EU Lists China as ‘Top Offender’ for IP Breaches

June 22, 2020 Updated: June 22, 2020

The EU considers China as one of the top offenders in terms of intellectual property rights infringement, a report shows.

The biennial report, issued by the European Commission in January, lists the bloc’s trading partners and how effectively they are enforcing intellectual property (IP) protection in their jurisdictions.

According to the European Commission, which coordinates trade policy for the 28 member nations, China ranks as Europe’s “priority 1” worst offender due to the scale and persistence of its IP rights and enforcement issues, which it says hinders the bloc’s trademark and patent owners’ goals. China is the only nation listed under “priority 1.”

The report found that Beijing grants questionable patents and encourages the use of “patent-thickets”—dense groups of IP rights in certain fields of technology—to thwart innovation.

“China is at the origin of a dominant share of counterfeit and pirated goods arriving in the EU, in terms of both value and volume,” the report states.

It notes that more than 80 percent of counterfeit and pirated goods seized by EU customs authorities originate from China and Hong Kong. This includes the production of counterfeit medicines and toys, which are “potentially dangerous for consumers.”

According to the report, in this environment Chinese firms use “patented foreign technologies “without paying adequate royalties.”

“Forced technology transfer is an increasingly important trade irritant,” the report says, noting that the practice discourages investment. China’s trading partners have long complained that their firms are often compelled to hand over prized technology in exchange for access to the world’s second-largest economy.

“China forces foreign companies to license technology, often at below market rates, as a precondition to access and operate on certain markets,” the report states.

The report adds that although Beijing has, in recent years, made some improvements in the protection of IP rights, “serious concerns remain about the quality of granted invention patents” in China where the number of patent applications is “growing exponentially.”

The countries of India, Indonesia, Russia, Turkey, and Ukraine are listed by the European Commission as “priority 2” offenders who are “causing significant harm to EU businesses” due to “serious systemic problems” in IP protection and enforcement.

Meanwhile, the list of “priority 3” countries causing “significant harm” to EU businesses include Argentina, Brazil, Ecuador, Malaysia, and Thailand, and new additions Nigeria and Saudi Arabia.

The United States has also voiced concern over the Chinese regime’s stance on intellectual property. Last month, Sen. Rob Portman (R-Ohio) outlined legislation—the Safeguarding American Innovation Act—to help prevent IP theft by the Chinese Communist Party (CCP).

US Senator Rob Portman
Sen. Rob Portman (R-Ohio) speaks to reporters outside Wyoming High School in Wyoming, Ohio, on June 22, 2017. (Paul Vernon/AFP/Getty Images)

The senator said the CCP has been taking advantage of the openness of American universities with strategies like the Thousand Talents Program. This program has been allowed to “systematically target promising research” in the United States, he said.

“China and the Chinese Communist Party has not played by the rules and that’s with regard to obtaining our intellectual property, our innovation, our research,” Portman said on May 20 from the Senate floor.

The legislation he will be introducing, “builds on PSI’s recommendations to promote an open and transparent research enterprise in the United States and crack down on the theft of American taxpayer-funded research and IP, while also empowering the DOJ and the Federal Bureau of Investigation to directly punish those who seek to steal America’s research to benefit our rivals.”

Masooma Haq contributed to this report.