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Intellectual Property- A Decade-Old Tussle Between The US And China


By: Aastha

Cornell Law journal defines intellectual property as "Any product of the human intellect that the law protects from unauthorized use by others.  The ownership of intellectual property inherently creates a limited monopoly in the protected property.  Intellectual property is traditionally composed of four categories:  patent, copyright, trademark, and trade secrets."


The intellectual property law in most parts of the world can be seen as similar or parallel to the law of tangible property as they both are concerned with protecting the rights of the owner. However, they both digress at a core point. While touchable property rights seek to protect the assets, of the owner, they do so with no specific incentive for the owner. Intellectual property seeks to provide an incentive, to the owner to encourage them to develop intellectual goods mentioned above for public benefit.


Over the last decade, there has been grave tension between the Chinese and the US governments regarding ownership and theft of academic property. China has introduced policies on technology transfer from foreign entities, which has resulted in two new dispute settlement cases at the WTO. For the first one, the allegations are on China for violating the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS). Conversely, China has asserted that the United States has imposed unilateral measures against certain Chinese products (in retaliation to China’s policies on intellectual property, thereby violating US' obligations under the General Agreement on Tariffs and Trade 1994 (GATT 1994) as well as Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU).


The United States has termed China as the “world’s principal IP infringer”.  The US bipartisan Commission on the Theft of American Intellectual Property in 2017 concluded that counterfeit goods, "pirated software and the theft of trade secrets cost the US economy between US$225 billion and US$600 billion annually, not including the full cost of patent infringement."  Subsequently, there was also a report, which was published by the office of the US Trade Representative (USTR), accusing China of the inability or unwillingness to impose enough reforms on IP protection and highlighted other concerns in their IP policies. It calculated an estimate of 80 percent of US counterfeit seizures to China, including Hong Kong.


The United States used its law, more particularly section 301, and introduced the imposition of a 25 percent tariff on a total of approximately $50 billion of Chinese goods. This move came as a response and countermeasure against alleged unfair trade practices of China towards the US intellectual property. In September, the United States imposed additional tariffs on approximately $200 billion of imports from China. The tariffs were cemented at 10 percent initially and were to be increased subsequently to 25 percent. This increase was deferred while there were negotiations for bilateral agreements between the United States and China concerning their relationship in trade and commerce; the topics included forced technology transfer, intellectual property protection, cyber intrusions, and cyber theft. However, these negotiations came to no avail and were disbanded on May 10, 2019. This was followed, by an announcement by the US Trade Representative regarding the United States' imposition on the previously deferred tariffs of 25 percent (on Chinese goods worth approximately $200 billion) effective immediately.


Coming to the present-day situation of the issue, US President Joe Biden termed the US-China dispute as to the controversy of the century while highlighting intellectual property as one of the vital issues concerning the US. Talking about his discussions with Chinese President Xi Jinping, Biden said: “America will stand up to unfair trade practices that undercut American workers and American industries. Like subsidies from [the] state to state-owned operations and enterprises and the theft of American technology and intellectual property [IP].” In the meantime, China has hinted towards IP protection on a priority basis in its 14th five-year plan for 2021 to 2025. This comes as part of its strategy to move towards self-reliance in critical technology.


A book with detailed guidelines was published by the economic planners from the Government that explains their intentions on strengthening the protection of IP and raising high-value patent ownership in the next five years, and China is expected to come public with its strategic plan to make China a global IP power by 2035 this year.

Previous November, President Xi announced to the Communist Party Politburo that “IP is a core factor of international competitiveness and a focus of international dispute”. He emphasized the importance of innovation as a forebearer of economic growth and mentioned that “protecting IP is protecting innovation”.


 Subsequently, he followed by saying that IP protection was of utmost importance for Chinese businesses, the loosening up of its economy, and the protection of critical technologies along with implications on national security. Several experts have been concerned with China's growing stake in IP as it grows every day in the international market.

Many US senators have repeatedly raised legislation intending to ease businesses that claim to be victims of intellectual property theft to block imports made with their trade secrets.


A bill was introduced by senators from both the Republican Party (Senator John Cornyn) as well as the Democratic party (Senator Christopher Coons) asking for an amendment in the Tariff Act of 1930 as well as for creating a new committee at the US International Trade Commission, as was reported in The Wall Street Journal. As per the bill, the owner of intellectual property was free to submit an allegation under oath. And such an allegation could be filed by the attorney general's office itself. The bill is presumed to apply to imports of any country. It is a widely accepted assumption that it stems mostly in response to allegations of intellectual property theft by Chinese companies.


This proposed legislation and bill was introduced soon after current President Joe Biden pressured leaders of both the Group of Seven (G7) wealthy democracies and the North Atlantic Treaty Organization (NATO) to work in tandem to confront China on the issues concerning, forced labor. It remains to be seen who wins this decade-old tussle over intellectual property; the superpower - the USA or the dragon - China.

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Tags: #China #US #war #internationalrelation #economics #diplomacy #internationallaw #infrigement #internationaltrade #multilaterlism #theft #IP #markets #trade #tradewar #intellectualproperty


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