More than ever before, proprietary Intellectual Property (IP) and Information Technology (IT) have become crucial to the success of companies in the United States. Not just software companies, either: U.S.-based manufacturing companies now account for 69 percent of private sector R&D spending in America. A manufacturing company’s IP is often its “secret sauce,” the component of their process that allows them to put a unique and attractive product on the market for their consumers.
The piracy of software and other patent-protected IP is a threat to all businesses, including manufacturers. In a recent survey, 79 percent of U.S. manufacturers stated that they consider software to be important to their overall success. This is one of the reasons why many of the most successful manufacturing businesses in America have invested so heavily into R&D to create unique IP for their businesses.
However, while the amount of capital being invested in the development of new IP is on the rise, so is the theft of the IP that is so integral to the success of a business. Overseas theft of the IP of American companies is on the rise. In foreign countries such as Indonesia and China, the software piracy rate is well over 70 percent.
How Piracy Harms American Manufacturers
When a company spends hundreds of thousands of dollars on R&D for a patented product, the costs that they have incurred are reflected in a higher price for the final product. When a competitor steals the software or designs that make that product possible, they are able to make a copy of that product for a lower price because they didn’t spend any money on R&D. This gives the second company a huge advantage over the original IP developer/owner.
The company that stole the IP, rather than develop their own, can flood the market with a cheaper product, causing the original manufacturer’s sales to dry up, perhaps even putting them out of business.
An Example of How Innovation Can Save a Manufacturer
Back in the late ‘90s, Marlin Steel was faced with a similar situation. Once known as the “King of Bagel Baskets,” we at Marlin made commodity bagel baskets for consumers all over the country. However, when foreign competitors hit the market with baskets that were cheaper than what we could buy the steel for, business dried up.
However, Marlin Steel was able to turn the situation around by investing in automation and advanced software programs, enabling us to make custom wire forms with greater speed and precision than ever before. It was our own investment into our IP that made the difference and saved our company.
Marlin Steel was able to become a picture of success by transforming our business through investing in automation and proprietary software, but our IP, and the IP of every other manufacturer in America, are still at risk.
In response to the threat of rampant software piracy, Drew Greenblatt founded the National Alliance for Jobs and Innovation (NAJI) to help protect companies from intellectual property theft and maintain a fair and balanced market for all companies doing business in America.
NAJI helps to protect companies by:
- Working with the Attorneys General of different states to take action against foreign companies that are stealing domestic company IPs.
- Providing investigative services.
- Working with enforcement officials.
- Producing research to expose IP theft.
- Working with both public and private sector entities to expose theft and change IP policy in America.
These actions benefit not only software companies and manufacturers, but all innovators, engineers, and companies who rely on IP or whose IP has been stolen.
Although a relatively new organization (having been founded in 2012), NAJI already boasts more than 380 companies from 40 states as members. While the majority of them are manufacturing companies, many trade associations and academic institutions are also a part of NAJI.
IP theft and software piracy are not victimless crimes. The unfair advantage claimed by those who illegally use an innovation that rightfully belongs to others allows these unscrupulous companies to put legitimate innovators out of business, costing people their livelihoods.
By working together with government officials to ensure fair and honest trade, NAJI is helping to keep jobs growing in America. Learn more about how you can support American industry today.