Commentary Magazine


Topic: intellectual property

How to Deter China’s Industrial Espionage

It hasn’t gotten much attention, but this week the Commission on the Theft of American Intellectual Property—a clumsy name for a valuable undertaking—issued its findings on the threat posed by espionage against American industry, mostly in the cyber domain, and suggested steps to mitigate them. The entire report of the commission, chaired by retired Admiral Dennis Blair and former Ambassador to China Jon Huntsman, is worth reading.

It certainly underlines the size of the problem, estimating that annual losses from intellectual property theft top $300 billion and result in the loss (or more properly the failure to add) millions of jobs to the U.S. economy. It also squarely blames China as the main source of all this theft, accounting for 50-80 percent of the whole. “National industrial policy goals in China encourage IP theft,” the commission found, “and an extraordinary number of Chinese in business and government entities are engaged in this practice.”

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It hasn’t gotten much attention, but this week the Commission on the Theft of American Intellectual Property—a clumsy name for a valuable undertaking—issued its findings on the threat posed by espionage against American industry, mostly in the cyber domain, and suggested steps to mitigate them. The entire report of the commission, chaired by retired Admiral Dennis Blair and former Ambassador to China Jon Huntsman, is worth reading.

It certainly underlines the size of the problem, estimating that annual losses from intellectual property theft top $300 billion and result in the loss (or more properly the failure to add) millions of jobs to the U.S. economy. It also squarely blames China as the main source of all this theft, accounting for 50-80 percent of the whole. “National industrial policy goals in China encourage IP theft,” the commission found, “and an extraordinary number of Chinese in business and government entities are engaged in this practice.”

What to do about this epidemic of industrial espionage? The commission offers some valuable suggestions, as summed up by Blair and Huntsman in a Washington Post op-ed: “denying products that contain stolen intellectual property access to the U.S. market; restricting use of the U.S. financial system to foreign companies that repeatedly steal intellectual property; and adding the correct, legal handling of intellectual property to the criteria for both investment in the United States under Committee for Foreign Investment in the United States (CFIUS) approval and for foreign companies that are listed on U.S. stock exchanges.”

Those are all valuable steps but what is really intriguing is a recommendation that the commission does not endorse at this time—but that it believes may be necessary in the future unless China mends its ways: letting companies counter-attack in the cyber domain against intellectual property thieves. Such attacks are illegal today—as is any hacking—but if it were legalized this “would raise the cost to IP thieves of their actions, potentially deterring them from undertaking these activities in the first place.” The committee didn’t endorse retaliation “because of the larger questions of collateral damage caused by computer attacks, the dangers of misuse of legal hacking authorities, and the potential for nondestructive countermeasures such as beaconing, tagging, and self-destructing that are currently in development to stymie hackers without the potential for destructive collateral damage.” It concludes: “Further work and research are necessary before moving ahead.”

These are all legitimate concerns, but given that imploring China to put a stop to its cyber-attacks has not worked, it is high time to deter such attacks by showing that the U.S. can strike back. This should not be a responsibility of industry. It is the U.S. government which is charged with the nation’s defense, and it is high time that the government—specifically the military’s cyber command—seriously consider retaliating in kind for Chinese attacks on our computer networks, both government and civilian. Only if Beijing knows that it will pay a heavy price will it stop its aggressive cyber-intrusions.

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GOP’s Short-Lived Shift on Copyright Law

The Republican Study Committee, a conservative policy-focused organization in Congress, recently released a smart paper on copyright law that’s drawn some controversy. It was written by RSC staffer Derek Khanna (full disclosure: he is a college friend), and it makes the case that current copyright law does the opposite of what it was originally intended to do — instead of fostering innovation and intellectual growth, it’s hindering it.

The paper echoes reasonable arguments for copyright law reform that libertarians have been making for years. But shortly after it was published, it was mysteriously yanked from the RSC website, supposedly because it wasn’t properly reviewed.

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The Republican Study Committee, a conservative policy-focused organization in Congress, recently released a smart paper on copyright law that’s drawn some controversy. It was written by RSC staffer Derek Khanna (full disclosure: he is a college friend), and it makes the case that current copyright law does the opposite of what it was originally intended to do — instead of fostering innovation and intellectual growth, it’s hindering it.

The paper echoes reasonable arguments for copyright law reform that libertarians have been making for years. But shortly after it was published, it was mysteriously yanked from the RSC website, supposedly because it wasn’t properly reviewed.

“This Policy Brief presented one view among conservatives on U.S. copyright law. Due to an oversight in our review process, it did not account for the full range of perspectives among our members,” said an RSC spokesperson. “It was removed from the website to address that concern.”

What makes that explanation even stranger is that there hasn’t been any backlash against the paper from the right — nobody clamoring (at least publicly) that their “perspective” wasn’t given due consideration. In fact, the paper received only positive reviews from various corners of the conservative sphere, including David Brooks, Red State, Reason, AmCon, Glenn Reynolds, and Volokh

The only real pushback seems to be coming from Hollywood lobbyists and “paid advocates” for the telecom industry. ArsTechnica reported the RSC pulled the paper under lobbyist pressure (although one of the top lobby groups denied involvement).

If the RSC did cave to industry pressure, that would be unfortunate. Not because the GOP is missing an opportunity to capture the youth vote, or get “revenge” against Hollywood, or anything that conniving. But because it’s a shame when lobbyists who profit from bad laws are able to block opportunities for reform. Under current copyright law, works don’t enter the public domain until 70 years after the author’s death (for corporate authors, the timespan is 120 years after creation). Authors should own the exclusive rights to their work for some time, or there would be little incentive to create anything. But at what point does the incentive taper off? If you knew you would only own the copyright to your work for the next 50 years, as opposed to the next 120 years, would you any have less incentive to write a book or compose a song or publish a scientific research paper? For the vast majority of authors, that probably wouldn’t even factor into their decision — but it makes a big difference for the general public.

Reforming copyright law could give the public freer access to books, scientific papers, music and art decades earlier than they otherwise would have. It would encourage online libraries, where people could access literature and scientific research as it enters the public domain. It would make learning less costly. And it would support innovation by fostering a society where ideas are more accessible, and easier to build upon. As the RSC paper pointed out, this is the explicit constitutional purpose of copyright law — encouraging innovation and scientific advancement, not ensuring indefinite compensation for authors.

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Should the Pentagon Respect North Korean Intellectual Property?

Twenty years ago, when still a young college student reconsidering early plans to become a research biologist (a C- in organic chemistry helped that decision along considerably), I interned at the Foreign Policy Research Institute in Philadelphia. In an age before Google and when Internet resources were few and far between, one of my jobs was to go to the University of Pennsylvania’s library and read through the Foreign Broadcast Information Service (FBIS) and the Joint Publications Research Service (JPRS).

For five decades beginning in 1946, FBIS would translate important newspaper articles and television and radio broadcasts from around the globe. Its corollary, JPRS, would translate journal and magazine articles. The U.S. government would recoup some of the cost of the operation by selling subscriptions to think tanks and universities. On an almost daily basis, FBIS and JPRS would mail out booklets sorted by region. The subscriptions were priceless for anyone who for research purposes wanted to read what the Soviet, Chinese, North Korean, Pakistani, or Cuban media was saying.

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Twenty years ago, when still a young college student reconsidering early plans to become a research biologist (a C- in organic chemistry helped that decision along considerably), I interned at the Foreign Policy Research Institute in Philadelphia. In an age before Google and when Internet resources were few and far between, one of my jobs was to go to the University of Pennsylvania’s library and read through the Foreign Broadcast Information Service (FBIS) and the Joint Publications Research Service (JPRS).

For five decades beginning in 1946, FBIS would translate important newspaper articles and television and radio broadcasts from around the globe. Its corollary, JPRS, would translate journal and magazine articles. The U.S. government would recoup some of the cost of the operation by selling subscriptions to think tanks and universities. On an almost daily basis, FBIS and JPRS would mail out booklets sorted by region. The subscriptions were priceless for anyone who for research purposes wanted to read what the Soviet, Chinese, North Korean, Pakistani, or Cuban media was saying.

The Clinton administration witnessed the rise of the lawyers at all levels of the U.S. government. Through his two terms and onward to the present, lawyers became the kings of policy, inserting themselves into almost every policy decision, no matter how mundane. Certainly, working within the law can be valuable, but often lawyers’ efforts to expand their domains would lead bureaucracies to lose focus on the metaphorical forest, and instead obsess about the trees.

Knowing one’s enemies is important. Whether in government or beyond, analysts and academics should study what enemies do, say, and try to understand how they think. Government lawyers, however, questioned whether FBIS and JPRS were violating the intellectual property of enemy regimes and their broadcasters by translating and disseminating reports.

FBIS and JPRS ended their run, but the CIA’s Open Source Center moved to fill the gap. While academics and government employees can access Open Source, the government is stingy with outside subscription and, regardless, the service is a shadow of its former self. Its idea of presenting articles is, too often, reprinting articles published in English and available on the Internet. While the Open Source Center publishes useful summaries, it translates very few articles in their entirety.

The situation is getting worse. Within the U.S. military, for example, certain outlets publish excerpts and analysis of important foreign news with the aim of educating officers and enlisted both regarding the nuances of foreign affairs and insight into crises which may not be covered on a day-to-day basis in The New York Times, Washington Post, Stars & Stripes, or The Early Bird. Foul cried the lawyers: Translating articles or even excerpting too much about what Koreans, Russians, Iranians, or Chinese say could violate their copyright laws. Never mind that no one had ever complained. Nor will playing nice stop Pyongyang from counterfeiting $100 bills, or stop Tehran bazaaris from knocking off American DVDs.

Within government, there are two types of lawyers: Those who see their jobs to obstruct policy and those who take the goals of policymakers and find ways to make them legal.  Unfortunately, the U.S. government is increasingly saddled with the former, taking an already slow and inefficient process and making it slower and even more inefficient.

A strong defense budget is essential. It should go to state-of-the-art weapons programs, equipment for our troops, salaries for those who put themselves in harm’s way, and services for veterans who have sacrificed their health and well-being. Never was the U.S. military meant to be a jobs program for lawyers. The more Pentagon lawyers sit around worrying about North Korean intellectual property rights and the evils of translating Syrian newspapers, the more Leon Panetta should conclude that the military’s lawyers should be at the front of the line when the budget axe falls.

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