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New Senate Bill Would Crackdown on IP Theft

by Chris Brook on Wednesday May 15, 2019

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A new bill introduced in the Senate this week would restrict U.S. tech exports to China and crack down on intellectual property theft.

A new bill introduced by an American senator this week is aiming to curb China's acquisition of sensitive U.S. technology, namely through intellectual property theft and unlawful transfer.

Josh Hawley (R-Miss.) discussed the bill, The China Technology Transfer Control Act of 2019, in a Senate Judiciary hearing on national security and competition in technology on Tuesday.

In Hawley's eyes, the bill (.PDF) will crackdown on the theft of American technology secrets by the Chinese military. The bill would also formally admonish the country for intellectual property theft and what Hawley calls and "predatory trade practices."

American companies complaining about Chinese firms stealing intellectual property is nothing new but in 2019, deep in the throes of an intensified trade war, the problem has dominated headlines of late and become top-of-mind, both for U.S. firms and President Donald Trump's administration. A 2017 IP Commission on the Theft of American Intellectual Property report estimated the annual cost of IP theft is somewhere between $225 to $600 billion.

“It’s time to acknowledge that China acts more like an adversary than a friend,” Hawley said Tuesday. “For too long, China has exploited American innovation to undermine our values and threaten our security. This legislation is an important step toward keeping American technology out of the hands of the Chinese government and its military.”

The bill would place core technologies on the country's “Made in China 2025" strategy, an industrial policy unveiled in 2015, on the Department of Commerce's Export Control List. Some of the sectors that should benefit from MIC 2015 include medical devices, agricultural machinery, power equipment, railway equipment, high-tech ships, and aerospace equipment. The effort, which aims to transform China into a “manufacturing superpower,” has been dubbed by many in Washington as a threat to the U.S. economy.

Hawley said Tuesday that military-grade technology, including artificial intelligence, robotics, semiconductors, advanced construction equipment and lithium battery manufacturing could all wind up on the Export Control List under his bill. Once on the list, companies would have to obtain a license to export the technology to China.

The bill is the second this week that’s been proposed to halt the Chinese military from extracting U.S. technology.

Hawley and handful of other senators Tom Cotton (R-Arkansas), Chuck Grassley (R-Iowa), Ted Cruz (R-Texas), Marsha Blackburn (R-Tennessee), and Marco Rubio (R-Florida) also introduced a bill in the Senate on Tuesday designed to prohibit individuals known to be employed by or sponsored by the Chinese People's Liberation Army (PLA) from receiving student or research visas to the United States. A companion bill was also introduced in the House of Representatives.

After 30 months of litigation, two companies involved one of the most recent IP theft cases, ASML US Inc. vs Xtal Inc., arrived at a settlement earlier this month. A U.S. court ruled in favor of ASML, a Dutch semiconductor company following allegations that XTAL stole trade secrets and other confidential information from the company. As part of the settlement, ASML will essentially subsume XTAL's assets, including its IP.

Tags:  Government IP theft

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