In the short span of the 21st Century, the world’s two top powers, the United States and China, have moved inexplicably toward a showdown. This evolved from a commercial competition into something more akin to permanent non-kinetic warfare. What does this mean for US business doing business in and with China? For this special 5-part blog post series, I visited with Brandon Daniels, President of Exiger, to explore issues diverse as a real danger, supply chain, exports, cyber-attacks, and IP theft from the business perspective and give the compliance and business executive their viewpoints on what you can do to not only prepare your company but protect it as well. In Part III, we consider export issues of US companies and rebalancing the global economy.

As tensions between the US and China continue to grow, so too does the threat of cyber espionage and intellectual property theft. According to the Pentagon, China-linked economic espionage cases have jumped 1300% over the past decade, and nearly half of all counterintelligence cases now involve China. Daniels sheds light on how China is stealing American Intellectual Property (IP) through intelligence services, nontraditional developers, academic partnerships, and hidden ownership of companies in the supply chain.

We not only consider the extent of China’s IP theft but provide some concrete steps for American companies to protect their crown jewels and seek recourse if they become the victim of cyber espionage. With trillions of dollars at stake, the US companies can no longer afford to be unprepared.

Here are some steps you can take for protection.:

1. Protecting crown jewels by having stricter, more active and proactive containment of technologies that are subject to export control laws.
2. Monitoring and identifying where there could be IP leakage through better due diligence of vendor and customer ecosystems.
3. Taking aggressive action to show China that any IP theft will be discouraged and the company will be remunerated for it.

1. More active and proactive containment of technologies

The first step to protecting your organization’s crown jewels from China’s non-kinetic warfare is to have stricter, more active, and proactive containment of technologies subject to export control laws. This means that public companies need to understand what are their “crown jewels” and how to protect them. They should be more aware of who their suppliers and customers are, and where those technologies are going. Your organization needs to be willing to call out and enforce international trade violations. This requires better due diligence when it comes to their vendor ecosystems, customer ecosystems, and where your organization is buying their technology from. Companies also need to ensure that they have contractual clauses around confidentiality and exposing information so that they can have legal recourse if their intellectual property is stolen. Finally, they should be willing to get serious and aggressive to show China that they will be remunerated for taking their IP.

2. Monitoring and identifying IP leakage

Monitoring and identifying where there could be IP leakage through better due diligence of vendor and customer ecosystems is a critical step in protecting intellectual property (IP) from theft. To begin this process, companies must understand their supply chain and customer ecosystem(s) to identify any potential areas of vulnerability. Companies should consider conducting background checks on their vendors, as well as tracking and monitoring the movements of their customer data and products. Additionally, companies should be aware of any suspicious activity in their customer and vendor ecosystems and take steps to protect against any potential IP theft.

Companies should be aware of any trade regulations or laws that could be applicable to their products, and take the necessary steps to ensure they are compliant. Additionally, they should consider utilizing insurance or other risk mitigation methods to reduce the potential of IP leakage or theft. Finally, companies should be prepared to take legal action to enforce their IP rights if necessary. This could involve filing lawsuits or engaging in international trade court proceedings to seek remedies for any IP violations. By monitoring and identifying areas of potential IP leakage, companies can better protect their IP and ensure that it is not stolen or misused.

3. Take aggressive action

Taking aggressive action to show China that any IP theft will be discouraged and the company will be remunerated for it. In other words, use the Rule of Law to not only protect your IP but also aggressively go after any IP theft through civil litigation. This all starts with protecting your crown jewels, which means having stricter containment of technologies that are subject to export control laws, and specifically doing this with regard to China. Companies should also monitor and identify potential areas of IP leakage, such as suppliers, customers and vendors, and perform better due diligence to ensure that the technology is not falling into the wrong hands. Finally, companies should not be afraid to take their cases to court. For example, Tang Energy Group successfully sued Aviation Industry Corp. of China, or AVIC for stealing their wind turbine technology and won a settlement in the tens of millions of dollars. By taking legal action, companies can demonstrate to China that any IP theft will not be tolerated and that they will be held accountable for their actions.

The threat of cyber espionage and intellectual property theft from China is real, and companies need to be aware of the implications and take action to protect their crown jewels. Companies should consider a three-step plan for protecting their IP and seeking recourse if it is stolen, including stricter containment of technologies that are subject to export control laws, monitoring and identifying potential areas of IP leakage, and taking aggressive action to show China that any IP theft will not be tolerated and will be remunerated. With the right steps in place, companies can protect their IP and ensure it is not stolen or misused. Take control of your IP today!

For a deeper dive into these issues, check out the 5-part podcast series with Tom Fox and Brandon Daniels, here.

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