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Foreign Countries’ Manipulation of Antitrust Laws Smother American Innovation

November 1, 2017

Back in May, I wrote an opinion editorial in The Hill regarding Obama-era Federal Trade Commission (FTC) policies that continue to limit our country’s ability to innovate – leading to a lackluster economy and endangering free market principles. In particular, I highlighted the FTC’s lawsuit against American tech company Qualcomm that was filed just a mere three days before President Trump took office under former FTC Chairwoman Edith Ramirez.

The FTC’s lawsuit is an example of overwrought regulatory policies infringing on the economic growth of industries and businesses; however, it could also have more far reaching consequences. As Chairman Ohlhausen noted in her original dissent, the suit has the potential to undermine U.S. intellectual property rights in Asia and beyond.

Across the world, foreign governments are misusing and abusing antitrust laws to undermine intellectual property and patent protections. In the name of competition, these provisions are being used as a discriminatory measure to keep out foreign competition and to undercompensate innovation while profiting off the inventions of American companies. Ironically, the foreign accusers are, in fact, the “monopsonists” which–as the single buyers of technology–are artificially forcing down prices on American property interests.

Chairman Ohlhausen said it well when she highlighted that “The United States is more technologically innovative than any other country in the world. This reality reflects, in part, the property rights [of] inventors. Still, foreign counterparts take or allow the taking of American proprietary technologies without due payment.”

According to the Wall Street Journal, “Microsoft Corp.’s antitrust battles over more than a decade have resulted in more than $2.5 billion in fines. Intel Corp., one of Qualcomm’s key rivals, has been going through years of appeals trying to reverse about $1.5 billion in fines from regulators in Brussels in connection with its business practices in the microprocessor market.”

Even though Chairman Ohlhausen clearly demonstrated the issues with the FTC’s case against Qualcomm, foreign regulators have followed suit. With little respect for intellectual property laws, China, South Korea, and Taiwan’s regulatory bodies have all manipulated antitrust laws to fine Qualcomm over two billion dollars in an effort to lower licensing payments for the company’s valuable IP (which, by the way, significantly bolsters each of these countries’ economies and mobile/tech sectors).

Not only will this harm America’s economy and our economic and trade relationships, but these countries will fare far worse without Qualcomm’s partnership and economic investment. In fact, Reuters reported that Taiwan’s Ministry of Economic Affairs released a statement that it is “deeply concerned” about the Taiwan Fair Trade Commission’s actions against Qualcomm. The official release highlighted that “revenue generated by Qualcomm’s orders is expected to grow to NT$432.4 billion in 2017.”

If America wants to remain a leader in global innovation and competitiveness, we need to protect the key tenets that enable us to do so, including our intellectual property and patent system. Policymakers should take a long, detailed look at regulators’ abuse of antitrust laws here and abroad – and realize the incredible impact it is going to have on our companies’ technological advancements and our country’s economic growth.

 

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