Industry Report On Trade Secret Theft, Congressional Demand For IP Protection, As US-China Meet

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A report released today asserts that trade secret theft is occurring on a massive scale worldwide, and that most companies are not taking sufficient steps to stop it. The report, which comes on the eve of bilateral economic meetings between the United States and China, offers a set of recommended actions for companies and others. Also today, leading Democratic members of Congress urged the Obama administration to demand tougher action by China on intellectual property rights protection.

The trade secret report notes that companies are trying to take advantage of expansion to global markets, but take significant risks in sharing sensitive information with suppliers and others internationally. Trade secret theft costs multinational companies billions of dollars per year, it said.

Entitled Trade Secret Theft: Managing the Growing Threat in Supply Chains [pdf], the study was published by the Center for Responsible Enterprise and Trade (CREATe) in Washington, DC. The non-profit industry group was founded in 2011 by Pamela Passman, a former corporate vice president and deputy general counsel at Microsoft responsible for regulatory compliance and public policy. Passman is president and CEO of CREATe.

Recommendations include assessing the company’s trade secrets, conducting due diligence before entering contracts and ensuring there are strong contractual protections. It also includes taking steps during and after the business relationship with suppliers.

Democratic Trade Leaders Demand Action on IP

Separately, US House of Representatives Ways and Means Committee Ranking Member Sander Levin (Democrat, Michigan) and Senate Finance Committee Chairman Max Baucus (Democrat, Montana) today urged Treasury Secretary Tim Geithner and US Trade Representative Ron Kirk to use the 3-4 May US-China Strategic and Economic Dialogue (S&ED) meeting to make progress on intellectual property rights protection, market access and currency concerns.

“We … continue to be concerned about the slow rate of progress with respect to the protection of intellectual property rights in China,” the members said. “The Chinese government has made numerous pledges and commitments in various fora, including in the S&ED in areas such as software legalization, but the implementation of those commitments has been mixed at best. While some U.S. software firms have seen an incremental or modest increase in sales to the Chinese government, there has been no meaningful progress with respect to sales to the much larger and commercially important state-owned enterprise (SOE) sector. Likewise, while personal computer sales in China have grown to surpass those in the United States, purchases of legal software have not kept pace.”

“And,” they continued, “massive problems persist with respect to patent, trademark, and trade secret protection. The Chinese government’s agreement to make the special intellectual property rights enforcement campaign permanent and its enhancement of the authority of China’s Ministry of Commerce are steps in the right direction, but far more must be done to protect America’s innovations and competitive edge. Chinese commitments must produce significant, concrete results.”

William New may be reached at wnew@ip-watch.ch.

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