements claimed that the 2004 case did not involve stolen Cisco code, Cisco in 2012 replied by describing the essence of their original complaint this way: “this litigation involved allegations by Cisco of direct, verbatim copying of our source code, to say nothing of our command line interface, our help screens, our copyrighted manuals and other elements of our products.” Routers are the core hardware technology at the heart of the Internet. Huawei routers, widely used in China and Europe, have played a key role in Huawei’s growth into a $95 billion global telecom equipment giant.
6. The CLIFBAW case
In 2015, the federal government charged six Chinese citizens with stealing wireless communications technology from two Silicon Valley microchip makers, Avago and Skyworks, and launching their own company to sell that technology in China. (Avago is now known as Broadcom.)
According to the indictment, after leaving their employers and taking the stolen technology, one of the six co-conspirators was so cocky that he suggested in an email to his partners that they should name their new company CLIFBAW for “China Lifts Bulk Acoustic Wave.” One of the other co-conspirators wrote in an email: “My work is to make every possible effort to find out about the process’s every possible detail and copy directly to China.”
The six alleged IP thieves were former employees of the two American chipmakers. Three of them had met studying electrical engineering at USC in Los Angeles. The technology they stole, thin-film bulk acoustic wave resonator technology, is used to clean up wireless signals, allowing cellular phone service to work better at greater distances from cell towers. It’s a critical piece of successful wireless systems.
One of the accused, Zhang Hao, was arrested at LA Airport in 2015 and spent eight weeks in Santa Clara jail. As of a 2016 report, he was fighting the case in a federal court in San Jose.
According to the federal government, Avago spent 20 years and $50 million developing this technology. Avago only learned about the theft in 2011, at least four years after the six thieves started seeking backing from Chinese universities for their new business.
7. The Allen Ho TVA/Nuclear Power case
In August 2017, Taiwanese-American engineer Allen Ho was sentenced to two years in prison for providing nuclear energy technology information to China’s state-owned China General Nuclear Power Company (CGNPC). According to the indictment, Ho, a naturalized American citizen, used his company Energy Technology International, which was based at his home in Wilmington, Delaware, to gather information on the production of nuclear material from American nuclear power developers including the Tennessee Valley Authority and pass that information to the CGNPC. Ho engaged in these activities between 1997 and 2016, through his own efforts and that of unnamed consultants he hired.
8. The File Storage and China National Health case
According to a May 2017 Department of Justice press release, Chinese spy Xu Jiaqiang stole data storage technology from a US storage technology company for the benefit of China’s health system, the National Health and Family Planning Commission. He then communicated with two undercover FBI agents and offered to sell them the so-called clustered file storage technology from the unnamed victim company. He explained to the undercover cops how to set up a network of servers and uploaded the proprietary storage software onto the servers. He offered to show them how to edit the software to eliminate any trace of the name of the victim company from the screen prompts. At a meeting in a hotel room on Dec. 7, 2015, Xu showed the undercover cops the proprietary software on his laptop and boasted of multiple other “customers” to whom he had provided the stolen software. He was arrested.
In 2017, Xu pleaded guilty to three counts of economic espionage. In January 2018, Xu was sentenced to five years in prison. “Xu, a Chinese national, is being held accountable for engaging in economic espionage against an American company,” said Acting Assistant Attorney General Dana Boente. “Xu not only stole high tech trade secrets from his U.S. employer – a federal crime – he did so both for his own profit and intending to benefit the Chinese government.”
9. The Unit 61398 Case
In May 2014, federal prosecutors charged five members of the People’s Liberation Army (PLA) of China with cyberhacking their way into the confidential computer files of four US companies and one labor union. The five military men were allegedly members of Unit 61398, a unit of the PLA dedicated to cyberhacking. The companies that were hacked included aluminum producer Alcoa, nuclear power plant producer Westinghouse, solar cell manufacturer SolarWorld, Allegheny Technologies Inc., and labor union United Steel Workers. SolarWorld said that a key proprietary technology for making solar cells more efficient was stolen in this hack and turned over to a Chinese competitor.
Attorney General Eric Holder said the case was “the first ever charges against a state actor for this type of hacking…The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response.”
Since none of the PLA hackers were in the US, the indictment was not followed by trial. One cyber-sleuth has said that after the exposure of Unit 61398, China moved its dedicated cyber-hacking unit out of the PLA and into a division of Chinese intelligence.
10. The Great Firewall Case
The Great Wall of China was built to keep out invaders. The so-called Great Firewall is a network of software tools China uses to control what Internet information and websites Chinese citizens have access to. You would think that if a totalitarian Communist nation wanted to control what its citizens could see and read, it would carefully construct its own software.
But even here, China enjoys stealing American IP. In 2009, Solid Oak Software of California announced that parts of China’s Green Dam-Youth Escort software, which China required be loaded onto every PC sold in China to control access to pornography and other sites deemed unsuitable by the government was actually stolen directly from Solid Oak source code.
According to Solid Oak CEO Brian Milgrim, days after he announced his intent to sue Green Dam for stealing source code, unknown hackers began attacking the Solid Oak computer network with denial-of-service attacks, forcing the Solid Oak team to abandon their own network and use Dropbox to exchange files. “It felt like they had a plan…if they could just put the company out of business, the lawsuit goes away. They didn’t need guys with guns or someone to break my kneecaps,” Milgrim told Bloomberg News. After three years of litigation, the case was settled out of court and the cyber attacks stopped as mysteriously as they had begun.
To hear the Americans tell it, the Chinese have gone on a commercial crime spree, pilfering trade secrets from seed corn to electronic brains behind wind turbines. China has stripped the arm off a T-Mobile robot, the U.S. says, and looted trade secrets about robotic cars from Apple.
The alleged victims of that crime spree are individual American companies, whose cases lie behind the Trump administration’s core complaint in the high-level U.S.-China trade talks going on in Washington: That Beijing systematically steals American and other foreign intellectual property in a bid to become the world’s technology superstar. Yet the odds of a resolution to the trade dispute this week — or anytime soon — appear dim, in part because China’s drive for technology supremacy is increasingly part of its self-identity.
he seven-month standoff has upset financial markets and likely weakened the global economy. The United States has imposed taxes on $250 billion in Chinese imports; Beijing has lashed back by taxing $110 billion in American products.
Determined to attain dominance in cutting-edge fields from robotics to electric cars, U.S. officials charge, Beijing is not only stealing trade secrets but also pressuring American companies to hand over technology to gain access to the vast Chinese market. U.S. intelligence officials told Congress last month that China poses the biggest commercial and military threat to the United States. A separate report said Beijing will steal or copy technologies it can’t make itself. Geng Shuang, a spokesman for the China’s Foreign Ministry spokesman, retorted that it’s “totally unreasonable to make random accusations.”
Beijing counters that the United States is just trying to suppress a rising competitor.
U.S. business groups broadly support the Trump administration’s decision to confront China over its strong-arm tech policies. But they mostly object to the administration’s weapon of choice: Steep tariffs, which are taxes on importers and are usually passed on to consumers to pay.
Rooting out theft could prove impossible. Beijing typically doesn’t dispatch spies on missions of commercial espionage. Rather, it encourages Chinese who study and work abroad to copy or steal technology and rewards them when they do. So U.S. companies might have no reason to suspect anything — until a Chinese employee leaves and the employer discovers that trade secrets have been compromised.
Most U.S. companies are reluctant to voice specific complaints about their encounters in China. Rather, most choose to speak through trade groups to avoid retribution from Chinese regulators. Last year, for example, the European Union Chamber of Commerce in China found that 1 in 5 foreign companies says it feels compelled to transfer technology to the Chinese as the price of market access.
Individual examples tend to surface only when the complaints wind up in court — often in cases brought by U.S. prosecutors. Consider:
• Federal prosecutors charged in an indictment unsealed last month that the Chinese tech giant Huawei stole trade secrets from U.S. cellphone company T-Mobile and offered bonuses to employees who managed to swipe technology from other companies.
U.S. authorities said Huawei was obsessed with a T-Mobile robot nicknamed Tappy that could detect problems in cellphones by mimicking how people use them. T-Mobile was letting Huawei engineers into the Tappy lab to test their phones. In 2013, according to the indictment, a Huawei engineer spirited a Tappy robot arm out of the lab in a laptop bag. Questioned by T-Mobile, he returned it the next day. Prosecutors allege that the Chinese company hungered for T-Mobile technology to use on its own phone-testing robot.
• Apple would collect less revenue without China, the country where its iPhone is assembled and the market that accounts for the most sales of that device outside the U.S. But a secretive project that could become a future gold mine has been infiltrated by thieves trying to steal driverless car technology for a Chinese company, according to criminal charges filed in Silicon Valley. The FBI seized the latest suspect, Apple engineer Jizhong Chen, this month after he bought a plane ticket to China.
Chen and the other suspect charged in July, Xiaolang Zhang, were part of an Apple project focused on self-driving cars, according to the sworn affidavits from FBI agents. The two are accused of using their access to labs where only 1,200 of Apple’s 140,000 employees were allowed to enter to steal trade secrets.
Chen took dozens of photos of confidential work on an iPhone 6 Plus, according to court records. One photo was taken last June just a week after Chen attended Apple’s secrecy training seminar for employees, the court records show.
Zhang stored Apple’s trade secrets on various devices before being caught by the company’s security team last spring, the FBI alleged.
The alleged theft occurred while Zhang was preparing to defect to Xiopeng Motors, or XMotors, a Chinese startup specializing in electric cars and self-driving technology. XMotors’ backers include Alibaba Group, China’s largest e-commerce company, and Foxconn, one of Apple’s major contractors in China. Zhang was arrested last year as he prepared to board a flight to China in San Jose, California, the FBI said.
The FBI also alleged that Chen was stealing Apple’s trade secrets while interviewing for a job at a Chinese company that wasn’t named in the court documents.
Daniel Olmos, an attorney for both Chen and Zhang, has declined to comment on the allegations. Apple has said it’s working with U.S. authorities on the cases.
• In November, the Justice Department charged a government-owned Chinese company, Fujian Jinhua Integrated Circuit Co., and co-conspirators with stealing trade secrets from the U.S. semiconductor company Micron Technology. According to the indictment, the Chinese hoped to break into the market for a technology called dynamic random access memory, or DRAM, that’s used in computer electronics.
“China, like any advanced nation, must decide whether it wants to be a trusted partner on the world stage or whether it wants to be known around the world as a dishonest regime running a corrupt economy founded on fraud, theft and strong-arm tactics,” then-Attorney General Jeff Sessions said at the time.
The U.S. has barred Fujian Junhua from importing U.S. components, an action that threatens to put the Chinese company out of business.
• A year ago, a Chinese company, Sinovel Wind Group, was convicted in a federal court in Wisconsin of stealing technology —the electronic brains that run wind turbines — from its American partner, AMSC, formerly known as American Superconductor Inc.
“We believe that over 8,000 wind turbines — an estimated 20 percent of China’s fleet — are now running on AMSC’s stolen software,” CEO Daniel McGahn told U.S. government investigators. “AMSC has not been compensated for its losses.”
The damage from that betrayal was severe: American Superconductor stock lost $1 billion in value, and the company slashed 700 jobs, more than half its global workforce. It was, McGahn said, a case of “attempted corporate homicide.”
• A Chinese businessman, Mo Hailong, who had been caught rummaging through an Iowa cornfield was sentenced to three years in prison in 2016 for pilfering trade secrets from U.S. seed corn companies. Five years earlier, DuPont Pioneer security guards had caught Mo and other Chinese men digging in a cornfield that contained test plots of new seed corn varieties. The other suspects fled the United States before they could be arrested.
Prosecutors said Mo had traveled to the Midwest while working for Kings Nower Seed, a subsidiary of the Chinese conglomerate Beijing Dabeinong Technology Group Co., to acquire corn seed and ship it to China so scientists could try to reproduce its genetic traits.
The Five Biggest Fallacies About Intellectual Property Theft
Often trusted insiders – such as employees, third-party contractors, or vendors–attempt intellectual property theft. The impacts of IP theft can be devastating. Trade secrets worth billions of dollars have been lost to foreign countries, competing products have been brought to market by former employees and contractors, and invaluable proprietary and confidential information has been given to competitors. However, many organizations misunderstand the motivations behind intellectual property theft, as well as how to prevent it. Here are five biggest fallacies about insider IP theft.
1. Insiders steal intellectual property to sell it
Very few insiders ever steal IP to sell it. Instead, they steal it for a business advantage either to take with them to a new job, to start their own competing business, or to take it to a foreign government or organization.
For example, a Chinese EV start-up Xpeng, has stolen some of Tesla’s intellectual property, as well as its website design – in attempts to capture potential buyers.
2. IT administrators are the biggest threat
Many people believe that because they hold the “keys to the kingdom,” that IT administrators would be the prime suspect for intellectual property theft. According to the Insider Threat Division of CERT, there is no observable case in their database which shows IT administrators stole IP.
3. High-level security technologies such as SIEMs will identify and prevent IP theft
Technology is not able to recognize human behavior from logs and system events. You cannot infer enough from logs to reveal people’s intention and motivation.
Did you know that dissatisfaction plays a significant role in many cases of IP theft? Dissatisfaction often results from the denial of an insider request, which in turn decreases the person’s desire to contribute and diminishes loyalty.Yet, machines are not able to recognize negative emotions as a risk, and businesses regularly miss these red flag behavior warnings.Perhaps most importantly, you cannot detect intellectual property theft until the information is in the act of being stolen. In other words, the window of opportunity can be quite small.That’s why it is essential to pay close attention when you see potential behavioral indicators of heightened risk.
4. IP theft takes a long time and requires sophisticated hacking
Not so! Most IP is stolen during business hours and within one month of resignation, using a variety of methods. Most of these crimes tend to be quick thefts around resignation. But some insiders steal slowly over time, committing their final theft right before departure.
5. IP theft is only conducted by a single person
Intellectual property theft can be initiated by a person that may not have access to the IP. Insiders can be recruited or coerced into providing the IP to third parties. In fact, according to the Insider Threat Division of CERT, around 33% of IP theft cases were conducted to benefit a foreign government or organization.
What can you do to mitigate Intellectual Property theft?
To prevent your IP from walking out the door, consider the following set of recommendations.
Review employee contracts
- Employees sometimes bring competitive (and possibly stolen) information with them a from their previous employers. Be aware that your organization may be liable for the theft. As part of your IP agreement that new employees sign, include a statement attesting to the fact that they have not brought in any IP from any previous employer.
- It is inevitable that many of your employees leave at some point in time. As soon as a person turns their resignation, you need to be prepared to act. Identify the information they are accessing. Identify movement of that information 30 days’ prior to resignation and 30 days’ post-resignation.
- Establish consistent exit procedures which should include access termination procedures. Ask departing employees to sign a new IP agreement reminding them of the contents of their original IP agreement when they give notice. It’s also important to regularly review your termination policies and processes.
Periodically review and adjust your access controls
- Many insiders at the time of stealing information had access above and beyond what their job description required.
Monitor suspicious user activity
- Monitor online and social media actions. These sites allow employees to easily share information about themselves as well as sensitive company information. Establish a social media policy that defines the acceptable use of social media and information that should not be discussed or shared online.
- Monitoring of data movement caused by unusual activities, such as sending large attachments via email, printing sizable documents, and copying or downloading certain information.
- Track all documents copied to removable media.
- Prevent or detect emails to competitors.
- Employ targeted monitoring of users when they give notice of resignation.
Pay attention to physical behavior
- Dissatisfaction, disgruntlement, or an argument with a peer or manager may lead an insider down the path of IP theft.
Conclusion:
The Federal Bureau of Investigation and the rest of the U.S. intelligence community lack experience in civil litigation, while the civil division of the Justice Department lacks the inclination or resources to pursue complex and long-term lawsuits in the area of cyberespionage. With cybersecurity and law enforcement measures clearly insufficient to deter or defeat Chinese espionage and intellectual property theft against U.S. victims, America’s business community and private practice law community need to enter this fight. The U.S. government should remove the obstacle standing in their way.
Under current federal law, any suit alleging patent or copyright infringement must be filed in the judicial district in which the defendant resides, or in the district where they committed infringement and have a regular place of business. This makes sense for garden-variety commercial disputes between American businesses. It usefully prevents “venue shopping” for plaintiff-friendly districts, in which lawyers seeking to pursue claims find reasons to file them in pro-plaintiff jurisdictions.
However, the current geography-based structure for intellectual property lawsuits makes little sense in cases wherein Americans are burgled by foreign companies acting as government proxies executing national policy. Intellectual property theft by old-fashioned burglary may happen abroad or the theft may take place online via a keystroke in Shanghai by the Third People’s Liberation Army’s Unit 61398 and parastatal actors. Yet most foreign courts are unlikely to be fair venues for American civil plaintiffs seeking to be made whole by pursuing politically sensitive claims, especially those involving defense technology.
This is especially true in China. While some progress has been made recently, and some Chinese provincial jurisdictions appear to be fairer to foreign civil litigants than others, damages for intellectual property theft under Chinese law are still limited, and in the end, Chinese judges report to the Chinese Communist Party. As a 2018 report by the United States Trade Representative put it, notwithstanding recent positive developments, “China remains a hazardous and uncertain environment for U.S. right holders hoping to protect and enforce their IP rights,” as “interventions by local government officials, powerful local interests, and the Chinese Communist Party remain obstacles to the independence of the courts and rule of law.”
To help counteract the Chinese threat, the U.S. government should amend the relevant statute — Section 1400, Title 28, of the U.S. Code. American plaintiffs who suffer intellectual property theft should be allowed to file suit in the District of Columbia if the defendant’s business is located outside of the United States and the infringed copyrights or patents are integral to articles subject to the Export Administration Regulations and International Traffic in Arms Regulations. Haul foreign civil parties into U.S. District Court, where plaintiffs and defendants of any nationality receive fair treatment.
The administration cannot implement this proposal alone; it will require a legislative fix. President Trump and Senate Majority Leader Mitch McConnell would have to reach across the aisle to Speaker of the House Nancy Pelosi to get this done. But protecting Americans from intellectual property theft should not be a partisan issue. While some American lawyers who represent foreign defendants in intellectual property theft cases will be displeased, both parties’ leaders and voters are already displeased with China’s activities and would likely be supportive of the proposed change.
Intellectual property suits against foreigners will still present challenges, even in U.S. federal courts. Civil defendants based in foreign jurisdictions may still hide or destroy evidence, try to bury plaintiffs under mountains of non-responsive foreign-language documents (which need to be translated and reviewed at great expense), or seek to avoid paying judgments. Some bad actors may remain over the horizon and beyond the reach of American law. But other foreign companies that notoriously act on behalf of Chinese intelligence often have subsidiaries to sue and attachable assets to seize in the United States, rendering some cases against them worth bringing, in economic terms.
Americans ought to be allowed to play this tough game on their home field. The U.S. government should give the American business community and the private bar a tool to take up this important fight on behalf of fellow citizens and servicemembers.
In this article I discussed what intellectual property is and how it important it is to our economy. I have also listed which countries are guilty of IP theft, with China being discussed in depth. I have also enclosed some fallacies about IP theft. I have included some ways we can protect ourselves from IP theft. It is evident that our government is wholly unprepared to handle this growing crisis. I am hoping that with the creation of space force, there will be some carry over in industrial espionage. Hundreds of billions of dollars are being lost every year from these illegal practices. We are losing the lead in technical innovation because of this theft. We have to limit it. Part of these loses are occurring in our universities. This occurred in the 1930’s and 1940’s with espionage and theft by Russia, which was initiated by Stalin. The most catastrophic loss occurring with the theft of nuclear bomb secrets from the Manhattan Project. So it has been a problem we have been dealing with for over 80 years. I believe that President Trump takes the Chinese and Russian threat to our country more seriously. I am hoping that censure of these countries will continue and be strengthened.
Resources:
inquartik.com; “The Different Types of IP Protection and Why They Are Important“; code42.com, “5 Security Flaws That Leave Corporate Counsel Blindsided by IP Theft,” By Paul Shoning; awakesecurity.com, “Intellectual Property (IP) Theft”; prosperousamerica.org, “Top Ten Cases of Chinese IP Theft,” By Jeff Ferry, CPA Research Director; observeit.com, “The Five Biggest Fallacies About Intellectual Property Theft,” By Boaz Fischer; chicagotribune.com, “Here are 5 cases where the U.S. says Chinese companies and workers stole American trade secrets,”By PAUL WISEMAN AND MICHAEL LIEDTKE; usnews.com, “Countries the U.S. Sees as Threat to Patents and IP,” By Sintia Radu;
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