IPEC Espinel Tells Congress About Protecting Intellectual Property Abroad

"Trade secret theft is not simply a business-to-business concern, but one that requires real government action,” Goodlatte said, especially when some of the businesses stealing trade secrets from American companies are tied to foreign governments. Such theft and foreign governments’ protectionist patent practices are hurting American companies, he said. Subcommittee Ranking Member Mel Watt, D-N.C., agreed. “The theft of trade secrets poses a substantial risk,” he said, as “trade secrets may enable foreign operatives to duplicate American products and undermine market access."

Protecting trade secrets from theft is a major priority, said the hearing’s sole witness, U.S. Intellectual Property Enforcement Coordinator (IPEC) Victoria Espinel. “We need to act aggressively to combat the theft of trade secrets,” she said, pointing to a recent agreement between China and the U.S. in which the former agreed to work to protect U.S. trade secrets. “Now our job is to make sure … they actually follow through on that commitment,” she said. More generally, she said, her office is developing a strategy “to try to make sure that we are as coordinated as possible and that we're acting as aggressively as we can."

The U.S. Trade Representative’s “priority” and regular watch lists have “been a useful tool” in encouraging countries to change IP policies, Espinel said when asked about the lists’ efficacy by Rep. Judy Chu, D-Calif. “It does serve as an incentive for countries to make changes,” Espinel said, suggesting that USTR clarify what actions and policies get countries placed on these lists and what changes are needed to get countries removed from the lists. “I fear that in the past, countries either felt they didn’t know enough about why they were there or they didn’t know what steps they needed to take” to be removed from the list, she said. “In order for it to be effective, it needs to be clear to countries what they need to do to get off the list."

Espinel was unable to immediately provide specifics on the recent removal of Spain from the USTR’s Special 301 report lists, which Chu asked about, because the addition of Spain to the list occurred outside of her time at the USTR, Espinel said. During her tenure, Espinel said, the USTR worked with the government of Hungary to facilitate its removal from the lists. “They made changes to their data protection legislation, and I understand that the reason they did that was concerns about being placed on the list,” she said. This is a 301 report success story, she said. “Our goal is not to have countries on the lists. Our goal is to use the list to encourage countries to make improvements to their systems."

IPEC will use a coordinated and aggressive approach to combat any unfair tactic employed by a foreign country, Espinel said when Goodlatte asked what “the next threat or legal trick” will be. “Anything that means that our companies have a less stable and predictable environment overseas is an issue of real concern,” she said. “Whatever those issues are, we will continue to try to combat them."

Watt asked how ongoing litigation between companies affects their willingness to work together to combat these issues. “To really be effective internationally, we need all hands on board, including the private sector,” he said. “One of the concerns … is that these internal disputes may be undermining the willingness and aggressiveness of private sector participants in supporting aggressive efforts internationally to protect someone else’s intellectual property."

This is not the case, Espinel said. In working with companies, “we heard a lot about escalating litigation costs,” she said. “I think by and large we have had good cooperation” among private sector participants. This increased cooperation has been a trend over the last few years, she said, but there is room for “more cooperation and more effective cooperation."

There are no major signs that private companies are not cooperating with one another on this front, Watt told us after the hearing. “I use these hearings to alert the private industry that if they don’t cooperate … at some point there may have to be some consequences,” he said, adding that there is no concrete idea what those consequences might be. “I don’t think we are close enough to having to implement consequences that I have to spend my time thinking what those consequences would be,” he said, “but we have to keep reminding them” to play by the rules and to work together to protect everyone’s intellectual property and bottom line.”