April 25th this year was World Intellectual Property Day, a celebration of innovation. Unfortunately, theft of intellectual property (IP) is an ongoing crisis. While U.S. companies can pursue litigation against IP theft committed by Americans, it is much more difficult to do that when foreign companies are the offenders. Pirating of software and other IP is especially common in India and China and costs U.S. businesses billions every year. This theft discourages innovation by American companies; why invest huge sums of money and labor to produce a product that will simply be copied for free by a foreign competitor?
Drew Greenblatt, President of Baltimore-based Marlin Steel, sums up the problem eloquently:
We have these amazing designs that my engineers are coming up with. They’re innovative and different. We’re whopping China, we’re hiring people, we’re growing, we’re reinvesting back into the plant — these are all good things. This is what makes America great. I pay my guys really well, and we want this train to continue. It makes it hard if the American government is not protecting me and my company’s IP. It hurts the stellar abilities of my engineers. . . .If we let these companies steal from us, we’re no different from them, and the only way we could compete is by lowering the price of employees.
The scope of IP theft is exemplified by Xiang Li, a Chinese man who is scheduled to be sentenced June 3rd for pirating software and other IP belonging to U.S. companies. Prosecutors allege that the retail value of the software stolen by Li is $100 million.
It is widely-acknowledged that the U.S. economy needs to improve. A good way of encouraging economic growth would be for the government to seriously address the problem of rampant IP theft. Failure to do so will allow IP theft to dramatically undermine the fundamental idea of capitalism- labor that creates great value will be rewarded.