21 August 2017
Washington DC
Reporter: Barney Dixon

US formally institutes China IP investigation


A Section 301 investigation into intellectual property malpractice in China championed by US President Donald Trump has formally launched.

Trump demanded the investigation, signing a memorandum asking the US Trade Representative, Robert Lighthizer, to examine whether the country should be investigated for alleged IP malpractice under Section 301 of the Trade Act of 1974.

He had promised some form of action during his election campaign, heralding that “just enforcing intellectual property rules alone could save millions of American jobs”.

On 18 August, only four days after the memorandum was signed, Lighthizer agreed to institute an investigation.

Lighthizer was part of President Ronald Reagan’s administration when Section 301 was used to broker a semiconductor deal with Japan.

The investigation will determine whether acts, policies and practices of the Chinese government related to technology transfer, intellectual property and innovation are unreasonable or discriminatory and burden or restrict US commerce.

Lighthizer said he had consulted with stakeholders and other government agencies and “determined that these critical issues merit a thorough investigation”.

The Trump administration said it has a “strong commitment to protecting the IP of Americans and ending the illegal theft and transfer of IP to foreign nations”.

According to Chinese state media publication, China Daily, the country’s government has urged the US to “objectively evaluate China’s progress in protection of intellectual property rights [sic] and resolve the differences with China through dialogue and consultation”.

China’s ministry of commerce said: “The US should treasure the current sound Sino-US economic and trade ties and cooperation momentum.”

“Any US trade protectionism move will surely damage bilateral ties and the interests of companies from both countries.”

It said that, if the US fails to respect basic facts and multilateral trade rules, and takes measures that harm bilateral economic and trade relations, “China will definitely not sit by, but take all appropriate measures to resolutely safeguard its legitimate rights and interests”.

Chad Brown, senior fellow at Peterson Institute for International Economics, discussed the investigation on his Trade Talks podcast.

He said the Section 301 investigation was instituted under a trade law against unfair practices where “the US government accuses a trading partner of doing something wrong and unilaterally threatens to retaliate against them”.

Brown described the 1974 law as a “Cold War law” that was “originally well intentioned” to help US exporting companies that were shut out of foreign markets because trading partners were doing things that were unfair.

He said that while the law made sense back then, the World Trade Organization how handles such disputes.

“In the 1980s, a lot of what the US was complaining about wasn’t covered by any trading agreements in place at the time … we didn’t have any rules for intellectual property enforcement.”

“To my mind this Section 301 approach of the 1980s is extraordinarily outdated and is not the way to go.”

More news
The latest news from IPPro Patents
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Nokia in deep waters at USITC
22 January 2018 | Washington DC | Reporter: Barney Dixon
The USITC will investigate Nokia over alleged infringement of Neptune Subsea Acquisitions and Xtera’s subsea telecommunication systems patents
Google and Tencent sign patent agreement
22 January 2018 | Shenzhen | Reporter: Barney Dixon
Google and Tencent have signed a long-term patent cross-licensing agreement, covering a range of products and technologies
Qualcomm NXP merger approved
19 January 2018 | Brussels | Reporter: Barney Dixon
The European Commission has approved Qualcomm’s acquisition of NXP, subject to full compliance with a series of commitments made by Qualcomm
Brinks, Gilson & Lione elects new president
19 January 2018 | Chicago | Reporter: Barney Dixon
Brinks, Gilson & Lione has elected a new president to succeed James Sobieraj
G&E launches IP practice
18 January 2018 | Wilmington | Reporter: Barney Dixon
Grant & Eisenhofer has launched an intellectual property practice, led by patent-trade secrets trial lawyer, Eric Evain
SCOTUS to hear extraterritorial damages question
17 January 2018 | Washington DC | Reporter: Barney Dixon
The US Supreme Court is to hear a case that considers whether patent owners should be able to recover lost profits from infringement outside of the US
Microsoft expands IP protection to Azure Stack
16 January 2018 | Redmond | Reporter: Barney Dixon
Microsoft has expanded its Azure intellectual property risk protection programme to cover its Azure Stack hybrid cloud platform