With an economy that stands shoulder-to-shoulder with global giants, California faces a critical challenge: the escalating threat of intellectual property theft. This issue, if not urgently addressed, could severely impact the Golden State’s economic stability.
Sens. Chris Coons (D-DE), Marsha Blackburn, (R-TN) and Thom Tillis (R-NC) recently expressed apprehension about the lack of enforcement of IP rights. In a recent letter, they decried the DoJ’s failure to focus on corporate offenders of IP abuses, opting to narrowly focus on individuals instead.
The DoJ’s blind eye approach to addressing corporate IP theft is affecting California more than most states. In fact, the senators’ letter specifically cited the case of CoStar Group et al. v. Commercial Real Estate Exchange, Inc. (CREXi), which is currently pending in the Central District Court of California Court in Los Angeles.
The senators said that the suit alleges CREXi “has used stolen passwords to impermissibly access the database of its primary competitor and to steal content” while “using foreign companies in India to impermissibly access that competitor’s websites to steal and crop copyrighted photos…” The worst part is that this might not be CREXi’s first rodeo when it comes to IP theft, either. The company was previously sued for stealing trade secrets from another rival, for which it paid damages. And yet, the senators noted that the DOJ does not currently appear to be pursuing criminal charges.
While CREXi is perhaps the most prominent pending case of corporate IP theft in California today, it is far from the only one. Should the DoJ continue not to prioritize investigating these incidents, it can undermine the state’s entire economy.
Unbeknownst to many, California boasts the largest sub-economy globally, with an astounding $3.8 trillion gross state product. This places California, if considered a country, as the fifth-largest global economy. A significant driver of this prosperity is the state’s robust tech industry, home to world-renowned giants such as Apple, Google, and Facebook. The vitality of these companies, integral to California’s economic health, hinges on robust IP protection. Without it, their value and, by extension, California’s economy, could suffer immensely.
A report by the Commission on the Theft of American Intellectual Property puts the cost of IP theft to the U.S. economy at an alarming $225 billion to $600 billion annually. Beyond economic prosperity, national security is also at stake. A 2018 analysis by the US Trade Representative revealed Chinese government-backed cyber intrusions into U.S. commercial networks, targeting sensitive business information. The extent of IP theft is so widespread that one in five North American companies reported such incidents from Chinese entities last year.
Fortunately, many elected officials have begun to recognize the need to become more serious about IP enforcement and are taking action.
The House of Representatives Select Committee on the Chinese Communist Party, led by Rep. Mike Gallagher (R-WI), is pressing the Department of Justice to intensify its response to IP crimes, especially those threatening American small businesses.
The importance of protecting IP is not lost on the U.S. Senate, either.
Senators Tammy Baldwin (D-WI) and John Cornyn (R-TX) recently introduced the American IP Defense and Enforcement Advancement (IDEA) Act, a bipartisan response to yearly significant losses business owners face due to IP theft.
The IDEA Act reauthorizes a law enforcement intellectual property enforcement program at $25 million annually from 2024-29. The program, which was in effect from 2009-2013, supports state, local, and tribal jurisdictions in preventing, reducing, investigating, and prosecuting IP theft crimes. The bill also creates an IP Protection legal aid program to counsel and protect small business owners, authorizes studies by the Government Accountability Office on protecting IP from misuse by watch list countries and recovering financial losses from theft, and creates an annual reporting requirement by the IP Enforcement Coordinator on theft prevention strategies.
While these members of Congress should be lauded for their stalwart defense of intellectual property rights, the country must ensure that the DoJ and Biden administration address IP theft with the same vigilance as members of Congress. It is the only way to ensure the California economy remains the envy of the world.
Mark Anthony, is a former Silicon Valley Executive with Forrester Research, Inc. (Nasdaq: FORR). He is now the host of the nationally syndicated program, The Patriot and The Preacher Show. Find out more at patriotandpreachershow.com.
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