The Theft Protection

Myths and Facts About Identity Theft


Victoria Espinel:
Today I am here to announce the
release of the administration’s
strategy to mitigate the
theft of U.S. trade secrets.
Trade secrets are crucial to
American global competitiveness,
and the strategy sets out a
plan for improved coordination
to protect them.
As President Obama said
in the State of the Union,
we cannot look back years
from now and wonder why we
did nothing in the face of
real threats to our security
and our economy.
In the three years since I was
confirmed as the nation’s first
intellectual property
enforcement coordinator,
I have met with hundreds of
companies and associations
from across our economy.
These companies embody the
entrepreneurial spirit,
the creativity and the ingenuity
that give the United States a
clear advantage in
the global economy.
Because our nation values and
protects intellectual property,
America leads the
world in innovation.
Foreign competitors of U.S.
corporations, some with ties
to foreign governments,
have increased their efforts
to steal U.S. trade secrets.
Our status as a global
innovation leader is
compromised by those countries
who fail to enforce the rule of
law or international
agreements or who adopt
policies that disadvantage
American companies and American
workers, including encouraging
or tolerating the theft of U.S.
trade secrets.
The theft of trade secrets
impacts national security,
undermines our global
competitiveness, diminishes
U.S. export prospects and
puts American jobs at risk.
As an administration, we will be
vigilant in addressing threats,
including corporate and
state-sponsored trade secret
theft, that jeopardize our
status as the world’s leader
for innovation.
We will act vigorously to
combat the theft of U.S.
trade secrets that could be
used by foreign companies or
by foreign governments to
gain an unfair economic edge.
One agency or department
alone is not going to solve
this problem.
We need to all be
working together.
So the strategy we are
announcing today here identifies
five areas in which the roles
and missions of the departments
are complementary and mutually
reinforcing and achieving the
overall goal of mitigating the
theft of U.S. trade secrets.
First is international engagement.
The administration will convey
our concerns to countries where
there are high incidences
of trade secret theft in a
coordinated, sustained and
consistent manner at the most
senior levels of the
administration and in
a variety of different forums.
It will be very clear to those
countries that this is a top
priority for the United States.
In addition, we’ll work to build
coalitions with countries that
share our concerns to
support our efforts.
We will urge foreign law
enforcement to do more,
and we will use the full reins
of our trade policy tools to
press other governments
for better enforcement.
The best outcome is if trade
secrets are not stolen in the
first place, so a second
priority is to work with the
private sector to see what stuff
they can take to reduce the risk
of trade secret theft.
We will encourage companies
to examine their internal
operations and policies,
to determine what more can
be done to protect against trade
secret theft and implement best
practices to reduce that risk.
We will encourage
company-to-company
sharing of best practices.
We believe that companies can
work very effectively with one
another to identify and to share
best practices that can be taken
to reduce the risk of
trade secret theft.
We know there is some good
work on this already happening;
we want to encourage it and
we want to ask for more of it.
Third, law enforcement and the
intelligence community will
increase law enforcement efforts
and improve information sharing
with the private sector on the
problem of trade secret theft.
Investigating and prosecuting
trade secret theft is already
an area of great focus.
I will defer to the attorney
general for more here,
but let me take this opportunity
to thank him for his tremendous
leadership on this issue and all
that the Department of Justice
does every day.
Fourth, our laws need to be
as effective as possible.
Just a few weeks ago, President
Obama signed two bills into law
that will improve enforcement
against trade secret theft and
economic espionage: one, close
a loophole that would allow the
theft of valuable source code
to go unpunished; the second,
raise criminal penalties
for economic espionage.
However, there may be even
more we can do to further
improve our laws.
Therefore, we will be conducting
a review of our domestic
legislation to see if there
are additional legislative
fixes that would improve
our ability to enforce.
And if they are, we will
continue our close partnership
with Congress on this
issue to make any necessary
legislative changes.
Lastly, we will continue
to raise public awareness
on the threat posed by trade
secret theft and the serious
implications for our economy.
The administration is firmly
committed to protecting
American innovation.
In order to lead, succeed and
prosper in the global economy,
the administration will use
this strategy to put in place
an effective and coordinated
approach to protect U.S. trade
secrets and to encourage our
innovators to work together
to mitigate the theft of trade
secrets by foreign actors.
At this time, I’m very pleased
to introduce the attorney
general of the United States,
the Honorable Eric Holder.
(applause)
Attorney General Holder:
Thank you, good afternoon,
and thank you, Victoria,
for those kind words, and
thank you all for being here
with us today.
It’s a pleasure to welcome
you all to the White House
and a privilege to stand
with so many friends,
key partners and indispensable
allies in introducing the
administration’s strategy
for combating the theft of
trade secrets.
Now, as Victoria just mentioned,
this work is a top priority for
the Obama administration, for
the entire administration,
of course for the dedicated men
and women of the United States
Department of Justice.
I’m deeply proud of the
contributions that my colleagues
have made in developing
this strategy,
and the pivotal role that
the Department will play
in its implementation.
And I’m really confident, really
confident that as we bring
government agencies and
additional private-sector
partners together to put
these plans into action,
we’ll continue strengthening
national efforts to protect
rights, safety and the — and
the best interests of American
consumers, innovators
and entrepreneurs.
Now, particularly in this
time of economic recovery,
this work is more important
than it ever has been before.
Despite the challenges of recent
years, American companies —
American companies remain the
most innovative in the world.
They are responsible for many of
the most important technological
advances the world
has ever seen,
an overwhelming number of the
100 most valuable brands and
almost 30 percent of global
research and developing —
development spending, all
related to American companies.
This level of innovation and
the investments that make it
possible benefit consumers,
create jobs and support
our economy.
For instance, in 2011 companies
in Silicon Valley added over
42,000 jobs and recorded a
growth rate more than three
times that of the U.S.
economy as a whole.
But as any of the corporate
leaders in this room can attest,
this prosperity is a
double-edged sword,
and it inevitably
attracts global rivals,
including individuals, companies
and even countries that are
eager to tilt the playing
field to their advantage.
By corrupting insiders, by
hiring hackers and engaging
in other unscrupulous
and illegal activities,
these entities can inflict
devastating harm on individual
creators — startups as
well as on major companies.
Now, as one private security
expert has said of the largest
U.S. corporations, there are
only two categories of companies
affected by trade secret theft:
those that know they’ve been
compromised and those
that don’t know it yet.
Now, this is because as new
technologies have torn down
traditional barriers to
international business and
global commerce, they’ve also
made it easier for criminals
to steal trade secrets and
to do so from anywhere —
anywhere in the world.
A hacker in China can acquire
source code from a software
company in Virginia without
leaving his or her desk.
With a few keystrokes, a
terminated or a simply unhappy
employee of a defense contractor
can misappropriate designs,
processes and formulas
worth billions of dollars.
Now, some of these criminals
exploit pilfered secrets
themselves, often by extorting
the victim company or starting
their own enterprise.
Others try to sell the illicit
information to a rival company
or obtain a bounty from a
country that’s interested
in encouraging such theft.
And all of these people, all
of these examples represent
a significant and steadily
increasing threat to America’s
economy and national
security interests.
Now fortunately, the men and
women of the United States
Department of Justice — and
in particular Lanny Breuer,
who is the head of our
Criminal Division —
are working
tirelessly to prevent,
combat and to punish
these serious crimes.
Thanks to the efforts of 40
prosecutors and four computers
forensic experts serving in the
Computer Crime and Intellectual
Property Section,
better known as CCIPS,
and more than 230 specially
trained prosecutors stationed
at U.S. attorneys’
offices around the country,
including 25 Computer Hacking
and Intellectual Property or
CHIP units, I’m pleased to
report that we are fighting
back more aggressively
and more collaboratively
than ever before.
And with approximately 240 FBI
agents in the field dedicated
to investigating IP crime along
with officials from U.S. —
the United States Immigration
and Customs Enforcement and 20
additional state, federal and
international law enforcement
agencies that are partners
at the IPR Center,
we are poised to build
on our recent successes.
Now, I’m proud — very proud of
the outstanding work that these
professionals are leading
every day in offices really
all across the country.
But I also recognize,
as do all of you,
that the Justice Department
won’t be able to continue making
the progress that we need and
that our citizens and companies
deserve on its own.
We need to increase cooperation.
We need to increase coordination
between partners at every level
of government.
We need to improve engagement
with the corporations
represented in the room today.
We need to find ways to work
together more efficiently and
more effectively by allowing
the road map set forth in the
administration’s new
comprehensive strategy.
And we need to do so starting
immediately because continuing
technological expansion and
accelerating globalization will
lead to a dramatic increase in
the threat posed by trade secret
theft in the years ahead.
In fact, by 2015, experts
believe that the number of
smartphones, tablets, laptops,
and other Internet-access
devices in use will be
roughly double the total
that existed in 2010.
In the same period, the
proliferation of cloud-based
computing will significantly
enhance flexibility and
productivity for workers
all around the world.
But these same forces will also
create more access points and
vulnerabilities that
allow criminals to steal
confidential information.
Just as increasing globalization
will enable American companies
of all sizes to benefit from
foreign technical experts and
research and development
activities in other countries,
the sharing of trade secrets
with entities operating in
nations with weak rule of law
may expose them to intellectual
property losses.
Any resulting cost advantages
will likely be more than offset
by losses in proprietary
company information.
Now unfortunately,
these projections,
these thoughts aren’t
merely hypothetical.
We’ve seen this phenomenon
before – including in the
late 1990s, when I had
the privilege of serving
as deputy attorney general.
Between 1997 and 2000, Internet
usage in the United States more
than doubled, and this massive
technological shift also brought
about major changes in
the nature of crime.
For instance, in 1999 alone,
we saw a 30 percent spike in
intellectual property cases
over the previous year.
In order to fight back,
in July of that year,
I announced the department’s
first major IP strategy,
known as the Intellectual
Property Rights Initiative.
Now, of course, we’ve all
come a long way since then.
As critical technologies
have advanced,
criminals have
adapted accordingly.
Our need to keep pace with these
changes remains imperative.
And the stakes have
never really been higher.
In some industries, a single
trade secret can be worth
millions — or even
billions — of dollars.
Trade secret theft can require
companies to lay off employees,
close factories, to
lose sales and profits,
to experience a decline
in competitive position
and advantage, or even
to go out of business.
And this type of crime can
have significant impacts not
only on our country’s
economic well- being,
but on our national
security as well,
allowing hostile states to
obtain data and technology that
could endanger American lives,
expose our energy, financial,
or other sensitive
sectors to massive losses,
or make our infrastructure
more vulnerable to attack.
Now, in response, the Justice
Department has made the
investigation and the
prosecution of trade
secret theft a top priority.
And this is why the
National Security Division’s
Counterespionage Section has
taken a leading role in economic
espionage cases and others
affecting national security
and the export of military
and strategic commodities
or technology.
It’s also why, in 2010, I
established an internal Task
Force on Intellectual Property,
led by Deputy Attorney General
Jim Cole and other senior
department leaders,
to improve and to expand
our enforcement efforts
in this area.
And it’s why the FBI has
increased its focus on trade
secret theft and its use
of sophisticated tools and
techniques in conducting
national security and
criminal investigations.
Now, of course, most trade
secret matters are dealt
with in civil court.
But when the Justice
Department receives referrals,
we investigate and,
when appropriately,
prosecute those matters
fairly as well as completely.
And though the — although the
primary legislation creating
criminal liability for
these acts is less than —
less than 20 years old, federal
law enforcement officials have
established what I think is a
remarkable record of success
in this area.
In the decade between
2001 and 2011,
we secured well over 100
convictions in cases involving
criminal trade secret thefts,
and six convictions in economic
espionage cases.
For instance, in December 2011,
a federal court in Indiana
sentenced a man from China to
more than seven years in prison
after his conviction on charges
of economic espionage on behalf
of a foreign university tied
to the Chinese government.
Last September in New Jersey, a
jury convicted another Chinese
native of trade secret theft
and other charges for stealing
information from a defense
contractor about the performance
and the guidance systems
for missiles and other
military hardware.
And last November in Michigan,
a former General Motors engineer
and her husband were convicted
of conspiring to steal more than
$40 million worth of
trade secrets from GM,
with the intent to use them
in a joint venture with an
automotive company —
a competitor in China.
Now, in these and
many other cases,
as we’ve refined our approach
and increased our understanding
of these crimes and increased
our understanding of those who
commit them, the department
has also gathered valuable
intelligence about foreign-based
economic espionage.
We have forged really strong
relationships with law
enforcement partners,
private sector experts,
and international allies.
And we’ve begun to raise
awareness about the truly
devastating impact of these
crimes and to encourage
companies to report suspected
breaches to law enforcement so
that violators can be caught,
so that they can be brought to
justice, and so that they can
be kept from striking again.
So as we carry this
work into the future,
thanks to the support and the
assistance of everyone here
today and the cutting-edge
strategy that we are committed
to implementing, I’m confident
that we’ll continue to make
great strides in the fight
against trade secret theft.
We’ll keep improving our ability
to crack down on intellectual
property infringement
and economic espionage.
And together, we will ensure
that the United States is and
always will be the world
leader in innovation.
At this time, it’s my privilege
to introduce another key leader
in this work, the deputy
secretary of commerce,
Rebecca Blank, who will provide
more information about the
administration’s ongoing
efforts in this regard.
Rebecca.
(applause)
Rebecca Blank:
Thank you much, Eric.
And I want to particularly
thank Victoria for her excellent
leadership on this issue over
many months and even many years
here in the White House.
Protecting the intellectual
property and the trade
secrets of U.S. companies has
never been more critical to our
ability to innovate and
to compete in America.
Just last year, the Commerce
Department studied the impact of
industries that have substantial
uses of intellectual property
protection such as
patents and trademarks.
We found that nearly 35 percent
of our GDP comes from industries
that relied very heavily
on intellectual property.
These industries accounted for
more than half of the goods we
export by value and they
support about 40 million
good-paying jobs.
Trade secrets are a unique
form of intellectual property,
in that, unlike the patents
and the trademarks we studied,
their value comes from
other businesses not
knowing about them.
Their total economic value to
our economy is hard to measure,
but is clearly
substantial, and therefore,
they require a unique protection
and enforcement effort on behalf
of the U.S. government.
Trade secrets are crucial to
helping our entrepreneurs and
our businesses start,
grow and innovate.
When someone steals
a trade secret,
it undermines the company’s
ability to compete in the
global marketplace.
It poses a threat
to the business,
to its workers and to
our economy overall.
Ultimately, spying and attempted
theft of trade secrets from
American businesses is only
accelerating right now.
That’s why we’re taking a
coordinated government-wide
approach to this issue.
The Commerce Department is
going to play a key role.
For example, our Patent
and Trademark Office and
our International Trade
Administration will be doing
more to understand how trade
secret protection laws work
in the countries where
our businesses trade.
We will also reach out to
foreign governments to help
strengthen enforcement
and be more active in
helping resolve disputes.
In addition, as we
all learned last week,
the president issued
a new executive order
on cybersecurity.
Through it, our National
Institute of Standards and
Technology, which sits at
the Department of Commerce,
is supporting an industry-driven
effort to identify and share
best practices.
We believe that this new
framework will ultimately help
improve the resiliency of
businesses and prevent theft.
And finally, we are reaching
out directly to U.S. businesses
operating both here and
abroad to educate them in
how to protect their
own trade secrets.
This includes everything from
conducting intellectual property
awareness campaigns and
promoting places like
STOPfakes.gov to one-on-one
meetings where we discuss
sensitive concerns that a
company might have about
a particular market.
Overall, we’re going to work
more closely with Justice,
State Department, with the
U.S. Trade Representative’s
Office and the
intelligence community,
with the private sector and with
our trading partners around the
world to make sure we are
doing everything possible
to reduce the threat
of trade secret theft.
My hope is that we will continue
to find ways to allow American
businesses and workers to
compete fairly on a global
scale, while ensuring that our
entrepreneurial spirit continues
to drive America’s prosperity
and our economy here at home.
So thank you all for being
in attendance here today.
I look forward to seeing these
new efforts move forward.
I look forward to hearing about
how today’s conversation goes.
Both the attorney general and I
have to go off to other events,
so we’re going to leave
Victoria behind to answer
all the hard questions.
But I know you’ve got a great
agenda planned, so thank you.
(applause)
Victoria Espinel:
Let me — I’ll just briefly
introduce our next speaker.
I’m so pleased to have the
undersecretary for economic
affairs, Robert Hormats,
here to join us today.
And with that, I will turn
the microphone over to him.
Robert Hormats:
Thank you, Victoria.
Well, I wanted to thank
Victoria for two things: one,
for her kindness in inviting
me to speak this afternoon,
and also for her enormously
powerful leadership of this
whole exercise.
This has really been
a remarkable exercise.
Under Victoria’s leadership,
we’ve had all the key agencies
of government, as you’ve gotten
a sample of just a few moments
ago, working on this subject.
This is a high priority for the
president and the vice president
and for the president’s team.
And Victoria is the person not
only who pulls it together but
really exercises the
leadership to make it happen.
And the report that
you have today,
the “Strategy to Mitigate
the Theft of Trade Secrets,”
is really a product of the
hard work that she and her
team have undertaken over
many months, indeed,
over the last 3 1/2 years.
Let me say at the outset
that for many reasons —
jobs, business
profitability, health,
safety and the support
of our most innovative
and creative industries —
protection of intellectual
property and trade secrets is a
core economic and foreign policy
interest of the United States.
In today’s world, global
competition is based on
innovative advantage.
Governments around the world
are building upon the success
of America’s very
innovative echo system,
emulating our
research universities,
our innovation clusters
all around the country,
our venture capital industry and
other parts of this very dynamic
and, indeed, very successful
echo system that has been built
up over the course
of many decades.
Regrettably, however, in
order to gain an edge,
some governments are also
pursuing a mercantilist set of
policies, and some companies
and governments are pursuing
downright illegal policies
and programs to gain
competitive advantage.
Subsidies, forced localization
and, in particular,
IPR and trade secret theft
can have a chilling effect
on innovation globally.
These governments
and, some cases,
companies that are engaged in
this process as well are gaming
the global economic system
to their advantage and to
the detriment of others.
As a result, American businesses
are finding it increasingly
difficult to capture the
full economic value of their
investment and their innovation.
To reverse this trend, to
level the playing field,
it is critical for American
innovators and inventors to know
that their intellectual property
is being protected and for
businesses around this country
to know that their trade secrets
will actually remain secret.
Such protection has a major and
beneficial impact on jobs in and
the profitability of some of
our most competitive companies
in this country.
This is true wherever
the threat occurs.
Our goal is to identify
and utilize a wider range
of policies and measures
in order to deal with
this growing threat.
For example, with
respect to China —
and I want to emphasize China
is not the only country,
but let me use China as
an important example.
With respect to China,
protection of intellectual
property and trade secrets
remains a serious and highly
troubling issue.
That’s why cybersecurity and
the protection of IPR and trade
secrets are among the main items
that we have discussed with the
Chinese over the years in
our annual Strategic Security
Dialogue that we hold with the
Chinese and indeed in other
discussions, like the Strategic
and Economic Dialogue,
which is held annually
with China as well.
We have repeatedly raised our
concerns about trade secret
theft by any means at the
highest levels with senior
Chinese officials, and we
will continue to do so.
Our message is actually quite
clear: The protection of
intellectual property rights and
trade secrets is critical to all
rights-holders, whether they
be from the United States or
whether they are for Chinese
companies as well or for other
countries around the world.
This is a matter of principle.
And indeed, there are many
Chinese companies that are
just as concerned about the
protection of intellectual
property rights as
American companies,
because increasingly the Chinese
are developing intellectual
property as well.
So it’s not that this is
just a bilateral issue;
there are powerful forces in
China who share this view,
and indeed, there are people
in other countries who have
generated intellectual property
who share this view as well.
So it’s not a bilateral issue
so much as it is an issue of
companies that have intellectual
property wanting to ensure that
it’s protected.
And we have a particular
interest, of course,
in protecting American
intellectual property.
Our approach with the Chinese
increasingly engages with
Chinese officials and NGOs in
China who themselves have an
interest in IPO (phonetic)
protection and trade
secret protection.
And as I said before, China
isn’t the only country.
This is a country which
does pose serious problems.
There are other countries
that do it as well.
And we’re making a major
effort to engage with them
and to address the
problems that they pose.
So this is a broad issue and
a major issue of concern as
other countries engage in
similar kinds of practices.
We’re making the same case with
these other countries where the
threat of IP theft or
piracy is very high.
And recently, in
India on a trip,
I described the concerns
we have with that country.
We’ve had similar conversations
with Russia and other countries
as well.
The Department of State, under
the leadership of Victoria —
who’s, as I say,
done a great job;
we’re coordinating
on a regular basis —
but the State Department can
play a strong role as part of
this team, and we are playing a
strong role as part of this team
because of the coordination
that’s going on.
We also work with
other key agencies,
which you’ve heard
represented here,
and my colleague Demetrios will
be speaking in a little while.
So there’s a strong
degree of unity here.
But the State Department
has certain advantages,
particularly the embassies that
we have around the world and the
consulates that we have around
the world and the fact that
frequently the secretary of
state and others make trips
around the world.
So we try to mobilize all of our
forces as well to identify both
bilateral and multilateral
opportunities with countries
with a goal of creating a more
rules-based global economic
system where trade secrets
are respected and where trade
secrets are protected.
The theme of creating
a transparent, fair,
rules-based global business
environment where countries can
compete on the basis of their
products and services —
because we believe our products
and services are competitive if
we can compete on a
level playing field —
is at the heart of the
State Department’s economic
statecraft initiative.
Economic statecraft highlights
economics as a central component
of our diplomacy and
of our foreign policy
throughout the globe.
Promoting strong IP protection
and enforcement fits squarely
into the department’s global
economic statecraft agenda.
We’re coordinating,
again, as I say,
with Victoria and her team to
make sure that where there are
problems that are perceived
by an American company,
we hear about them,
we coordinate on them,
and we take action in the
various parts of the world
where those problems emerge.
The strategy being released
today adds to our international
engagement on trade secrets
in several important ways.
First of all, we will enhance
and track even more effectively
our diplomatic engagement by
senior administration officials
with any country where there
are trade secret problems.
This will allow senior
administration officials
to deliver a coordinated message
to foreign governments on trade
secrets and send a clear signal
that significantly reducing
trade secret theft is a high
priority for the United States.
We will work also with our
foreign counterparts to improve
legal frameworks in order to
provide strong and efficient
remedies for trade
secret theft victims.
And this is extremely
important as well.
It’s not just important
that there be tough laws;
it’s important that there
be tough enforcement of
those laws and consistent
enforcement of those laws.
And we will leverage the
full scope of our diplomatic
resources, what we call
our force in the field,
which is the U.S.
embassies and consulates.
We will strive to improve
communication and coordination
inside of our diplomatic
missions and among our
diplomatic missions so that they
can learn from one another on
best practices as well and set
forward concrete steps for our
embassies and consulates to
engage host governments on
trade secret issues.
And finally, we will enhance
engagement on trade secret theft
issues with U.S. industry
representatives that are
working both in the
United States and abroad.
I and my colleagues in the
department frequently meet
with representatives of U.S.
companies in Washington and
during my travels
around the world,
where I meet with
AmChams and others,
to discuss their concerns,
to discuss specific issues
that they have and to discuss
the optimum ways of addressing
these kinds of things.
This strategy that has been
unveiled today marks yet another
step in achieving improved
results to deal with these
issues in a robust way, and
we at the State Department
are eager to play and
enthusiastic about playing
a substantial role.
We look forward to working with
all the members of the team that
Victoria’s assembled and
of course with the U.S.
business community.
We have two — three
key representatives here:
Keran (phonetic), Dean (phonetic)
and John (phonetic),
all of whom are very
actively involved in this.
We talk very regularly with
them and other businesses in
order to get their input.
So I want to congratulate
everyone who has worked on
this report and to simply let
people know that they should
feel very free to come to
the State Department where
they have problems.
Many of the companies
represented here do already,
and we hope many more will take
advantage of this because our
aim is to follow this up.
As I say, it is a core element
of our foreign policy and a core
element of our diplomacy,
and we aim to follow up.
And this report gives us added
impetus and added ammunition in
order to do that.
So my final role is to introduce
my very good friend Demetrios
Marantis, who is deputy U.S.
trade representative and with
whom I collaborate on a
regular, virtually two to
three times a day basis.
So Demetrios, the
floor is yours.
(applause)
Demetrios Marantis:
Hi, everybody. Good afternoon.
I want to jump on the we love
Victoria Espinel bandwagon as
well and just compliment
Victoria and her office for
the amazing job that they did in
putting together this strategy.
You know, it’s no secret to
all of you in the room —
you heard from the
attorney general,
you heard from Dr. Blank,
you heard from Undersecretary
Hormats — how important it is
to prevent the misappropriation
of trade secrets and to prevent
the theft of trade secrets.
And the strategy that Victoria
and her team have laid out will
really help increase the potency
of our efforts in leveraging,
you know, government resources
across agencies to do this.
And from sort of the geeky
trade negotiator perspective,
I think it’s really important
for our trading partners to see
the critical attention that the
administration is placing on
fighting the misappropriation
of trade secrets and really
ensuring that our intellectual
property is protected and
enforced in foreign markets.
You all know how important
trade secrets are.
I’m not going to go into that.
What I’d like to talk a little
bit about is the work that we’re
doing at USTR on the
trade secret issue.
We are moving on a
whole variety of fronts.
We’re moving in the context
of international negotiations.
We’re working bilaterally on
trade secret-related issues with
some key — some key trading
partners, and we’re also trying
to incorporate the protection
of trade secrets in the work
that we do in non-IT
areas like investment.
For — so let me
give you an example.
We are currently negotiating,
as many of you know,
the Trans-Pacific Partnership,
which is an 11-country
negotiation that is seeking to
achieve the highest standards
in a whole variety of areas.
One very important innovation
that we’re pursuing this year,
or pursuing in the
context of TPP,
is in the area of trade secrets.
For the first time ever, the
United States is proposing
provisions that offer
rightholders remedies
similar to those
provided under U.S. law,
including criminal
penalties and procedures
for trade secret theft.
I don’t know if you all
know Previer (phonetic) —
Matta Previer (phonetic)
is our TPP IP negotiator,
and he is fighting
the fight on this one.
So if you have any questions,
comments or concerns,
direct them at him, not at me.
(laughter)
Additionally, in TPP, we are
also negotiating a chapter on
technical barriers to trade,
where we’re proposing a
provision that would basically
say that governments should not
require companies to disclose
proprietary formulas as part of
the product registration process
unless there’s a legitimate need
for doing so and the government
has a mechanism for protecting
the disclosed data.
So hopefully the TPP will
serve as a model for trade
negotiations going
forward, as how we —
you can use our trade agreements
to protect trade secrets.
We’re also working on
trade secrets bilaterally.
Bob talked a bit about the work
that we’re doing in China as
part of the JCCT, the Joint
Commission on Commerce and
Trade, as well as in the
Strategic & Economic Dialogue.
Last year in the S&ED, China
affirmed that the protection of
trade secrets is an important
part of intellectual property
protection and that it would
intensify its enforcement
efforts against trade
secret misappropriation.
Kira Alvarez is our negotiator
who deals with IP-related issues
to China — with China.
We are also working in the
context of our bilateral
investment treaties
to address this issue.
We are — we and the State
Department together are
proposing binding disciplines
that would prohibit the forced
transfer of technology as
well as requiring the use
of domestic technology.
We also have a mechanism
which many of you —
are near and dear to
many of your hearts,
which is our Special 301 Report.
That highlights those partners
that do not adequately protect
intellectual property,
including trade secrets.
We’re going to devote even more
attention to trade secrets in
the annual Special 301 process.
As part of this new strategy,
we’re going to increase our work
on action plans, on out-of-cycle
reviews and related tools that
we have in the Special
301 context to gather and,
where appropriate, act on
information about the lack
of trade secret protection
and enforcement by U.S.
trading partners.
Elizabeth Kendall deal with
Special 301 in our IP office.
We have in the past,
as many of you know,
used many of these tools already
to address trade secret theft,
and we’ll continue to do so.
And so I just — again, let
me just end where I started,
which was by commending Victoria
and the whole team for the great
efforts that have been put
into developing this strategy.
Trade obviously is an
integral part of it.
You know, we hope to use the
various tools that we have at
our disposal to really address
a growing and concerning issue.
And with that, let me turn the
podium over to Frank Montoya,
who is the national
counterintelligence executive,
and he bears responsibility for
leading the counterintelligence
and security activities
for the U.S. government.
And so Frank, over to you.
(applause)
Frank Montoya:
Thank you.
Otherwise known as
the squeaky wheel.
(laughter)
It is a great privilege
to be here amongst this
august company and to be
able to talk about this.
Thank you very much for your
leadership on this process and
for the opportunity that you
have given to the Office of
the Director of
National Intelligence,
but more particularly, to the
national counterintelligence
executive to play a role in
this truly whole-of-government
approach to protecting trade
secrets, American trade secrets.
It really is an important aspect
of what we do in the national
counterintelligence these days.
It is a 21st-century
national security issue,
there’s no question about it.
But if I may paraphrase a
very 20th-century leader,
President Dwight D. Eisenhower,
you can’t have good national
security if you don’t have
good economic security.
Again, rough paraphrase,
OK, so don’t quote me.
But the point being is it
really is important that,
especially from an American
business perspective —
and innovation is a key element
of our success over the decades.
If we can’t protect innovation,
then we don’t have the
opportunity to be successful,
to grow our economy,
to have a successful impact
economically on the families
that make up this great country.
And if we don’t — if
we can’t protect them,
if we can’t provide them with
a way to generate the economic
success that we have
over the past 200-plus
years of our existence,
we can’t expect to have a
national security that is worth
leaving behind for our children.
But it’s very important that
we play a key role as an
intelligence community in
this element or this effort,
this whole of government
effort, really,
to protect trade secrets
in the United States.
The key element of this effort,
however, is working together.
If we don’t do that well, we
will continue to suffer when it
comes to the protection
of our trade secrets,
when it comes to maintaining
our ability to innovate.
It is absolutely
essential that we do that.
And through these efforts, while
we’re strengthening the laws,
while we’re improving the
enforcement of those laws,
while we’re enforcing the
application of penalties for
violation of these laws, when
we’re doing that robustly and
as a government, we’re going
to be able to do the things
that are necessary to
preserve our way of life,
to preserve where we
are in the world today,
and that is
absolutely essential.
Now, what is the intelligence
role or part of that process?
Well, very specifically, when
it comes to this strategy,
it’s about identifying in
those instances where there
is a foreign nexus or there are
entities that have a foreign
nexus that are taking
advantage of us from a
trade secrets perspective.
It is very important in that
respect that we not only
identify those foreign
powers or foreign nexus —
nexi but that we are able to
take the information that we
have and share it with those
that are most affected,
for instance, our — the
companies, the American
companies that we — that
we have relationships with.
That private-public sector
interaction is absolutely
essential to helping us achieve
the goal of protecting state —
or these trade secrets.
It’s absolutely essential.
And so one of the things that
we will be doing as the National
Counterintelligence and through
the Office of the Director of
National Intelligence is
increasing our ability to
outreach, our — expanding the
threat and warning that we are
able to provide to the private
sector, working together with
them in a — in a concerted
effort to protect those —
the elements of their business
that are most essential to their
continued success.
You’re going to hear some
stories today, I think,
from the panel that absolutely
illustrate why this is
important, why we need to be
shoulder-to-shoulder with them
in this effort, why we need to
bring to bear the abilities of
the intelligence community,
the United States intelligence
community, to assist
them in these efforts,
why we need to do a better
job of working together,
whether it’s, you know, through
the Department of Defense and
the intelligence community
entities that are part of
the Department of
Defense, with the FBI,
not only from a law enforcement
perspective but from their
intelligence perspectives
as well and utilizing those
capabilities, and to other
members of the intelligence
community and their ability,
working with State Department,
for instance, throughout the
world to take advantage of our
relationships with
our foreign partners,
to improve our
foreign engagement,
to make sure that we’re all
talking about the same things
and trying to protect what
is most important to protect.
You know, I started this
by saying that, you know,
I’m also known as
the squeaky wheel.
Well, there is also an old adage
that the counterintelligence
professional in the room is also
the one that says no or likes to
say no, and that’s not the
perspective that we want to
convey either.
We know we have to engage.
We know that our business
partners are engaged
internationally, that they have
lots of partners in a lot of
different places.
The idea is not to prevent
that, not to kill it,
but to enable it, to enhance it,
to make it better and to utilize
the full resources of the
United States intelligence
community to do so.
So again, we are very grateful
to be partners in this —
in this endeavor.
We really do think that working
together as a community,
as a government, we are going to
be very successful in preserving
what is necessary to preserve,
as — not only as a country from
a national security perspective,
but also that economic edge that
our businesses have
enjoyed for so many years.
Thank you very much
for this opportunity.
And what I would like to do
now then is introduce Assistant
Attorney General Lanny Breuer,
who is going to be our panel
moderator today.
Assistant Attorney General
Breuer is the assistant attorney
general of the Criminal Division
at the Department of Justice.
Lanny?
Thank you.
(applause)
Lanny Breuer:
Well, thank you, Frank.
I am really delighted to be here
and delighted to join all of you
as the administration launches
it’s strategy on how to combat
trade secret theft.
Obviously, a remarkably
important issue and one
that as we all know has
such national security
and economic consequences.
I am not original, and so I will
do what everybody else did which
is to thank Victoria.
She really has been an
extraordinary leader with
great charisma and great
commitment and I think it
is why we are all here today.
And we at the department from
the Attorney General to me and
to everyone involved, really
have tried to be real partners
with Victoria and with the
administration as a whole.
Because of course it does
take the administration and
government whole approach
to deal with this really
remarkably serious problem.
The speakers that you have
already heard from have really
laid out sort of the
consequences here.
Why trade secret theft is
really so remarkably important?
Why we have to fight corporate
insiders who take advantage of
information that they have?
Those consequences and those
from the outside literally
can force companies
to close their doors.
And for folks to
lose their jobs.
And, of course, we have all
just seen the report from a
particular company as reported
in the New York Times.
One company, perhaps a state
sponsored company had such
devastating effects in what
it has been able to do over
the last years.
According to the report, 141
companies have had their trade
secrets, their most
valuable assets compromised.
In 20 different industries,
just think about that.
It really runs the
gamut of what we all do,
20 different industries.
Whether it is blueprints,
or proprietary information,
manufacturing processes,
test results, business plan,
pricing documents,
partnership agreements,
it goes on and on and on.
All were taken.
All were stolen.
It is as simple as that.
They were stolen.
And that was just
from one company.
One group.
It is really quite
extraordinary.
And so we have to figure out
how are we going to deal with
insiders who are bribed,
hackers who come in and
take what is not theirs.
Who really take the very
proprietary information that
companies in the United States
and literally around the world
deem and have that
are so valuable.
You already heard from
the Attorney General.
You have heard from
distinguished speakers.
I guess what I would say to
you is we at the Department
of Justice care
deeply about this.
And I recognize as that of
the criminal division that
prosecuting these cases
is very important.
But it is only one
piece of the solution.
We alone cannot, and I have
said it before and the Attorney
General has said, we
can’t prosecute our way
out of this problem.
What we need is with industry
partners such as all of you.
And I applaud what all of you
are doing, with our partners.
We need to figure out
a way together to deal
with this situation.
And, of course, that is why
Victoria wants us here and
what has brought us here today.
So, so far today you have heard
from those in the government.
But, of course, it is industry
that really is bearing the price
of the kinds of crimes
that we are talking about.
And so what we are going to do
for the next few minutes is have
discussions with three very
eminent leaders of industry.
I begin with Karan Bhatia
who is the Vice President
and Senior Council of Global
Government Affairs and policy
for General Electric.
We all know that General
Electric is really involved
in everything.
It is one of the largest
companies in the world dealing
with electricity and lighting.
Dealing with jet engines and
locomotives and media and
entertainment and on and on.
Before joining GE,
Bhatia was also with
the US Trade Representative.
He was the Deputy US
Trade Representative.
He was the Assistant Secretary
for Aviation and International
Affairs at the Department
of Transportation.
He was in fact also the Deputy
Undersecretary and Chief Counsel
at the Commerce Department.
Before that, he was
a partner at Wilner.
I would like to know
what he does for fun.
(laughter)
Next to him is John.
John Powell is the Vice
President and General Counsel
and Corporate Secretary of
American Superconductor.
John is going to be able to
talk a lot about American
Superconductor which
is a leading provider,
small company in wind
and power grid products.
And services worldwide.
He has been there since
1999 and before that was
IP counsel at Raytheon.
Furthest to the left is Dean
Garfield who is the President
and CEO of Information
Technology Industry Council.
As President CEO of ITI, Dean
leads a Global Trade Association
that represents many of the
leading innovative companies
of our country and the
world in the communications
technology sector.
Before joining ITI
as its President,
he was Executive Vice President
and Chief Strategic Officers for
the Motion Picture
Association Industry.
And he is also a
regular contributor
to the Huffington Post.
So with that, let me start
with our panelists and begin
the discussion.
And let me begin
with you, Karan.
How, Karan, does a company
as large as General Electric,
approach the very basic
challenge of protecting
itself and preventing
trade secret theft?
Karan Bhatia:
Well, maybe I can start, Lanny,
first of all by thanking you and
thanking Victoria
for the invite today.
This is a fabulous gathering and
as a company like GE whose stock
and trade for more than
130 years going back to
our founders Thomas Edison
has really been innovation,
we appreciate the critical
importance of intellectual
property rights and trade
secrets and not only stimulating
economic growth, but also
finding solutions to the
biggest problems
the world faces.
So we are delighted to be here.
How does a company
like GE approach it?
We approach trade secret
protection as really being
sort of part of a, of a map.
We see really three parts to it.
One is contractual obligations.
We spend an awful lot of time
making sure we try and protect
our, our technology as
effectively as possible
through our contractual agreements.
We do business all
over the world.
We have partners,
we have suppliers.
All of those pose to some
extent a degree of risk.
So strong contractual
protections are key.
Secondly, statutory
registrations, patents,
copyrights, we have substantial
focus on really being best in
class in that area.
And then third, getting the
rights that is a processes and
resources around controlling
access to the core technology.
And that itself has really
three parts to it as well.
The first is identification.
We, the core to this is
finding out what are your
crowned jewels, identify them,
constantly refreshing that.
Making sure you understand what
the key technology is and really
singling that out for
special height and focus.
Secondly, monitoring
and, and prevention.
We monitor the network and
assets of both physical and
electronic constantly.
We watch for patterns of
activities that indicate theft.
So it is, that is a substantial
effort at our company.
It is one we place a
great deal of emphasis on.
And then third, we take
action where warranted.
We will investigate
suspicious activity.
Sometimes we’ll
interview employees
about suspicious downloads.
We have an entire program called
Data Loss Prevention that really
gets this at this risk.
And where warranted we work
closely with law enforcement,
with the government,
in the United States
and around the world.
And the actions we pursue will
be tailored to the specific
circumstances we face.
So that is sort of in a nutshell
how we, how we go about it.
Lanny Breuer:
Dean, do you want to jump in?
I know you represent a number
of large companies as well?
Dean Garfield:
I thought, I thought
Karan covered it well.
Lanny Breuer:
Okay. Karan, then you mentioned
a moment ago that among your,
the different factors you
use is that you obviously
protect your rights.
You are willing to ensure
that if you need to,
you may have to go into court.
You will obviously register
that which is yours.
But, of course, many countries
around the world have a weaker
regime, weaker rule of
law than perhaps we in
the United States do.
And we probably
too could improve.
So given that GE tries very
forcefully to protect it’s
rights from your perspective,
what can countries who have
weaker rules of law do to make
industry more protected and what
here in the United States you
think we could do to better
protect companies such as GE?
Karan Bhatia:
You know Lanny, I, it is
exactly the right point.
Because the strength
of rule of law,
the strength of protections, the
strength of processes around the
world really is key to
enabling companies like ours,
not only to access markets
around the world but feel
comfortable investing
in those markets.
Creating jobs, creating
innovation there.
Which frankly is in their
country’s best interest as
well as ours.
There are changes we recommend
happen not only in the United
States, but around the world.
I will mention
four in particular.
You know, the first has to do
here in the United States with
the ability to prosecute
actors that are engaged
in trade secret theft.
We applaud some of the recent
amendments to the EAA that were,
that were adopted, but we
think there is more that
can be done specifically.
And specifically to target,
enable prosecutorial resources
to target actions and people
outside of the United States.
People not American citizens
for actions that happen abroad.
Secondly, in, in thinking about
cyber security and thinking how
we approach cyber
security, you know,
we believe that the best
approach is one that enables
government and industry to
work together collaboratively,
perhaps through a set
of voluntary standards.
Those that enable
industry to really bring
it’s innovative capacity.
We don’t think that standards
that dictate certain approaches
or certain outcomes are right.
But we do want to work together
very closely to achieve higher
voluntary standards
around cyber security.
The third, and this
was alluded to before,
but the importance of creating
the kinds of regimes and levels
of comfort that are going to
allow business and industry to
work together, establishing
safety harbors so that we,
we can exchange
information with,
with collaborators and with
other members of industry,
with government, that are going
to enable us to, to do this.
Whether it is exemptions in
the antitrust laws or whatever,
that they are
required to do that.
And then lastly, I think
there is a whole global
component to this.
And it was alluded to before.
But I think whether it
is capacity building,
and we think there is more
that can be done there.
Whether it is working
through trade agreements,
and I applaud Demetrios’ efforts
and USDR’s efforts in that area.
Bilateral dialogue.
I think all of that can have an
important impact in working to
help our trading partners around
the world strengthen their
trade secret laws to enable
us to feel comfortable.
Dean Garfield:
If I, if I could, picking
up on that last point.
I think to the extent that
we can work to persuade other
markets that it is in their
national best interest as well,
that we serve ourselves well.
And so if we can point to
strong trade secrets protection
that actually help
markets to innovate,
and reinforce that an important
part of the innovation ecosystem
that other markets are trying
to recreate is having a strong
trade production laws.
I think to the extent that
countries realize that we
encourage the type of,
type of innovation that
they want to see.
But we want to see it developed
through global standards.
And so working in that state,
I I think is quite important.
Lanny Breuer:
You know interestingly, based
on the points that both Karan
and Dean made, I should point
out that some months ago I was
privileged to announce
a prosecution of Cloned
Industries, a South Korean
company that the United States
alleges stole the
proprietary information
of various companies.
Both companies in the
United States like DuPont,
but also frankly a
Japanese company.
And there not only have
we indicted the company,
but we will seek to
extradite the individuals.
That may take many, many
years, we may or may not
succeed in our extraditions.
But I think it is a very, very
important point that we are
making and very much follows
up on what you are saying.
And similarly, we at the
department often with the
funding of the State Department
do in fact have resident legal
advisers around the world,
lawyers who are working
with their counterparts.
And often in this space
what they are doing,
some of whom are called IPLAC’s,
they are trying to work with
other countries to in fact
develop the very kinds of
processes and strong rule of
law that was being discussed.
Dean, just sort of jumping off
from that point, obviously,
ITI represents 50 or so of
America’s biggest and most
innovative high tech companies.
What in your view does ITI do to
encourage it’s members to focus
on the threat of trade secret
theft and really to share best
practices among themselves?
Dean Garfield:
Three things principally.
I would say it is less ITI
specific than the innovation
sector generally.
One is an issue that, that
Victoria started with at the
beginning and like
everyone else,
I should thank Victoria
and Rob for their leadership
in this area.
I know it feels like
Valentine’s Day all over again.
With all of the love
we are throwing at you.
But it is, it is well deserved.
This is a growing global problem
and it is important that we
learn lessons and convene and
look at best practices across
geographic boundaries and
we are working to do that.
So that is one.
Two is working across
industry silos.
There are a lot of
different strands
of the innovation ecosystem.
And often times it is our
tendency to work in the
semiconductor industry or in
the photo voltaic or otherwise.
But in order to share best
practices and work effectively,
we have got to work across those
industry silos to make sure we
are getting the best, the best
out of those best practices and
optimizing our learning.
The third and final thing I
would say is making sure that
we are building on existing
infrastructure if you will
that are advancing sharing
of best practices.
And so, for example, there was
an organization created in the
private sector, a year and
a half ago, called CREATE.
Center for Responsible
Enterprise and Trade that
is focused on sharing best
practices among industry.
The government is playing an
important or the public sector
is playing an important
role in that regard as well.
NIST works quite collaboratively
with the private sector in,
in advancing consensus
space voluntary standards.
And so helping to support and
advance those public sector and
private sector initiatives
I think is quite important.
Part of the reason that we have
all been showering so much love
on Victoria and the work here
is I think a recognition that
we can do a lot more.
And so the convening power and
the catalyst for action that
comes out of this event I think
will be quite important and it
will be a motivation for us
as well to put added emphasis
on these issues.
Not only as ITI, but in
conjunction with all of our
companies who are, who are
really driving innovation in
this country and globally.
Lanny Breuer:
Dean, a few moments ago, Karan
was talking about what GE does
and talked about when it will
work with law enforcement.
Having seen what a number
of different companies do,
when a company from your
perspective becomes a victim
of trade secret theft, what have
you determined are the factors
that that company relies on
when it determines that it will
either pursue civil remedies and
perhaps file suit against the
perpetrator, or in fact refer
the case criminally to the
Department of Justice?
Dean Garfield:
Well, I think as you —
it is a great question.
As you and Attorney General
Holder noted at the beginning,
in the vast majority of
instances that the remedy
that companies pursue, is
through their civil remedies.
I think a part of the benefit of
this event and the work that has
been done on this report, is
that will have greater clarity
around what it takes to
advance a criminal case.
I think as a general matter,
there isn’t well — a great
understanding of the thresholds
for instance on when the US
Government will pursue a
case and when it will not.
And so most of the remedies are
focused on the areas that Karan
and I identified, which is
looking at what you can do to
protect your own trade secrets.
As well as the contractual
remedies you may have developed
in advancing that civilly.
Lanny Breuer:
One point I would make
there and I think there
has been an evolution.
But I think from our perspective
we would also say that there has
been historically a bit of a
reticence by certain companies
to come forward and to say that
our intellectual property was
stolen, because they were
worried about how the market
would react.
Dean Garfield:
Absolutely.
Lanny Breuer:
And so they haven’t
come forward.
And, of course, one of our
real goals is to encourage the
private sector to come forward,
and I would like to think under
the Attorney General’s
leadership, we have shown,
that we very aggressively
go after the perpetrators.
Dean Garfield:
If I, if I can add one
point to that, Lanny.
One of the things that I think
is endemic to the community that
I, that I have the privilege of
representing is that they are
the best and most dynamic
innovators in the world.
Many of whom are
in this room today.
And so often times the instinct
is we can out innovate anyone.
Lanny Breuer:
Yeah.
Dean:
And so these trade secrets
thefts are critically important,
but we’ll move so fast that
they won’t be able to keep up.
I think the thing that we are
seeing and learning is that is
in part true, but
not completely.
And so the efforts of yours
and the Attorney General more
broadly, to exercise a
willingness to advance
these cases I think will
help in moving and shifting
that perspective.
Lanny Breuer:
Great. John, I want to turn
to you and obviously to some
degree your experience and
your company’s experiences.
The most raw of
all and very real.
So AMSC, AMSC of course has
been the victim of the theft
of a trade secret.
One of your employees, of
course, stole the trade secret.
And, in fact, was convicted
in, Austria of doing just that.
Can you talk a little bit about
it and tell us the lessons that
AMSC has learned from this
very unfortunate episode?
John Powell:
Sure. Before I do that though, I
would like to also say it is an
honor to be part of this panel.
I would like to thank Victoria
for inviting me to attend as
well as Ron Roe.
I appreciate that very much.
I would also like to say over
the course of this last year and
a half or so that we have gone
through this, this process,
that US government has been a
tremendous ally in particular
Ambassador Marantis and his
team have been very supportive
and true assets to
our, to our cause.
In terms of lessons learned, I
would say the primary lesson we
learned is no matter how
secure you are in terms
of your products and your
networks from external threats,
internal threats, your employees
can probably be the most serious
and difficult to detect threats.
So, you know, with
that, you know,
I think all companies
have to keep that in mind.
In particular small companies.
You need to do whatever,
whatever you can to protect
from external threats.
That is a given.
You know, these, these are
real, and they, you know,
you have got to assume that
they are going to happen.
So you have got to take all of
the right precautions to protect
your network and your products.
Again, the internal threats
are very, very challenging.
The things that we have done
to protect against the internal
threats are compartmentalizing
trade secrets,
identify our trade secrets,
and put them on separate,
in our case it was a, it
was a software source code.
So we put them on
separate servers.
We limit access to, to our
engineering and our R&D teams
to a very low percentage
of the overall code.
We know we have to be vigilant.
We have got to monitor people.
We have got to monitor
suspicious behavior,
communications, travel.
Life style changes
and things like that.
Lanny Breuer:
John, given the steps that
you have taken, I mean,
your company is
relatively small I think.
Fewer than 500 employees.
And, of course, much of
your revenue is generated
from overseas.
So from that perspective, do you
have a sense that companies like
you, a smaller, where a lot of
revenues are generated overseas,
are they aware of the problems?
Sufficiently aware of
the roblem of theft
of trade secrets?
And in your view are such
companies taking adequate
precautions to
protect themselves?
The kinds of steps that
you have just outlined.
John Powell:
Sure. Yeah, I think that there
is clearly a general awareness
of these risks.
My feeling though is
for smaller companies,
who face such challenges
in large markets that,
that could provide so
much benefit to them
in terms of revenue.
They tend to sort
of weigh you know,
they do a cost benefit analysis
and determine how much revenue
they can generate versus
you know the cost of,
of not entering those markets.
I don’t think they — and they
also they are typically trying
to generate as much, you know,
get the profitability so they
are concerned about expenditures
for protective measures.
I think that they have to take a
serious look at this and really
understand that it is a real
threat and it is a really costly
threat if it happens.
The cost of the — that they
will incur will be far more
significant than the costs
of putting these preventive
measures in place.
So —
Lanny Breuer:
John, before you were
complimenting the US Trade
Representative appropriately
for their role in your case.
But it just, we are all
here talking about government
as a whole.
But, of course, our
ambassador from the state,
from the state department, our
ambassador also in Austria,
where the theft occurred has of
course been an enormous advocate
for your cause —
John Powell:
Yeah.
Lanny Breuer:
And has really rolled up his
sleeves and tirelessly worked
to support your business and
American business generally.
John Powell:
That’s right.
Ambassador Eacho has been
probably our biggest champion
and obviously I would
like to thank him as well.
Dean Garfield:
If I can, if I can —
Lanny Breuer:
Please.
Dean Garfield:
— just add to that.
It has been said a couple
of times in this room.
But one of the things we are
experiencing a lot of these
markets is a combination
of activity that includes,
and Ambassador
Hormats said it well,
where trade secrets and
forced localization and
other Mercantilist policies are
coalescing into keeping US based
companies including free flow
of information and keeping
US companies from competing
fairly in those markets.
It would be impossible for
our companies to succeed and
continue to participate in
those marketplace without
an all of government approach.
And so the work that the State
Department and the USDR and the
US Government in general
is doing in this regard
is critically important
to our continued success.
Karan Bhatia:
Can I just very quick.
I would echo everything
that both of them said
in that regard.
But I do think it bears
something that John said
and Mr. Montoya said
bears emphasizing,
which is the alternative
here cannot be to pull back
from global markets.
Right. I mean, this is the
world in which we live in.
Last year, GE’s revenues, 60
percent derived from markets
outside of the United States
that supported tens of thousands
of jobs in the United States.
And so the answer here cannot
be to pull back internally.
The answer has got to be able
to create better regimes,
better systems, better
processes inside our companies,
and better cooperation
within our own government,
with our government, and with
other governments as well.
Globalization is here to stay.
This is key, but, but, we got to
do a better job addressing this
challenge and this risk.
John Powell:
Well, I was just going
to make another comment.
I think addressing the
small company challenges.
I don’t think small companies in
necessarily will think about the
utilizing government
support as a,
as a means for challenging or
taking recourse against these,
these kind of threats.
For us, you know, we, we did
contact the government early
on and I think it is really
a critical part of any small
company or any company
strategy in trying,
in trying to respond to
these kind of, of issues.
Lanny Breuer:
Well, I think on that
note, Victoria, I mean,
the notion of the public
private partnership,
the notion that globalization
is here to stay,
and the notion that if you are
a company large or small and you
have a problem, we would love
to know it in the government
because we want to enforce your
rights in whatever way we can as
you do yourself.
This is a great way to end.
So thank you so much
for having us, Victoria.
We are delighted to be here.
(applause)
Victoria Espinel:
Well, thank you very much.
I want to thank the
Attorney General, Dr. Blank,
Undersecretary Bob Hormats,
and Ambassador Marantis,
the Honorable Frank Montoya, and
the Assistant Attorney General
Honorable Lanny Breuer
for being here today.
I second want to take the
opportunity of having the
microphone again to seek a
commitment from the companies
and the associations that are
sitting at this table and the
companies and the associations
that are in this room and the
larger community that
is listening to this.
To both take a very careful look
at what you are doing internally
to see if there is more that you
can do to reduce trade secret
theft or the risk of
trade secret theft.
But also, and I think
this is really critical,
To commit to share
what you find,
to share those best practices
with other companies that may
not be thinking about
this as carefully.
I think that company to company
of sharing best practices is
absolutely critical.
So I am, I am asking you
to do that here today.
I think that is not
just a critical.
I think it is absolutely an
essential part of making sure
that we address this problem.
And then lastly, I want to thank
everyone for being here today.
Thank you for coming.
Goodbye.
(laughter and applause)

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