CCP Steals Up to $600 Billion a Year in US Intellectual Property, Experts Warn

A Chinese Communist Party has been seizing intellectual property in the United States for years. It is estimated that this can cost Americans as much as $600 billion per year, which would be equivalent to $6,000 each family. An expert testified at 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.), stated, and then corrected his comments.

“I think it needs to be changed to, ‘They’ve been stealing our lunch money and parading in front of us.'”

Experts say the United States should use a multidimensional strategy in order to end thievery. This includes developing a bipartisan, social will to tackle the problem.

Witnesses gave their testimony at a House Judiciary Subcommittee on Courts, Intel property, and the Internet hearing on March 8. Members from both parties admitted the theft of American intellectual properties and resolved to come up with a solution.

Uncivil Acts

Since 1972, when President Richard Nixon restored diplomatic relations with China, the United States has been open to trade with China.

The open trading relationship is generally good, but it hasn’t had the expected moderating impact on the behaviour of the Chinese Communist Party as Darrell Issa (R.Calif.), subcommittee chairman, said.

“American national security is at risk because of China’s government’s quest to achieve superiority using both internal and external gotten technology” Issa stated that Issa can use legal or illegal methods.

Hank Johnson (D.Ga.), ranking member, agreed with this 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.

“We know we must improve our laws to protect America’s intellectual properties from China and to reduce the harm already done.” Johnson said.

Johnson and other speakers added the concern that American competitiveness with China should not fuel anti-Asian racism.

“China and the United States are engaged in an innovative war. However, we can’t win the war by abandoning our values and allowing hate to prevail.” Johnson said.

Anything Not Nailed Down

Witnesses described the Chinese Communist Party’s IP theft program as a “Whole society” approach.

“China has its own intelligence services. It also uses science and technology investments. Academic collaboration, research partnerships. joint ventures. front companies. Mergers and acquisitions.” said William Evanina, founder of the Evanina Group, a consulting firm specializing in intellectual property security.

China steals pretty much “All” having to do with intellectual property, Evanina said.

The list is “It is concise and clear while being comprehensive, yet strategic and thorough. You can also find information on: biotechnology, aerospace technology, deep-sea technology and manufacturing.” he said.

The Chinese company Comac’s C929 airplane, to be debuted next month, was created almost entirely with stolen technology, Evanina 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 non-compete 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, 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 American companies have also provided opportunities for intellectual property theft.

“We do not follow the Communist Party of China’s rules.” Evanina said.

While acknowledging that American investment in Chinese countries is legal and often lucrative, Evanina asked business leaders to weigh the tradeoff between profit and national security.

“Our global supremacy and our capitalist mindset are clearly in conflict with our national security interest.” he said.

Tech innovators and research institutions are not 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.

“The issue is to evaluate the potential backdoor risk. We need to be better at this.” 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 Chinese Communist Party 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.

“The political will to win across all parties and administrations as well as in the U.S. Business community is essential.” he said.

“It will become increasingly difficult for the United States to defend its economy from negative Chinese practices and policies without a sustained will. [intellectual property].”