Both the National Association of Attorneys General (NAAG) and the Senate Committee on Small Business and Entrepreneurship (Senate SBC) asked the Federal Trade Commission (FTC) to collaborate with U.S. States on halting the theft of intellectual property (IP).  Consumers have a stake in the outcome because IP theft harms U.S. manufacturers and costs U.S. jobs.

The need for effective action is clear.  The U.S. public is aware of knockoff Coach purses, fake Avastin (a cancer treatment drug), military parts, stolen music and movies.  Some foreign firms compete with U.S. firms by using stolen manufacturing software to make advanced goods.  Theft avoids high cost software to give them an unfair cost advantage.  IP theft kills American jobs by negating American manufacturers’ edge through using advanced software.

NAAG and the Senate SBC reminded the FTC that it has a mandate to fix any “unfair method of competition” under Section 5 of the FTC Act.  When goods are produced with stolen software in the U.S., law enforcement can seize the manufacturing facility and impose hefty penalties.  When goods are produced elsewhere and retailed in the U.S.,  the goods can be captured at the street level, but that has little impact on offshore manufacturer.

When IP theft is perpetrated by manufacturers outside the U.S. it can be difficult for the FTC to investigate and prosecute under the constraints on the FTC’s foreign actions.   To make progress, cooperation is needed from the foreign government where the theft occurred.   That may be forthcoming if the country has a reciprocal interest in protecting its own intellectual property (e.g. in Canada or Germany), but that cooperation may be withheld or delayed (e.g. China) when the country has little IP to protect, or when it feels immune due to other factors.  For countries that refuse to cooperate in halting IP theft, the growth of a constructive attitude is beyond the FTC or states’ purview and should be a task assigned to the U.S. State and Treasury Departments.

Consumers want IP theft halted because it kills jobs.  U.S. businesses want IP theft halted because it unfairly weakens their competitiveness.  Both should join with the NAAG and Senate SBC in urging the FTC’s effort to stop IP theft.

Alan Daley is a retired businessman living in Colorado.  He follows public policy from the consumer’s perspective