The theft of American Intellectual Property by China costs the U.S. hundreds of billions annually.
For decades China has been pilfering U.S. Intellectual Property. To this day, they continue to steal IP at record breaking levels using sometimes nefarious means. Many electronic goods from China include back doors that allow hackers to enter the devices and grab potentially sensitive information, documents, photographs and more. Their electronic measures to grab U.S. intellectual property is on the rise and very well documented by numerous sources. But there are also more legitimate, though just as unsavory methods, by which they gain access to US technology. Despite getting caught red handed, there seems to be little done about the problem.
In August of 2017 President Trump as the office of US Trade Representative to investigate China’s attack on America’s Intellectual Property. A little over 7 months later and the results are in and the US Trade Representative’s office stated that Chinese theft of American IP costs between $225 billion and $600 billion annually. In March 2018 the administration formulated a response.
President Trump placed tariffs on $50 Billion worth of Chinese goods. President Trump stated this was in response to “the unfair and harmful acquisition of U.S. technology.” Most of the news focused on which products and industries were going to be hit by the tariffs, whether they were fair or not, and who was the winner or loser.
Granted some products might cost the average US consumer more in the future, the real message was lost to the masses – the real message was a warning shot about unfair IP practices – something that in the end will save every American consumer and worker.
The real message to the Chinese was that if we can’t stop you, we will at least make you pay in other ways.
IP theft costs the US billion annually as well as thousands of jobs lost overseas. These are important skilled position jobs that the US really wants to keep. According to a 2017 report from the Commission on the Theft of Intellectual Property, annual costs of IP theft is in the hundreds of billions. This fits in line with another report by a US Trade Representative that advised the Trump administration that “Chinese theft of American IP currently costs between $225 billion and $600 billion annually.”
Chinese companies try to acquire American technology by any means possible, be it illicit or quasi-legitimate. Espionage and theft are big parts of the problem, but many conditions are put on companies who want to do business in China. What business doesn’t want inside the Great Wall with billions of potential customers? This however often comes with a hefty price. Many companies are forced to do technology transfers or mandatory joint ventures as a condition for getting to do business in China. So companies may have a new large audience for their product, but their IP is laid bare for exploitation as a result. Forced technology transfers have especially been a burden for US tech firms.
Yet another method of acquiring US technology is the new Chinese cyber security policy. Under the guise that technology could be used against the government and national security, the new law allows China to conduct security reviews of technology products. It is also said that the measure is to help combat online fraud and strengthen the personal protection of Chinese citizens. However, despite the intentions or excuse for the law, the new law means that Chinese officials with dubious intentions would be allowed to go line by line through source code or engineering diagrams or review other proprietary or sensitive information.
Overall, these concerns create unfair advantages for Chinese companies while at the same time creating barriers for US based companies.
As people debate steel tariffs and other recent political moves – one must remember that China is the “world’s principal IP infringer” and any tariffs and penalties are more than what they appear to be on the surface.
What are your thoughts on the recent tariffs and Chinese IP theft? Let us know! And if you want to protect your patent, copyright, or any other intellectual property, let us know. Williams IP Law provides foreign IP protection, not only US.
Author: Jeff Williams
Jeff Williams is an experienced mechanical engineer and lawyer that consults closely with clients in a strait forward and clear manner. He brings a particular set of strengths and unique perspectives to the firm.
Jeff received a B.S. in Mechanical Engineering from Arizona State University in 2005. He was an engineer for a number of years at a number of large corporations before pursuing his law degree. He graduated from Texas A&M University School of Law (formerly Texas Wesleyan University School of Law) with a J.D. in 2010. By combining his education and prior work experience into the field of intellectual property law, Jeff has developed key skills to fully assist clients.