China Ranks as World Leader in IP Theft


zhang-kaiyv-9v_Nork6P1w-unsplashIf you’ve ever done any shopping while traveling abroad (perhaps for a BBC2 motoring program), you’ve likely come across products with familiar names at prices that seem too good to be true. Perhaps not on the shelves of more reputable establishments, but the street vendors are more than eager to show you their slightly-off wares. And as with most things these days, China seems to be leading the way in intellectual property theft. In a report issued by the Commission on the Theft of American Intellectual Property, China was cited as “the world’s largest source of IP theft,” and estimated to be responsible for somewhere between 50 and 80 percent of all Intellectual Property theft.

At fault seems to be China’s lax system of IP law and protection, which places the growth and development of Chinese brands as paramount, often at the expense of patents, trademarks and copyrights held by outside interests. The Chinese government often mandates technology standards that favors domestic manufacturers and withholds access to the Chinese market to leverage technologies from foreign companies. Chinese companies are encouraged to copy foreign patents and then file them in China as their own innovation, and even sue if the original inventor if they try to sell their product in China. Rather than trying to market the same product with a slight twist, some Chinese companies will go so far as to even copy the marketing campaigns and store layouts of the original manufacturers.

More than simply a laissez-faire attitude from the government, Chinese companies are also taking an active approach to IP theft. The report from the IP Commission cites a flood of counterfeit parts within the Department of Defense supply chain from an investigation by the U.S. Armed Services Committee. In its investigation, the committee found entire Chinese factories devoted to the sole purpose of counterfeiting electronic components for military equipment. While the savings might be music to the ears of these folks, the sale of these counterfeit parts comes at the expense of the legitimate manufacturers that invested capital developing their products and their employees, not to mention the safety of DoD personnel in units that are unknowingly using sub-standard components.

Given such brazenness, the Chinese seem to have adopted the American axiom “go big or go home”, in some cases quite literally. The Imax Corporation, known for its exceptionally large movie screens that make even Tom Cruise appear tall, is in the midst of a dispute with a Chinese company over alleged IP theft. The Canadian company is claiming that its technology was stolen by the government-owned China Film Group. At the center of the accusations is former Imax employee Gary Tsui, who is alleged to have taken technology from his former employers and provided it to Chinese film companies. It’s a troubling development for Imax, which has 20% of its 785 theaters in China.

It remains to be seen what steps, if any, China takes to enforce what intellectial property laws they have, or even adopt policies more in line with the rest of the world. It bears watching as China moves closer to overtaking the U.S. as the world leader in economic output.

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