China uses court to attain Western tech

Chinese China economy growth

Amid the growing conflict with the US, China is using its courts and patent panels to undermine foreign intellectual-property rights and help Chinese businesses, especially in technology, pharmaceuticals and rare-earth minerals, says American and EU officials, The Wall Street Journal reported.

China leans on an array of levers to pry technology from American companies. In 2018, The Wall Street Journal laid out the example of Beijing’s plan to pry technology from other nations. DuPont Co. suspected its onetime partner in China was getting hold of its prized chemical technology and spent more than a year fighting in arbitration trying to make it stop. Then, 20 investigators from China’s antitrust authority showed up.

For four days this past December, they fanned out through DuPont’s Shanghai offices, demanding passwords to the company’s worldwide research network, say people briefed on the raid. Investigators printed documents, seized computers and intimidated employees, accompanying some to the bathroom.

And to strengthen its control over technology from the US, now, China is using the legal system.

A US 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, reported The Wall Street Journal.

In China’s 20th National Congress, in October 2022, President Xi Jinping secured the third term and pledged to help the country in becoming a global innovator and also to help it prosper further.

“We will increase investment in science and technology through diverse channels and strengthen the legal protection of intellectual property rights, in order to establish a foundational system for all-around innovation,” he told Chinese lawmakers.

The battle over China’s acquisition of technology has raged for years. Counterfeit products and logo look-alikes are pervasive in China. Recently, Beijing has tried to crack down on domestic companies violating the intellectual-property rights of some foreign firms. In July, luxury shoemaker Manolo Blahnik said it won a long-running trademark dispute against a Chinese businessman accused of improperly selling shoes under a similar name.

Officials in the U.S. and EU and executives at some Western companies, however, say Beijing is going the opposite route in some industries. China’s State Administration for Market Regulation, the government body that oversees all intellectual-property matters, and the Chinese embassy in Washington didn’t respond to requests for comment, according to The Wall Street Journal.

The conflict is central to the growing competition between the US and China for technological and economic superiority. The U.S. has slapped restrictions on chip-related exports to China. Beijing has accused the U.S. of politicizing science and technology to try to protect American leadership in those fields.

In December, the EU sued China in the World Trade Organization on behalf of Swedish telecom-equipment maker Ericsson AB and other companies, complaining that China has barred EU companies from suing to protect their patents in courts outside China. The EU called China’s policy “extremely damaging,” saying Chinese companies requested the intervention “to pressure patent right holders to grant them cheaper access to European technology.”

Canada, Japan and the U.S. had asked to join an initial version of the European complaint, which the EU said could now take about 18 months to adjudicate, reported The Wall Street Journal.


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