Increased Commitment from Private Sector Needed to Combat Cybertheft, Chertoff Says

The private sector must be just as involved as the U.S. government in improving cybersecurity -- particularly when it comes to economic cyberespionage and intellectual property theft, said former Secretary of Homeland Security Michael Chertoff Thursday. Chertoff is now of counsel at Covington & Burling and chairman of the Chertoff Group, which consults with companies on cybersecurity issues. Industry actors can no longer consider increasing their cybersecurity protections a “luxury” -- it’s now a necessary protection of economic growth and profitability, he said at a Covington & Burling-George Washington University Cybersecurity Initiative event. Cybertheft has become the “preferred pathway” for entities to steal intellectual property -- and it’s the most visible cyberthreat the U.S. faces, Chertoff said. Recent studies have confirmed the Obama administration’s position that the pace of economic cyberespionage and intellectual property theft are accelerating, Chertoff said. He said the Commission on the Theft of American Intellectual Property (IP Commission) and others have estimated the theft of U.S. intellectual property is worth up to $300 billion annually.

The federal government also has significant opportunities to increase its role in combating economic cyberespionage and intellectual theft, including enhancing and increasing the nation’s cybersecurity defenses, Chertoff said. The government should also increase criminal prosecutions for cybertheft and the use of trade and enforcement tools to go after foreign entities, he said. Chertoff said he still believes Congress should pass legislation, like the Cyber Intelligence Sharing and Protection Act, to improve information sharing capabilities between government and the private sector. But he also said it’s “hard to imagine” Congress will be able to pass an information sharing bill now because the controversy caused by Edward Snowden’s National Security Agency surveillance leaks has “caused an allergic reaction” against such ideas. Enhanced information sharing capabilities are valuable because if one company gets attacked and is able to share information about the attack, “it can be a one-time event,” Chertoff said.

The event coincided with the release of a Covington & Burling-GWU Cybersecurity Initiative brief on the current U.S. response to economic cyberespionage and trade secret theft. The paper said the U.S. government should improve federal agencies’ internal coordination on cybersecurity and the protection of trade secrets, and more frequently utilize trade policy tools and enhanced enforcement tools to raise the importance of trade secrets protection. The paper also said companies should be proactive in investing in trade secret protections. Those investments “should not be viewed as sunk costs, but rather important investments to preserve and enhance value,” the report said.

Former Deputy Secretary of Defense William Lynn said joint public-private efforts will be critical to defending U.S. networks. Lynn now is CEO of DRS Technologies, which supplies electronic defense systems to government and the private sector. Economic cyberespionage and intellectual property theft “can’t be addressed by either the private sector or government alone,” he said. “The reality is that cybertheft of IP involves all of us.” The government needs to recalibrate its response to state-sponsored intellectual property theft, he said. The IP Commission -- an independent initiative co-chaired by former Director of National Intelligence Dennis Blair and former U.S. Ambassador to China Jon Huntsman -- has found that about 70 percent of international intellectual property theft originates in China, which has become such a major factor in IP theft because they “face no consequences” now, Lynn said. A more “balanced” U.S. response to state-sponsored intellectual property theft should include the imposition of stronger tariffs at the national level and the denial of access to the U.S. market for individual companies, he said.

China appears to be more “committed” to improving its response to intellectual property theft following bilateral U.S.-China meetings in July, said Stan McCoy, assistant U.S. Trade Representative-intellectual property and innovation. China is beginning to recognize the “gravity of the trade secret theft problem,” he said. The Chinese economy itself would “gain an awful lot of economic advantage as well” if it adopted an intellectual property theft policy on par with the U.S., he said. More generally, an “all-government response” is needed to combat intellectual property theft and economic cyberespionage, McCoy said. Such a response must include the federal law enforcement, intelligence, defense and trade communities, he said.