Pulling back the curtain on Intellectual Property theft

Eric H. Holder Jr., the U.S. Attorney General, starkly divided American companies into two groups at a meeting yesterday to describe the President’s strategy to combat the theft of U.S. trade secrets through the Internet.

“Those that have been compromised,” the attorney general said, “and those that don't know it yet.”

Eisenhower Executive Office Building -- Photo: Drew Greenblatt

Several dozen business leaders, including Marlin Steel President Drew Greenblatt, were invited to attend the event at the Eisenhower Executive Office Building beside the White House to raise the level of awareness and urgency about the increasing cost and frequency of IP theft undermining American commerce. The administration wants to address the problem with a stronger, more unified voice. A New York Times article today described a recent willingness of American businesses to admit they have been victims of hacking -- an exposure they were reluctant to discuss a few years ago, fearing the impact on stock prices and copycats.

American Superconductor, whose general counsel also attended yesterday’s meeting, offered actions that small business should take to help protect themselves:

1. Compartmentalize critical information.

2. Give very limited access to employees. Internal threats are often the most serious and hardest to detect.

3. Monitor sudden changes in your employees’ spending habits.

4. Some of the threats come from overseas; some are with disgruntled employees

Administration officials told the group that the U.S. successfully prosecuted more than 100 cases of IP theft between 2001 and 2011, but acknowledged that as the tip of the iceberg. By some estimates, one-third of the Gross Domestic Product and half of American exports could be vulnerable. The White House is encouraging companies to report infractions.

Protection of intellectual property is a core element of the Trans-Pacific Partnership trade agreement that will enter its 16th round of negotiations among 11 countries next month in Singapore. Better to establish safe harbors than pursue anti-trade.