Chinese Intellectual Property Theft and Crimes

  • Chinese IP theft and crimes are not a new phenomenon, though they have taken an aggressive form in the past decade as China and Chinese partners increasingly act to steal U.S. intel and trade secrets.
  • This, on average, costs the United States an estimate of about $225 to $600 billion annually.
  • Theft or crimes to U.S. IP can occur in many distinct ways including hacking, voluntary file sharing, foreign students enrolled in U.S. universities, and other IP thefts.
  • The United States and federal authorities have responded by ramping up enforcement efforts, analyzing the causes of Chinese data thefts, and encouraging U.S. companies to be wary of their dealings with Chinese partners and report any suspicious behavior to their local law enforcement authorities.
  • U.S. companies doing business with Chinese partners may be unaware that this is occurring, which could be detrimental to the business of U.S. companies in the long run.
  • Consider hiring a defense attorney experienced in Chinese IP theft and crimes.

Experienced Defense Team

If you need advice regarding Chinese intellectual property theft and crimes, do not hesitate to contact one of our defense attorneys.

Today’s threats to U.S. security have expanded in intensity and quantity. The sophistication of technology and advances in the Internet make it possible for a single theft or misappropriation to result in the loss of millions or even billions of dollars.

The increase in Chinese IP theft and crimes has been described as an aggressive cyberwar between the United States and China and poses significant risks to the intelligence, data, IP, and other trade secrets of the United States and U.S. companies.

Do not wait to get in touch with a qualified attorney today. Put Oberheiden, P.C. on your side to advise you on these legal issues and implications of Chinese IP theft and crimes.

History of Chinese IP Theft and Crimes

Historically, country-to-country misappropriations occurred in the form of record and film theft as well as counterfeiting luxury goods.

As China started to covet and steal U.S. intellectual property, the United States traditionally entered into memorandums of understanding (“MOUs) with China. These MOUs would stipulate that China was not allowed to target U.S. intelligence, though these efforts generally failed.

The newest forms of IP theft – cyber-crime – involves the use of an internet device or other online network to hack a U.S. intelligence or data system and steal the information, technology, and other data therein.

U.S.-China diplomacy has experienced a bumpy relationship over the past decade.

It is now routinely described as a national security threat to the United States by which the economic development, military intelligence, infrastructure, IP, and other critical data are at risk due to Chinese cyber threats.

Theft of American trade secrets and IP by China costs the United about $225 billion to $600 billion each year.

Congressional and Federal Reaction to Chinese IP Theft and Crimes

U.S. officials have increased their efforts to investigate and prosecute Chinese IP thefts and crimes. For instance, in 2018, the DOJ announced its new initiative to combat Chinese economic espionage.

U.S. authorities warn that Chinese officials are targeting all industry sectors and are not limited to misappropriating data from defense sectors. China may even be rewarding IP theft from foreign countries.

Members of the U.S. government continued their discussion in early 2020 and held a conference where they discussed the risks of Chinese IP theft of the U.S. technological and academic sectors.

The conference – coined the China Initiative Conference – was aimed at uniting the private sector, academic community, and research industries and updating everyone on the progress of government investigations combating Chinese IP theft and crimes.

Tools and Laws to Combat Chinese IP Theft and Crimes

Section 301 of the Trade Act of 1974 authorizes the president to impose trade sanctions against countries that have failed to properly protect and safeguard intellectual property rights. It is one of the tools by which the United States enforces trade agreements.

U.S. companies owning IP have also found success in enforcing their rights in Chinese courts. The Economic Espionage Act of 1996 provides for civil liability and criminal sanctions for the theft or misappropriation of trade secrets.

Risks to Companies Partnering with China for Business Transactions

Chinese companies have been accused of stealing IP from foreign countries by using devious tactics such as forming business partnerships or joint ventures with the companies, gaining their trust and cooperation, and then ultimately stealing their vital IP information and data.

Some companies are unwitting victims in this process, though other companies have willingly allowed their Chinese business partners to access their information in exchange for the U.S. company’s access to China’s markets.

While it is important to note that entering into business contracts and ventures with Chinese business partners is not illegal, it is equally important to be cognizant of the fact that most partnerships with Chinese partners will involve some transfer of U.S. technology and IP.

Chinese companies have been alleged to continue using U.S. technology even after the terms of the agreement with their U.S. partners have ended.

The FBI warns that many U.S. companies do not understand what is happening nor see the damage that is occurring to their business because of their information-sharing policies with Chinese partners.

For instance, U.S. companies often receive access to China’s markets to do business in exchange for allowing or selling their research and development data to Chinese partners.

For the 2019-2020 term, the FBI has been increasingly engaged in communications with U.S. companies. These communications have focused on warning U.S. companies against doing business with both the Chinese government and the private companies that are controlled by China.

To guard against these risks, it is imperative that U.S. companies maintain healthy and open relationships with law enforcement agencies at all government levels. These companies should follow recent indictments against Chinese companies and also make sure that their business has a secure network and IP protection policies.

Thus, companies ought best to proceed with the utmost caution and be especially wary of unusual or questionable behavior if they work with or are thinking about working with Chinese business partners.

Examples of Enforcement Actions Regarding High-Profile Chinese IP Theft and Crimes

A recent CNBC CFO survey reveals that 1 in 5 companies have had their IP stolen from China within the past year. The United States and federal agencies can bring enforcement actions against Chinese officials or individuals located within the United States for engaging in the illicit sharing of information and data with China.

Below we offer a few examples of Chinese IP theft and crimes:

  • The DOJ brought additional charges against Huawei for conspiracy to steal trade and IP secrets from U.S. telecommunication company, T-Mobile, for promoting its employees to steal trade and IP secrets, and then for covering up its theft.
  • The DOJ charged government-owned Chinese company, Fujian Jinhua Integrated Circuit Co., with stealing trade secrets regarding computer electronics from the U.S. semiconductor company Micron Technology.
  • Chinese company, Sinovel Wind Group, was convicted in federal court for stealing technology pertaining to wind turbines from its American partner, AMSC.
  • Chair of Harvard University’s Department of Chemistry and Chemical Biology was charged with false statements and concealing his involvement with China’s Thousand Talents Program and Wuhan University of Technology, the program of which gave the professor living expenses, an annual salary, and research funds of more than $1.5 million by the Chinese government.

Need Advice on Chinese IP Theft and Crimes?

It is hard to notice instances of Chinese IP theft and crimes targeting your company. We understand that it may sometimes be hard to realize this possibility especially where Chinese partners have given your company access to Chinese markets.

We stress for all U.S. companies to heed warnings from federal authorities such as the FBI and DOJ regarding developing stories of Chinese IP theft and crimes against the intelligence, data, technology, and other IP of the United States and U.S. companies.

If you have any concerns or questions, contact our law firm today. The attorneys at Oberheiden, P.C. have the experience and knowledge needed to advise you on evolving Chinese IP theft and crimes.

Call us at 888-680-1745 or contact us online today for a free consultation to counsel you on these widespread challenges.

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