Automaker Protection Of Software Underscores Issue Of Rising IP Theft

The theft of American intellectual property is endemic. According to a widely cited report issued by the Commission on the Theft of American Intellectual Property, IP theft costs the U.S. economy hundreds of billions of dollars each year: Estimates range from $225 billion to $600 billion.

Nowhere is this more potentially important than in the auto industry. Automakers have been wrestling with Big Tech companies for years over who ultimately is driving the car, since Google, Apple and the like figured out that software would configure the future of the automobile, not traditional hardware like the engine — or tailfins.

Major tech players insinuated themselves into a position behind the car’s dashboard through navigation systems, user interfaces and the like, then the electrification of vehicles as well as the push toward autonomous driving gave them unprecedented openings.

But lately, automakers have begun pushing back, as they’ve understood how crucial it is for them to own not only the software that helps power and direct their products but also the software and communications systems that enable drivers and passengers increasingly to interact with the vehicle, to customize their experience, to conduct e-commerce and Zoom meetings while onboard. General Motors, for example, recently said it would replace infotainment systems from Apple and Google with GM-specific software for some of its new models and hired a former Apple executive to lead a newly formed software unit.

As automakers increasingly take back the intellectual digital property that defines their vehicles, they’ll take greater strides to protect this IP from theft. And as they and other industries do so, one bright spot in the midst of government dysfunction and heightened polarization is the willingness of the Senate — both sides of the aisle — to focus on this critical issue.

In July, Senators Tammy Baldwin (D-WI) and John Cornyn (R-TX) co-sponsored the American IP Defense and Enforcement Advancement Act. That bill includes provisions increasing funding for law enforcement efforts to enforce IP rights, supports studies on how to further protect U.S. IP, and backs legal aid programs to assist small businesses in securing their intellectual property rights.

In a letter sent to the DOJ, a cross-party group of three additional U.S. Senators has urged the Department of Justice to focus on corporate IP theft. Senators Thom Tillis (R-NC), Chris Coons (D-DE) and Marsha Blackburn (R-TN)—all strong advocates of IP rights—raised concerns about the impact of large-scale theft of American intellectual property and decried the DOJ’s focus on individual, as opposed to corporate, offenders.

The primary case of corporate wrongdoing cited by the senators is the federal civil case brought by CoStar Group, owners of multiple real estate marketplaces, against California-based Commercial Real Estate Exchange, Inc. (CREXi). According to the senators, a civil suit alleges CREXi “used stolen passwords to impermissibly access the database of its primary competitor and to steal content.” The claims of IP theft against CREXi are not new: The company was previously sued for stealing trade secrets from another rival, where it issued a public apology and paid damages. Yet, as the senators noted, currently the DOJ does not appear to be pursuing criminal charges.

Their letter also cited Booking.com’s alleged violation “of the Computer Fraud and Abuse Act by accessing an airline website without authorization and mass-copying data from a password-protected section of the site.” Again, no criminal charges or investigation was announced.

The senatorial signatories believe that, while the DOJ has a satisfactory track record of going after individual IP offenders, it seems to be dragging its feet on the corporate front. That’s a problem when considering that corporations are largely responsible for the $225 to 600 billion hit that the U.S. economy takes each year from IP theft. IP is a constitutionally protected right, and 38% of the U.S. economy comes from IP-intensive industries.

The Republican and Democratic senators have come together to shine a spotlight on this issue, which has such significant ramifications for the economy, innovation, and job creation, in the auto industry and beyond. As the letter signers maintained, “the Department of Justice’s ability to enforce the intellectual property protections Congress has designed is paramount to the success of American businesses.”