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BioWorld - Thursday, February 25, 2021
Home » Blogs » BioWorld MedTech Perspectives » Pickpocket: China’s national IP theft policy

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Pickpocket: China’s national IP theft policy

July 2, 2014
By Mark McCarty
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A famous site in Beijing, a city where not only dreams go to die.
A famous site in Beijing, a city where not only dreams go to die.

Anyone in the medical device business knows there is a sizeable intellectual property hazard to doing business in China, but one wonders if the rewards merit the risks. The answer at this point in time is apparently yes, but will it stay that way?

As this report points out, China’s government hacked three medical device firms last year, and it is widely known in Washington that China (and Russia, while we’re at it) has an official policy for hacking and IP theft.

Need another reason to believe doing business in China is growing more dangerous? Sen. Ron Wyden, chairman of the Senate Finance Committee, said in a June 25 statement that Beijing is not just a perennial currency manipulator, but that it and Chinese businesses “intimidate witnesses, forcing American businesses to relocate factories or surrender intellectual property, and threatening retaliation if they speak out against unlawful behavior.”

Need more evidence? This report, which is about a year old, alleges that China is responsible for roughly 80% of IP theft of American intellectual property. The Commission on the Theft of Intellectual Property at the National Bureau of Asian Research says in a recent report that theft of U.S. intellectual property is equal in value to everything the U.S. sells to all of Asia each year.

So what do we know about IP theft in China? Not much where U.S. med tech firms are concerned. Wall Street device companies have zero incentive to disclose such events because such disclosures would pummel their shares, so we can’t assume these companies will be forthcoming (pity the shareholder who finds out with no notice that the med tech CEO has allowed the thieves to destroy their investment).

Beyond that, it might take time for Chinese scientists to engage in the reverse engineering they’re so renowned for, so any piracy of device designs, including software, might not show up on the market for a couple of years.

In any event, one assumes Beijing will keep the piracy down to a level that will keep Western businesses and governments from abandoning the country entirely. Still, the picture is far less friendly than in bygone times, and we should assume we haven’t heard the last of China’s blatant theft of American technology.

The most distressing thing of all, however, is the continued pretense by Washington that China’s IP pirates are acting without Beijing’s consent. This report delusionally claims that China (and India) are not doing enough to fight intellectual property crime. Even more absurd is that the U.S. Trade Representative apes that kind of vapid thinking in a July 1 report.

Does anyone in their right mind really believe Beijing isn’t the director of this criminal circus? Ridiculous. Absolutely ridiculous.

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