More Action Needed to Protect US Intellectual Property
The U.S. government recently raised the stakes in its ongoing trade fight with China by accusing it of stealing American trade secrets. But unlike the U.S. government’s moves to impose sweeping tariffs on China, which were roundly criticized, this latest salvo is likely to win more plaudits.
While there are many who would like the U.S. to continue its tough stance on China, the tariff-based approach is meeting stiff resistance from American workers, farmers, and manufacturers who see the reverberations affecting job growth, wage growth, and bottom lines. But while the tariffs remain in place, at least for now, the battle to protect American innovation is heating up.
The Department of Justice recently threw its weight behind Idaho manufacturer Micron in its fight against China by charging China-backed chip manufacturer Fujian Jinhua and others with a conspiracy to steal trade secrets from the U.S. company. Coupled with an announcement from the Department of Commerce restricting American companies from selling software and technology to Fujian Jinhua and the Justice Department’s charges against two Chinese intelligence officers for attempting to steal jet engine technology, these actions represent a noticeable change in the American approach to intellectual property preservation.
Although these are positive steps, much more should be done to continue to shine a light on this issue. The independent, bipartisan Commission on the Theft of American Intellectual Property estimates that pirated software, counterfeit goods, and theft of trade secrets costs the U.S. economy between $225 billion and $600 billion a year. With these high losses and continued blows against its innovation, it is imperative we take on IP theft and create a more productive environment for U.S.-China trade relations.
While Micron is the latest company in the headlines, many other innovators, from Veeco Instruments’ wafer carrier technology to Knowles’ micro-electrical-mechanical systems microphones and InterDigital’s wireless mobile phone technology patents have fallen victim to IP theft. These and others would certainly benefit from the U.S. government’s backing as well.
The ways certain Chinese companies co-opt foreign IP should face increased scrutiny as well. In the cases of Micron, Veeco, Knowles, InterDigital, and others, Chinese companies converted American IP into Chinese IP by suing American IP owners in certain Chinese courts for alleged patent infringement. When a Chinese court upholds the allegation, the American entity is either forced out of the Chinese market or required to pay the Chinese company that appropriated its IP in the first place.
For now, negotiations between the U.S. and China have hit a stalemate, but opportunities for progress on these and other key issues remain. With a renewed focus on the importance of protecting American IP, global leadership meetings like the G20 summit in Buenos Aires this week present a chance for the U.S. and China to engage in constructive conversations that may better and more systematically address the tensions that persist between them. It is advantageous for both sides to come to the table and come up with solutions beneficial to all.
The stakes are high, and it is important for all parties to get this right. Otherwise, the U.S. economy and the future of its innovation will continue to be caught in the crossfire.
Scott Mulhauser is the founder of Aperture Strategies, the former chief of staff at the U.S. Embassy in Beijing and the Export-Import Bank of the U.S., and a former senior advisor to the U.S. Senate Finance Committee.