How the U.S.-China Trade War Effects IP Strategy

In addition to the widening trade deficit, another driver of the trade war has been China's history of intellectual property misappropriation. While the United States alleges illicit activities including theft by Chinese agents, e.g., by breaking into U.S. corporate offices, and bribing U.S. corporate employees, to obtain high-value trade secrets, the allegations of misappropriation extend to subtler activities. Foreign companies doing business in China have complained of China's use of administrative measures, such as foreign ownership restrictions, licensing requirements, and product approvals, as mechanisms used to coerce foreign companies to transfer technology and IP to Chinese companies. Although foreign ownership requirements have been relaxed in some sectors, in others foreign businesses are still required to form joint ventures with Chinese firms in order to do business in China. These joint ventures often require some level of technology transfer, after which the Chinese partner has sometimes used the transferred technology to thereafter compete with the foreign company.