On May 22, 2013 the IP Commission – a blue ribbon panel of business and government experts – released its Report on assessing international intellectual property theft.  Not only does the Report look at the pervasive scope and damage of IP theft in its many forms – patent infringement, cyber theft, and copyright and trademark violations – but it also evaluates China’s central role as a sponsor of such activity, and succinctly outlines recommendations for steps the U.S. government should take in the short and long term to stop the hemorrhaging of American knowhow.  The Report dovetails with the February 2013 White House Administration Strategy on Mitigating the Theft of U.S. Trade Secrets, which we talked about in our April 22 post.

In short, the IP Commission concludes that “cheating is commonplace,” existing remedies are inadequate, and American business suffers billions in losses.

One of the best points made in the Report is that Government diplomacy, regulation and legislation must change the cost-benefit analysis for foreign governments and private actors who steal our IP. Until IP theft is unprofitable and competitors and foreign entities are effectively incentivized to pay for American IP instead of stealing it, the landscape is unlikely to change.

Among a number of next steps, the Report recommends that Congress amend the Economic Espionage Act to create a private right of action for companies to recover damages caused by IP theft, especially trade secrets.  At present the EEA only permits criminal prosecution for such bad behavior.  The Report also recommends that companies victimized by cyber attacks be authorized to use cyber tools to identify and neutralize any IP stolen as a result of the attack, even to the extent of destroying the hacker’s own computers and network.  Under existing law, any such counteroffensives are illegal.

Until American companies have the tools to protect their assets and make IP piracy a losing strategy, the cyber theft landscape won’t change.  The IP Commission’s Report is the latest call to level the playing field.