President Trump has valiantly defended American companies’ intellectual property rights when negotiating tough trade deals with China and other trading partners. Rightfully so. By some estimates, China has stolen at least $200 billion of our patents, trademarks, and inventions without paying a dime to the lawful American owners.
To appreciate the value of patents and IP, consider that the new Pfizer COVID-19 vaccine was researched and developed with billions of dollars of investor capital in just ten months. That wouldn’t have happened if other drug companies or other nations could steal the formulas. It is a vaccine that has the potential to save 10 million or more lives worldwide.
Patent protection is at the core of a high-stakes and closely-watched battle for supremacy in batteries for the burgeoning electric vehicle market. As automakers begin to move swiftly into the electric vehicle market, the fight for battery supremacy is raging between two of the largest battery producers, LG Chem and SK Innovation, two Korean companies with a large presence in the United States. LG Chem alleges blatant theft of trade secrets and intellectual property by SKI.
LG Chem is the EV battery supplier for Tesla and General Motors, while SKI provides battery components for Volkswagen and Ford Motor Company. This legal dispute is in front of the International Trade Commission right now, and a ruling is expected soon. If LG Chem wins, SKI will have to pay stiff penalties for IP theft.
On the merits of the case, it looks grim for SKI. Evidence was uncovered in the preliminary ITC hearings that 75 SKI employees were instructed to cover up any evidence of theft by “deleting every material related to the rival company [LG Chem] from every single individual’s PC.” That’s a reasonably damning communication.
If LG Chem wins, it is expected to expand its operations and create more than 1,000 jobs in its Ohio battery factory in addition to those already employed in a Michigan facility.
The ITC’s ruling could send a valuable message to the rest of the country and even the world: The days tolerating IP theft in the U.S. are no more.
For the American economy, this could be a big lift. In a 2017 study, the Committee to Unleash Prosperity found that the value of intangible assets, including IP of all the S&P 500 firms in the U.S., exceeded $10 trillion.
About 45 million jobs in the U.S. are directly or indirectly tied to IP protection. The average value-added of an employee in IP-intensive industries is $250,000, almost double the other workers’ output.
Yet, the theft of IP is still rampant and too often unpunished. The Commission on the Theft of American Intellectual Property, a bipartisan and independent initiative, issued a report in 2017 that estimates that IP theft costs the U.S. between $250 to $600 billion annually.
The ITC must recognize that these IP crimes jeopardize American economic supremacy in tech, pharmaceutical, entertainment, and manufacturing industries in addition to being job killers. The ITC must defend innovation. That is an excellent way to support the Trump Doctrine of putting America first.
Stephen Moore is an economist at FreedomWorks. He is co-author of Fueling Freedom: Exposing the Mad War on American Energy.
