Responding to Intellectual Property Theft: Vigilance or Paranoia?

By Nayeon Kim

Nayeon Kim is a freshman at the University of Pennsylvania.

The recent theft of sensitive data from the Office of Personnel Management that supposedly originated from China has raised concerns about the vulnerabilities of cyber security in the U.S. government and further strained the relationship between China and the U.S. Referring to the increased number of cyber attacks perpetrated by China and other nations, President Obama stated that there would be a point where the U.S. would consider these breaches “a core national security threat” and noted the possibility of retaliation. [1]
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Although the Office of Personnel Management case is one of the largest breaches of sensitive personal data, it is not the only attack suspected to be carried out by China. China, which is responsible for a startling 70% of all global intellectual property theft, is one of the major perpetrators of the crime. [2] U.S. security officials believe that the Chinese government is behind many attacks on U.S. commercial data and often shares these data with Chinese companies. [3] Such a strategy predates even the Internet as a comprehensive and detailed book on Chinese industrial espionage suggests that China has long maintained a policy of utilizing and sometimes illegally obtaining Western technology to drive growth in key technological areas. [4] Even though China repeatedly denies its relation to intellectual property theft, the U.S. believes that China puts extraordinary effort in acquiring valuable foreign technology.

In response to China’s continuous attempts to steal U.S. intellectual property, the U.S. has heightened its effort to identify and punish individuals suspected of transferring important technologies to China. In May 2014, the Justice Department charged five hackers in the Chinese military for stealing trade secrets of six American companies related to energy, steel, and solar products. This is the first case for the U.S. government to directly pinpoint a state agency for intellectual property theft, which shows how much the government is wary of China stealing valuable information. [5]

However, the U.S.’s efforts to identify individuals responsible for intellectual property theft are not without blunders. As recently as this September, the U.S. dropped charges that accused Temple University physics professor Xi Xiaoxing for sending a blueprint of a sophisticated device called a pocket heater to Chinese scientists. The Justice Department unsealed an indictment on May 21 stating that Dr. Xi violated an agreement with an unnamed U.S. company to not distribute the design of a pocket heater that revolutionized the field of superconductors. [6] But after the prosecutors gathered evidence that communications between Dr. Xi and Chinese scientists were not about pocket heaters but about an unprotected technology with limited commercial application, the Justice Department dropped all charges on the grounds that “additional information came to the attention of the government.” [7]

This case generated heated reactions both in and out of the U.S. In the U.S., the case of Dr. Xi raised concerns that the government may be targeting innocent Chinese Americans based on their race, an act fueled by the government’s anxiety over economic espionage by China. [8] This case proved to be more alarming in light of the case of Sherry Chen, a Chinese-American hydrologist who was accused of spying for China but was later proven innocent. The series of cases in which the government charged Chinese-Americans for insufficient evidence left an impression that there is an ongoing trend within the government to suspect citizens of Chinese race. Outside the U.S., this apparent trend gave room for Chinese media to portray the U.S. government as paranoid and to further advance China’s agenda of forging an equal partnership with the U.S. [9] In and out, this blunder definitely did not give a favorable impression of the U.S. government.

Intellectual property theft is surely a great challenge to a technologically advanced nation like the United States. Not only causing immense financial losses to the U.S., intellectual property theft threatens to damage the fundamental propeller of our economy: innovation. Still, the U.S. should be careful to maintain the balance between beneficial vigilance and paranoid McCarthyism while making sure that a similar case does not happen again. As Dr. Xi’s daughter noted in a column, “We can do better, America.” [10]

[1] Sanger, David. “Cyberthreat Posed by China and Iran Confounds White House.” The New York Times, September 15, 2015. http://www.nytimes.com/2015/09/16/world/asia/cyberthreat-posed-by-china-and-iran-confounds-white-house.html
​[2] Blair, Dennis et al. The IP Commission Report: The Report of the Commission on the Theft of American Intellectual Property. The National Bureau of Asian Research. 2013. http://www.ipcommission.org/report/IP_Commission_Report_052213.pdf
[3] Bennett, Brian. “NSA chief says Chinese government encourages cybertheft.” Los Angeles Times, September 24, 2015. http://www.latimes.com/world/asia/la-na-nsa-china-cyber-20150924-story.html
[4] Hannas, William et al. Chinese Industrial Espionage: Technology Acquisition and Military Modernization. New York: Routledge, 2013.
[5] Williams, Pete. “US charges China with cyberspying on American firms.” CNBC News, May 19, 2014. http://www.cnbc.com/2014/05/19/us-files-first-ever-cyber-economic-espionage-charges-against-china-govt-officials.html
[6] “University Professor Charged in Wire Fraud Scheme.” U.S. Attorney’s Office Eastern District of Pennsylvania. 2015. http://www.justice.gov/usao-edpa/pr/university-professor-charged-wire-fraud-scheme
[7] Associated Press. “America drops sale-of-secrets-to-China case against Temple physics professor after making embarrassing—and crucial—evidence error.” Daily Mail, September 11, 2015. http://www.dailymail.co.uk/news/article-3231656/America-drops-sale-secrets-China-case-against-physics-professor-embarrassing-crucial-evidence-error.html
[8] Xi, Joyce. “To get my father, Xiaoxing Xi, FBI twisted America’s ideals.” USA Today, September 20, 2015. http://www.usatoday.com/story/opinion/2015/09/18/xiaoxing-xi-china-spy-fbi-state-visit-column/32560009/
[9] “Mistrust not in the interests of US, China and the world.” China Daily, September 14, 2015. http://www.chinadaily.com.cn/opinion/2015-09/14/content_21849923.htm
[10] Xi, Joyce. “To get my father, Xiaoxing Xi, FBI twisted America’s ideals.” USA Today, September 20, 2015. http://www.usatoday.com/story/opinion/2015/09/18/xiaoxing-xi-china-spy-fbi-state-visit-column/3256000/

Photo Credit: Flickr User Christiaan Colen

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