Tech Industry Complains About China IP, Tech Practices in USTR Investigation

The U.S. Trade Representative office received more than four dozen comments on its investigation into the Chinese government's tech transfer, IP and innovation policies and practices, which many filers said put U.S. companies and others at a disadvantage (see 1708150039). Comments were filed last week. The interagency Section 301 committee plans a 9:30 a.m. hearing Oct. 10 at 400 E St. SW, with post-hearing rebuttal comments due Oct. 20. BSA|The Software Alliance said the Chinese government's IP-related and market access policies and practices prevent foreign businesses from operating there "efficiently, or at all" and fail to protect IP and trade secrets. It said barriers are "particularly acute" in telecom and IT industries such as cloud computing, cross-border data flows, requirements for disclosing a company source code, and enterprise standards. The Telecommunications Industry Association said China's drive to boost its domestic industry is "accompanied by a more concerning attempt to undermine and shrink the role of U.S. and other foreign technology firms." TIA worries more security rules to vet foreign tech may disadvantage U.S. exporters selling to China's markets and could set a precedent for other countries. The Information Technology and Innovation Foundation said Chinese policies: "induce forced" tech and IP transfer across many advanced-technology industries; engage in state-directed foreign direct investment and mergers and acquisition that targets foreign enterprises as part of an effort to move China 'up the value chain' in those sectors; and coordinate cyber-based IP and technology theft. CompTIA said China's aggressive implementation and use of technical standards to support industries like the ICT sector creates major interoperability issues, lack adequate safeguards to protect IP, and are developed without sufficient transparency and participation rights for foreign companies. It wants the USTR to encourage the Chinese government to adapt tech-neutral policies and allow the market to choose technology and standards. China has taken positive steps to amend civil law to make clear trade secrets are subject to civil IP protection, but the American Bar Association Section of IP Law said it's "a significant problem." The ABA said "enforcement measures are inadequate, penalties are weak, bad faith registrations are a problem, and systemic counterfeiting and widespread piracy still needs to be addressed," including stronger copyright protections and damage awards for patent infringement.