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Top House Judiciary Democrat: China Bashing Not Going To Work

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Recalling a past trip to China with Rep. Jack Brooks, a fellow Democratic lawmaker from Texas,  Rep. John Conyers of Michigan said his hosts at the time showed off some products that were pirated to the dumbfounded visiting congressmen. He that Brooks threatened to "give them a piece of his mind," which he was later dissuaded to do.

"They were proudly showing us how they were stealing our intellectual property, and of course it was meant to be a compliment," said Conyers.

Conyers, the top Democrat on the House Judiciary Committee, told the audience of about 60 at the Intellectual Property Breakfast Club's monthly breakfast series that "The Texas Approach" " is not going to work, and that "our task is to figure out where we really might go from here."

The 81-year-old congressman, who is seeking his 25th term, adopted a surprisingly conciliatory -- yet frank -- tone during a rambling, Zen-like talk filled with anecdotes and observations on conversations he's had with colleagues and advisers on how U.S. policymakers should best engage with China as it grows increasingly powerful.

For his part, Conyers noted that China's influence is almost palpalble in continents such as Africa, which now exports much of its natural resources over there.

Investment banks such as Goldman Sachs and BNP Paribas project that China's economy will become as large as the United States' between 2020 and 2025, and that it will be double the size of the United States' by 2050.

The question of U.S. influence matters on purely commercial terms as U.S. firms seek to grab a toehold in China's gigantic and lucrative market that has yet to reach its peak.

Even now the numbers are staggering: There are more than 800 million cell phone subscribers in China as of July 2010, and more than 457 million people with access to the internet, according to China's Ministry of Industry and Information Technology.

And the country is just starting to embark on building a whole new energy, communications and transportation infrastructure as well as whole new cities.

According to the U.S. Commerce Department, China plans on investing $10 billion annually between 2011 and 2020 to build a national smart grid, and an additional $590 billion to build an electric power grid, for example.

In recent years, U.S. companies have complained to U.S. policymakers about China's efforts to jump the technology learning curve by enacting rules that would have required them to effectively surrender their intellectual property to Chinese-run companies.

Lawmakers in the U.S. Congress have openly criticized China for its policies, but the Obama Administration has worked hard behind the scenes to negotiate changes.

The efforts culminated in January when President Obama rolled out the red carpet for Chinese President Hu Jintao and feted his visit.

For his part, Hu promised that the central government would drop its controversial procurement policies that would have required companies that sell products to the central government to have developed its intellectual property in China.

Hu also pitched China as a great place for U.S. companies to do business and he promised that their intellectual property would be protected.

On Tuesday, Conyers said that Americans are having a tough time readjusting to the coming power realignment, and how to think about the coming changes.

He said his own experience ranged from observations of friendly-student exchanges designed to build bridges between the two countries, to hearing more cynical thoughts from some on how China is busily building its military might as its diplomats make nice.

The open question that Conyers posed to his audience on Tuesday is the fundamental conundrum that U.S. policymakers are struggling to address everyday in Washington DC: What is the most effective way to influence and engage Chinese lawmakers on important policy issues?

Instead of blasting the Chinese government, which his congressional colleagues did once again the following day during a House Ways and Means Committee hearing, Conyers appealed to the Chinese government to work together even as he frankly pointed out the need for better enforcement of intellectual property laws in the nation of 1.3 billion.

"We want to help China's special enforcement campaign on combating intellectual property infringement, and this is pretty difficult work," Conyers said. "They say some of this underground material that is being copied is so enormous, and embedded in the culture itself that it's going to be difficult to get rid of."

China recently announced that it is mounting another short-term crackdown on pirates and counterfeiters. In January, a top Chinese official said that more than 4,000 people had been arrested since August for infringing upon intellectual property rights.

Conyers echoed the sentiments of both Presidents Hu and Obama when they said in January that the members of the two nations needed to engage in more dialogue -- both through more frequent meetings between the members of their two governments, but also through cultural exchanges.

The Democratic congressman also said that he's asked Lamar Smith, the Republican Chairman of the Judiciary Committee (and a Texan,) to put together a delegation of congressional and administration officials to visit China later this year.

He acknowledged the creation of the United States'  intellectual property enforcement co-ordinator to formulate a national strategic plan, but he said: "that needs to be made to work a little bit more effectively."

And, he said: "We've got to meet more with our friends from the Chinese Embassy. I understand Mr. Chen [China's intellectual property attache in Washington, D.C.] is here, and I am grateful for that."

Conyers delivered a keynote speech that opened up a panel discussion about China and the latest developments its government is taking to build an innovation-fueled society powered by intellectual property.

3 Comments

  1. One area of outright inequity in the trade between America and China is IP THEFT.

    IT IS AN UNEQUAL TREATY IMPOSED ON HUNDREDS OF THOUSANDS OF CHINESE EXPORTERS YEAR IN AND YEAR OUT. American behemoths, with Washington at least trying not to look, TALK protection of IP, yet PRACTICE predatory “what’s mine remains mine, but what’s yours is also mine.”

    Just look at the typical TOC (Terms and Conditions) that almost all of the major American importers demanded of their vendors, and you will find similar provisions everywhere:

    “CONFIDENTIAL INFORMATION; NONDISCLOSURE

    Supplier shall not at any time, during or after the Term of this Agreement, disclose to others, take or use for its own purposes or the purpose of others, any of Company’s confidential information, knowledge, designs, data, know-how, trade secrets, or any other information considered “confidential” or “proprietary” by Company. Supplier understands, agrees and recognizes that this obligation applies, but is not limited to, technical information, designs, marketing and financial information, and any business information that Company treats as confidential. Any confidential information, knowledge, designs, data, know-how, trade secrets, or any other information considered “confidential” or “proprietary” by Supplier which the Supplier shall have disclosed or may hereafter disclose to the Company and which in any way relates to the goods or services covered by this order, agreement or contract, shall, unless otherwise specifically agreed to in writing by the Company be deemed to be confidential or proprietary information and further shall be acquired by the Company free from any restrictions (other than a claim for patent infringement) as part of the consideration for this order, agreement or contract. No cause of action will arise on Supplier’s behalf for Company’s use of any confidential information disclosed to Company, and no damages whatsoever shall accrue to Supplier for Company’s use thereof. Supplier shall keep confidential any and all technical processes and information, economic and financial information, designs, data, marketing information, and any other business information that Company treats as confidential furnished to Supplier in connection with this order, agreement or contract and Supplier shall not divulge, export or use directly or indirectly, such information for the benefit of any other party without obtaining Company’s written permission. Supplier shall return all items belonging to Company and all copies of documents containing such confidential information in Supplier’s possession or under Supplier’s control upon request by the Company or termination of this Agreement.”

    [Note how that “what’s yours ends up mine” language is craftily hidden in the middle of the passage. Typical American style drafting.]

    You think that is bad? Try this zinger:

    “INTELLECTUAL PROPERTY

    Absent a separate express agreement between Supplier and Company and after one year from date of importation of Merchandise into the United States which in any way relates to the goods or services covered by an Order, , Supplier will irrevocably grant to Company a full paid up, royalty free license to make, use, sell and offer for sale any such Merchandise free of any claim of infringement or misappropriation of any intellectual property of Supplier. The aforementioned paid up license will remain in effect until the expiration of any intellectual property relating in any way to the Merchandise.”
    __________________

    Can you imagine clauses like that imposed on Microsoft, or Intel, etc., by any Chinese entity without causing a fire and brimstone response?? Yet this sort of chicanery is imposed by major American companies in contracts of adhesion on hundreds of thousands of Chinese exporters year in and year out.  The typical Chinese company simply is not in a position to bargain.   As a result, China had been ROBBED of hundreds of billions of dollars of valuable IP over the decades.

    What is good must be universal. If IP is to be protected, everyone’s IP should be protected.

  2. Rep. Conyers is exactly right. Given the issue of pride (which is amply present on both sides), a confrontational approach is never going to work.

    And since CHINA is the growing market, more confrontation merely means that American companies WILL (guaranteed) LOSE profitable opportunities. Perceptions are very important. If it is rightfully perceived that: (a) Americans have much more IP; (b) Americans have sneakier (OK, more experienced) lawyers; and (c) Americans are robbing the Chinese blind (especially on IP) in a system built and ran by Americans, you can be sure that there would be reaction.

    At the end of the day, only a win win arrangement can be long lasting.

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