Global Intellectual Property Theft Continues To Threaten U.S. Businesses

Congress appears eager and determined to confront China on any number of fronts in the next two years, and the country’s intractable indifference to protecting intellectual property rights is—rightfully—high on that list.

For instance, earlier this month the House Judiciary Committee held a hearing on China’s IP theft, which Darrell Issa—the chair of the subcommittee with jurisdiction over the issue—declared to be the first of what will be a series of hearings on the issue.

The problem is enormous—the FBI estimates that China’s IP theft alone may cost U.S. businesses and taxpayers as much as $600 billion—and there is no evidence suggesting that it will abate any time soon. And China is not the only culprit: The theft of American intellectual property knows no borders, and emerging economic heavyweights like India are also getting in on the act.

For instance, the real estate technology firm Costar—which runs the website Apartments.com and has thousands of researchers in the United States—has been in litigation with a rival firm, The Commercial Real Estate Exchange (or CREXI), which it alleges is stealing its intellectual property—photos of real estate properties—via offshore labor located in India. Evidence suggest that CREXI is using a network of firms across the country, from Chennai to Rajasthan to Delhi.

Costar’s lawsuit alleges that CREXI has stolen over 50,000 photographs, and it had to amend its complaint to update its count of stolen photographs as the thievery continued unabated even after the lawsuit.

Documents seized and offered as evidence—for this lawsuit as well as in raids in other lawsuits instigated by Costar—include instructions for the shop providing CREXI with photos to simply download them from Costar, remove any logos and watermarks that identify them as belonging to Costar, and put them up on their own website. The CEO of CREXI’s main contractor told the court that CREXI had him sign false testimony for CREXI’s use in the Los Angeles Case brought by CoStar.

Costar is far from alone in fighting a sisyphean battle to protect its IP from foreign concerns eager to filch it, and sometimes the justice system will step in to protect intellectual property rights. For instance, earlier this year a GE employee who was a Chinese national was sentenced two two years in prison for sending proprietary secrets related to the design and production of gas turbine blades. The courts valued the IP in the millions of dollars and reckoned that it would help Chinese companies speed up their development of cost and performance competitive gas-powered turbines by several years while reducing their need to invest in research and development.

Both political parties have come to the realization that foreign industrial espionage is a critical threat to the U.S. economy and that more needs to be done to combat it. Companies like CoStar should not have to rely solely on the civil litigation process when offshore theft constitutes an attack that harms U.S. businesses and American workers. While the refusal of countries like China and Russia to honor even the most basic international agreement makes it difficult to achieve quick successes, a government that takes intellectual property rights seriously and steps in to help when there is overwhelming evidence of wrongdoing is at least a good basis for further action.