china stealing intellectual property

(1) China is perpetrating what Secretary of Defense Mark Esper has called the greatest intellectual property theft in human history. I bear the consequences of what I did.. considering whether the AI might be violating intellectual interviewed him in November 2017. Beijings preference for large firms and state funding at the expense of genuine competition ensures it will struggle in key areas, from aircraft development to shale. i Abbreviations and Acronyms Commercial Computer Networks and Cyber-Enabled Theft of Intellectual Property and Center for Strategic and International Studies With its focus on deterring and punishing cyberintrusionsin which hackers try to make The significance of this particular issue is exaggerated. wanted the meeting to happen in a country that would be amenable to arresting Xu. This must extend to barring receipt of U.S. capital, directly or indirectly, and prohibition of all sales in the American market. This 22-page document is a good primer on how to protect your intellectual property in China. The rattled stock market gets all the trade war attention, but its the sharp decline in Chinas U.S. investments that should alarm Americans. The latest news, analysis, and data from the country each week. Economics proprietary information. Chinas Record on Intellectual Property Theft Is Getting Better Intellectual Property In the last week of March 2018, Hua flew to Brussels, accompanied by Hull and other agents. When F.B.I. In principle, exports can occur without involving technology transfer. Finally, he confronted Hua with evidence showing that Hua had met with people other than just friends and family. I tried to explain to her that everything would be fine, he told me. As Wray warned in London, "It may be a lot cheaper to preserve your intellectual property now than to lose your competitive advantage and have to build one down the road.". Hua finally disclosed that he had given a presentation at N.U.A.A. According to Alperovitch, there has been an increase in hacks by China's Ministry of State Security, which he considers more skilled than the People's Liberation Army, which previously stood for most of the hacking. China Intellectual Property The defense argued that Xu had been tricked; the intent behind his correspondence with Hua was not to steal trade secrets but simply to facilitate an academic exchange between Hua and Chinese scientists. It might enable China to copy mRNA technology and then try to bankrupt American vaccine-makers. [11], A 2018 report by the Australian Strategic Policy Institute, looking at incidents from Germany, Australia and the United States, including the Rio Tinto hack, stated that China was likely to be in breach of its bilateral cyber espionage agreements. After his return from China, Hua stayed in touch with his hosts in Nanjing. Is Tellis right? The allegations of intellectual property theft by China are contentious in United StatesChina relations and between the People's Republic of China and several other nations. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. His wife was worried. Hua couldnt help wondering if this had anything to do with the secret of his Nanjing trip that he had been keeping from his employer. The F.B.I. In 2008, a Chinese-born engineer named Chi Mak who worked for a defense contractor in California was sentenced to more than 24 years in prison for having stolen and passed on to China information about several sensitive technologies, including systems for the U.S. Navy. experts on using composites; Hua thought they would help him save time when putting together his presentation, which he planned to do on his flight. But I always tell myself, thats the past, what can I do? The Ministry of State Security, along with other Chinese government-backed organizations, spends considerable effort recruiting spies from this diaspora. A .gov website belongs to an official government organization in the United States. But do Washington and Brussels agree on how to deal with Beijings growing cloutShow more? Ive liked drinking tea since I was a kid., A few dozen students and faculty members attended Huas talk. Yes, there are. Webintellectual property claims against Chinese citizens and companies within US courts in an attempt to assert their dominance over Chinese companies. The commit espionage and steal American technology, intellectual property and state secrets. To find the right tradeoff, they must take stock of their countrys innovative capacity, consider international norms and standards, weigh wide access to knowledge against incentives to invent, and seek common ground between the short-run interests of firms and the long-run interests of society as a whole. MI5 chief Ken McCallum called Chinas threat "game "Make no mistake, we will be relentless in defending our country from China," he said. 22, 2019. E-Commerce is an excellent business enabler. "We're comfortable with where those cases are and that we continue to stand behind them," he said. China even became the most litigious country in terms of the number of IP-related cases as early as 2005, and the number of cases has increased at a rate of over 40 percent per year for the past two years. For instance, by the early 20thcentury, the United States had fallen well behind Germany in the key chemical industry. A lock ( A locked padlock ) or https:// means youve safely connected to the .gov website. The department announced the China Initiative in 2018 to combat what officials said at the time and still say is the Chinese government's relentless campaign to steal U.S. secrets, technology and cutting-edge research. "We have a deficit with China because of predatory trade practices, practices that violate Chinas obligations to us. On Wednesday, Microsoft revealed in a blog post that it has tracked a group of what it believes to be Chinese state-sponsored hackers who have since 2021 The agent characterizes the unmasking of Xu as a significant milestone in the effort to combat economic espionage by the Chinese, for reasons that go beyond this one case. Since G.E. He repeated the answers he had given to his employers security officers. I will definitely contact you again if I have a chance to visit China in the future, he wrote to Qu, keeping the door open for another academic exchange at the university. Countries do not enact strong IP rights systems until their ability to innovate at home displaces reliance on outside knowledge. Xu was simply doing his job, they pointed out, adding that he was not a rogue operator or criminal mastermind. A lenient sentence would be appropriate, the memo argued, because the U.S. government couldnt hope to deter Chinas theft of intellectual property by harshly punishing a single intelligence officer. Keep up with the world without stopping yours. There, investigators also found an audio recording of a 2016 conversation with a professor at N.U.A.A. The 7 sins supported former President Trumps China trade position, but the USA actually had little control over most of them. With regard to PRC beneficiaries of illegal IP acquisition, the starting point should be to treat their behavior as criminal and to recognize that the U.S. has no obligation to allow new business of any kind with accused criminals. But unfortunately, as the FBI works to counter this threat, it's up against not just China, but the U.S. government itself. after discovering that he had been downloading proprietary information about the companys heart catheters. At the end of the trial, Xu was convicted of conspiring and attempting to commit economic espionage and theft of trade secrets. Join FPs Ravi Agrawal for a discussion with experts on both sides of the Atlantic: Cindy Yu, an assistant editor of the Spectator and host of its podcast Chinese Whispers; and James Palmer, author of FPs weekly China Brief newsletter. China has continued to steal intellectual property from other countries, according to a report out this week but one cyber security expert says that's not the real issue. Delivered Wednesday & Sunday. Being recognized back home was especially fulfilling for Hua, who grew up poor in a small village and was the only child there from his generation to go to college. As he struggled to find paid work in the weeks that followed, his efforts on behalf of the F.B.I. The revelation of Xus activities lifts the veil on how pervasive Chinas economic espionage is, according to the F.B.I. No, Hua replied. They started making appeals to Chinese Americans saying theres no conflict between you being American and sharing information with us. Then the security officers told Hua that the F.B.I. The Prepared Homestead on Twitter: "RT @EpochTimes: We The plan was to have Tian who was working at a Safran plant in Jiangsu install malware provided by Xu onto the laptop of a Safran employee visiting from France. White House officials have downplayed the reported tensions. At the moment, even existing enforcement possibilities are being ignored. During the time he was helping the F.B.I. A sense of that scale comes from a pair of indictments unveiled in federal court in the District of Columbia in 2019 and 2020 naming five computer hackers in China responsible for intrusions into more than 100 businesses, nonprofits and government agencies in the United States and other countries. And China's good fortune doesn't stop there. Intellectual Property Rights and its role in E-Commerce. Its not often that prosecutors find a one-stop shop for much of their evidence, but thats what Xus iCloud account was a repository of the spys personal and professional life. Argument: In the final version, China is simply "encouraged" not to avail itself of the waiver. Yukon Huang is a senior fellow at the Carnegie Endowment for International Peace. Its own IP rights system began with the Copyright Act of 1790, which explicitly didnotgrant any protections to foreign works, stating, Nothing in this Act shall be construed to extend to prohibit the importation or vending, reprinting or publishing within the United States, of any map, chart, book or books written, printed or published by any person not a citizen of the United States. During the early days of its industrialization, the United States was a world leader in IP rights violations, a fact often overlooked in the current discourse. There are multiple documented cases of Chinese trade-secret theft for almost every year this century, from Datangs receipt of information stolen from now-defunct Lucent in 2001 to China State Nuclear Technologys receipt of information stolen from Westinghouse in 2010 to X-Motors receipt of information stolen from Apple in 2019. They eat dogs. [12] This shift from the PLA to the Ministry of State Security, as well as an increase in sophistication, has also been noted by U.S. intelligence officials. I said: This is G.E. A California engineer named Walter Liew was caught stealing secrets relevant to the production of titanium dioxide, which is used as a whitener in paint and toothpaste. He had worked at the Ministry of State Security since 2003, earning six promotions to become a deputy division director of the Sixth Bureau in the Jiangsu Province M.S.S. Searching his house, agents found more documents he had collected from two other U.S. medical device companies where he had worked. Its part of a recruiting cycle. In March 2017, an engineer at G.E. [2] China has repeatedly and vigorously denied the allegations, stating that Western companies willingly transfer technology to get access to China's market. There was one problem, though: Hua knew that G.E. The most important dimension of U.S.China relations is technology, which is vital to economic, military, and even ideological competition. Where had he visited, and why? They also say it helped fuel a narrative of intolerance and bias against Asian Americans at a time when attacks and hate crimes targeting Asians in the U.S. were already skyrocketing. Xu was represented by a team that included five attorneys from Taft, Stettinius and Hollister, a leading Midwest law firm, which suggests that the hundreds of thousands of dollars required in legal fees was paid by the Chinese government. We met at a Chinese restaurant for lunch. In earlier conversations with Qu, he talked about his responsibilities as the oldest son in the family, and so it made sense for him to want to visit home during the Chinese New Year. As a strategic consensus emerges in Europe, France is in the way. According to Dan Wang, a technology expert and visiting scholar at Yale Law Schools Paul Tsai China Center, Chinas tech competitiveness is grounded in manufacturing capabilities. Yet the Department of Commerce has failed to take any action on foundational technologies established technologies that should not be freely shared, such as high-performance semiconductors. Intellectual property (IP) infringement and theft is widespread in China, and firms operating there must take steps to protect and enforce their IP rights. agents go out to talk to companies and universities about the threat, he says, skeptical listeners ask for the evidence that proves the theft of trade secrets is part of a campaign directed by Chinas government. [6] According to Christopher Wray, the FBI opens a new Chinese counterintelligence investigation every 12 hours. The two men walked through the galleries. All Rights Reserved. They create debt slaves out of Africans and other poor minority countries. Economists see the accumulation and dissemination of knowledge as key to sustainable economic growth. While intellectual property theft has been prevalent for years, it has increased signicantly in more recent times, with China being one of the biggest perpetrators.9 As always with industrial policy, those who object to these laws are free to opt out. The decision to end the program comes after a months-long review ordered by the new head of the National Security Division, Assistant Attorney General Matthew Olsen. Yet the lessons of history suggest that a punitive approach is misguided. It opens a new China-related case every 12 hours. North American-based companies are less concerned that they have been in recent quarters about the impact of U.S. trade policy on their business. suspected that the Jiangsu science and technology association was a front for the Chinese government and that Qu Hui, the man who gave Hua the tea, was an intelligence officer. Most notably, the businessman Francis Cabot Lowell helped launch the United States industrial revolution by copying and adapting the British power loom, one of the most impactful inventions of the 19thcentury. A few times during our conversation, I saw his eyes glisten and his lips quiver. If you ask me, are there days when I have trouble falling asleep? The accusation that China has been relentlessly stealing intellectual property from American companies and institutions although China is now a And so, in exchange for an assurance that he wouldnt face charges, Hua became an asset for the F.B.I., willing to communicate with his Chinese contacts at the F.B.I.s behest. The hackers belong to the group APT41, which the Department of Justice says is backed by the Chinese government, and it didnt restrict itself to the theft of intellectual property and business information. He told Qu he would be willing to return for another visit in February, a week before the Chinese New Year. The U.S. has been unwilling to create policy tools to target recipients of stolen IP. first interviewed him. NEW FOR SUBSCRIBERS: Like so many of us, he had taken pictures of important documents using his iPhone his national ID card, pay stubs, his health insurance card, an application for vacation which is how they ended up in his iCloud account. Cyberattacks have become an increasingly common tactic because they cant always be linked directly to the Chinese government. U.S. trade policy remains a negative for businesses around the world, but right now European CFOs are expressing the biggest concerns about trade policy as an external risk factor. How are other countries being impacted as a result? Like Chinas economy, the spying carried out on its behalf is directed by the Chinese state. Around 4:30 p.m., at which point the interview had been going for a few hours, Hull suggested taking a break to eat some pizza that he had ordered for everyone. If just one provincial officer can do what he did, the agent suggests, you can imagine how big the countrys overall operations must be. China is regularly accused of state-organized economic espionage and theft of intellectual property, in violation of international trade agreements. Stealing This one-two punch justifies strenuous efforts to protect American IP. Your guide to the most important world stories of the day. Still, he didnt see himself as a victim. But in Europe, where trade tensions between the U.S. and EU countries have been rising, the risks from U.S. trade policy are becoming more prominent. Hua sank into his chair as if knocked back. Yet observers tend to lose sight of the broader picture and single out the illegitimate and questionable methods. (The firm declined to comment for this article.) If further incriminating evidence does not come to light, the ban should be removed. In short, the world has been asked to trust Beijing regarding vaccine IP. He provided instructions on how to create the file in Notepad. American companies later alleging losses to Chinese competitors using illegally acquired technology will have a base of evidence available. They would say: Everything in my presentation was approved by my company. Anything that builds our economy is good for our national security. The U.S. governments response increasingly appears to be a mirror image of the Chinese perspective: In the view of U.S. officials, the threat posed to Americas economic interests by Chinese espionage is a threat to American national security. Find it at Lockheed Martin, Xu said. That night, Hua took a train back to Shanghai; the next day, he flew back to the United States. Although China publicly denies engaging in economic espionage, Chinese officials will indirectly acknowledge behind closed doors that the theft of intellectual property from overseas is state policy. Technology with dual military and commercial uses must be transferred on demand from Chinese firms to the Peoples Liberation Army under the PRCs much-discussed militarycivil fusion, a policy and a term created by the Chinese government. Intellectual Property Rights and its role in E-Commerce. More ways to stay updated on global news: By submitting your email, you agree to the Privacy Policy and Terms of Use and to receive email correspondence from us. Days later, Chen sent him an email inviting him to N.U.A.A. Those attacks described in a report by CrowdStrike, a cybersecurity firm started in 2010, shortly after the state-owned Commercial Aircraft Corporation of China (COMAC) announced that it had chosen a joint venture between G.E. It is certain that China will try to acquire IP generated through new American research and then subsidize goods produced using that IP. More recently, Chinas efforts to promote indigenous innovation and support strategic sectors as outlined in its highly contentious Made in China 2025 program added to the pressure on domestic companies to both obtain technologies from abroad and develop domestic capacity to innovate. He also downloaded a few G.E. Business lobbying of executive-branch regulatory agencies can undermine congressional intent. But they underestimate the danger. I think that is pretty good stuff, Xu said. 1616 Rhode Island Avenue, NW China Intellectual Property Theft Secure .gov websites use HTTPS 1 based on "significant progress" he said is being made the issue of IP theft has been a huge sticking point. What exactly are these differences, and how will they impact the worlds relations with China? Delivered Wednesday. The agent who spoke to me described the interview as incremental truth telling. Some pan out, some dont, but this is them throwing the fishing lines out, trying to vet people., At Xus trial, Mangan buttressed the argument about the so-called exchanges being anything but benign by citing an audio recording of a four-hour meeting between Xu and several Chinese engineers. fired Hua after he was on leave for several months except for a couple of weeks when he worked as a driver for Uber Eats. The U.S. House of Representatives passed a resolution condemning Chinas brazen violation of United States sovereignty in deploying the balloon, which was fitted with antennas capable of collecting signals intelligence; the Chinese government condemned its downing as an overreaction. Delivered Thursday. I saw Xu at a pre-sentencing hearing on Aug. 23 last year, in federal court in Cincinnati, dressed in an orange-and-white prison jumpsuit. hide caption. The use of carbon-based composites in fan blades and their casings, instead of metal, means lighter engines and a commercial advantage. The United States could also exert meaningful influence through multilateral channels by calling on allies to demand reciprocity and by pushing to strengthen the role of international arbitration courts. An I.T. Stripped of its context and underlying intent, that message can carry a powerful resonance for Chinese Americans and expatriates keen to contribute to nation-building back home. Such violations -- from counterfeiting famous brands and stealing Chinas Record on Intellectual Property Rights Is Getting Better and Better, Want to read more on this topic or region? The one linked to jastquhui@gmail.com opened a treasure trove. From 21st-century Americas perspective at the technological vanguard, it appears natural that China should be pressured to adhere to higher standards. China can offer access to a very large market in which to sell products developed from the IP, with no questions asked. Hua told them he had gone back home for a college reunion and spent all his time reconnecting with friends and family. to give a research presentation. For Western companies in high-tech industries, it was reassuring to know that two leading law enforcement agencies are focused on protecting their intellectual property. Trying to slow Chinese innovation will simply weaken its incentive to strengthen IP rights. Ralph Kohnen, one of the defense attorneys, said in his closing argument, Whats happened here is Mr. Xu, my client, has become a pawn, a pawn in the tense place between U.S. industries trying to exploit China and trying to get along with China., The prosecution contended that Xu had been systematically going after intellectual property at aerospace companies in the United States and Europe through cyberespionage and the use of human sources. If the sector in question is deemed valuable by the central or local government, firms will receive heavy subsidies. ", "China will continue to present an aggressive and relentless threat to U.S. economic and national security interests," he said. Historical records show that dropping atomic bombs was the least bad option. Freed, even if only in a limited sense, Xu gave a nod of gratitude. International Trade Administration An early draft of the agreement would have barred China from taking advantage of the waiver, based on its enormous vaccine exports. agents, who were already in the building, entered the room. No one begrudges a nation that generates the most innovative ideas and from them develops the best technology, John Demers, former assistant attorney general for national security, said in a 2018 hearing before the U.S. Senate Judiciary Committee. China The F.B.I. I am just using this picture as an example, but I cannot share the details of what we are designing or using.. A monthly digest of the top articles read by FP subscribers. They argue that the U.S. should maximize innovation and accept some leakage. Where is this new tech war headed? A new book overplays the domestic roots of Sino-U.S. confrontation and underestimates its geopolitical logic. I dont want to, he said. Hardline Trump U.S. Trade Representative Robert Lighthizer said on Wednesday in testimony on Capitol Hill that a deal with China must not only include more Chinese purchases of U.S. products but enforcement. When confronted by the government, there is no recourse for a Chinese firm holding American IP. The U.S. and China Are Caught in a Technology Trap, America Is Winning Against China in Oceania. BShow moreut Ashley J. Tellis, a longtime watcher of U.S.-India relations, says that Washingtons expectations of New Delhi are misplaced. Legal and illegal technology acquisition followed by enormous state support helps account for the speed and extent of the rise of Chinese telecom-equipment makers, for example. The plan behind the campaign, which was directed against Honeywell, Capstone Turbine and Safran, among others, became clear only later when security researchers connected the dots. The $50 billion figure is based on U.S. Evening roundup with our editors favorite stories of the day. The allegations are not hyperbole. One of them was Arthur Gau from a Honeywell division in Phoenix, who testified at trial that Rong and Xu paid him $5,000 and covered his airfare to China for a 2017 visit to Nanjing to make a technical presentation. According to some reports, Chinese IP theft has cost the United States $225 billion to $600 billion a year. The witness subsequently met with Xu, who repeatedly offered to reimburse his round-trip tickets to China in exchange for sharing his knowledge of and experience in I.T. He advised Hua to relate everything he could remember about the visit to N.U.A.A. Ironically, if the West wants China to get better at protecting IP, it also needs to work with China to help it to become a more innovative nation. The agents were later able to obtain search warrants for the two iCloud accounts. Last published date: 2023-04-07 Intellectual property (IP) infringement and theft is widespread in China, and firms operating there must take steps to protect and
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