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IP concerns and doing business in China

Chinese officials have a number of tools at their disposal to force American companies to turn over its intellectual property. Sometimes Chinese business partners will gain access to the technology. In other instances, the Chinese government itself can demand the turning over of trade secrets information.

According to an article in the Wall Street Journal, China’s antitrust authority was able to seize technology, information and equipment from DuPont Co. Tactics are said to include intimidation of employees. It also included urging on the part of the antitrust authority for Dupont to drop its case against its former Chinese partner.

Placing of pressure upon American companies

Specific tactics Chinese officials may use for seizure of trade secret information include:

  1. Placing pressure on American companies through joint venture partnership requirements
  2. Invalidation of licensing and patents by the Chinese courts
  3. Seizure of information through government antitrust and other types of investigations
  4. Regulatory panels passing trade secret information belonging to U.S companies on to Chinese companies

Complaints of such practices are not new. Issues are more complex today because China is now such a significant rival to the U.S. in the economic sector. Plus, with the current trade dispute between the two countries, China may not currently give in to demands to curb their trade secret practices.

Costs to American companies for such practices is high. It also reduces any incentive to innovate if such efforts may be lost.

It’s difficult to know what direction trade talks will take, or if the situation for American businesses in China will improve. But every business needs to do what it can to protect its IP rights in China. Speaking with an attorney who understands what your business is up against is a start in protecting IP interests.

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