Opinion: U.S. Needs To Control Overseas Intellectual Property Theft

Sep 25, 2005 (06:09 AM EDT)

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After listening to a recent speech given by Commerce Secretary Carlos Gutierrez, it is becoming increasingly clear that Washington lacks a coherent trade and export control policy.

Gutierrez insisted Washington would step up enforcement of intellectual property (IP) laws, but IP theft is still on the rise and out of control (see Sept. 21 story). And Washington’s tough talk has apparently fallen on deaf ears. For example, Gutierrez claims that Brazil ratified a law to allow Brazilian drug companies to legally violate U.S. patents to make their HIV drugs.

Besides lost sales and jobs, IP theft has other serious consequences. For instance, due in part to IP theft, China’s trade surplus with the United States is projected to break last year’s record of a staggering $162 billion.

At the speech, the commerce secretary carefully managed his rhetoric, avoiding the saber rattling terms that make American businesses shutter: “sanctions” and “trade wars.” But until Washington includes this vocabulary in its stance, Brazil, China, India, Russia and other IP-theft offenders won’t take Washington seriously.

And strangely, during his speech, Gutierrez also did not bring up the ticklish subject of export control policies to a small audience at the event, which was hosted by chip-equipment giant Applied Materials Inc.

Perhaps he can’t explain the muddled policy for U.S. companies. For example, many in the chip-equipment industry still insist that Chinese chipmakers are prevented from importing tools that can process wafers below 0.25-micron. On the other hand, Chinese silicon foundry specialist Semiconductor Manufacturing International Corp. (SMIC) is ramping up its 90-nm process in a 300-mm wafer fab in Beijing.

A disconnect in the export control policy, along with feeble IP enforcement, sends the wrong message to compete in the new, global economy.