The national security regime in the US is killing innovation

One of the aspects of the National/Homeland security infrastructure in the US is the dampening effect it has on innovative activity. There are two sides of this, first being the outright stopping of privacy enhancing technology from hitting the market under the guise of security by requiring it to pass the national security test. The next is theft of intellectual property.

I have first hand experience in this area, being involved with a very small firm that has developed technology (and received patents) which encrypts in a relatively unbreakable fashion transmissions, both voice and data. The owners of the firm have been getting the jerk around from the government for almost a decade. NSA, CIA, DOD, FBI, Congress, all of them. The tech is OK to sell, per the government, and once a sale (to a firm who would ultimately distribute it), it gets the kibosh, from some area of the government, indicating that it needs more review. Those reviews occur and then then committee assignments in Congress change or new folks are put in positions in the security agencies and the reviews have to start all over. The government won't buy the product to take the patent rights, but they also won't let the product be sold. This firm has the first encrypted cell phone that has a commercially viable price point and have US patent on the technology. They have just sought and received patents in Argentina, have began to sell the product out of there and are moving the firm. It is absolutely theft of intellectual property for the government to not allow the product to be sold and not compensate the developers of it appropriately. Is there any doubt at all that with the growing concern about privacy, there would not be products or services to cater to that market? No it does not. The products and services are there and they are being kept from the market.

Intellectual property rights. China is the country that folks typically think of when we consider state sponsored theft of intellectual property. It is illogical that the US government is not stealing IP in a similar fashion. With full scale reading of e-mail and warrantless searches of e-mail that IP is at a minimum being observed by third parties. As mentioned above, IP is definately being usurped. Beginning a small firm that is IP based, you would seriously consider establishing in Latin America or Europe rather than the US. Nonsense such as bogus regulations such as Sarbanes/Oxley just another nail in the coffin of innovation in the US as is the tax policy on small business. Keep in mind that IP is not just the material associated with the product or service itself. It is communications with actual or potential clients, RFI and RFP responses who show how clients will use the products/services. Financial models, methodology. IP is more than system specifications/designs and code.

It used to be that the "next big thing" was likely to come out of the US. Technology is a step curve and often the steps were reached in the US

There are other start-up firms that are being squashed in the privacy space under the guise of security and coupled with the anti business climate, the next tech wave is likely to come from outside of the US

The innovation is still happening so you should change your title maybe to "National Security is Killing the Innovation Market" instead.

It may be harder for the private sector to get the new ideas out to the public but i've no doubt that we are still leading the curve in tech advances.

reply to post by kro32


Innovation will occur anytime there are bright and creative people with ideas. That there is innovation however, is immaterial if the innovation can not be brought to the market. The stark difference between doing business in Argentina and the US is astounding.

With respect to the technology I'm familiar with, most of the potential sales were to non-US firms and governments. What is the probability that, for example Airbus would purchase a piece of technology designed to ensure secure data and voice transmissions when the US government is demanding that the US firm provide them access to the full design and implementation schema of Airbus? How about a European drug firm that wants to implement encrypted video and telecommunications to discuss internal matters. No chance will they use it when you have the corporate interests in the country essentially running the government and the US is demanding rights to the keys, hence the ability to violate the privacy the technology was designed to provide? How about a sale to a soverign nation who wishes to use it when Uncle Sam is demanding that the US firm provide encryption keys and algorythms? No chance. Those actions and demands without question degrade the competetive advantage of the technology, stripping significant wealth from the developers of it. It also quells the add on innovations that always occur once a product hits the marketplace. There are USB based personal use IP encryption technologies out there are well that are encountering the same issues. A tool that would enable the private citizen to communicate and use the internet with absolute privacy is not going to be supported and hence not allowed to be sold. It will be sold, it will just not be sold by a US firm. These firms, whos owners have significant resources tied up in these technologies are right now seeking international buyers for the technology.

There is a whole investment banking and legal niche industry being spawned that takes nascent IP and seeks foreign buyers of it prior to it being placed on a watch list. They secure international executives, international patents and solicit buyers. Many of the technologies you are using that are sold by non-US firms such as Nokio and Toshiba were developed by tiny firms in the US. The climate prevents the tiny firm from becomming a large firm, killing job creation. When the whole medley of government intrusion into developing a product or service to market is considered, you would be a fool not to take your ideas overseas.