For 50 years, consumers walked by street merchants selling offshore knockoffs of US-branded articles such as handbags and athletic shoes. More recently, sidewalk and internet offerings include recordings, electronics, and computer software. At the corporate stratum, theft of intellectual property focuses on more sophisticated loot. The “usual suspects” were Japan in the 60s, Hong Kong in the 70s, and Korea in the 80s. Now it’s China’s turn.
Countries that used IP theft to pump prime their own industrial development now object to being victimized by others who follow that strategy. Germany has experienced the theft of entire product designs by Chinese firms contracted to manufacture the product. Excepting China, IP theft is not approved by government.
In other examples, German software company SAP stole software and documents from US rival Oracle. The trial jury awarded Oracle $1.3 billion. In Korea, LG and Samsung employees stole technology secrets for OLED (organic light emitting diode) circuitry from Samsung. The LG-Samsung case has unresolved demands for apology and accusations of defamation. Apple and Samsung have been countersuing each other claiming patent infringement by the iPad and Galaxy smart phones.
1960s mimicry of US-branded tennis shoes and handbags hurt US assembly line workers. But in the 60s the US had strong international competitiveness advantages in many sectors that were less vulnerable to theft and counterfeit. By the 1970s, offshore knockoffs moved uptown to copy or counterfeit US-brand consumer electronics. That harmed high tech factory workers. In 2003, US firms lost a quarter trillion dollars to counterfeit products.
Recently, the victims of IP theft have been advanced-degree workers who design the latest photonics and electronics, high tech military and industrial tools, new pharmaceutical and biological agents. Advanced-degree workers typically earn triple what workers who lack a high school diploma earn, so the loss of an advanced degree job has a much deeper impact on US GDP and tax collection. Consumers have a stake in halting counterfeiting and theft of any products. Perpetrators of high tech or low tech theft should never get our cooperation – it harms workers in our community.
Alan Daley is a retired businessman living in Florida and following public policy from a consumer’s perspective.