IP and Intelligence

21st January 2019
Joe Bush

Misappropriating IP, copying ideas and gathering intelligence on organisations, people and nations is as old as time and despite the increasing trade tensions particularly between the US, EU and China it isn’t going to stop anytime soon. It is however perfectly legitimate for organisations to look closely at their competitors’ products and services to understand if they have achieved a competitive advantage in the market and if so, use that intelligence to formulate a plan to catch up and overtake their competitors. 

In this article ecsn chairman Adam Fletcher suggests that the wider proliferation of IP and intelligence generally benefits all in society and therefore demonising the few who take things too far is probably counter-productive.

Organisations in the semiconductor market have historically sought to secure strong global patents on their underlying core technology IP rather than on individual components, believing that achieving ‘first mover’ advantage was the best way to achieve strong market share for a product with a new technology. However, competitors often then either reverse engineered the component and produced their own variant or more often, negotiated with their competitor to produce their own version under licence, which was usually the preferred solution. In a fast growing market the IP holder benefited from having an approved second and third sources of supply for their component, encouraging more customers to design it into their equipment and thereby increase the size of the available market.

As semiconductor components became more complex the licencing and cross-licencing of technology, design tools and manufacturing processes between organisations became a market necessity both at the components and end equipment level. Producing a high-end smartphone today involves acknowledging and paying to use the IP of 1,000s of independent organisations without whose collective IP creativity it would be impossible to achieve the time-to-market necessary to achieve commercial success.

The current trade dispute between the US and China (although other nations, notably the EU, Canada and Australia are also involved) is predominantly about the control and protection of IP of western organisations that for over 20 years has been unfairly accessed by some Chinese state-owned organisations. The electronic components industry is at the centre of this dispute because the ownership of enabling semiconductor IP gives a huge economic advantage to an organisation and to their home nation who benefit from the investment, employment and taxation on the revenues generated.

Regardless of their location organisations should not be expected to give away their technology advantage or in essence, have it stolen from them. After many unfruitful years of quiet unproductive diplomacy, the US Government has finally moved to impose tariffs on a wide range of products manufactured in China in order to protect US-based organisations. Previously almost no tariffs were levied on electronic components traded between China and the US but they are now subject to a ten percent tariff and a hike to a 25% was due to come into force early this year. Fortunately, the implementation date has been delayed for 90 days to enable further negotiations to take place.

Government / third party intelligence
All governments have sophisticated and generally publicly acknowledged intelligence gathering operations involved in obtaining some insight into, or advantage over other nations, whilst at the same time seeking to protect the interests of their own citizens. Various whistle-blowers including Wikileaks, Edward Snowden and defecting diplomats have provided us all with an uncomfortable insight into these nefarious activities.

We do however accept that governments routinely monitor our communications for keywords and believe – perhaps naively – that they do so primarily for the greater good of society. In addition, all governments mandate that ‘backdoors’ into communications systems are made available to the relevant authorities and we permit a wide range of third-party organisations such as Google, Facebook etc. to access a huge amount of our personal data which is primarily used in targeted advertising, but this data has also been subject to abuse. Although new and enhanced regulation and legislation on what these organisations may do with our data is evolving, the global nature of this data flow makes this very difficult so we are increasingly reliant on the expertise of the organisations that specify and operate communication systems, along with regulators to ensure that systems are robust, secure and able to withstand attack.

In a global economy increasingly dependant on a wide range of highly integrated and interoperable technology solutions we need to ensure that international legislation on IP protection works effectively for all organisations, nations and their citizens. In my opinion demonising a few miscreant organisations or governments is likely to be counterproductive to resolving the issue. My hope is that the current trade dispute is quickly resolved and an effective framework for future negotiation via the WTO is re-established and greeted with widespread support.

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