U.S. Firms Paying High Price for Global IP Theft
Criminals are going after intellectual property (IP), and companies around the world are paying a high price. In fact a survey of more than 1,000 Chief Information Officers in eight countries conducted by security firm McAfee found that last year alone their companies lost billions in intellectual property.
Tensions over intellectual property theft originating in Asia are particularly high. China remains one of the worst offenders. U.S. Secretary of Commerce Gary Locke has said that the U.S.-China trade imbalance is unsustainable and that American companies are losing billions to China alone from intellectual property theft.
Locke argues the losses associated with intellectual property theft are “simply unacceptable.” In remarks last month at the Washington International Trade Association (WITA) Locke said, “Commerce is not just concerned with helping American companies get their products into foreign markets. Once they get there, we want to ensure they receive the same rigorous intellectual property protections that they would at home.” Locke goes on to say the current system for protecting U.S. intellectual property—both domestically and internationally—is “fraying at the seams.” Locke added, “Every year, American companies in fields as diverse as energy, technology, entertainment and pharmaceuticals lose between $200-$250 billion to counterfeiting and piracy.”
The Global Intellectual Property Center an Affiliate of the U.S. Chamber of Commerce says IP drives economic growth. The group has compiled these startling statistics on not only how much U.S. IP is worth…but also how much its theft is costing corporations:
What is U.S. IP Worth?
- U.S. intellectual property is worth $5-5.5 trillion - more than the gross domestic product (GDP) of any other country. (Source: “The Economic Value of Intellectual Property,” USA for Innovation)
- Intellectual property accounts for more than half of all U.S. exports, helping drive 40% of U.S. economic growth. (Source: U.S. Department of Commerce)
- Intellectual property-intensive industries employ 18 million Americans.
- Jobs in intellectual property-intensive industries were expected to grow faster over the next decade than the national average. (Source: Robert J. Shapiro and Nam D. Pham, “Economic Effects of Intellectual Property-Intensive Manufacturing in the United States,” World Growth, 7/07)
What is the Cost of IP Theft?
- Intellectual property theft’s impact on the global economy accounts for $500-600 billion in lost sales each year, or 5-7% of world trade. (Source: World Customs Organization)
- Counterfeiting and piracy impacts the U.S. economy with over $200 billion in lost sales each year. (Federal Bureau of Investigations)
- For fiscal 2008, the U.S. Customs and Border Patrol reports that China alone accounted for $221.6 million, or 81% of the total domestic value of $272.7 million in seized counterfeit or pirated goods. That was an increase over fiscal 2007 and well ahead of the 72% share that China commanded in fiscal 2005, according to Crain’s Detroit Business.
Surge in IP Theft
Global intellectual property theft puts a company’s financial health in jeopardy. Criminals stole a combined $4.6 billion worth of intellectual property from the 1000 companies around the world polled by McAfee. Those companies subsequently spent about $600 million repairing the damage. Moreover, the security firm estimates that total global economic losses due to data theft and security breaches by organized crime, hackers and inside jobs reached a whopping $1 trillion last year.
Kevin Rowney, from the data loss prevention arm of Symantec, is quoted by the BBC as saying, “It is conceivable that a company can lose its corporate life through a large scale data breach.” Rowney goes on to say, “The intellectual property of a company can represent the crown jewels and are almost worth more than the building. This is the core asset of a company and any breach or loss can be very expensive.”
Who or What is to Blame?
In a separate study the Ponemon Institute pinpoints a relaxed attitude towards security on the part of companies as a big part of the problem, reports the BBC. Ponemon, however, argues that IP theft and data breaches are preventable events. The Institute also warns the recession will cause the number of thefts to surge.
Amid the trend, a growing number of corporations are seeking corporate security experts to identify and help prevent IP theft both at home and abroad, particularly Asia. Executive search firm, A.E. Feldman, is on top of the trend and is currently addressing this need with the industry’s leading fraud specialists.
Are you concerned about the security of your intellectual property? If you want help to protect your corporate intellectual property assets, contact A.E. Feldman’s President, Mitch Feldman, today.
