In 2017, the World Economic Forum’s assessed the competitive landscapes of 137 economies across the globe. The U.S. ranked second out of 137 in overall competitiveness and innovation.
Part of that success is due to our strong patent system — first recognized in the U.S. Constitution — and the robust protections we put in place that allow inventors to capitalize on their achievements and incentivize research and development. When foreign countries undermine our patent system and inventors’ intellectual property rights, America loses. And unfortunately, there is a growing trend around the world of other nations using regulatory enforcement as a pretense to undercut intellectual property and patent protections.
According to the International Competition Policy Expert Group convened by the U.S. Chamber of Commerce, there are now more than 130 countries in the world with active competition agencies, many of whom do not share America’s high standards for judicial due process. According to the group, “this proliferation of enforcement has in some instances led to an alarming potential for these agencies, and other instruments of foreign governments, to use competition law as a vehicle of industrial policy.” In fact, the Korean Fair Trade Commission has reportedly opened 30 investigations against American companies since the U.S.-Korea Free Trade Agreement was implemented. The antics of the KFTC are shocking to anyone who supports even the most basic due process rights of litigants.
According to a report from the IP Commission, America loses between $225 billion and $600 billion in intellectual property each year, with China being the world’s principal infringer. In fact, China has implemented policies that seem specifically targeted at undermining the protections of foreign companies. For example, the 2017 U.S. Trade Representative's Special 301 Report cited China’s Cybersecurity Law as a problematic provision since it “may require the disclosure of critical IP” as a condition for market access. Other measures in China require technology to be developed locally or transferred to a Chinese entity as a condition to operate in the country. Such measures discourage innovation and preclude firms from participating in the Chinese market.
Moreover, unnecessary regulatory intrusion can have a chilling effect on American investment in foreign countries. For example, Taiwan’s Fair Trade Commission recently fined the American company Qualcomm $773 million for alleged antitrust violations — the culmination of a bid by other firms seeking cheaper access to Qualcomm technology. Even Taiwan’s Ministry of Economic Affairs recognized the danger here. The ministry issued a press release denouncing the Taiwanese regulators’ decision against Qualcomm, noting that the office has “strong and deep concern” about the fine since Qualcomm is a “crucial partner to the Information and Communication Technology and semiconductor industries in Taiwan” and “the ruling is unfavorable for foreign companies expanded investments in Taiwan in the future.”
The Korean Fair Trade Commission has also imposed a huge fine against Qualcomm, and more worrisome has sought to impose global remedies on the company to dictate its patent pricing everywhere.
These increasingly aggressive actions by foreign competition authorities targeting American companies raises serious concerns and threaten to undermine the intellectual property rights of American companies.
The Trump administration must take appropriate action to protect our property rights. Anything less will undermine the companies and individuals investing time and resources in developing ideas and inventions that lead to economic growth and job creation here in the U.S.
Dan Schneider serves as Executive Director of the American Conservative Union (ACU), America’s oldest and largest grassroots conservative organization.
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