Semiconductor IP News and Trends Blog

Secrecy is no Friend to IP Innovation

New information casts further shadows on Asia’s reputation – from a potential Trans-Pacific Partnership to counterfeit electronics and global hacking.

Intellectual property (IP) partnerships – often the result of technology clustering – have been around for many decades. In Portland, OR, we have strong software, nanotechnology and semiconductor chip clusters.

In the past, I’ve covered other global technology clusters. Most of them are structured around a model of IP sharing and protection – such as IMEC in Belgium and Minalogic in France. There are many similar clusters and partnerships located around the world. All strive to increase innovation through sharing IP, business and marketing expenses.

But there is another kind of partnership whose ultimate IP goal seems veiled in secrecy. Recent commentaries have raised concerns as to the real purpose of the Trans-Pacific Partnership (TPP). Part of the problem is that very little is known about this international group except that they seem to have a vested interest in rewriting the global rules on intellectual property enforcement, according to the Electronic Frontier Foundation. “All signatory countries will be required to conform their domestic laws and policies to the provisions of the agreement,” explains a foundation official.

What are those provisions? No one seems to know. But many wonder how an international agreement, spearheaded by the TPP, might be used by future members of the TPP – especially one large Asian country with a long record of IP violations from other countries.

A quick perusal of some of this week’ headlines reinforce the legitimacy of those concerns. Consider a recent IHS report that identifies the five most prevalent types of semiconductors reported as counterfeits (see Figure) and that have widespread commercial and military use. Total annual risk for the global electronics supply chain is pegged at $169 billion. Quoting from the report: “A faulty counterfeit analog IC can cause problem ranging form a mundane dropped call to a serious tragedy in the aviation, medical, military, nuclear or automotive areas,” noted Rory King, director, supply chain product marketing at IHS.

A recent example of the growing dangers of counterfeit chips can be found in the mission failure of Russia’s Phobos-Grunt space craft. (see, “Shadow Supply Chain Demands System-Level Verification”) 

A more direct link to China is provided by a recent IEEE spectrum report on hacking – “Every Major US Company Already Compromised by Chinese Hackers, Says Former Official” Other examples abound.

There is a growing consensus that Asia – one large country in particular – is the source of most global IP theft and counterfeit electronics. Some observers worry that this large country is preparing to become part of the TPP. It that is the case, then understanding the international IP agreements being developed by this secretive, global partnership is imperative for those countries and companies that value the rule of law.