UPDATE 4-U.S. seeks to tackle trade-secret theft by China, others

Reuters Middle East

* Technology allows trade-secret theft across borders

* Holder says threat includes "companies and even countries"

* Mixed reaction from U.S. business groups

WASHINGTON, Feb 20 (Reuters) - Faced with the growing theft

of U.S. trade secrets, the White House said on Wednesday it was

stepping up diplomatic pressure and mulling tougher laws to stem

the threat to American businesses and security from China and

other nations.

The plan includes working with like-minded governments to

put pressure on bad actors, using trade policy tools, increasing

criminal prosecutions and launching a 120-day review to see

whether new U.S. legislation is needed.

"A hacker in China can acquire source code from a software

company in Virginia without leaving his or her desk," U.S.

Attorney General Eric Holder said at a White House event to

unveil the strategy.

Although the White House report did not cite China by name,

many see the Asian giant as the main threat. A study released

this week by a private security firm accused the Chinese

military of orchestrating numerous cyber attacks against U.S.

businesses, a charge Beijing has denied.

The Obama administration said its strategy aims to counter

what Holder called "a significant and steadily increasing threat

to America's economy and national security interests."

"As new technology has torn down traditional barriers to

international business and global commerce, they also make it

easier for criminals to steal secrets and to do so from

anywhere, anywhere in the world," Holder said.

Last week, Representative Dutch Ruppersberger, the top

Democrat on the House of Representatives Intelligence Committee,

said U.S. companies suffered estimated losses in 2012 of more

than $300 billion due to theft of trade secrets, a large share

due to Chinese cyber espionage.

The White House report listed 17 cases of trade-secret theft

by Chinese companies or individuals since 2010, far more than

any other country mentioned in the report.

U.S. corporate victims of trade-secret theft have included

General Motors, Ford, DuPont, Dow Chemical, Motorola, Boeing and

Cargill. A target company can see the payoff from research

investment evaporate as a result of corporate espionage and lose

market position, competitive advantage and efficiencies.

"We have repeatedly raised our concerns about trade-secret

theft by any means at the highest levels with senior Chinese

officials and we will continue to do so," said Robert Hormats,

an undersecretary of state.

Those cases cited mostly involved employees stealing trade

secrets on the job rather than cyber attacks.

Victoria Espinel, the White House intellectual property

rights enforcement coordinator, said the effort aims to protect

the innovation that drives the U.S. economy and job creation.


Cybersecurity and intelligence experts welcomed the White

House plan as a first step, but some said much more needed to be


"You've got a nation-state taking on private corporations,"

said former CIA Director Michael Hayden. "That's kind of

unprecedented ... We have not approached resolution with this at


The U.S. Chamber of Commerce, the nation's largest business

lobby, offered a lukewarm statement of support, while other

industry groups expressed more enthusiasm for the effort.

"We strongly endorse and applaud the administration's focus

on curbing theft of trade secrets, which poses a serious and

growing threat to the software industry around the world," said

Business Software Alliance President and CEO Robert Holleyman.

The report that laid out the strategy repeated a 2011 White

House recommendation that the maximum sentence for economic

espionage be increased to at least 20 years, from 15 currently.

Another part of the solution is promoting a set of "best

practices" that companies can use to protect themselves against

cyber attacks and other espionage, Espinel said.

The report also said the U.S. Federal Bureau of

Investigation was "expanding its efforts to fight computer

intrusions that involve the theft of trade secrets by

individual, corporate and nation-state cyber hackers."

In an interview, U.S. Trade Representative Ron Kirk said the

problem of trade-secret theft in China was a factor in the

decisions of some U.S. companies to move operations back to the

United States.

The companies have "had very frank conversations with the

Chinese, (saying) 'You know it's one thing to accept a certain

level of copyright knock-offs, but if you're going to take our

core technology, then we're better off being in our home

country,'" Kirk told Reuters.

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