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July, 2018

China defends its IPR protection record

Original article: Xinhua

China is once again defending its record of intellectual property rights protection as the Sino-U.S. trade dispute simmers. Hua Chunying, the spokeswoman of China's Ministry of Foreign Affairs, told reporters that the U.S. is selfish with regards to intellectual property rights. “No one has the monopoly over the application of IPR to promote social and economic development," she said. 

Analysis:

China's leadership knows how to make a statement. Indeed, no one country (namely, the United States) can monopolize IPR - especially when its companies believe their future lies in another country: China. That's certainly the dilemma the Trump administration faces. 


The crux of Beijing's argument, that U.S. firms voluntarily agree to share technology with their Chinese partners, has some truth to it. Last year, leading artificial intelligence chipmaker Nvida announced a partnership with China's Baidu. In a press release, the two companies vowed to bring cutting-edge AI technology to cloud computing, self-driving vehicles and AI home assistants. It's likely Nvida will be sharing some of its technology with Baidu and vice versa. 


In her remarks, Hua highlighted China's IP-related achievements. “China has already become a major power in terms of independently creating intellectual property rights,” she told reporters. “In terms of output, China boosts the largest amount of patent applications, scientific publications, and scientific workers and researchers. China is emerging as a leader in global innovation and brand-building.”


In the numbers game, China is doing well. Local governments regularly tally trademark and patent applications, publishing the results in local media. Some provinces are seeing triple-digit annual increases in both categories. As a nation, China is second only to the United States in international patent applications. 


Still, China's legitimate progress in intellectual property is often overshadowed by its misappropriation of others' trade secrets and technology. The thievery by Chinese parties is well documented - and it keeps happening. In July, the Justice Department indicted a Chinese national for stealing a document from Apple containing schematic drawings of a circuit board to be used in an autonomous vehicle. The man, Xiaolang Zhang, formerly worked as an engineer for the iconic tech giant. He resigned in April. 


Zhang got caught because he was sloppy. He told Apple that he had to return to China to care for his sick mother. Apple security became suspicious when they noticed his network activity surge in the days leading up to his resignation. Security staff later discovered that he downloaded trade secrets from a project database. 


In this case, Apple's security team and the FBI - who arrested Zhang at San Jose Airport before he could board a flight to Beijing - did their jobs well. But Apple needs to think more carefully about its investments in China, especially plans to build additional R&D facilities. 


Had Zhang evaded the grasp of U.S. authorities, he would likely have gone to work for Guangzhou-based Xiaopeng Motors, analysts say.

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