The Chinese Communist Party has been stealing U.S. intellectual property for years, costing Americans up to $600 billion annually, the equivalent of $6,000 for every family, an expert testified on Capitol Hill on March 8.
The theft has been systematic, deliberate, and obvious—but not adequately addressed by the federal government, witnesses said.
“When it comes to intellectual property, the Chinese Communist Party has been eating our lunch for many years across both parties’ administrations,” Rep. Ben Cline (R-Va.) said, then corrected his comment.
“I think it needs to be changed to, ‘They’ve been stealing our lunch money and parading in front of us.’”
To stop the thievery, the United States must employ a multidimensional strategy that begins with developing a bipartisan, societal will to confront the problem, experts said.
Uncivil Actions
The United States has embraced trade with China since President Richard Nixon reestablished diplomatic relations with the country in 1972.While generally beneficial, the open trading relationship hasn’t produced the hoped-for moderating effect on the behavior of the Chinese Communist Party (CCP), subcommittee chairman Darrell Issa (R-Calif.) said.
“American national security is at risk because of China’s government’s quest to achieve superiority using both internal and external gotten technology” through both legal and illegal means, Issa said.
Ranking Member Hank Johnson (D-Ga.) agreed with the assessment.
“We know that the sale scale of China’s IP theft is enormous. We know that it hurts our inventors’ ability to compete and succeed," Johnson said.
“And we know that we need to improve our laws and policies to not only protect America’s intellectual property from the Chinese government but also to mitigate the damage already done.”
Johnson and other speakers noted that U.S. competitiveness with China shouldn’t fuel anti-Asian racism.
Anything Not Nailed Down
Witnesses described the CCP’s IP theft program as a “whole society” approach.“China uses intelligence services, science and technology investments, academic collaboration, research partnerships, joint ventures, front companies, mergers and acquisitions, and outright theft via insider threats and cyber intrusions,” said William Evanina, founder and CEO of the Evanina Group, a consulting firm specializing in intellectual property security.
China steals pretty much “everything” having to do with intellectual property, he said.
The list is “clear, concise, at the same time strategic and comprehensive. Just to name a few: aerospace deep-sea technology, biotechnology, information technology, manufacturing, clean energy, electric battery technology, and DNA genomics,” he said.
Addressing Vulnerabilities
Predatory use of patent laws is a primary tactic of Chinese companies, witnesses said.Chinese companies will steal U.S. ideas and innovations, sometimes aided by state laws prohibiting noncompete contracts, then obtain patents on the work and sue the innovating U.S. company for patent infringement.
To combat that, the U.S. patent process should be improved to ensure that patents are correctly reviewed and that legal enforcement is fair both here and in China, according to Charles Duan, a professor at American University Washington College of Law and a member of the U.S. Patent and Trademark Office’s public advisory committee.
Joint ventures between Chinese and U.S. companies have also provided opportunities for intellectual property theft.
“We don’t play by the same rules as the Communist Party of China,” Evanina said.
While acknowledging that U.S. investment in Chinese countries is legal and often lucrative, Evanina asked business leaders to weigh the trade-off between profit and national security.
“We are in a place right now where our global supremacy, our capitalist mindset is clearly superseding and overlapping with our national security interests,” he said.
Tech innovators and research institutions aren’t the only points of vulnerability. Social media apps are another, especially those that send data back to the app makers, many of which are based in China.
“This is really a matter of evaluating the backdoor risks that are posed. I think we need to do a better job of that,” said Mark Cohen, distinguished senior fellow and director of the Asia IP Project at Berkeley Center for Law and Technology.
Previous attempts to reform the behavior of the CCP by multiple administrations have failed. The starting point for any future attempt is to develop a bipartisan, public-private approach to the problem, according to Evanina.
“You have to have the political will across parties and administrations and, importantly, in the U.S. business community,” he said.
“Absent the sustained will, it will be increasingly difficult to protect the U.S. economy and American workers from the negative impact of Chinese policies and practices on [intellectual property].”
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