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Mónica Guzmán

Stories at the intersection of tech and life from a boldly connected city.

March 29, 2014 at 8:00 PM

Will cyberattacks destroy the invention economy? Seattle-area analyst sees danger ahead

On a scale of 1 to 10, how much would you say you care about IP theft?

IP what?

IP is intellectual property. It’s the core of invention — the thing that gets protected so that good ideas become good products that make good money and inspire more good products down the road.

If you’re like me, the fact that technology makes IP easier to steal hasn’t been anywhere near as interesting as how it’s helped you get more done, or keep up with friends, or launch into debates over things like location, privacy and whether Android beats iPhone.

Mark Anderson (Photo: Dan Lamont)

Mark Anderson (Photo: Dan Lamont)

But, according to a smart guy who makes big calls from Friday Harbor, we should be paying a lot more attention.

Mark Anderson has been called a futurist. He prefers “predictions scientist,” but his label isn’t as important as his reputation. The publisher of Strategic News Service, a pricey newsletter read by the likes of Bill Gates, Steve Ballmer and Michael Dell that’s been going strong since 1995, Anderson called the 2008 recession on CNBC in 2007, and he hosts the likes of Tesla and SpaceX founder Elon Musk at his influential tech conference, Future in Review.

Right now, Anderson has his eye on two issues he believes are world game-changers: global warming and — you guessed it — IP theft.

The threat of IP theft is so big, in Anderson’s view, that he’s created a consortium of companies called INVNT/IP — pronounced “invent IP” — to unite businesses in what he terms “inventing countries” against something called nation-sponsored theft of IP.

Here’s what he sees going on.

Technology is dominating every sector of the economy. Not just some sectors; all of them. That means intellectual property in every sector of the economy, stored conveniently in digital form, is now more vulnerable to a growing wave of cyberattacks and malicious theft.

This theft is not the occasional poaching of this patent or that owned idea. It’s institutionalized stealing, Anderson said. And the biggest perpetrator, he believes, is China.

This is where some headlines you’ve seen might come to mind. Product clones, piracy, charges of corporate espionage and lots of suspicions and denials coming from Russia, a smattering of smaller nations, but mostly — by far — China.

It’s murky, and few talk about it openly, but to business leaders, attorneys and policymakers who work in that part of the world, piracy in China is a known and serious issue.

We’re just not doing very much about it.

Anderson points to the telecommunications equipment sector as an example of what strongly suspected Chinese cyberattacks have wrought.

Anderson said once-dominant players like Motorola, Cisco and Siemens have lost major ground to recent Chinese competitors like Huawei. If you follow the news stories, the 10-year hack strongly suspected to have brought down the once 9,000-employee Nortel, in particular, has become a cautionary tale for companies that assume wide-scale theft is someone else’s problem.

American officials are hardly ignoring the problem. Bob Hormats, while undersecretary of economic growth, energy and environment in the U.S. State Department, said in 2012 that Chinese cyberattacks result in the theft of valuable proprietary information at “unprecedented” levels.

But it’s a tricky thing to confront head-on. One source who explained China’s weak, skewed IP law enforcement to me over the phone — along with allegations that it shares the results of government espionage with its homegrown companies — asked that I not use his name in this column. It’s just possible China wouldn’t let him back in the country if I did.

INVNT/IP, too, is keeping a low profile. It’s already been reported Google was a founding member — that company has been more open about this than most — but Anderson would tell me little about who else is in the group, or even how many members there are.

The group’s last meeting was in Park City, Utah, Anderson said; representatives from all members showed up in person, and officials from the NSA, the FBI and the CIA joined in. When members communicate digitally, it’s through airtight channels that security experts have tested and retested.

So why is this a concern for me, or you, or anyone not in business? The way Anderson sees it, if IP theft thrives as the lucrative business model it appears to have become, we could see the long-dominant economy of invention, the force of innovation we’ve always taken for granted, the very thing that makes technology so fun and exciting in less-spooky conversations become crippled beyond repair.

It may not be military, Anderson said, but it’s war. One that will need greater public awareness, policy execution and corporate collaboration to win.

That adds up to a hell of a bold claim. It’s all very obvious to Anderson, a pattern matcher who says his predictions have been accurate more than 94 percent of the time over years and years. But the future is a wily thing, and it’s tough to wrap my non-economist head around one side of this story, let alone any others.

With the stakes this high, it probably wouldn’t hurt to try.

Mónica Guzmán’s column appears in Sunday’s Seattle Times. Got a story about living with technology in the Northwest — or know someone she should meet? Send her an email, follow her on Twitter @moniguzman or send her a message on Facebook.

Comments | More in Column, Disruption, Money, Security

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