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Intellectual property thefts are costly
by Kevin Wang, Medill News Service
Washington (UPI) Jun 28, 2012

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As the global economic crisis forces countries to maximize competiveness, U.S. businesses have lost at least $13 billion due to attacks on their intellectual property by foreign countries, a senior FBI official said Thursday.

At a hearing hosted by the House Subcommittee on Counterterrorism and Intelligence, authorities warned that intellectual property thefts conducted by foreign countries remain high-level threats to the U.S. economy and national security.

"This is an issue that touches small and medium-size businesses in congressional districts all across America." said U.S. Rep. Billy Long, R-Mo., acting chairman of the subcommittee. "In many ways, a threat posed by the economic espionage is similar to the threat posed by al-Qaida and its affiliate networks."

Long said what makes espionage threats even more complex is that many activities remain hidden and hard to spot. Many foreign intelligence agencies operate through computers in third countries to confuse the origins of the activity.

"Foreign nations and their intelligence services are understanding more than ever that it's cheaper and faster to steal our technology and use their precious budget resources, even some of our allies," added Frank Figliuzzi, assistant director of the FBI's counter-terrorism division.

Figliuzzi said that the most recent FBI statistics indicate U.S. businesses have lost more than $13 billion due to foreign intelligence attacks in 2012.

Stuart Graham, chief economist at the U.S. Patent and Trademark Office, called that $13 billion loss an "undercount."

"What we can never count are the benefit-associated innovations that never happened because innovators are less likely to create their innovations," he said. "They fear that what they are going to get at the end is an unprotected product."

Graham stressed that U.S. businesses are facing unprecedented challenges in protecting intellectual property. He said that without IP protection, those who invest time and money in developing new products and services would be at a disadvantage.

Graham said IP-intensive industries such as machinery, chemical and healthcare are targets of the foreign espionage activities. He said those industries account for 40 million jobs, or 27.7 percent of all U.S. jobs.

"Every two jobs in IP-intensive industries support an additional one job elsewhere in the economy," he said.

Experts also warned of a new type of cyberthreat: "insider threats."

While many foreign governments and their intelligent services still conduct espionage activities outside the United States, the experts said they have seen more of these "insider threats," such as employees stealing crucial business information and selling it overseas.

Though cases involving large global corporations have been exposed, experts told the committee they were worried that the real risks lie in smaller research institutions that are harder for federal laws to oversee.

"Each year, foreign intelligence services and their collectors become more creative and more sophisticated in their methods to undermine American business and erode the one thing that most provides American business its leading edge -- our ability to innovate," Figliuzzi said.


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