The U.S. economy runs on startups. For all of America’s mega-corporations, it’s young firms that create most of our new jobs during periods of economic growth. Those startups depend on America’s famously strong laws protecting their inventions and intellectual property. The only way someone with a big idea but minimal resources can out-compete established firms is through government protection of their innovations.
Today, we are failing in that responsibility. Our laxity is empowering predators foreign and domestic — endangering not only the next Apple, Microsoft, or Facebook, but our entire economy.
For years, the greatest threat to American intellectual property has been China. Chinese IP piracy became endemic — totaling an estimated $600 billion in costs to the U.S. per year. A CNBC survey of American corporations found that one-third had experienced IP theft by Chinese pirates. Testifying before Congress, Facebook CEO Mark Zuckerberg said, “I think it’s well documented that the Chinese government steals technology from American companies.”
More telling than Zuckerberg’s acknowledgment was the strange equivocation by other Big Tech executives at the hearing. The CEOs of Apple, Amazon, and Google — individuals famous for their breadth of knowledge and laser focus on their businesses — all shrugged and testified only that they hadn’t personally seen any Chinese IP piracy.
There is a reason those firms might not want to shine a light on IP theft: it’s a valuable part of their own business models.
In January, the U.S. International Trade Commission issued a ruling finding that Google infringed on five patents belonging to Sonos, a company that makes smart speakers. The story is a worst-case scenario for a startup. Sonos developed one of the most advanced wireless audio systems in the market — a product so impressive that Google wanted to partner with the company. Sonos alleges that early in the partnership, Google lifted Sonos-patented technology for Google’s own audio equipment.
Sonos was no fluke. Google faced 48 patent infringement lawsuits in 2021. But Google is not the only perpetrator.
In 2020, a federal jury ordered Amazon to pay $5 million to Texas-based Vocalife for infringing on its patents. Apple was recently ordered to pay $300 million in damages to Optis Wireless Technology for infringement.
It’s no accident that the number of IP lawsuits rose in 2020 for the first time since 2015, and court awards rose to $4.67 billion from just $1.5 billion in 2019.
It makes holding China to account much harder. If the richest and most powerful businesses in America are ignoring our intellectual property laws — why shouldn’t our global adversaries?
The issue here isn’t complicated: When laws against theft aren’t enforced, thieves are going to steal. Slaps on the wrist aren’t going to deter pickpockets in Beijing, Silicon Valley, or anywhere else. Congress has to tighten up our IP laws and stiffen penalties, and the Justice Department needs to ramp up enforcement while there are still startups left to save.
One noteworthy aspect of the American Dream is that the most important businesses of 20 years from now are probably ones we haven’t heard of yet. In order for them to lead us into the future, the government must protect them from foreign adversaries and Big Tech.