When Theft Gets Political: Addressing China’s Corrupt IP Practices

By: Mona Ibadi

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The United States spends billions of dollars making revolutionary strides in technological research every year. Businesses, big and small, are expending resources to provide up-to-date, innovative products to effectively compete in the market. Although technological development is rapidly growing, the concern for intellectual property theft remains an issue. Despite a lack of public concern, economic espionage from America’s leading culprit – the Chinese government – has increased by 1,300% in the past decade.

If that doesn’t catch your attention, statistics show that most adult Americans have had data stolen in one way or another by China’s government. For example, in 2017, China hacked Equifax and stole the information of about 150 million adult Americans – almost half the nation – and this is not an isolated incident. Though these statistics should be alarming, the truth is that China’s intellectual property theft practices are simply old news. As such, the level of concern is significantly lower than that given to present-day issues.

The implications of these developments are vast and far-reaching – from injury to the American economy to supplying China with military-enhancing technology that contributes to human rights atrocities. China’s authoritarian government, in its pursuit to become the leading superpower, is growing at a remarkable pace by stifling American progress. In one extreme case, China stole American technology and attempted to sell it to the very company from which it stole the information.

Other portions of stolen information from locations across the U.S. come from Chinese spies working undercover for the Chinese government as researchers around the U.S. Over this past summer, an FBI investigation led to the arrest of six such criminals. One “researcher” was ordered to study the setup of the medical lab to recreate it upon return to China; another stole code for the People’s Liberation Army (“PLA”) after his American supervisor invested two decades developing and researching it. Following the arrest of the spies, about one thousand Chinese researchers emigrated from the U.S. The treachery may not cover all of those who fled, but it does raise suspicion about the prevalence of deception that the Chinese government has installed in our nation.

Why is this important?? Much of the public disregards China’s IP theft of American property because it has been a recurring phenomenon for decades. However, to ignore the continuous theft would be to ignore the threat of China overtaking the U.S. as the premier superpower. Where America operates under a democratic republic, China operates as an authoritarian state with few limitations, both legal and ethical. This absence of restraint by the Chinese government impermissibly allows China to operate without rules – putting the U.S. at a disadvantage.

In response, the U.S. Department of Justice launched the China Initiative in 2018 to prioritize and combat intellectual theft of trade secrets, economic espionage, and Foreign Corrupt Practices Act (“FCPA”) offenses. The Initiative was successful in bringing charges in ten cases for trade secret theft. One case involved Chinese company United Microelectronics, which pled guilty to criminal trade secret theft from American leading semiconductor company, Micron Technology, Inc, resulting in a fine of $60 million (the second-largest fine for a trade secret case).

Former-president Donald Trump and his Republican cohorts have exerted pressure on China over the last four years to curtail illegal activity and restrict China’s reach into U.S. operations. The Trump administration and other Republican Congressmen took action with legislative proposals to maintain pressure on China before the transition of power. Proposals from the China Task Force include prohibiting the use of U.S. funds to purchase goods made by enterprises linked to the Chinese military. Andy Barr, congressional representative of Kentucky, explains that the goal of the Task Force is to 1) support America in competing with China’s unfair trade practices, 2) protect the American market from Chinese entities receiving subsidies by the Chinese government, and 3) combat infiltration into the Thousand Talents Program (through which Chinese nationals exploit U.S. federal research grants and steal from American research institutions).

Given these advancements to protect American property, the question becomes, “Is President Joe Biden going to maintain this pressure against China to curtail the government’s unscrupulous practices, or will he be scaling back such regulations?” President Biden’s mixed statements concerning China bring questions about the U.S. approach to China in the coming four years; however, Biden states China’s role in American IP theft must stop. John Demers, Assistant Attorney General for national security, states efforts under the China Initiative will continue under Biden’s presidency. Nevertheless, the new administration’s efforts will differ from the previous administration in several ways. For instance, Biden seeks to coordinate with allies to address IP theft problems, whereas Trump embodied a unilateral front against China. Additionally, Biden seeks to lift tariffs on Chinese imports created by the Trump administration and take a softer approach than Trump by utilizing entities like the World Health Organization in hopes of imposing international pressure on China and coaxing it into an agreement.

However President Biden chooses to check China’s corrupt acts, this nonpartisan issue needs to be a priority for the new administration. Biden’s tolerant nature with China must come second to American security and progress. This may require a tougher stance against the Chinese government to ultimately hold it accountable for deceitfully profiting off American workers. Still, coordinating with the international community will aid American efforts to go head-to-head with one of the largest, most powerful, and economically successful countries in the world.

Mona is a second-year law student at Wake Forest University School of Law. She holds a Bachelor of Arts degree in Political Science from Drew University. Upon graduation, she intends to practice transactional law in the realm of privacy and corporate law.