The Trope: China is Stealing Our Intellectual Property
by John Lawrence, August 27, 2019
Do American corporations have completely clean hands when it comes to this issue? They steal intellectual property from other Americans all the time. It is so easy to do. When a patent is issued, that is supposed to guarantee the owner of that patent intellectual property rights. That means if someone else wants to use the ideas presented in the patent, they have to pay the owner of the patent. The reality is that it doesn't work that way unless the owner of the patent is a corporation with a team of corporate lawyers who can sue the offending party. Take me for example.
My patent, "Multilevel digital information compression based on Lawrence algorithm", issued in 2000 is available online for anyone to see and utilize. No one has offered to pay me although I'm sure the ideas have been used in high tech technology. If one doesn't want to pay the owner of the patent, another workaround is simply to do another patent that accomplishes essentially the same thing. Especially when the patent represents "intellectual property" and not a hardware device, it's impossible to know whether the ideas from the patent have been incorporated into some hardware device maybe buried deep within it unless some whistleblower came to me and said, "The company I work for stole the ideas from your patent." Then all I would need is a team of high power lawyers costing hundreds of thousands of dollars, which I don't have, to go after the offender.
Which brings me back to China and the trope that the Chinese have stolen American intellectual property. It's a little like the pot calling the kettle black. There were more than 360,000 Chinese students in the United States in the 2017-2018 school year, according to the Institute of International Education, more than triple the count from nine years earlier. U.S. schools benefit from the tuition they pay, educators say, and the global perspective they add to campuses. Many of these students get advanced degrees at some of the US' top educational institutions. What does Trump expect? The US has opened the door for the free development of intellectual resources from all over the world. That's probably a good thing, but then you can't expect that, when those students go back to China, they are all of a sudden going to be ignorant of all the ideas that they and others developed and were exposed to in the US.
American corporations have a sordid history of s ripping off lone inventors. Take the RCA corporation for example and the invention of TV. It is well known that RCA didn't invent TV, but they sure did capitalize on it pushing the lone inventor out of the way. On August 26, 1930, Philo Farnsworth, an Idaho farm boy, received a patent for the first totally electronic television system, about a decade after first having the idea that underlaid his invention. Then President of RCA, David Sarnoff, became interested in the invention and fought in court with Sarnoff for years over ownership rights and patents. Farnsworth was no match for the corporate backed Sarnoff when it came to legal wrangling. Eventually, they settled and RCA introduced television to the world at the 1939 World's Fair. Farnworth ended up a bankrupt and a drunk
A similar battle was fought over FM radio. Edwin Armstrong, the inventor, went to bat with Sarnoff at RCA and again lost. According to Wikipedia:
In 1940, RCA offered Armstrong $1,000,000 for a non-exclusive, royalty-free license to use his FM patents. But he refused this offer, primarily because he felt this would be unfair to the other licensed companies, which had to pay 2% royalties on their sales. Over time this impasse with RCA would come to dominate Armstrong's life. RCA countered by conducting its own FM research, eventually developing what it claimed was a non-infringing FM system. The corporation also encouraged other companies to stop paying royalties to Armstrong. Outraged by this turn of events, in 1948 Armstrong filed suit against RCA and the National Broadcasting Company, accusing them of patent infringement and that they had "deliberately set out to oppose and impair the value" of his invention, for which he requested treble damages. Although he was confident that this suit would be successful and result in a major monetary award, the protracted legal maneuvering that followed eventually began to impair his finances, especially after his primary patents expired in late 1950.
Arnstrong jumped to his death from a 13th floor apartment in New York City in 1954. David Sarnoff disclaimed any responsibility, telling Carl Dreher directly that "I did not kill Armstrong." After his death, a friend of Armstrong estimated that 90 percent of his time was spent on litigation against RCA.
So some of America's greatest inventors have had their patents stolen in effect not by the Chinese but by American corporations. As far as China is concerned, it works both ways. I wrote in 2015:
Qualcomm has been fined almost a billion dollars by China for violating its antimonopoly law. China has the world's most internet users and the largest smartphone market so Qualcomm has to tread gingerly with the authorities there since it doesn't want to be booted out of the world's most lucrative market. The fine will knock 58 cents a share off Qualcomm’s earnings for the year. Qualcomm CEO Steven M. Mollenkopf thinks paying the fine will make Qualcomm better positioned to cash in in the future.
This could be another front in the brewing economic conflicts between China and the US. To sweeten the pot Qualcomm has offered China deep discounts on licensing its patents for certain systems and agreed to partner with Chinese companies. But all this could be construed as a bribe in order to get access to the Chinese market.
If American corporations want access to Chinese markets, then they have to play ball with China or else China will develop its own products and leave the US out of the loop altogether. Trump's trade war with China is only further hastening the day when China becomes the exclusive seller of Chinese products to the Chinese market.
