Online vulnerabilities lead to the loss of U.S. intellectual property, which strikes at the heart of our competitive advantage on the global stage. This threat grows with each passing year.
Intellectual property (IP) is a strategic asset, and its creation, preservation and protection will largely determine the future of U.S. economic growth and competitiveness. However, the advent of Internet-enabled networks of computers, theft, inadvertent disclosure, and deliberate espionage by foreign governments represent grave threats to U.S. IP.
Valuable IP is routinely created by U.S. Government-funded research, but it is often not fully capitalized upon, either by not being commercialized or by simply being released to the public domain. Government organizations are often better at basic research than applied research, and are not as well suited to commercializing IP as are private, profit-seeking enterprises.
For example, although initially funded by ARPA, the Internet was more fully leveraged to the public benefit once private enterprise developed it along with a range of applications to fully realize its potential. Some maintain that since taxpayers have already paid for this IP by its funding by the U.S. Government, it should be made freely available to the public.
To this end, U.S. Government agencies manage programs that enable technology transfer to other government agencies, academia, and industry, examples of which are described by the National Institute of Standards and Technology (NIST).
In exchange, the U.S. taxpayer should receive benefits from the Government’s IP spend in the form of novel products or services at a reduced cost.
The Nature Of The Competition
The reciprocity and transparency of the U.S. Government research enterprise encourages the free exchange of ideas and stands in stark contrast to that of the Chinese government. According to law firm Harris Sliwoski, LLP, a comprehensive Internet security and surveillance program has been put in place based on the Cybersecurity Law adopted in China in 2016, in effect, it claims that all information stored or transmitted within China belongs to its government.
This new program is breathtaking in its scope and includes, “…all networks, information systems, cloud platforms, the Internet of things, control systems, big data and mobile Internet”. The law applies to all information technology implementations, whether owned by Chinese or foreign entities, including applications such as TikTok that are engineered to collect intelligence on unwitting users.
The Chinese government recognizes the importance of IP but struggles to develop its own. Consequently, it resorts to employing strategies aimed to acquire and develop IP created by others, as part of an ongoing strategy that employs cyber-breaches and other intelligence gathering mechanisms.
The Chinese model is essentially to take others’ IP, copy it, refine it, and then release products built with it, enabled by government policy that does not respect international IP standards and supports large-scale espionage to enable its collection and dissemination to Chinese companies.
Specific Offenses
In its quest for exploitable IP, China specifically targets U.S.-based research organizations. The 2019 report from the Senate Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs describes “talent recruitment plans” by the Chinese government wherein researchers working in critical areas sign contracts with Chinese entities that provide salaries, research funding, lab resources, and other incentives to capture and transfer IP developed in the U.S. to China.
Research funded by the National Science Foundation (NSF), the National Institutes of Health (NIH), and the Department of Education (DOE) has also been targeted by these “talent programs.”
China’s IP exfiltration effort has gone as far as to emulate successful U.S. High School programs. The National Review reported on the purchase by the Chinese government of IP created by Fairfax County Virginia’s Thomas Jefferson High School, a leading U.S. STEM school that sometimes does projects with defense contractors.
The purchase was funded by a variety of “donations” for the school, which were essentially payment for the school’s IP, including but not limited to curriculum, syllabi, floor plans, blueprints, lab photographs, and student senior projects.
Of particular concern are the students’ senior projects, which would ostensibly be the students’ and possibly defense contractors’ IP.
The ingrained lack of respect for IP rights leads to a significant advantage for Chinese firms. Freed of the expenditure for basic research, they can focus on application: being fast followers and adapters rather than developers and innovators. From The Free Press, “It doesn’t matter where an idea comes from or who came up with it,” argues Taiwanese AI expert Kai-Fu Lee, whose firm Sinovation Ventures backs AI start-ups in China. Further, her writes in his book AI Superpowers, “all that matters is whether you can execute it to make a financial profit.”
China’s Direct Challenger To American AI
One impact of this mindset is the development of DeepSeek, announced January 27, 2025, which reportedly cost dramatically less, took less time to develop, and required fewer computing resources to execute.
News of this resulted in a roughly $600 billion loss of market capitalization for Nvidia. There are credible reports that firms in China have acquired banned Nvidia AI chips via the gray market at the time of this announcement, suggesting DeepSeek’s success is more subterfuge than true innovation.
China’s basic disrespect for international IP norms makes a Chinese-owned AI model dependent on user input even more problematic. When individuals download and use DeepSeek AI, they provide it with a massive new source of data, acquired by users freely providing it, from which the model can learn and adapt.
Among other things, DeepSeek collects one’s IP address, keystrokes, chat content, and device information to be stored in China, where it is then legally the property of the Chinese government.
Digital Harvesting
As insidious as this new development seems, these strategies have already been deployed in other forms, such as TikTok, which is a vehicle by which the Chinese government can spy on its users and possibly exert covert influence on the U.S. public by using its push algorithms to amplify or suppress specific content.
For example, Chinese users see videos about how to do math or the virtues of the Chinese government. Users in the U.S. get less enriching content, including that which encourages self-harm and other unproductive pursuits. Further, the app is a portal for invasive data collection on its users, including, but not limited to, face and voice recognition.
Such data can be used to train AI face and voice recognition models, and also for future influence as users of the app can be tracked from their youth to a time in the future when they might be susceptible to such influence.
The U.S. Government, businesses, and citizens make significant investments in the creation of IP. To date, this investment is neither adequately protected nor leveraged to maximum benefit to the U.S.
The U.S. Government needs to recognize and protect U.S. IP as a significant strategic resource to a greater extent. A new basis for interaction is necessary, one that does not tacitly allow state-sponsored IP theft at scale by adversarial governments, and rather imposes costs on this behavior.
W. David Salisbury is the Sherman-Standard Register Professor of Cybersecurity Management at the University of Dayton. He was the founding Director of the UD Center for Cybersecurity and Data Intelligence, leading it during its designation as a Regional Programming Center for the Ohio Cyber Range Institute, and is now a Senior Fellow at the Center. Dave also teaches coursework on the NIST Risk Management and Cybersecurity Frameworks, and holds the (ISC)2® Governance, Risk & Compliance Certification.
Benjamin Hazen currently serves as an Assistant Professor of Operations and Supply Chain Management at the University of Dayton. He previously served 20 years in the U.S. Air Force in both enlisted (Satellite, Wideband, and Telemetry Systems) and commissioned officer (Aircraft Maintenance and Logistics) positions. Retiring in 2019, Ben last served as an Associate Professor of Logistics and Supply Chain Management and Deputy Director of the Center for Operational Analysis at the Air Force Institute of Technology.
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