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Fear Mongering Report Suggests 'IP Theft From China' One Of The Biggest Problems America Faces

from the based-on-what? dept

A bunch of folks have been sending in variations on a report that came out last week, grandly titled "The IP Commission Report" as if it were some sort of official body. In the subhead, we find out that it's actually by the even more ridiculously named "The Commission on the Theft of American Intellectual Property." Who put together this "commission"? Well, it's the National Bureau of Asian Research, which also is not an official government organization as you might think, but a private think tank that more or less was spun out of the University of Washington, and was originally the National Bureau of Asian and Soviet Research, put together at the behest of Senator Henry Jackson, who believed strongly that America should intervene around the globe to promote American interests, often at the expense of those where we were intervening. He supported interning Japanese Americans during WWII. He strongly supported the Vietnam War. He's considered the spiritual father of today's neoconservatives. As you may have guessed, the "National Bureau of Asian Research" is not exactly about figuring out the best way to understand and improve relationships between the US and Asia. It's about how US interests can dominate Asia.

As the NY Times points out, the report itself was put together by two ex-Whitehouse officials, both of whom left "on strained terms," Dennis Blair (former Director of National Intelligence) and John Huntsman Jr. (former ambassador to China, who ran for President, badly, in the last election). The report itself is quite incredible. Based on almost nothing factual, it makes incredibly sweeping statements about "IP theft" (which it never actually defines, and it seems to use the broadest possible way of determining it), and then insists that the problem is incredibly big. It also assumes, without any proof, that the only possible way to have incentives to innovate is to have the strictest possible intellectual property regime out there -- and that IP is the fundamental incentive for innovation. The fact that this has been disproved by a tremendous amount of evidence doesn't even enter into the conversation. Blair and Huntsman take it on faith that strong IP absolutely leads to greater economic benefit.
The second, and more fundamental, effect is that IP theft is undermining both the means and the incentive for entrepreneurs to innovate, which will slow the development of new inventions and new industries that can further expand the world economy and continue to raise the prosperity of all. This effect has received some attention in the cases of a few industries, but it affects others as well. Unless current trends are reversed, there is a risk of the relative stagnation of innovation, with adverse consequences for both developed and developing countries.
Except, that's simply not true. It assumes, incorrectly, that without IP there's no incentive to innovate. Yet, actual research shows that most innovation happens because companies or individuals need the innovation themselves, or they see value in selling the actual product or service in the market. You can do that whether or not there's IP protection. But the report's authors don't even consider that a possibility -- perhaps because they're not actually even remotely tied to innovative industries.

As you might have guessed from the name of the commission itself, they talk a lot about "theft" even in nonsensical ways:
On an unprecedented level, a critical driver of this worldwide economic growth is in trouble. Trade secrets, patents, copyrights, and trademarks are being stolen, especially from American but also from European, Japanese, and other nations’ companies and organizations
But what does that even mean? Does it mean copied -- as in infringement? Or does it mean someone actually "stealing" the underlying products? Or does it mean somehow registering a patent or copyright or trademark away from the original holder (about the only thing that would actually be "theft")? How the hell do you "steal" a trademark anyway? Or a patent? None of this makes any sense, which makes it difficult to take seriously. The report never actually defines IP theft. It just leaves it out there, and sometimes appears to be talking about actual stealing of hard drives of information, but often, it just seems to be about whatever the hell the report's authors want it to mean. There is simply no intellectual rigor behind this. It's just throwing everything together into a giant messy, stupidly meaningless pile.

The report correctly notes that much of the value of publicly traded companies is tied up in "intangible assets" but then falsely claims that this is the same as "IP." But it's not. So much growth in intangible assets often comes from a lack of intellectual property, allowing for greater information exchange and sharing, which grows the overall pie. Leave it to a bunch of politicians to not understand the difference between a zero sum and non-zero sum economy. Throughout the report, the authors confuse any kind of intangible concept or knowledge with "intellectual property." But "intellectual property" are laws, not the actual ideas -- and knowledge grows not by strengthening the laws, but frequently by ignoring those laws and having information and innovation shared. Under this report, massive economic growth driven by open source software, for example, is credited to strong IP laws. Which is absurd.

More ridiculous: in discussing the impact of "IP theft" it only looks at one side of the equation. Take the following two examples:
Effects on industry. Lost sales; lost brand value; reduced scope of operations; lost jobs and reduced ability to provide employee benefits; reduced ability to conduct R&D; increased IP protection expenses for prevention, remediation, and enforcement; increased costs from dealing with malware acquired from unlicensed software; reduced incentive to innovate.
Um. What about about increased sales, increased services, ability to do things more cheaply thanks to lower resource costs? How about increased incentives for innovation due to stronger motivation to keep ahead of the competition? All of those things have been widely observed. All of them are ignored.
Effects on consumers. Harm to health, harm to safety, costs incurred as a result of product failure, decreased or increased purchasing power.
How about keeping prices of proprietary goods in check as they need to compete? How about the ability to be productive, to accomplish more for less? How about the ability to make use of these products to create even more economic wealth? Again, ignored.

Even worse, it completely ignores the fact that the $200 billion estimate it extrapolates as one basis for claiming $300 billion has been debunked over and over again, and is based on layers upon layers of bogus premises from decades ago, that today is just expanded every few years by lobbyists who insist it's growing. Of course, when the actual numbers were looked at closely, it was discovered that a more accurate assessment might be about 2% of that number. But Huntsman and Blair instead insist that the $300 billion is probably too low. Based on what? Nothing. Just the fear mongering they hear from companies and lobbyists -- the same companies who certainly have a very strong vested interest in protectionism against Chinese competitors (oh wait...).

The authors are further suckered by the ridiculous belief that China's growth in its patent system is "a response to a concerted government effort to spark innovative activity." That's wrong. There was a concerted government effort to spark growth in the patent system because China understands what US politicians still can't grasp: patents are a purely protectionist system, and having more Chinese patents (no matter what they're for, and no matter whether or not they spur any innovation at all) means they can leverage those as a weapon against US and other foreign companies. Nearly every single major patent case in China has been a Chinese company against a foreign company and (spoilers!) the foreign company always loses.

We'll be having a few more posts about the suggested "remedies" set forth in the paper, but since they all seemed to be based on ridiculously poor methodology and assumptions, as you can imagine, the recommendations are ridiculously problematic as well. We'll highlight one quick one, and then delve in deeper in a few later posts:
Designate the national security advisor as the principal policy coordinator for all actions on the protection of American IP.
Yes, you read that right. They want to elevate "the protection of American IP" to the level of a national security issue. As if it hasn't already gotten to an insane level by having Homeland Security and Immigrations and Customs Enforcement cowboys shutting down websites based on nothing. Now we're going to make it into a national security issue? Based on a report that's almost entirely wrong? Yikes.

The whole paper is incredibly problematic, based on bad methodology and ridiculously bad assumptions. It conflates a number of different topics, ignores significant amounts of well-respected research debunking huge parts of the claims, and makes a number of outlandish statements based on a near total ignorance of how actual innovation works today. The paper is a complete joke.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Robert (profile), May 28th, 2013 @ 7:45am

    IP Theft?

    How about corporate control over the government and foreign policy - those severely outweigh any "IP Theft" impact, both economically and in the worldly view of the US.

     

    reply to this | link to this | view in thread ]

  2.  
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    Anonymous Coward, May 28th, 2013 @ 7:56am

    For all the fear this mongers, I haven't seen any measures against China for its "IP theft" as harsh as the action taken against dead grandmothers for downloading music.

     

    reply to this | link to this | view in thread ]

  3.  
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    Pragmatic, May 28th, 2013 @ 7:58am

    Re: IP Theft?

    ...which, in turn, is informed by the aforementioned corporate controllers, Robert.

    Designate the national security advisor as the principal policy coordinator for all actions on the protection of American IP.

    Yes, you read that right. They want to elevate "the protection of American IP" to the level of a national security issue. As if it hasn't already gotten to an insane level by having Homeland Security and Immigrations and Customs Enforcement cowboys shutting down websites based on nothing. Now we're going to make it into a national security issue? Based on a report that's almost entirely wrong? Yikes.


    I smell the hand of the **AAs in this. It's the loony wing of the Republican Party. What did you expect from them? Greatness? They laugh at "the reality-based community!"

    http://www.theamericanconservative.com/articles/revenge-of-the-reality-based-communit y/

    Where is Derek Khanna when we need him?

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 8:00am

    "Fear Mongering Report Suggests 'IP Theft From China' One Of The Biggest Problems America Faces"

    Fair enough. So, when can we expect that American companies will be told to stop doing business with China, including demobilising their factories from China?

    (must...keep...straight...face)

    BWAWAWAWA!

    Seriously, your problem is that globalization works both ways. You move to China in search of cheap labour. In turn, they flood your markets with cheap crap which, ironically, is built using your own factories and technology.

    Live by the sword, die by the sword.

     

    reply to this | link to this | view in thread ]

  5.  
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    Anonymous Coward, May 28th, 2013 @ 8:03am

    Re:

    They would love to punish China ... but how?

     

    reply to this | link to this | view in thread ]

  6.  
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    Anonymous Coward, May 28th, 2013 @ 8:06am

    just make better crap. We have an enormous milk formula shortage here because chinese people are buying it and shipping it home :p

    But slightly more seriously, I was wondering when you'd get around to covering this, I was particularly offended by the part where they say 'more than X$ damage, but we can't actually know how much'. Wow. And that is on one of the first pages, after which I had trouble reading through the rage.

     

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  7.  
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    Anonymous Coward, May 28th, 2013 @ 8:09am

    Because of this massive IP theft, we are going to have to introduce intrusive monitoring of all American citizens, and draconian punishments, to drive piracy out of existence around the world!
    /Sarc (maybe)

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 8:09am

    'It's about how US interests can dominate Asia'

    in other words, do what the USA usually does, ignore anyone and everyone else and just bully everywhere else to do what the USA wants that will be to it's advantage!!

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 8:09am

    Re: Re: IP Theft?

    Hollywood donates considerably more tot he Democrat movement than the GOP.

     

    reply to this | link to this | view in thread ]

  10.  
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    jameshogg (profile), May 28th, 2013 @ 8:10am

    You know what would stop China having such a monopoly on piracy?

    Reducing copyright terms.

    Al Capone had a secret sympathy with the prohibition amendment, and we all know it.

     

    reply to this | link to this | view in thread ]

  11.  
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    jameshogg (profile), May 28th, 2013 @ 8:12am

    Re:

    Also, expect crowdfunding websites to be blocked in China soon if they haven't been already.

    Again, secret sympathy.

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 8:13am

    'IP theft is undermining both the means and the incentive for entrepreneurs to innovate, which will slow the development of new inventions and new industries'

    in actual fact the exact opposite is true, but as is the usual case, these guys are so out of touch, so bias in their thinking, that the truth or any other opinion is completely wrong! this is the sort of backwards thinking that has stifled innovation and the economy, not just of the US but of other countries as well

     

    reply to this | link to this | view in thread ]

  13. This comment has been flagged by the community. Click here to show it
     
    identicon
    out_of_the_blue, May 28th, 2013 @ 8:25am

    Should be IP Theft BY China, NOT from.

    Don't see who committed that error -- probably Mike -- but it's whatcha call a Freudian slip.

    Here's Mike's payload, where his position is to approve of IP theft whether by China or copyright infringement: "As if it hasn't already gotten to an insane level by having Homeland Security and Immigrations and Customs Enforcement cowboys shutting down websites based on nothing." -- I don't thereby endorse this report, just saying that Mike actually is being consistent with his pro-piracy position, and it caused him to toss in this unrelated bit about website shutdowns.

    "Now we're going to make it into a national security issue? Based on a report that's almost entirely wrong? Yikes." -- Hey, Mike: check out the 2001-2003 "reports" of WMD in Iraq and yellowcake from Nigeria that Condaleeza Rice claimed meant a "mushroom cloud" was imminent: the US and UK start wars based on false reports. And are again doing so now in Syria. But I'm glad to see disparaging of neo-cons: perhaps everyone is waking up to who's lying and why.

     

    reply to this | link to this | view in thread ]

  14.  
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    RadialSkid (profile), May 28th, 2013 @ 8:46am

    I've noticed lately that "IP theft" is the **AAs favorite phrase now. All of their mouthpieces have begun using it every single time copyright issues come up.

     

    reply to this | link to this | view in thread ]

  15.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 9:22am

    Re:

    Yeah, it's a damn shame for them. Now that their IP's been thefted they can't use it anymore.

     

    reply to this | link to this | view in thread ]

  16.  
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    OldGeezer (profile), May 28th, 2013 @ 9:33am

    One thing this article failed to mention is one of their recommendations was to implant ransomware into software code that would shut down computers with pirated copies until they contacted authorities to obtain a password to unlock it. Nothing could go wrong with that idea! I scanned through this report and they seem to blend patents, trademark, trade secrets and copyright infringement like they don't even know the difference. It was also odd that they didn't even seem to address infringement of movies and TV programs. As I said, I just scanned through it so I might have missed it if they did.

     

    reply to this | link to this | view in thread ]

  17.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 9:45am

    Re: Re: Re: IP Theft?

    They donate to both sides. They own both sides. That's how lobbying works these days. It's how they have so much control. When you own both candidates, every election is a victory for you.

    Anyone who thinks the current problems in Washington can be solved by replacing members of one party with members of the other party is kidding themselves.

     

    reply to this | link to this | view in thread ]

  18.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 10:01am

    Re: Should be IP Theft BY China, NOT from.

    Last paragraph good. The first part, not so much. C'mon blue, you can dooo eeet.

     

    reply to this | link to this | view in thread ]

  19.  
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    jameshogg (profile), May 28th, 2013 @ 10:25am

    Re: Should be IP Theft BY China, NOT from.

    "And are again doing so now in Syria."

    I'm sorry, but fuck you.

     

    reply to this | link to this | view in thread ]

  20.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 12:12pm

    'they flood your markets with cheap crap'

    just to be clear, the 'cheap crap' is, in a hell of a lot of cases, a damn sight better built than anything the US or even EU can put out even when it's a lot cheaper! before condemning the build quality, i think a good area to look at at first is why so many companies from all countries have manufacturing done in China? if it wasn't done there, with the very low costs, would the companies be able to sell the products if they were made outside of China or Asia? i doubt not! with increased production costs comes lower number workforces anyway, so the employment situation is not a viable excuse either. lets just face it, those writing this shit dont have a damn clue about the real world and just make this rubbish up to try to give credence to whatever job they think they have

     

    reply to this | link to this | view in thread ]

  21.  
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    Ninja (profile), May 28th, 2013 @ 12:14pm

    So currently the bogeyman under their beds is Chinese eh? I think Russians look more threatening =/

     

    reply to this | link to this | view in thread ]

  22.  
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    crade (profile), May 28th, 2013 @ 1:00pm

    Re:

    The Romulans have already stolen *all* the US's intellectual property. If the romulans steal all our intellectual property, and nobody notices, does it still make a sound?

     

    reply to this | link to this | view in thread ]

  23.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 1:20pm

    Re:

    Act against China, and America runs out of electronic goods.

     

    reply to this | link to this | view in thread ]

  24.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 2:36pm

    This is good news actually.
    The more loonies the Copyright Cartel has speaking on their behalf, the more the consumers will begin to see through their ruse.

     

    reply to this | link to this | view in thread ]

  25.  
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    Mike Masnick (profile), May 28th, 2013 @ 3:33pm

    Re:

    One thing this article failed to mention is one of their recommendations

    We're doing other posts on the recommendations, including one on that recommendation that went up this morning too. More are coming.

     

    reply to this | link to this | view in thread ]

  26.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 6:30pm

    Re: Re:

    "Do without". Isn't that what the copyright maximalists love to say?

     

    reply to this | link to this | view in thread ]

  27.  
    identicon
    horse with no name, May 28th, 2013 @ 7:10pm

    Yet

    This morning the BBC is running a story about Chinese hackers gaining access to the plans for a number of new US weapon and defensive systems. Are you suggesting that stories like this are planted to create fear?

     

    reply to this | link to this | view in thread ]

  28.  
    identicon
    Anonymous Coward, May 28th, 2013 @ 9:14pm

    Re: Yet

    You can prove that it is not a fabrication to create fear?

     

    reply to this | link to this | view in thread ]

  29.  
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    OldGeezer (profile), May 28th, 2013 @ 11:30pm

    Re:

    Just like Japan did, China is rapidly improving quality. The way they hold down costs is their workforce is practically slave labor. They live in crowed dormitories and are charged rent and meals that their low wages barely cover.
    I used to work at Boeing and I remember when Chinese engineers for companies Boeing was outsourcing to were visiting our plant. The story in the paper said that they earned about the equivalent of about one dollar an hour and were provided a small apartment. At that time a union engineer here was in the range of $30 to $35 an hour. My job was basically unskilled labor and I made $26 an hour. That is not even counting the value of our benefits package.

     

    reply to this | link to this | view in thread ]

  30.  
    identicon
    Anonymous Coward, May 29th, 2013 @ 12:51am

    Re: Re: Re:

    Imagine what happens when people cannot replace their TV sets, they might have to actually talk to each other.

     

    reply to this | link to this | view in thread ]

  31.  
    identicon
    Anonymous Coward, May 29th, 2013 @ 1:03am

    Re: Yet

    WMDs in Iraq'

     

    reply to this | link to this | view in thread ]

  32.  
    identicon
    staff, May 31st, 2013 @ 6:50am

    more dissembling by Masnick

    'The second, and more fundamental, effect is that IP theft is undermining both the means and the incentive for entrepreneurs to innovate, which will slow the development of new inventions and new industries that can further expand the world economy and continue to raise the prosperity of all'

    Finally, you get it right.

    'Blair and Huntsman take it on faith '

    It's common sense. If you cant own the house you build, then you wont build it.

    Masnick and his monkeys have an unreported conflict of interest-
    https://www.insightcommunity.com/cases.php?n=10&pg=1

    They sell blog filler and "insights" to major corporations including MS, HP, IBM etc. who just happen to be some of the world’s most frequent patent suit defendants. Obviously, he has failed to report his conflicts as any reputable reporter would. But then Masnick and his monkeys are not reporters. They are hacks representing themselves as legitimate journalists receiving funding from huge corporate infringers. They cannot be trusted and have no credibility. All they know about patents is they don’t have any.

    http://truereform.piausa.org/default.html#pt.

     

    reply to this | link to this | view in thread ]


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