IP Theft Hurts the U.S. Economy

A new government reports sheds light on the impact of intellectual property theft on the U.S. economy. Counterfeiting and piracy erode the returns on innovation and slow economic growth because of the negative impacts on companies, consumers and governments, according to the Congressional Joint Economic Committee.

The report notes that IP infringement harms companies through lost revenue, the costs of IP protection, damage to brand, and decreased incentives to innovate because of potential theft. In fact, one estimate found that the average company lost $101.9 million in revenues and incurred costs of $1.4 million in identification and enforcement of intellectual property rights.

Even more alarming, the problem is getting worse, according to the report. Investigations of foreign infringement of domestic intellectual property rights have risen in eight of the last ten years, from 17 cases in 2002 to 69 cases in 2011. In addition, the number of cases investigated by the United States International Trade Commission (U.S. ITC) has also grown dramatically, rising by 80.6 percent and 23.2 percent in 2010 and 2011, respectively

Below are several additional findings:

  • While the problem is worldwide, China accounts for the vast majority of pirated goods seized at the U.S. border.
  • Small businesses often lack the budget and resources to adequately defend themselves against IP theft or pursue enforcement actions when facing losses. While small businesses represent 79 percent of all U.S. businesses, only 10.5 percent have issued IP theft complaints.
  • Resolution of infringement complaints is also hampered by a lengthy process. Nearly one-third of all submitted cases to the U.S. ITC took over a year to resolve.

As this report highlights, IP theft and infringement can have a serious impact on U.S. businesses. If you would like to make sure you have the right protections in place, contact me for more information.


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