RCEP And Phase 1: Strange Bedfellows in IP

Misery acquaints a man with strange bedfellows.”  William Shakespeare, “The Tempest”.

I have just read through the recently concluded Regional Comprehensive Economic Partnership Agreement (RCEP)  among  Brunei Darussalam, Indonesia, Malaysia, Thailand, Singapore, the Philippines, Cambodia, Myanmar, Laos, Viet Nam, Japan, China, South Korea, Australia, and New Zealand.  RCEP creates the world’s largest trading bloc , with about 30% of global GDP. 

RCEP was originally perceived to be China’s answer to the Trans-Pacific Partnership (TPP), which the US abandoned and would have been the world’s largest Free Trade Agreement (FTA).  In the absence of US leadership, the RCEP sets new standards in intellectual property.  It may also be a foretaste of what a more heavily China-influenced global IP environment would look like, particularly if the United States does not soon re-enter large-scale plurilateral trade agreements in IP.

It would be wrong, however, to argue that all the provisions in RCEP were proposed by China.  Indeed, its numerous negotiators’ participation in the discussion had undoubtedly resulted in compromises over a range of issues.  Still, it is hard to search for the imprints of those economies that signed onto the TPP’s successor agreement, the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP), or have signed bilateral FTA’s with the United States which might have advanced more protective IP regimes in this FTA. Among the countries that have signed either or both such agreements are: Brunei, New Zealand, Singapore, Australia, Japan, Malaysia, Vietnam, and the Republic of Korea.   

It is important to note  that numerous IP-related provisions in IP were suspended in the CPTPP.  Scaled-down aspects of some those suspended provisions in the CPTPP are found in the RCEP, such as with respect to technological protection measures  and rights management information  in the online environment (11.14 and 11.15).  In addition there were reportedly efforts by some developed countries, such as Korea and Japan, to include various TPP or bilateral pro-IP provisions, including on pharma-related IP rights, permitting IP in investor-state dispute settlement and requiring accession to the 1991 treaty for the International Union for the Protection of Plant Varieties (UPOV).  Although China was making bilateral commitments to the US on pharma-related IP in the Phase 1 Trade Agreement, those efforts are also not reflected in RCEP, owing perhaps to the participation of those economies that have less interest in robust IP protections for more advanced biotechnology. 

To further complicate the analysis, China has expressed an interested in joining CPTPP.  However,  the CPTPP contains many provisions that would make it difficult for China to join, including disciplines on subsidies and state owned enterprises.  Although TPP was hardly perfect in addressing statist approaches to IP, the chapter on IP issues did include restrictions that may have been drawn from US experience with China, including limitations on administrative IP enforcement (TPP, Sec. 18.74(16)), enhanced transparency (Sec. 18.4, et seq.), availability of statistical data on a country’s IP regime (Sec. 18.73), and availability of remedies against state-owned enterprises (fn. 102).  The competition law chapter similarly has important procedural due process provisions as well as support for economic analysis in competition law determinations (Secs. 16.2, 16.6, 16.7).  These disciplines are largely missing from RCEP.

On the positive side, RCEP is far more extensive on IP than prior China FTA’s, such as the Swiss FTA (2013).  China’s traditional FTA practice had been to focus on a limited range of issues, many of which have been advocated by other countries in the developing world, such as geographical indications, traditional knowledge, folklore and the provision of mechanisms for technical negotiations and technical assistance.  In many respects, RCEP is a also deeply statist instrument in both dispute resolution and intellectual property.  It shares a statist approach with the vastly different US-China Phase 1 Trade Agreement.  While both agreements expand on certain substantive rights and criminal penalties, they do little to support civil enforcement,  reaffirm the centrality of IP as a private right, restrain state intervention in IP, limit the role of SOE’s, or promote transparent civil legal process. 

RCEP may well contribute to efforts by many countries to distance global IP trade policy from US FTA IP policy or even TRIPS standards.   Although RCEP provides that the TRIPS Agreement prevails in the event of any inconsistency between RCEP and TRIPS (Art 11.3), there are certain aspects of RCEP that are below TRIPS minima.   This would not be consequential if the WTO had a functioning Appellate Body (AB) to resolve IP disputes, as TRIPS provisions could be resolved through the AB mechanism.  The absence of a functioning AB means that RCEP’s own dispute resolution mechanisms may be more important for resolution of these TRIPS provisions which are incorporated by reference.  RCEPS may facilitate easier enforcement around lower standards,  and thereby enable RCEP to develop its own interpretation of often unclear TRIPS IP provisions.

One of the TRIPS-minus provisions is found in IP-related competition law.   In both the IP and competition law chapters there is no reference is made to TRIPS Art. 40.2 which restricts the exercise of competition law authority in IP issues to where there is “an abuse of intellectual property rights causing an adverse effect on competition.” This language had been a matter of some controversy in TRIPS negotiations as it required that competition authorities demonstrate not only an abuse of rights but a causal impact from that abuse on competition.  The language is also significant as it is distinguishes itself from other, hortatory TRIPS language which state that the TRIPS agreement is intended to address licensing practices that inhibit technological development of WTO members (Preamble, Arts 5, 40.1).   To be fair, the TPP also shares this perspective of focusing on technology dissemination (Sec. 18.3).  The competition chapter of RCEP however does not require a causation analysis  and defines anti-competitive activity only by providing examples: anti-competitive agreements, abuses of a dominant position, and anti-competitive mergers and acquisitions (fn.2).    The IP chapter, by contrast,  speaks to the need to balance IP rights with other public interests, and to promote the “dissemination of technology” (11.1, 11.4).  As there has been no WTO case to date under TRIPS Art. 40.2, there are few guardrails to limit an RCEP panel in its interpretation of competition law obligations under RCEP and TRIPS.

RCEP predictably embraces Doha on access to medicines and generally strikes a balance between IP rights owners and users/consumers.  As with the discussion of licensing, this is frequently code for diluting rights. In addition, RCEP does not commit its members to provide for any pharma-related IP incentives, such as patent linkage, patent term extension, or regulatory data provision. RCEP does authorize members to determine the extent of an “experimental purposes” exemption from infringement (fn. 34).  This is also arguably a TRIPS-minus provision as it could be used to craft Bolar-type exemptions from research done in advance of marketing approval of a pharmaceutical.  China has long had such a “naked” Bolar exemption, which does not compensate the rightsholder for erosion of its patent protections due to marketing-oriented experimental use.  Overly-broad Bolar type exemptions were also the subject of a WTO dispute, and are subject to WTO disciplines.

Importantly, the IP provisions in RCEP provide no new gloss on murky but important WTO/TRIPS concepts such as an a “independent judiciary”, “independent counsel”, or “transparency”.  With regard to transparency, RCEPS maintains the vague, decades-old and largely unexamined obligations requiring that “final judicial decisions and administrative rulings of general application” shall be published, leaving China with the possibility of not publishing court cases because of its “civil law” orientation, and of never publishing preliminary injunctions, court documents involving settled cases, or trial court decisions that had been appealed because they are not “final.” China – along with many civil law countries – has developed a  quasi-precedential judicial system. These economies should not be relieved from the obligation to publish cases on the basis of a theoretical civil law orientation.  The IP chapter also lacks an Article 63 of TRIPS that would compel a country to produce cases of interest to another member country.  This is no surprise since China did not comply with a prior US Art. 63 request at the WTO to produce IP cases.  I am surprised that other countries acquiesced to this.    

There is considerable text around geographical indications (Section D) including grandfathering of previous agreements (11.34), probably to ensure no disruption to commitments made with European or other countries about mutual recognition of GI’s.

RCEP also updates TRIPS with post-TRIPS treaties being incorporated, including the WIPO Internet Treaties, and the Marrakesh Treaty as well as the Madrid Protocol and the Patent Cooperation Treaty (11.9). As mentioned, RCEP does not require accession to UPOV ’91.  RCEP does update the TRIPS agreement with various commitments to on-line IP protection, including domain name disputes (11.55).  RCEP also requires criminal remedies in the digital environment, which is another needed modernization of TRIPS (11.75).

RCEP also has relatively extensive provisions on traditional knowledge, genetic resources and folklore, which have also been actively promoted by the developing world (Section 3). The Agreement authorizes but does not require disclosure of the source of genetic resources in patent applications (11.53). 

There is nothing new on RCEP regarding trade secrets. In this sense, RCEP deviates from US FTA practice, the Phase 1 Trade Agreement, the TPP and current thinking about the inadequacy of the general commitment to protect trade secrets in TRIPS Art. 39.

RCEP’s provisions regarding proof of copyright ownership (11.58(5)) appears consistent with the Phase 1 Agreement  (18.27, Art. 1.29).  RCEP also obliges signatories to address government software piracy, as does the Phase 1 Trade Agreement  (11.17, Sec. 1.23 respectively).  Camcording of motion pictures in theatres is also a prohibited act under RCEP; however  RCEP only mandates a criminal remedy for illegal camcording (11.74).  This is also similar to US law (18 U.S.C. § 2319B). 

One of the oddities of RCEP is that criminal remedies were expanded to include the importation of commercial-scale counterfeit or pirated goods (11.74). If RCEP signatories had intended to address trade in counterfeit and pirated goods, the more potent remedy would have been to require Customs remedies for exports and/or to criminalize the export of infringing products.  This would have complemented existing WTO obligations to control the import of infringing products.  The TPP provisions are far more significant.  The TPP requires criminal remedies for import or export of infringing goods (Sec. 18.77).  Controls over the exports of infringing goods could prove highly valuable to RCEP states seeking to further integrate their supply chains within the RCEP region through enhanced deterrence at the source country.

In what looks like a rebuke to the US, the IP chapter also lets the parties determine the magnitude of commercial-scale infringing piracy and counterfeiting that they need to criminalize and their use of criminal procedures to address them (Art. 11.74).  RCEP provides that the Parties may “determ[ine] the scope of application of criminal procedures and penalties in case of wilful copyright or related rights piracy on a commercial scale, in accordance with its laws and regulations.”  This issue was litigated by the United States at the WTO in the DS362 dispute against China regarding TRIPS Art. 61.  The US did not succeed in that case due to a lack of evidence and an unwillingness of the WTO panel to compel China to produce relevant cases via Article 63 of the TRIPS Agreement.  The WTO panel did not, however, determine, as the RCEP language might suggest, that the scope of “commercial scale” was to be “determined” by WTO members by their “laws and regulations.”  In fact, the panel specifically rejected that argument when it noted that the panel had no power to “add to or diminish the rights and obligations provided in the covered agreements”.  It also rejected China’s concern over “sovereign jurisdiction over police powers” in seeking to achieve flexibility over the definition of “commercial scale.”  

Coincidentally, RCEP’s text which undermines TRIPS Article 61 is found at RCEP’s footnote 61.  One wonders if this was intended as a direct criticism of the United States understanding of TRIPS Art. 61, or to poison the waters for any US consideration of joining RCEP.  The United States, by the way, included its own poison pill in the US-Mexico-Canada Free Trade Agreement, restricting FTA negotiations with non-market economy countries.

There is also regrettably nothing in RCEP which specifically incorporates or builds upon TRIPS Art. 49.  Article 49 requires that administrative enforcement procedures should conform to civil procedures.  The removal of this provision from RCEP may be part of the flexibilities articulatedin RCEP footnote 61 for member states to determine how to criminally enforce IP.   In the DS362 criminal enforcement WTO case, China had specifically urged the WTO to consider that its extensive administrative mechanisms addressed all types of infringement of “commercial scale”.  China may now be better able satisfy any RCEP member inquiries regarding the availability of criminal remedies by pointing to its administrative enforcement mechanisms, unencumbered by Art. 49.  For those concerned about human rights, administrative enforcement can also result in harsh penalties, such as reeducation through labor.  The TRIPS Agreement required at least a minimum of judicial supervision in the form “criminal process” to support criminal penalties.   RCEPs now condones these administrative penal procedures.

RCEP also lacks a provision similar to the TRIPS Preamble requiring that IP is treated as a  “private right.”  RCEP also does not address the general role of markets in: monetizing IP;  infringement by state-owned enterprises or the State; or other state interventions in China’s evolving IP ecosystem. 

Many observers have noted that RCEP is a broad but not deep FTA.  Perhaps the reason for the hodge-podge set of IP commitments in RCEP lies elsewhere than in IP.  RCEP may  be a potent weapon in China’s efforts to address supply chain disruptions brought on by Trump Administration sanctions, Covid19 and other developments. RCEP has extensive provisions regarding a common country of origin certificate and mechanisms to facilitate greater flow of goods within the RCEP community. 

China has already responded to the commercial opportunity afforded by RCEP by turning Hainan Island into the world’s largest free trade port (FTP)  In addition, China’s National People’s Congress has recently decided to establish China’s fourth specialized IP court in the Hainan FTP.  Considering the small size of the IP docket in Hainan courts, and the very low number of foreign related IP cases, the decision to establish an IP court in Hainan likely anticipates the anticipated impact of RCEP on the Hainan economy and the desire of China to further project its IP influence in the region.

Sadly, RCEP looks like the model of an IP agreement in a world where the US has disengaged from plurilateral trade-related IP negotiations. For President-elect Biden it may serve as an incentive to re-engage allies on IP and innovation.

The two agreements are also strange historical bedfellows, joined by a common moment in time and common approaches to IP which diminish its role as a private right. Both agreements speak to nationalist and trade needs of the United States and China. The differences between the two agreements are also significant.  The Phase 1 Agreement explicitly contemplated a Phase 2 Trade Agreement. It also only involved one country.   RCEP intends to be comprehensive and regional, if not global. It is an alternative to the TPP.  It fills a vacuum in the region and will help China establish global IP norms.

Please send me your comments and corrections.

China IPR, Thanksgiving and “The Room Where It Happens”

“No one really knows how the game is played
The art of the trade
… no one else is in  
The room where it happens.”

(Lin Manuel-Miranda, from the musical “Hamilton”)

I never met Joe Biden, although I did work on IP for him in China.  My work for the Vice President over the Thanksgiving holiday of 2013 has influenced my attitude towards interagency dialogues with China on economy and trade, including who should be in “the room where it happens.” 

I received a phone call from the White House on Friday November 29, 2013 to be part of the advance team for Vice President Biden to negotiate IP issues as part of his meetings in Beijing.  The Chinese Embassy issued me a visa in a matter of hours and my PTO team was able to get me a ticket at the last moment. I reluctantly said goodbye to my family gathered for the holidays, and I was on a plane that weekend. 

My discussions in Beijing involved post-filing supplementation of data in pharmaceutical patent applications.  One does not normally think of the Vice President leading these types of discussions.  However, the meetings were held at the Ministry of Finance under the auspices of the US-China Strategic and Economic Dialogue (S&ED), which was chaired by Treasury and had originally been initiated by Secretary Hank Paulson under the leadership of George W. Bush, Jr with the abbreviation at that time of the “SED” (often pronounced like “said”).   The SED added a new, higher level IP negotiations beyond the Joint Commission of Commerce and Trade (JCCT), which was chaired by USTR and the Commerce Department. 

Zhu Guangyao, the Vice Minister of the Ministry of Finance, hosted the negotiations as he worked in the counterpart ministry in China to the Treasury Department.  I  knew Zhu from prior Treasury-led IP discussions, which he hosted but had largely absented himself from.  The discussions, however, were concluded in time for a fact sheet encompassing the range of bilateral economic relations that was released on Thursday, December 5.  My  blog appeared on my return of December 6.   The IP outcome had been downplayed constituted a mere 3.2% of the overall fact sheet text.  In the spirit of the season, I was nonetheless grateful for such high-level support.

Why did Biden negotiate IP under the “framework of” the  S&ED? The S&ED had been initiated by Secretary Paulson as an omnibus, authoritative integrated negotiating process with China.  It provided the broadest possible interagency support.  The Secretary of Treasury chaired the “economic” track, and the State Department chaired the “strategic” track.  The first meeting in December 2006 brought IP into Treasury’s interagency umbrella by highlighting the role of “effective intellectual property protection” in “competitive markets.”  At one of those first working-level meetings,  I sat warily on the backbench watching an impressive team of IP colleagues from China, all of whom I knew, negotiate with seasoned Treasury officials whom they did not know, and who were also new to Chinese legal and/or IP issues.  The negotiations were part of efforts on both sides to avert a WTO case that had been threatened by the United States. The WTO case in preparation involved copyright piracy and trademark counterfeiting, including Customs remedies, and the Chinese team was staffed with experts on enforcement of these rights.  Treasury led with a  discussion around Schumpeter’s economic views of disruptive innovation.  It was a great engagement – if you were an academic.  Technology-related IP, such as patents, trade secrets and licensing, were not part of that WTO case.  The WTO case was nonetheless filed on the 10th of April 2007.   I was in “the room where [those discussions] happened,” but without a speaking role.

The S&ED was intended as a “super-dialogue” mechanism to resolve issues that could not be resolved through other mechanisms.   At their best, super-dialogues, whether led by Treasury or the JCCT, offered an opportunity for difficult issues to be progressively “elevated” from “lower” agency-led expert discussions to “higher” political discussions for their ultimate resolution. The 2013 meeting afforded such an opportunity.  At their worst,  the super-dialogues could produce a number of negative outcomes: issues and agencies were alienated from the process or subsumed into macro-economic discussions; issues were horse-traded against other concessions in a manner where line agencies lost control; Cabinet-level or high-level agency officials wasted their time in high-level meetings with little relevance to their agency; and non-experts led discussions to no avail, such as that meeting in 2007.

During my tenure in the government, I believe that Chinese IP officials also easily recognized when there was an inexpert negotiator at the table.  They must certainly have wondered how Treasury officials or other trade generalists could be negotiating IP-related concerns.    Often the high-level US experts were also inadequately schooled in Chinese law, as Chinese legal scholar Jamie Horsley recently pointed out. Thankfully, most of my interagency colleagues on a working level were reasonable people and they knew when they had to delegate more granular negotiations. However, the paramount institutional authority vested with the heads of these super-dialogues, including making sure that their right people were “in the room”.   

Given the political firepower of the S&ED and JCCT, did lower-level meetings still make sense? At the same time as the S&ED meeting and the WTO case that was filed in 2007, there were other expert-level dialogues on IP.  These cooperative efforts employed far greater IP expertise but with lesser political authority.  Collaborative engagements were based on MOU’s between USPTO and SIPO, SAIC, the National Copyright Administration, and an interagency consensus that USPTO would co-chair an IP working group under the Joint Commission on Commerce and Trade among other activities.    

One of the durable outcomes of that cooperative period was initiated by a  phone call that I received from USPTO Director Dudas on December 24, 2006 to ask me to invite China to join an expanded community of five largest patent offices which would explore improving patent policy and practice.  That group is now called the IP5.  The first IP5 meeting was held in Hawaii at nearly the same time as the WTO case filing.  The IP5 structure has since expanded to include a TM5 for trademarks and an ID5 for industrial designs.  The photo above is of the first ID5 meeting in 2015.  Many issues, including expanding the scope of patent protection for graphical user interfaces, addressing bad faith trademark registrations, improving patent and trademark examination, making in-roads into post-filing supplementation of data for pharma applications, evaluating pending legislation, engaging on the role of specialized IP courts, reforming China’s technology transfer regime, discussing the role of precedent in IP cases, had made progress in these and other cooperative discussions.  In that pre-Trump era system, the additional political pressure from high-level dialogues was used to help accelerate these IP reforms in China.  These meetings were also not without political consequence – from the China side.  In some cases PTO officials, including myself were able to engage well above our bureaucratic rank – up to the Vice Premier level, including with Vice Premier Wang Yang and his predecessor Vice Premier Wu Yi.

Fast forward several years, and Janet Yellen and I were at the same meeting of the Strategic and Economic Dialogue with Treasury Secretary Jacob Lew in 2016.  That meeting showed the octopus-like reach of the S&ED, with about 30 enumerated separate sub-dialogues under the economic track alone. The role of Treasury officials in organizing bilateral IP issues was well-established.  However, I believed that our negotiations were getting strait-jacketed by an excess of scheduled talks and its consequent risks.  Indeed, in that 2016 dialogue, the principal focus was on economic policy,  trade and investment, and financial stability.   We had entered a period of  capture by the “super-dialogue” and “hyper-dialoguization” (sp).  Everyone needed to be in the room where it happens.  Other dialogues fared no better.   An earlier effort in 2014  by Commerce Secretary Penny Pritzker to  “choose a location outside of Washington” and “invite our respective business communities” to “reimagine and reinvigorate” the JCCT could hardly address the structural issues involved in a proliferation of dialogues and bureaucratic disincentives to using them effectively.

It is difficult to ascertain who was in the room during the Trump-era trade war, although photographs suggest that many of the higher-level negotiations were held by USTR, the White House and even the President himself without high ranking IP agency officials.  Photographs reveal that Chinese officials who cut their teeth on US-China trade negotiations, such as Zhu Guangyao, continued to play an active role in the Phase 1 Trade Agreement.  I wonder if  Zhu Guangyao was amused that the same post-filing supplementation of data issues from 2013 were included again as part of the 2020 Phase 1 Trade Agreement.  More likely, he did not recall those earlier discussions.

How much will a Biden administration reinvigorate super-dialogues? In an interview on CNN this year, Treasury Secretary Designate Janet Yellen has demonstrated an understanding of the complex bilateral tech issues that are now a focus of US-China economic relations.  She correctly noted that the Phase 1 Trade Agreement  doesn’t remove the “more troublesome” risk of conflict over emerging technologies.  If confirmed, Secretary Yellen will join a Treasury Department that now also plays a more direct role in tech relations through its chair of the Committee on Foreign Investment in the United States, and its sanctioning authority under the International Emergency Economic Powers Act.  However, Treasury has also been criticized as being “the very model of an unprepared generalist” – a tech mini-agency with a big mandate and without adequate tech expertise.

It is my hope that Biden appointees can find a balanced way to ensure that the United States government engages with China with pragmatic goals in mind without the strait jacket of excessive, redundant and inexpert meetings.  As the United States engages with the outside world, the lesson of the past several years remains that dialogues are never the ultimate solution. With respect to China,  tariffs may continue to need to be part of the picture, particularly if other multilateral solutions are ineffective.  Unilateral sanctions also require strategic depth to be effective.  I believe the Phase 1 Trade Agreement could have been much improved through the contribution of experts

No matter what strategy is undertaken, negotiations can only be part of an effective strategy if the right people participate “in the room where it happens.”

Three New Reports Proposing Policies for China Engagement

Three reports were recently released on Chinese law, Chinese science cooperation and US-Chinese relations with recommendations for the incoming administration. Here is a summary:

The Brookings Institution’s report “The Future of US Policy Toward China – Recommendations for the Biden administration” has a chapter on “Revitalizing Law and Governance Collaboration with China”  written by Jamie Horsley. 

Ms. Horsley urges the renewal of legal engagement with China.   She draws heavily on IP engagement for her suggestions.  She notes that “the U.S. Patent and Trademark Office hosted its first Chinese delegation [in 1979] and explained the American patent system to officials working on China’s first laws governing intellectual property (IP). U.S.-China IP law exchanges helped promote the establishment of specialized IP courts, introduced the practice of amicus briefs in IP proceedings, and supported China’s development of a form of case precedent to enhance uniformity of court judgments. All of these developments were informed by U.S. law and practice and are contributing to a procedurally and substantively fairer system of IP law in China.”  This cooperation, she further notes, has “promoted more professional and accessible courts and specialized intellectual property tribunals in which foreign plaintiffs are winning a majority of their patent infringement cases.”

As a further example of successful cooperation, Ms. Horsley points out that “the U.S. Department of Justice joined with Commerce in 2016 to hold the first high-level U.S.-China Judicial Dialogue, which brought officials and judges from both countries to discuss case management, alternative dispute resolution, precedent, and evidence in civil and commercial cases.” In fact, a principal focus of this program was also, IP. In preparation for those meetings the USPTO reached out to several prominent Chinese IP judges, including Justice Tao Kaiyuan of the SPC, the former President of the Beijing IP Court (Su Chi), Chief Judge He Zhonglin of the International Cooperation Division at the SPC and formerly of the SPC IP Tribunal, and former Deputy Chief Judge Wang Chuang of the SPC IP Tribunal (now with the SPC’s national appellate IP court).  These four judges are in the picture above, taken at the 2016 meetings. 

The second report, “Meeting the China Challenge: A new American Strategy for Technology Competition” was prepared by  the Working Group on Science and Technology in US-China Relations under the leadership of University of California San Diego Prof. Peter Cowhey. I was part of that Working Group.

IP issues play a role in many of the recommendations of the report.  The report criticizes a prior ban on US participation in standards setting activities with Huawei as counterproductive.  It also views NIST support for IP rights in standards setting processes as helpful to new market entrants in standards setting.  It expresses concern over Chinese efforts to dominate standards essential patents (SEPs) in 5G.  However it is agnostic over the quality of Chinese SEPs, noting that “the purpose of this Working Group is not to settle debates about the significance of the total number of patents in 5G standards versus an emphasis on the technological significance of specific patents. This group agrees that China has set a policy goal of being the overall leader in setting global 5G standards. The question for us is how to respond.”

The report also urges oversight of China’s pharmaceutical-related IP reforms in implementing the Phase 1 Trade Agreement. It also urges greater strengthening of IP protection in the pharma sector in the United States through “reform[ing] [US] interpretation of the intellectual property (IP) laws to allow important new forms of biotechnology eligible for patenting by aligning its practices with those of the European Union and China.”

Regarding “IP Theft”, the report states that “[t]e U.S. government and private and public research laboratories should cooperate in criminal investigations and support active monitoring of patent filings, ‘shadow labs,’ and research publications to alert U.S. entities of patent fraud and IP theft….”  “Patent fraud” refers to  instances where patents may have been filed in China in violation of the rightsholder. The patents may be filed with requests for anonymity when published to avoid revealing the theft.

The third report, “The Elements of the China Challenge” was prepared by the Policy Planning Staff of the State Department.  Despite the limited focus on IP, this report shares many similar recommendations to the other reports.

One of the common recommendations involves training.  The State Department report argues that the US needs to train and develop  “a new generation of public servants — in diplomacy, military affairs, finance, economics, science and technology, and other fields — and public policy thinkers who not only attain fluency in Chinese and acquire extensive knowledge of China’s culture and history.”   Horsley’s report is more specific on consequences of untrained officials: “better understanding [of Chinese law is needed to] facilitate more effective resolution of bilateral disagreements and help ensure that bilateral agreements are enforceable under Chinese law.” She also points to “misunderstanding concerning the binding force of various Chinese documents.” This is a phenomenon I have also observed.    

Other common recommendations are to “use diplomacy to coordinate with other allies and like-minded countries” (UCSD report), and to “strengthen…at home” (Brookings).    The UCSD report particularly underscores the need for a range of technological self-strengthening steps. Importantly, the reports all recognize that the United States “must promote American interests by looking for opportunities to cooperate with Beijing subject to norms of fairness and reciprocity” (State Department).  I agree that confrontation or collaboration  is a false dichotomy in our complex engagements with China.

The Biden agency review teams would be well served by reviewing these reports to implement pragmatic approaches to better manage U.S. interests in our IP and other relations with China.