American Intellectual Property Theft a $600 Billion Dollar Issue

American Intellectual Property (IP) theft is costing the domestic economy as much as $600 billion per year, as reported by the Associated Press, and it appears lawmakers and watchdogs have taken note.

Understanding the events that have precipitated the current U.S. IP theft climate will help us know what we can expect in 2024.

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American IP Theft by the Numbers

Data security firm Cyberhaven defines Intellectual Property theft as “an illicit activity that manifests through the unauthorized use, reproduction, or distribution of intellectual property owned by others.” This can include infringement and abuse of copyrights, patents, trademarks, trade secrets, pieces of art, and more. According to the Visual Capitalist, “Intangible assets currently account for 90% of the index’s total assets.” In other words, intangibles like intellectual property make up much of an organization’s wealth.

That’s why keeping – and losing – IP comes with a heavy price.

The National Intellectual Property Rights Coordination Center (IPRCC) is the U.S. government’s enforcement arm for trade laws against Intellectual Property (IP) theft. According to the IPRCC,

  • Criminal arrests for IP theft are up by 39%
  • Convictions are up by 29%
  • Indictments are up by 99%

These statistics only begin to tell the economic story. As of 2018, the sales of counterfeit and pirated goods totaled between $1.7 trillion and $4.5 trillion annually, per The U.S. Patent and Trademark Office. Music piracy costs the U.S. economy more than $12 billion annually, the Institute for Policy Innovation notes, and the average cost to defend a patent lawsuit now exceeds $3 million dollars.

And then there are the intangible costs of IP theft. Notes research firm Deloitte, “IP theft has ramifications that are harder to grasp: fewer up-front, direct costs but potential impacts that might metastasize over months and years. Theft of PII might quickly cost customers, credit ratings, and brand reputation; losing IP could mean forfeiture of first-to-market advantage, loss of profitability, or — in the worst case — losing entire lines of business to competitors or counterfeiters.”

Bad News for an IP Economy

No country wants to be hit with IP theft, but some are more impacted than others. This depends on their reliance on intellectual property in the first place. When it comes to considering qualifying candidates, the U.S. might top the list.

U.S. Ambassador Dennis Shea stated that as many as 9 out of 10 U.S. exporters are patent-holding firms. IP-intensive industries generated 5.6 million jobs, and workers in this field earned nearly 40% more than their non-IP counterparts. And, according to President Bush’s Economic Report to Congress in 2006, 70% of publicly traded companies’ value was in intangible assets.

Domestic IP Theft Headlines of 2023

There are stories behind the dismal numbers. This past year, the IPR Center had their hands full of U.S. IP abuses. Some of the highlights included:

Fake NFL merchandise

The IPR Center teamed up with the National Football League (NFL) this past spring to confiscate nearly $23 million in counterfeited sports swag. It was especially hard-hit before the Super Bowl.

Illegal World Cup live stream

In March, twenty-three websites were apprehended for illicitly live streaming the World Cup games, and directly violating Fédération Internationale de Football Association (FIFA) copyrights in the process.

Spoofed World Series goods

Enforcers got smart and tried to circumvent the expected onslaught of mimicked goods before they ended up in customers’ hands. In October, IPRCC teamed up with Homeland Security Investigations (HSI), U.S. Customs and Border Protection (CBP), and Major League Baseball (MLB) to prevent the physical or online sale of knock-off World Series products.

FiveEyes vs. Chinse IP theft

The Five Eye’s Alliance issued a rare joint statement condemning China for its “unprecedented threat” to protected innovation, particularly in the United States. Concurred FBI Director Christopher Wray, “China has long targeted businesses with a web of techniques all at once: cyber intrusions, human intelligence operations, seemingly innocuous corporate investments and transactions…Every strand of that web had become more brazen, and more dangerous.”

IDEA

A new law was proposed to create dedicated oversight to run an IP enforcement program at the state and local levels. Known as the IDEA Act, the American IP Defense and Enforcement Advancement Act is a response to the high costs domestic businesses are now paying in IP theft.

For every one highlight, there are several more in the shadows.

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What We Can Expect in 2024

If this year is any indication, next year will be full of anxious attackers waiting to get more out of U.S. intellectual property.

Generative AI is still in murky territory where IP is concerned; know the risks and proceed with caution. Watch out for disgruntled insiders: External threat actors poach them for their access to IP goods and up their efforts during times of layoffs. And make sure you’re staying compliant. IP theft that occurs through malicious data exfiltration can be stopped by adhering to industry and government regulations like HIPAA, GDPR, SOX, and more.

Whether it be state secrets, trade secrets, or just team swag, the result is detrimental to the U.S. economy, and today’s organizations need to be on the lookout.

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