September 25, 2015
By: Larry Hart, Senior Fellow, American Conservative Union Foundation
China’s President Xi arrives in Washington, DC straight from a visit to the “other” Washington, Washington state. Specifically Seattle, where Xi met with top Tech executives where the Chinese role in the rash of hacking incidents was sure to be discussed. Probably not discussed, at least in detail, was China’s role in intellectual property theft.
When Xi visits Congress on Friday, it would not be surprising if he endorses pending legislation, such as H.R. 9, the Innovation Act, which would dramatically weaken our system of patents. If this legislation passes, China would be the chief beneficiary, as they are number one in the world when it comes to the theft of intellectual property. A 2012 report by an international commission on the state of intellectual property around the world showed that there were just under 23,000 shipments seized for violations of intellectual property rights with a total retail price of $1.26 billion. China was the source of 72% of all seized goods. The U.S. government estimates the cost to the U.S. economy at $300 million annually.
Unfortunately, legislation such as HR 9 and S 1137, The PATENT Act in the Senate, would dramatically weaken the ability of legitimate patent holders to keep American companies from using cheap Chinese knockoffs of American products. Would big companies be affected? Sure. But the person who would be hit the hardest is the individual entrepreneur that has made the United States the cradle of technology for 200 years.
Take Bryan Pate who had a cool idea he turned into reality. Bryan was frustrated by his inability to use existing bicycles for fitness because of hip and knee injuries. So he got together with a mechanical engineer he knew and at a beachfront coffee shop in California drew some rough sketches of an outdoor version of the elliptical trainer to be found in gyms. Bryan is now the CEO of ElliptiGO, the world’s first elliptical bicycle that can be used outdoors. Guess who also thought this was a neat idea? China’s intellectual property thieves who have replicated the product and have it for sale on websites such as Alibaba.com.
In testimony before the House Judiciary Committee, Bryan Pate said this: “If H.R. 9 was the law in 2005, then ElliptiGO would not exist today.” Why? Because the legislation immunizes everyone outside of China from court action to protect the patent. Pate said for his product, he could see a dozen different trading companies sourcing from Chinese factories and feeding that supply in the U.S.
Now, if you’re thinking that President Obama will do something about this, forget it. He is fully in support of this patent-destroying legislation as are a number of congressional leaders. Yes, they will pay lip service to the “IP problem,” but what good will that do if they push through legislation that will encourage China to keep those IP thieves in business?
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