Protecting Intellectual Property and the Nation’s Economic Security

Intellectual property is a driving force behind the U.S. economy. Intellectual property refers to the inventions, ideas, designs, and creations that are protected by U.S. law. Even the country’s founding fathers recognized the importance of intellectual property and provided for its protection in the Constitution. Article I of the U.S. Constitution grants Congress the power to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” In the Federalist papers, James Madison explained that maintaining the rights of individuals to their writings and inventions was a “public good.” The public good from intellectual property is increasingly threatened at great cost to the U.S. economy. The United States must stem the loss of intellectual property before the lost value to the economy leads to irreparable harm to national security.

Value of Intellectual Property
The United States protects IP rights primarily through patents, trademarks, and copyrights. Patents, protected by the Patent Act of 1952, refer to “inventions of processes, machines, manufactures, and compositions of matter that are useful, new, and nonobvious.” Trademarks, protected by the Trademark Act of 1946 (also known as the Lanham Act), refer to the “words, names, symbols, sounds, or colors that distinguish goods and services from those manufactured or sold by others.” Copyrights, protected by the Patent Act of 1952, refer to “original artistic and literary works of authorship.”

The United States also protects a fourth kind of intellectual property called “trade secrets.” Trade secrets are defined as “all forms and types of financial, business, scientific, technical, economic, or engineering information . . . whether tangible or intangible,” provided the owner takes reasonable measures to protect the information and the information provides economic value if not known publicly. Examples of trade secrets include software source code and the ingredients of unique recipes like Coca-Cola. In the United States, trade secrets are primarily protected by state laws, although there is some federal protection via the Economic Espionage Act of 1996,and the Theft of Trade Secrets Clarification Act of 2012. Trade secrets are not registered federally, because such registration would make them public.

Threats to Intellectual Property
While intellectual property is critical to the U.S. economy, it is subject to a tremendous level of theft. The DOC estimates the domestic value of stolen intellectual property to be between $200 billion and $250 billion annually. Protection of IP rights is especially important to the ICT industry because of losses to the industry, and the fact that the Internet makes IP theft easier.

Many companies in the ICT industry are heavily dependent on their intellectual property; therefore, those companies are at great risk to theft. Sometimes the theft is from consumers, and sometimes from competitors. For years software manufacturers, such as Microsoft, have sought to prevent consumers from using a single license on multiple computers. ICT companies also must protect their intellectual property from competitors.

Countering Intellectual Property Threats
In a 2010 speech at the Export-Import Bank Annual Conference, President Obama said the following:

In line with the president’s comments, U.S. companies and the U.S. government pursue multiple avenues to protect IP rights.

Based on recent “off-the-record” interviews in Silicon Valley, U.S. companies take several approaches to protecting their intellectual property. First, companies tightly control their research departments, with some limiting research to their headquarters where communication and controls can be monitored. For those that manufacture their products offshore, some U.S. companies insist on having U.S. overseers in the plant at all times. Other companies only produce a “dumb box” outside the United States, and don’t add the proprietary components until the product is in a tightly controlled U.S. facility.