Category: China

Mark Anderson, Founder & CEO, INVNT/IP

Security, Risk, and Software: Protecting Crown Jewels from State-sponsored Theft

COFES 2015: Stepping Back to See the Big Picture

 

Executive Branch Commits to Serious Penalties for Crown-Jewel Intellectual Property Theft – Addresses Espionage Described by INVNT/IP (an SNS Initiative) As “National Emergency”

The INVNT/IP Global Consortium, a Strategic News Service global initiative, has issued a strong public endorsement of President Barack Obama’s presidential order leveling sanctions against those who steal corporate trade secrets. It applauds and supports the President and Michael Daniel, Special Assistant to the President and Cybersecurity Coordinator, in their work to curtail the ongoing epidemic of other nations stealing America’s “crown jewel” intellectual property. The Consortium has now shown that this practice does irreparable harm to the US and global economy, and believes that President Obama’s Executive Order 13964, signed on April 1st, is the first major step in a difficult path toward more equitable global competition for innovating US firms.

INVNT/IP internal research shows that Chinese cyber espionage – an ongoing nation-sponsored project targeting crown-jewel intellectual property in firms worldwide – caused at least USD 2.27 trillion in damages to the US economy in just four economic subsectors between 2003 and 2013.

Non-classified INVNT/IP information indicates that the People’s Republic of China is responsible for 80% to 90% of the theft of crown-jewel intellectual property. INVNT/IP’s work further shows that Chinese state-sponsored groups are currently targeting innovating firms in 402 different sectors specifically chosen by the Politburo Standing Committee, seeking to steal and “digest” the intellectual property of leading firms and government bodies in the United States and abroad.

The Consortium anticipates that the President’s order paves the way for further action regarding the issue of economic espionage perpetrated against US firms and government organizations. In declaring such theft a national emergency, the directive authorizes strict economic consequences, including seizure of assets, restriction of travel, and prosecution by the Treasury and Attorney General in cases of significant financial harm to US interests through malicious cyber activity.

“The INVNT/IP Consortium encourages both parties in Congress to take additional steps in this direction, united by the understanding that technology drives the global economy, and state-sponsored theft of crown-jewel secrets is a direct attack on American jobs, families, companies, and the nation’s economic security.

“We fully support the President in this action and applaud his leadership in identifying the Number One threat to American workers and business owners today. Stealing corporate trade secrets is a calculated, illegal activity which has already destroyed entire global economic sectors, creating trillions of dollars in permanent damage to American towns and cities, our most innovative companies, and the country itself. The competitive struggle so often described today between the US and China is not one of legitimate competition, but rather is a battle between thieves and victims. This has to stop, and the President’s order is a great first step,” said Mark Anderson, CEO of the INVNT/IP Consortium.

INVNT/IP represents the world’s top technology companies in working with lead government agencies and universities worldwide to protect “crown jewel” intellectual property. The Consortium conducts active programs for the promotion of IP value recognition and protection through cooperation among its corporate members and global government network. It currently operates in Australia, the US, the UK, and the EU.

For more information about INVNT/IP, visit the website: www.invntip.com.

From The Seattle Times:

Seattle-area analyst sees danger ahead

On a scale of 1 to 10, how much would you say you care about IP theft?

IP what?

IP is intellectual property. It’s the core of invention — the thing that gets protected so that good ideas become good products that make good money and inspire more good products down the road.

If you’re like me, the fact that technology makes IP easier to steal hasn’t been anywhere near as interesting as how it’s helped you get more done, or keep up with friends, or launch into debates over things like location, privacy and whether Android beats iPhone.

But, according to a smart guy [Mark Anderson] who makes big calls from Friday Harbor, we should be paying a lot more attention.

Read the complete article.

Innovation is now the driving force of the global economy and intellectual property (IP), which results drive wealth creation in companies, economic sectors, and countries. So what can universities and other public institutions do to turn innovations into IP and to protect that IP so that it generates future jobs for the US economy?

That’s one of the fundamental questions to be addressed on Thursday, March 13, at the University of California, San Diego, in a workshop on “The Growing Value of Innovation & Intellectual Property As Drivers of the Global Economy.” The meeting – which is open to the public, but registration is required at www.calit2.net/iip/ – is organized by the California Institute for Telecommunications and Information Technology (Calit2) and the Inventing Nations vs. Nation-sponsored Theft of IP (INVNT/IP) Global Consortium.

“Calit2 has a long-term interest in pulling together the academic and private sectors to create environments which encourage innovation,” said Calit2 Director Larry Smarr. “A major part of that environment must be an effort to define and safeguard intellectual property which emerges from innovation. This is a kickoff meeting of a multi-year Calit2 program with our campus and private sector partners to pursue best practices in the creation and protection of IP coming out of UC San Diego labs.”

The workshop is the first held by INVNT/IP on a university campus, after extensive prior interactions with large corporations and international policymakers. INVNT/IP was established in 2011 by the Strategic News Service (SNS), after a lengthy study of nation-state business models that rely heavily on the theft of IP.

“It’s about the Big Shift in the global economy, as we move from an era when inventions paid off to an era when copying and theft makes more money,” wrote INVNT/IP founder Mark Anderson in an SNS article republished by Forbes magazine in August 2013. “Is it possible that we are not running out of great inventors, but rather, the business models to enable them?”

Anderson, a longtime member of Calit2’s Advisory Board, recently invited Calit2’s Smarr to join the INVNT/IP Advisory Board, and the two will co-chair the March 13 workshop in the Qualcomm Institute, the UC San Diego division of Calit2 (the other division is at UC Irvine).

Prior to the afternoon workshop, Calit2 is holding meetings with UC San Diego faculty from the three campus units co-sponsoring the event: the Rady School of Management, the School of International Relations and Pacific Studies (IR/PS), and the Jacobs School of Engineering. The morning meetings will focus on ways for the three schools to enhance academic research into the broad issues related to the growing role of innovation leading to the creation and transfer of IP in the global economy.

Smarr, who is also a professor of Computer Science and Engineering in the Jacobs School, said “the university plays a critical role in the creation of IP, but there are many people in the private sector who don’t necessarily know how an innovation goes from being an idea in a professor’s lab to being a formal piece of intellectual property – and how the university decides which innovations to back. We hope this meeting will shed some light on this process and how valuable IP can be protected.”

Smarr will open the workshop, followed by INVNT/IP’s Mark Anderson, who will provide a short talk on the challenges that INVNT/IP was created to overcome. In his framing talk, Anderson will explore global business models, a new theory of Flow Economics, and how the flow of IP around the world will determine tomorrow’s winners and losers. “If you think of innovation as a supply chain from the research lab to the global marketplace, if that chain is short-circuited because of IP theft, you may lose a future company of great value,” said Anderson. “So we have to understand the scale of the threat facing the $84 trillion of the global economy that is driven by IP.”

Jane Moores, assistant vice chancellor in the UC San Diego Technology Transfer Office, will moderate the first of three afternoon sessions. “The Role of Research Universities in Defining, Protecting, and Innovating with IP Protection in the University” will feature talks by Bill Decker of the university’s Technology Transfer Office, Qualcomm Institute Director Ramesh Rao, and Alan Kraemer of ComHear, a company that recently signed a wide-ranging agreement to fund and commercialize advanced audio research with the Qualcomm Institute’s Sonic Arts R&D laboratory led by professor Peter Otto.

Smarr will moderate a following session on “Supporting Intellectual Property Creation in San Diego.” Speakers will include Jacobs School of Engineering Dean Al Pisano, who is in a unique position to talk about creating an environment that both generates and protects IP, after having created nearly a dozen companies out of his lab at UC Berkeley before joining the Jacobs School in 2013. Others on the panel will be: Rory Moore, who leads EvoNexus, one of the most successful incubators in San Diego; and Ruprecht von Buttlar, VP of Business Creation and Development at CONNECT, who leads its Springboard business-creation program.

The final panel will delve into “How Wealth Is Created by the Invention and Protection of Intellectual Property.” Moderated by Bruce Bigelow, San Diego editor of Xconomy (the workshop’s media sponsor), the session will explore the legal and regulatory environment facing technology companies. Attendees will hear from David Titus, president of the San Diego Venture Group (which represents the growing venture-capital community in the region), and representatives from local IP-based companies.

INVNT/IP’s members comprise some of the top technology companies in the world, and its Global Network includes Cabinet-level policymakers in the US, Australia, the UK, and much of the European Union.

Related Links

Workshop website www.calit2.net/iip/
INVNT/IP http://www.invntip.com
Strategic News Service www.stratnews.com
Calit2 www.calit2.net

SNS Members have been way ahead of the curve in learning about China’s national business model and its dependency on stolen foreign intellectual property. Until recently, China’s Intellectual Property thefts have been discussed and dealt with publicly as security or crime issues.

Since President Obama’s State of the Union speech, however, and more specifically in the last three weeks or so, we have had the deep satisfaction of seeing virtually all members of the Executive Branch, and Congress, espousing what we can now call the “SNS INVNT/IP” interpretation of this problem, a perspective we have described in detail over the last three years.

Finally, unlike what we heard from Obama during the presidential campaigns, we now are seeing a publicized direct connection between Chinese theft of corporate IP, and jobs. Also from the INVNT/IP playbook: an orchestrated effort by all branches of the government to end this theft.

In the last month, the the president, the State Department, and now the DoD have all embraced the SNS/INVNT/IP view on this matter, linking the economy to security, IP theft to job loss, and China’s government and military to sustained IP attacks. Although we cannot attribute any particular government action to INVNT/IP efforts, we can celebrate a result that we have been working to achieve over the last year.

Here are a few quotes behind the campaign, beginning with the just-released Department of Defense report:

 “In 2012, numerous computer systems around the world, including those owned by the U.S. government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military.”

 

And here is SNS member and INVNT/IP network contact Robert Hormats, Under Secretary for Economic Growth, Energy and the Environment. Members who attended the SNS Annual Predictions Dinner at the Waldorf-Astoria in December 2011 will recall Bob’s similar, private comments, after we’d had a chance to talk at length about this problem. This excerpt is from a recent speech Bob gave in China (highlights are the publisher’s):

 

Let me turn to the third area, which is cyber theft and IPR protection. Another key problem that can leave China disconnected from, or subject to suspicion within, the global online community is the serious and continuing challenge of insufficient protection of intellectual property rights.

It is troubling to see the deterioration in the confidence in our economic relations with China, within the U.S. government, and our business community, because of IP violations, trade secrets piracy, and incidents of cyber intrusions.

So many aspects of the U.S.-China bilateral relationship are moving in the right direction. In fact, there are many examples where we are working constructively on economic, political, and security issues. It’s disappointing that this is not one of those areas.

From my vantage point, more than any other single factor, serious incidents of IP violations, trade secrets piracy, and growing evidence of cyber intrusions are responsible for substantial mistrust in our economic relationship by many American businesses and many officials in our government, who otherwise hope for, and are working for, improved relations with China. And, unfortunately, this mistrust is not confined to the United States. It extends to other countries as well.

The level of IPR infringement and trade secrets piracy in China – including online piracy – remains puzzling to me for a country that has more and more intellectual property of its own that needs to be protected.

Allow me to focus for a moment first on the IP issue. When I addressed this gathering in 2011, I emphasized that we do not view IP theft as a “United States versus China” issue. Many in China also suffer from it. So, it would be useful for all stakeholders in the U.S. and China to collaborate on this issue.

I have noted during the past year that this message also resonates with many Chinese companies, researchers, and educational institutions. Unfortunately, the IP issue can be a major deterrent to the high-value added investment China wants to encourage. It also goes to the trust factor as it relates to access of Chinese goods to foreign markets – if there is suspicion that certain products are made with illegally obtained intellectual property.

We know that many Chinese companies have devoted significant resources to developing new products and new technologies. And many of these companies complain that they also suffer when competitors here have illegally copied their ideas and technology.

But it is also important and fair to acknowledge that China has made some progress in some areas. Much of that progress is the direct result of the personal engagement of Chinese leaders. It reflects the hard work of people like former Vice Premier and now Politburo Standing Committee member Wang Qishan led the State Council IP campaign and worked to create the National Leading Group on IP. And as a result of these efforts, there has been improved IP protection in some areas, such as software legalization.

Further improving intellectual property rights protection would be a positive development for China. It would give inventors and creators here greater opportunity to engage foreign counterparts in business and research cooperation without these foreign counterparts fearing loss of their intellectual property.

The United States will continue to work with China in this area. We desire cooperation, not confrontation, because we believe that business and scientific collaboration between our two countries and among all countries can be mutually beneficial if done fairly and on a level playing field. But at the same time, we will vigorously act to protect our own interests because our innovation is vital to the future.

We recently unveiled a new IP and trade secrets strategy to address the theft – both online and otherwise – of our IP and trade secrets wherever it comes from in the world. The United States also has utilized the Special 301 and Notorious Markets reports to encourage improved IPR protection and enforcement.

We have seen positive results in many countries, and some positive results here in China where companies are attempting to address these concerns. But, there remains a great deal left to be done.

Finally, let me turn to the cyber issue. The level of cyber intrusions emanating from China that result in theft of valuable propriety information has reached an unprecedented level. Recent public evidence has documented this.

This problem is a big part of the mistrust I mentioned earlier. The U.S. government is taking an active approach to addressing the issue, and we continue to raise our concerns with senior Chinese officials.

As an old friend of China, I question and ask my Chinese friends to question, whether this activity serves China’s real interests as it seeks to attract high-end investment, aims to develop international markets for its innovative products, and wants its companies welcomed and respected as they increasingly invest around the world. —

In a recent speech, the U.S. National Security Advisor, Tom Donilon, called for a constructive direct dialogue between the United States and China to address acceptable norms of behavior in cyber, noting that our two countries, “the world’s two largest economies, both dependent on the internet, must lead the way in addressing this problem.”

The need for a productive dialogue with a clear and constructive outcome is critically important to our bilateral relationship and the restoration of trust. The dialogue must not be prolonged and must be a means to an end — which in this case must mean an end to this problem.

– Under Secretary Robert Hormats, speaking in China at the

U.S.- China Internet Industry Forum, Beijing (April 9, 2013).

(Arranged and sponsored by SNS member Craig Mundie, Microsoft)

 

Bob again, writing on HuffingtonPost.com:

Many nations have adopted strong intellectual property rights systems, which have benefitted not only their own people but also the global economy. Many governments, however, still turn a blind eye to trade secret theft, counterfeiting, and piracy. Some governments also believe in “innovation nationalism” which discriminates against innovators abroad. In the long-term, intellectual property theft or nationalistic innovation restrictions — that often appear to be attractive options in the short run — benefit no one. Innovators — young and old alike–deserve the opportunity to be rewarded for their efforts. And, the world economy benefits from new innovations, and growing collaboration among global innovators, to fuel growth and development.

Inventors and creative innovators should be seen as role models for this generation. It is they who will make the future work! Governments and individuals gain when more and more nations recognize and respect the value of intellectual property rights. All of us have a common interest in protecting and respecting intellectual property rights, which support innovative efforts and creativity.

In addition, our young people, and indeed all creators, inventors and entrepreneurs, must educate themselves about intellectual property rights regimes and take the time to learn how to protect their creations. They must know that a patent is only valid in the country where it is filed. They must consider the quality of intellectual property rights protection in the country, or countries, where they do research, work, manufacture, invest and sell their inventions, so those inventions are protected. Stopfakes.gov is a great place to start that research.

Finally, it is important for recognize the overall cost of failure to protect intellectual property rights. While fake handbags, illegally used software, counterfeit drugs, stolen copyrighted works or pirated movies may look appealing, many people who worked hard to create and produce them suffer from their sale. (And many are downright dangerous such as counterfeit drugs, auto and airplane parts etc.) Moreover, the incentive to put more money, creativity and energy into new creative products is diminished. The economy suffers. And there is a huge ripple effect. So, we all share responsibility to encourage our friends, families, associates, and governments to understand and respect intellectual property rights, for ourselves and coming generations.

 

We’ll be releasing a more detailed study of this major shift in US policy in the next few weeks. For the moment, it’s enough to make sure that SNS members realize that the US government, at the highest levels, now seems fully aligned with SNS INVNT/IP’s objectives.

 

Terrific.

 

And yes, there is much more work to do, creating actions that will lead to real results.