Intellectual Property and Indigenous Innovation, Two Opposite Roads For Foreign IPR Holders

Photo Danny Friedmann
IP and indigenous innnovation
roads going in opposite directions?

The US-China Economic and Security Review Commission will hold hearings on China's intellectual property  and indigenous innovation policies on May 4th. Emphasis will be given on the consequences of these policies for the film, broadcast, and software industries.

Programme:
8:30 am – 8:45 am: Hearing Co-Chairs’ Opening (Commissioners Dick D’Amato and Dennis Shea);
8:45 am – 9:15 am: Panel I: Congressional Perspectives by Senator Slade Gorton (R-WA) - retired;
9:15 am – 10:45 am: Panel II: Film and Broadcast Industry by Mr. Richard Masur, former President, Screen Actors Guild;
11:00 am – 12:30 pm: Panel III: Business Software by Mr. Michael Schlesinger, Of Counsel, Greenberg
Traurig, and International Intellectual Property Alliance and Mr. Ken Wasch, President, Software & Information Industry Association;

1:15 pm – 2:30 pm: Panel IV: China’s Indigenous Innovation Policy by Ms. Thea Lee, Deputy Chief of Staff, AFL-CIO and Mr. Alan Wm. Wolff, Of Counsel, Dewey & LeBoeu.

Information about location here.

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Joint-venture with technology transfer no panacea for market access to China's aviation industry

China's 12th Five-Year Plan (2011-2015) states that the general aviation industry's development will be
promoted, reform the airspace management system as well as increase the efficiency of the allocation and utilization of airspace resources. Bright sky for China's aviation industry. But what about foreign aviation companies, will they be able to takeoff or will they stay grounded.

Like all governments the Chinese government is giving its national aircraft corporation, the Commercial Aircraft Corporation of China, Ltd. (COMAC), support. The government made it obligatory for foreign aviation companies that want to supply to China to partner with COMAC and establish joint-ventures to get technology transfer via the ARJ21 and C919 projects. No company, including Western companies wants to give its intellectual property away without compensation. Therefore those Western companies that agreed to the terms of technology transfer for the C919 did so with old versions of their technology.

飞机

Cliff, Ohlandt and Yang write in their report 'Ready for Takeoff' sponsored by the U.S.-China Economic and Security Review (USCC) that joint ventures per se do not guarantee effective market access, but that the inverse, “those that do not provide access to coveted technologies or—even more problematically—are perceived to compete against domestic producers are not likely to receive preferential treatment and may indeed face severe obstacles.”

Read Roger Cliff, Chad J.R. Ohlandt, David Yang, Ready for Takeoff, China's Advancing Aerospace
Industry RAND National Security Research Division, sponsored by the U.S.-China Economic and
Security Review Commission, 2011, available here.

Wonderful characters 飞 fei 机 ji mean literally "bird machine" = airplane

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USCC 2010 Report Released

2010 Report to [the U.S.] Congress of the U.S.-China Economic and Security Commission (USCC) has been released. The report is 324 pages long and IP Dragon will read those parts relevant to intellectual property in China, including market access, in the coming weeks.

If you cannot wait read the 4 page opening remarks of Chairman Dan Slane and Vice Chairman (why not vice chairperson?) Carolyn Bartholomew on the report which includes information about indigenous innovation and procurement in China without applying the WTO Governement Procurement Agreement (GPA) rules (which is not that strange since its status is observer since February 21, 2002, not party, see here, Hong Kong is party June 19, 1997 and Taiwan July 15, 2009), a striking name for China's approach to internet control as "networked authoritarianism" and its take on the hijacking of U.S. internet traffic. Read here.

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November 17: USCC Report about Indigenous Innovation, WTO and Disclosure Requirements

U.S.-China Economic and Security Review Commission (USCC) will release its 2010 Report to Congress at a press conference Wednesday, November 17.

Among the topics in the 316-page report will be about:

National defense and foreign affairs and energy and environmental issues.

But also about economic, trade and censor issues:

• China's 'indigenous innovation' policy to promote favored industries and limit imports;.
• China's past and future role in the World Trade Organization;
• How China's revised state secrets laws may conflict with U.S. disclosure requirements and put U.S. investments in Chinese firms at risk.

UPDATE November 18, 2010: report has been released, read more about it here.

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USCC 2008 Report to Congress: From Visible IPR Infringements To Undectable Cyber Espionage

The US-China Economic and Security Review Commission came up with their 2008 Report to Congress. The conclusion includes:

• "China continues to violate its WTO commitments to avoid trade distorting measures. Among the trade-related situations in China that are counter to those commitments are restricted market access for foreign financial news services, books, films and other media; weak intellectual property protection; sustained use of domestic and export subsidies; lack of transparency in regulatory processes; continued emphasis on implementing policies that protect and promote domestic industries to the disadvantage of foreign competition; import barriers and export preferences; and limitations on foreign investment or ownership in certain sectors of the economy."
• "China has an active cyber espionage program. Since China’s current cyber operations capability is so advanced, it can engage informs of cyber warfare so sophisticated that the United States maybe unable to counteract or even detect the efforts."

So it's all about intellectual property rights violated, noticed or unnoticed. Read the 405 page report here.

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Again Harsh Words in US-China Economic Security Review Commission Report (2008) About Intellectual Property Protection/Enforcement in China

In the 405 pages of the 2008 Report to Congress of the U.S.-China Economic and Security (USCC) Riew Commission (published November 2008) intellectual property is mentioned often and prominently:

"China made scant progress in reining in the rampant counterfeiting and piracy that deprive legitimate foreign businesses operating in China of their intellectual property, while they provide an effective subsidy to Chinese companies that make use of stolen software and other advanced technology." pg. 12.

"But China's penchant for using currency manipulation, industrial subsidies and intellectual property theft to gain an advantage violates international norms." pg. 15

Also in the 2007 USCC report harsh words were easy to find:

"China is still not enforcing its own laws against intellectual property theft."

And in the 2006 USCC report:

"China's failure to enforce intellectual property provides a particularly egregious example of its noncompliance with WTO rules."

Read the 2008 annual USCC report here (pdf), the 2007 version you can find here and the 2006 version you can find here.

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Is China a responsible international stakeholder, does it comply with WTO's TRIPS?

November 16, the chairman and vice chairman gave a preview of the 2006 Annual Report to Congress of the US-China Economic and Security Review Commission (USCC). The Commission was established in 2000 to monitor aspects of China’s behavior after Congress voted to admit it to the World Trade Organization (the WTO), including TRIPS. USCC tracka and advisea Congress on the national security implications of the bilateral trade and economic relationship between the United States and China.

USCC Chairman Larry Wortzel made a statement at the release of the Annual Report:
"China has demonstrated that it understands many of its obligations to the 149 other members of the World Trade Organization. China has made considerable progress in writing the internal legislation and regulations to comply with the agreements it made nearly five years ago to join the WTO. But China is falling short on its implementation of those new laws and regulations and is failing to adequately enforce laws already on its books. One glaring example: China's obligation under the WTO to combat the illegal piracy of intellectual property. China has fallen woefully short of complying with international rules that protect intellectual property."

Vice Chairman Carolyn Bartholomew added in the following statement: "On the trade front, China has failed to fulfull many of the obligations on internal market-oriented reforms it made when it joined the WTO. Rampant piracy of intellectual property, for example, continues across the country. Entire towns can depend on the revenue generated by counterfeiting. The Chinese government has failed to control such violations and typically prefers administrative fines rather than the more effective avenue of criminal prosecutions. Yet during the Commission's trip to China last June, amid the excuses from Chinese authorities about their inability to control counterfeiting, a stark contradiction presented itself: Chinese authorities had somehow managed to prevent any counterfeiting of the 2008 Beijing Olympic logos."

Update the Annual Report itself can be found here.

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