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IP protection: Don’t expect government help


Security experts say last week’s agreement between U.S. President Barack Obama and Chinese President Xi Jinping could lead to a reduction in economic cyber espionage. But, they say, it is just as possible that nothing will change.

If actions – or in this case inaction – speak louder than words, the message from the U.S. government to the private sector regarding defense against cyber economic espionage by China is clear: “You’re on your own.”

That remains true, in the view of multiple experts, even after Chinese President Xi Jinping and U.S. President Barack Obama announced an agreement last week that, according to a White House press secretary Fact Sheet, “neither country’s government will conduct or knowingly support cyber-enabled theft of intellectual property, including trade secrets or other confidential business information, with the intent of providing competitive advantages to companies or commercial sectors.”

First, the agreement refers only to the governments of both countries – not their private sectors.

Harvard Law professor Jack Goldsmith noted in a post on the Lawfare blog, “this statement leaves untouched cybertheft of IP (intellectual property) by non-governmental entities in China, including NGO cybertheft activity of which China’s government is aware (as opposed to that which it supports).”

Second, Xi has consistently denied that China engages in economic espionage to benefit its private-sector corporations. So, in essence, he is agreeing not to do something he says his nation doesn’t do anyway.

That in spite of overwhelming evidence – at least in the view of U.S. experts – that while many countries engage in economic espionage, the overwhelming majority of it against the U.S. is done by China.

Third, the U.S. response over the past six years from top officials including President Obama has been to make numerous threats of economic sanctions, but none of those threats has ever been carried out.

Indeed, just about a month ago there were yet more threats. The Washington Post reported that, “the Obama administration is developing a package of unprecedented economic sanctions against Chinese companies and individuals who have benefited from their government’s cyber theft of valuable U.S. trade secrets.”

But, with the approach of Xi’s visit, those reports faded. There was still some strong rhetoric. U.S. National Security Adviser Susan Rice, in remarks at George Washington University, said Chinese economic cyber espionage, “undermines our long-term economic cooperation and it needs to stop.”

In a speech to the Business Roundtable before Xi’s visit, Obama again threatened sanctions.

“Industrial espionage and stealing trade secrets, stealing proprietary information from companies is an act of aggression that has to stop,” he said. “And we are preparing a number of measures that will indicate to the Chinese that this is not just a matter of us being mildly upset, but is something that will put significant strains on the bilateral relationship if not resolved.”

But, as the Wall Street Journal somewhat sardonically noted in a story just before Xi’s visit, the only “decisive action” the U.S. has taken in response to Chinese economic espionage on American companies has been to, “announce that President Obama will no longer stay at New York’s Waldorf Astoria. The hotel was bought by a Chinese insurance company with close ties to Communist Party bosses, making the risk of surveillance too great.”

Even Director of National Intelligence James Clapper has said U.S. policy on economic cyber espionage lacks, “both the substance and the psychology of deterrence.”

All this, multiple experts say, is in large measure because both nations’ economies are so heavily dependent on one another. If the U.S. imposes crippling sanctions on China, that would affect China’s economy, which would in turn depress the U.S. economy. American purchases from China have reportedly surpassed $460 billion.

Harvey noted that most of the options available to the U.S., “involve possibly hurting our trade with them.” Meanwhile, “China is addicted to our intellectual property and cannot afford to stop, especially with the volatility in their economy,” he said.

Kevin Murray, director at Murray Associates, said the reality is that, “both leaders know economics comes first.

“Waving an ‘agreement’ in the air may mollify some of their constituents,” he said, but the subtext of promising that “governments” won’t do it acknowledges the reality that they, “can’t control all the rogue hackers out there. All they can say is that their governments are not behind it, and they don’t condone it.


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