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China's Newest Weapon To Nab Western Technology - Its Courts (wsj.com) 85

Posted by msmash from the how-about-that dept.
The growing conflict between China and the U.S. extends from computer-chip factories to a suspected spy balloon over American skies. Running through it all is a struggle for technological superiority. From a report: China has striven for years to develop cutting-edge technologies, in part through heavy spending on research. Now, according to Western officials and executives, it also has mobilized its legal system to pry technology from other nations. Officials in the U.S. and European Union accuse China of using its courts and patent panels to undermine foreign intellectual-property rights and help Chinese businesses. They say China is focusing such efforts on industries it deems important, including technology, pharmaceuticals and rare-earth minerals.

A U.S. manufacturer of X-ray equipment had a decade-old patent invalidated by a Chinese legal panel. A Spanish mobile-antenna designer lost a similar fight in a Shanghai court. Another Chinese court ruled that a Japanese conglomerate broke antitrust law by refusing to license its technology to a Chinese rival. At China's Communist Party congress in October, when Xi Jinping secured a third term as party leader, he praised the country for becoming a global innovator and pledged to help it prosper further. "We will increase investment in science and technology through diverse channels and strengthen legal protection of intellectual property rights, in order to establish a foundational system for all-around innovation," he told Chinese lawmakers.
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China's Newest Weapon To Nab Western Technology - Its Courts More

China's Newest Weapon To Nab Western Technology - Its Courts

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  • Ahh the good old days (Score:5, Insightful)

    by Frank Burly ( 4247955 ) on Tuesday February 21, 2023 @02:25PM (#63312117)
    When China was famous for even-handed enforcement of IP laws and allowing foreign companies to operate freely within their borders. This newest weapon will surely be one to contend with.

    • Re: (Score:3, Interesting)

      by cb88 ( 1410145 )
      Yeah this article is silly.

      My uncle was CEO of a fiber optic company manufacturing in china with US patents and I think it was in the 90s they kept winning the cases and they would shut them down but they would be back in business in a week... so instead of bothering with endless legal fees they just paid off the local what is essentially the mob to have them keep them shut down....

      Also the only reason they knew about this company was because they were manufacturing cloned optics with the polarities backwar

    • Nobody in the US gives a fuck about some Chinese kangaroo court.

    • Re: (Score:3, Informative)

      by AmiMoJo ( 196126 )

      They learned from the best. There is a reason companies often sue in Texas. Remember when Apple enforced a rounded corners patent there? Even at the federal level, foreign companies often find themselves at a disadvantage.

  • Nothing like trading... (Score:5, Insightful)

    by TWX ( 665546 ) on Tuesday February 21, 2023 @02:33PM (#63312143)

    ...long-term solvency for short-term profits by standing-up manufacturing and sending your proprietary processes and designs to a place where there's zero respect for your rights to your designs and processes.

    • Re:Nothing like trading... (Score:5, Insightful)

      by ebunga ( 95613 ) on Tuesday February 21, 2023 @03:45PM (#63312335)

      It's the dumbest thing. Imagine in the 1960s, 70s, and 80s, if someone said, "Hey, let's offshore our entire manufacturing base, including components vital to national defense, to the USSR and countries within their sphere of influence." They would be laughed out of the boardroom. Now they get a bonus for wrecking their company.

    • Making it mandatory to get funding is even worse. (Score:5, Interesting)

      by Ungrounded Lightning ( 62228 ) on Tuesday February 21, 2023 @04:11PM (#63312407) Journal

      Nothing like trading...long-term solvency for short-term profits by standing-up manufacturing and sending your proprietary processes and designs to a place where there's zero respect for your rights to your designs and processes.

      I was in the founding team of a startup a bit over a decade ago. (Not at C-suite level, unfortunately.) To get funding from the denizens of Sand Hill road (or other venture capitalists) you had to have an "offshoring story" in your business plan.

      Regardless of our preferences were left with the choice of offshoring a bunch of our process or not getting the funding to start up.

      An established company chosing to go offshore and getting bit as a result bites one company. The venture capitalists as a group requiring this of all new companies as part of the ante to play in the business world bites an entire generation of businesses.

    • ...long-term solvency for short-term profits

      Actually people are trading insolvency for normality. Welcome to the 2020s. No one gives a shit about Made in America (or any other country). Few people care about quality. The only thing you're doing by not moving production to China is raising your price tag above that of the competition.

      Corporations didn't race to the bottom, they raced to their consumers who demanded the bottom.

      • Re: (Score:1)

        by Anonymous Coward

        It took more than consumers wanting low prices for the situation to get this way. Trade relations with China began to open up in the early 1970s because of Kissinger and Nixon for... many reasons. There were ineffective attempts to revoke China's trade status after the Tiannanmen Square massacre. China became a permanent free trade partner to the USA in 2000.

        If you had the power to, would you change this situation at all in any way, or let it be, cynically placing the blame on consumers who don't care about

    • "A Capitalist will sell you the rope that you hang him with"

    • If I may add, trading with the US and EU should be a privilege, not a right. Because once you allow companies to trade with and offshore manufacturing to a place where there's zero respect for rights to designs and processes, other companies will follow in order to not be at a cost disadvantage. But if China knew the US and/or EU could initiate a China "mandatory divestment" plan for US and EU companies if China doesn't obey international laws, China would not be so brazen about stealing US and EU designs a
    • Nailed it in one ;)

  • Just be disposable labor and consumers please! (Score:5, Interesting)

    by Tailhook ( 98486 ) on Tuesday February 21, 2023 @02:34PM (#63312147)

    Anyone have sympathy for those losing their IP to China? The people getting screwed here are the same people that lobbied for China's MFN status and various trade schemes so they could employ disposable Chinese workers and sell stuff into China's growing market. Now that China is wealthy and powerful it's throwing its weight around, fucking with Western IP owners.

    Boohoo. It's your own damn self-inflicted fault and to the extent that China can compromise the Western IP regime they're doing the world a great favor.

    • Re:Just be disposable labor and consumers please! (Score:5, Insightful)

      by Dutch Gun ( 899105 ) on Tuesday February 21, 2023 @03:03PM (#63312223)

      Most everyone these days acknowledges the west propped up China and largely created this mess by chasing after short term profits. This sort of thing has been going on for decades, but the cheap labor and easy manufacturing access was apparently worth having your products ripped off in "third shift" factories, because those were only sold domestically in China anyhow - just the price of doing business. And so the clever CEOs thought, with a tacit a wink and nod. First it was just their products, but later it was their IP, and then they found (surprise, surprise) the Chinese courts couldn't care less about upholding international IP law. This is nothing new at all.

      However, now that China is a superpower in every sense of the word, the game looks a bit different. China didn't open up as some (perhaps naively) hoped through it's closer ties with western democracies. They've grown more belligerent and hostile, have remained a largely closed and protectionist economy, and have made no real effort at legal, social, or political form - actually backsliding in most regards since Xi grabbed power.

      You may enjoy your schadenfreude at the west's expense, but make no mistake... China is NOT doing the world any favors.

      • by chasing after short term profits. This sort of thing has been going on for decades

        Those two sentences can't both be true. Short term is not "decades". The reality is the latter is correct. Companies didn't outsource to China for short term profits, they did so for survival as no one is interested in paying a premium for "Made in the USA" labels stuck on things. You can make a stand and go broke in the process.

        • >> Those two sentences can't both be true. Short term is not "decades". The reality is the latter is correct.

          Of course they can be correct at the same time.
          1) a string of short term profits can be repeated (what happens in China)
          2) "Decades" itself can be short term. (not what happens in China)

          • 2) "Decades" itself can be short term. (not what happens in China)

            9 out of 10 businesses fail in a year. Most of the rest fail within 5. Decades is not short term in the business world regardless of how you want to define it. This goes double for the tech industry.

        • Re: (Score:2)

          by sd4f ( 1891894 )
          It's a short term profit, when a business outsources to a cheaper region when all their competitors are still stuck with the higher cost of production. Once the market has adjusted, and all are back on the same playing field, having all moved to the cheaper region, it's back to square one.

          • when all their competitors are still stuck with the higher cost of production.

            Except they aren't. That's the fundamental point. There's a reason everything you have in your vicinity says Made in China on it. The initial push may have been profit driven, but right now bringing down the cost of manufacturing is a question of long term survival for most product categories.

            Consumers are incredibly price conscious, they are demanding the race to the bottom. Only some categories of products escape this, usually a smaller subset of luxury goods or specialist manufacturing items which comman

            • Re: (Score:2)

              by sd4f ( 1891894 )

              when all their competitors are still stuck with the higher cost of production.

              Except they aren't. That's the fundamental point. There's a reason everything you have in your vicinity says Made in China on it. The initial push may have been profit driven, but right now bringing down the cost of manufacturing is a question of long term survival for most product categories.

              Consumers are incredibly price conscious, they are demanding the race to the bottom. Only some categories of products escape this, usually a smaller subset of luxury goods or specialist manufacturing items which command high margins per device.

              That is exactly what I wrote in the second sentence that you didn't quote.

        • The mindset of forever chasing after short-term profits, is something that has been going on for decades.
      • They are not nearly as powerful as you think. See my other posts in this thread.

        • Re: (Score:2)

          by dknj ( 441802 )

          You need to link to the other posts on this thread. You are not special enough for me to adjust my thresholds just to find your opinion. And even if you were special, I would demote your social status because this reeks of holier-than-thou attitude.

          Good Day.

      • China didn't open up as some (perhaps naively) hoped through it's closer ties with western democracies.

        Those "some" failed because they forgot one very important point:

        When you start showering religious fanatics (yes, that includes Communists) with money, they're not gonna thank your God, they're gonna thank theirs. For clouding your mind and dumbing you down, to make you give them power.

        (Communists may not call Marx a god, but his memory is definitely gospel to them)

      • Re: (Score:2)

        by Zak3056 ( 69287 )

        You do have to admire how they got companies to line up begging to cut their own throats. As an example, the high speed rail companies (Siemens, Bombardier, etc.) gave their technology away to China in exchange for the ability to build some rail lines, and now they have Chinese competitors not just for China projects, but for global ones. A fantastic example of short term vs long term thinking.

    • Re:Just be disposable labor and consumers please! (Score:5, Interesting)

      by hdyoung ( 5182939 ) on Tuesday February 21, 2023 @03:07PM (#63312235)
      I generally agree with your sentiment, except for the characterization that China is "wealthy and powerful".

      They're LARGE. That brings both advantages and disadvantages.

      Wealthy? Their GDP per capita sits somewhere between Costa Rica and Romania.

      Powerful? Just like the USSR, much of their power is vaporware. Their hard power rests on their nukes, which only go so far in terms of getting their way. The current sh*tshow with Russia has demonstrated that. Their conventional military is entirely unproven. They haven't fought a real war for... like.... forever. And their soft power is mostly gone. The idea that the Chines Emperor offers a viable alternative to western democracy is laughable. The only people who really want to hitch the wagon to that? Other dictators.

      Xi made a serious mistake by prematurely dumping the "play nice and quietly get stronger" strategy. Now, the west is no longer sharing freely and playing nice. They're gonna have to stand on their own two feet, but their economy is BARELY BETTER THAN ROMANIA's. Yes, size does matter, but it isnt enough to get you across the finish line. They're badly caught in the middle income trap.

      It's a serious shame, really. Think of what a billion-strong Chinese democratic capitalism could have accomplished. They would be ruling the planet.

      • It's a serious shame, really. Think of what a billion-strong Chinese democratic capitalism could have accomplished. They would be ruling the planet.

        We would be currently bowing down to the Chinese equivalent of Microsoft instead of waiting another 10 to do that here.

      • Re: (Score:1)

        by XXongo ( 3986865 )

        I generally agree with your sentiment, except for the characterization that China is "wealthy and powerful". They're LARGE. That brings both advantages and disadvantages. Wealthy? Their GDP per capita sits somewhere between Costa Rica and Romania.

        In terms of "powerful", it's GDP, not GDP per capita, that measures economic power. China's GDP is number two in the world, only slightly behind the US (and a factor of four ahead of number 3, Japan).

        Yes, they're powerful.

        • Re:Just be disposable labor and consumers please! (Score:5, Insightful)

          by hdyoung ( 5182939 ) on Tuesday February 21, 2023 @06:00PM (#63312619)
          Not nearly as powerful as the total GDP number suggests. How do I explain this? I’m not an economist and I don’t want to write an entire frikkin essay.

          Picture two villages, the small village with 10 people, and the large village with 40 people. Both villages live a subsistence existence. Each person is barely surviving. One of these villages is 4 times larger. Is it 4 times richer/powerful? You might say so, but the answer is: no, not really. If everyone is constantly close to death, nobody has any energy, or resources, to do anything except struggle to stay alive.

          Now, imagine that the small village manages some sort of advance in farming technology, or sets up a more efficient government, making them 4 times as productive. Ok, so now these two villages are equal with each other, right? Nope. The smaller village is now VASTLY more powerful. 3 farmers can now feed the entire village, freeing up the other 7 villagers to do other things. One can be a potter, another a blacksmith, another a weaver, etc. etc. Suddenly, life in that small village gets MUCH better. If these two villages ever fight, the small village has all sorts of advantages. They can put as many as 7 professional soldiers into the field, which the larger village is still constantly near-starvation. Remember everyone in the larger village can barely find the energy to get up and scrape for their food every day. In addition to all this, the population of the small village is going to grow now, because life is better. Even if the small village doesn’t straight-up conquer the larger village, theyre probably going to attract the best people to move.

          This is a drastic oversimplification, but it captures why GDP PER CAPITA is extremely important. China has about 3 times as many workers as the US, but US workers are about 3 times as productive. Actually, last time I looked at the number is was closer to 4 times as productive. That makes the US vastly more powerful.

          • Not nearly as powerful as the total GDP number suggests. How do I explain this? I;m not an economist and I don;t want to write an entire frikkin essay.

            Have AI write one for you!

        • It's a combination of the two. In grossly simplified terms, if meeting the needs of the population requires 10,000 money per person worth of stuff per year, a country with a million people, a GDP/capita of 20,000, hence GDP of 20,000,000,000, of which 10,000,000,000 is already gone, can afford the same number of tanks as a country with ten million people and a GDP/capita of 11,000, hence GDP of 110,000,000,000, of which 100,000,000,000 is already gone.

          • Re: (Score:2)

            by XXongo ( 3986865 )
            You could say that.

            Nevertheless, I'll assert that the economic power of China is a hell of a lot more than "somewhere between Costa Rica and Romania."

      • Re: (Score:2)

        by sd4f ( 1891894 )

        Scale plays a bigger role than you suggest. Sure you can look at GDP per capita, but you lose the scale, such as number of millionaires in China is around 7 million. That's about one third of Romania's population. Similarly the USA's high GDP masks that by its own definition, there are around 40 million people living in poverty, or about twice the population of Romania.

        The fact is that the slice of the pie may be very small in comparison with a country like China, but the pie is absolutely enormous.

  • After 4 decades of court packing our courts are so full of loon balls and hyper nationalists they couldn't care less what the rule of law is.
  • Many countries don't care about IP and will steal anything they can. During Desert Shield/Storm I was stationed in Bahrain. I visited Manama a few times and while there I came across a store that would copy anything for $1 - books, computer diskettes, music cassette tapes, anything media based basically. They would even copy the original artwork of the music cassettes, all while you waited. This store wasn't in some back alley either, it was right in the mall. For $10 I got a copy of Turbo Pascal 3.01 on 5.

  • Doesn't sound that bad (Score:4, Interesting)

    by mysidia ( 191772 ) on Tuesday February 21, 2023 @03:26PM (#63312277)

    Another Chinese court ruled that a Japanese conglomerate broke antitrust law by refusing to license its technology to a Chinese rival.

    If you are an entity who wants to do business in China, then you gotta follow their laws - just about every country has antitrust rules. As for licensing IP.. perhaps the prudent thing to do is to Not be the IP holder for business units operating overseas; license your IP from a parent company.

    A U.S. manufacturer of X-ray equipment had a decade-old patent invalidated by a Chinese legal panel.

    So a Chinese court decides rights on a certain patent won't be upheld within China... That's fine: every country decides for itself whether patents are available or Not for the use of inventions within their borders. The equipment maker can still enforce their patents granted in other countries on actions outside of China's borders - such as the Chinese makers manufacturing or exporting products within the borders of other countries.

    • Re: (Score:2)

      by AmiMoJo ( 196126 )

      TFA doesn't say that the patent was improperly invalidated. Maybe there was prior art in China. Something I invented turned out to have been invented at the same time in Israel. If they hadn't also tried to get an international patent at the same time we wouldn't have known.

    • So... it's not stealing if you take the loot straight home and lock the doors?
    • As I've said in another post, the equipment maker cannot enforce their patents granted in other countries on actions outside of China's borders. Chinese counts prevent US and European companies from enforcing their rights in non-Chinese courts (for example, preventing a European company from going after a Chinese company in an Argentinian court over goods the Chinese company exported in Argentina) by hitting them with large fines in China. This is something that the EU is aware of and trying to stop btw: ht [europa.eu]

      • Re: (Score:2)

        by mysidia ( 191772 )

        As I've said in another post, the equipment maker cannot enforce their patents granted in other countries on actions outside of China's borders.

        Sure they can.. they just need to submit an ITC complaint, and they'll block movement of infringing products at customs+border patrol; the Chinese courts have no jurisdiction over patent actions in another country, which are controlled by that country's laws, and China's has no power over.

        • Chinese courts don't have any power directly, but they have an indirect way of stopping non-Chinese companies from enforcing their patents against Chinese companies in other countries. They basically go to those non-Chinese companies and say, "Sure, you can file an ITC complaint, and you may win, but if you do, we will hit you with such a large fine in China that you will deeply regret doing so". The official term for this is "anti-suit injunction". The only way for a company to not be vulnerable is to not

  • For over a decade you gave it away for free? (Score:4, Interesting)

    by HnT ( 306652 ) on Tuesday February 21, 2023 @03:38PM (#63312317)

    Just look at German car makers and other manufacturing powerhouses, the promise of a supposed Chinese market made them so blind they were building in a Chinese factory owned by the CCP under license, and to make sure they could also copy the whole development and R&D process, they demanded e.g. cars be changed for the Chinese market.

    Now that is suddenly an issue when before you handed everything over for free hand over fist?

  • Duh. China doesn't have rule of law. (Score:4, Informative)

    by Eunomion ( 8640039 ) on Tuesday February 21, 2023 @04:38PM (#63312491)
    Law is not a concept familiar to that society. Whatever the state says at any given moment is what goes, period.

    People have been saying this for two decades, and the Western business community just dismisses it because they think they can score profit in China for a while before the other shoe drops. They don't care what it will end up costing society as a whole when that happens.

  • So they are free to use within China. When any goods are exported they can be attacked/stopped due to the patent violation. OK: good theory but enforcing patents can be expensive and there are plenty of countries that will buy from China regardless.

    • "When any goods are exported they can be attacked/stopped due to the patent violation." Nope. Chinese courts can and do prevent US and EU companies from enforcing their patents in non-Chinese courts. See my other posts for why (I have already posted it twice and I will attract the ire of moderators if I post it a third time).
  • It's worth noting three things:

    1) Patents are only valid in the country they are issued in, in other countries they aren't worth the ink they are printed on. As such, a company claiming some invention must get a patent in every country it considers a relevant market for that invention. This means a country-specific patent office can reject a patent claim either due to prior art in that country, obviousness, or non-patentability according to the local laws. This results in a certain amount of leverage the

  • What can I say? It looks like China learned from the best, as in how US courts harmed foreign competition by upholding bogus patents. Good example is Apple versus Samsung.

    • Re: (Score:2)

      by sd4f ( 1891894 )
      This is just another part of foreign policy, just like warfare. Those countries who can be coerced and must do as they're told, do so. Those who feel they can hold their own, and don't need to comply to another nations whims and demands, won't, and in this, we have all the enemies of the US; those countries who feel they don't have to subject themselves to the US's foreign policy. The smaller nations got acquainted with the US military, while the larger ones like Russia and China, well they get the evil eye
  • Comment removed based on user account deletion

  • China claims to be a communist country. I disagree, but for this point I'll take them at their word.

    In a communist country, all instruments of government are united with The Party. Just as there are no actual independent businesses, and anything that looks like one is just a camouflaged government entity, there are also no independent courts. Any so-called court and and judges/juries are all simply entities of The Party or members of The Party, and any "rulings" are going to be what The Party has deemed nec

  • Coke and Gillette are examples of companies which didn't get patents and thus didn't have to share their secrets with the world. If companies want to avoid patent theft by the Chinese Communist Party, they might be wise to consider not getting one and locking their secrets in a vault.

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