
China Announces Punishments for Intellectual-Property Theft - kjhughes
https://www.bloomberg.com/news/articles/2018-12-04/china-announces-new-punishments-for-intellectual-property-theft
======
dmortin
Is there still a rule that foreing companies can operate in China only if they
are joint ventures with Chinese partners?

If so then the Chinese partners can get to know all the foreign IP.

I'm sure there will be show punishments under the new law, but through the
joint ventures China can still get all the foreign tech knowledge it wants.

~~~
nosleeptill
Yes, China doesn't need to steal much of anything, because in order to
manufacture in China you need to hand over your IP to your Chinese partner
company. Your Chinese partner company has another partner, the Chinese
Government, so in effect when you manufacture in China you need to share your
IP with the Chinese government, and they share the information you gave them
with any Chinese company that could benefit.

Passing all the laws won't matter, because western companies are just handing
their IP to the Chinese government.

~~~
metacritic12
The nature of "laws" are also different in China versus a rule-based society
like the USA (heck even Europe is less rule-based than the US).

Even if China nominally had a law against IP theft, on the ground in it can be
very different. They could (and do as the stories below show) ask companies to
"voluntarily share their methods" and when they don',t, towns can delay
permits, throw up selective barriers, and put in all sorts of disadvantages
that are not officially codified.

The west would be smart to wait to see how easy it _really_ is to do business
in China without giving over IP before giving China credit.

China has been playing the "we passed a new law/speech" game to buy time for a
long time, but the walk is far from following the talk. I hope China is
serious, but only time will tell, not the law.

~~~
kyrra
Another interesting one is financial services in China. It's been closed to
outside companies, but China said they would let non-Chinese companies in.
Except they put a barrier that the company must have $15 billion in assets.
Plus, no company has even been approved to operate there yet (as of the last
reporting I saw).

[https://www.wsj.com/articles/wall-street-investment-banks-
fa...](https://www.wsj.com/articles/wall-street-investment-banks-face-new-
hurdle-in-china-1528811470)

non-paywall: [https://outline.com/UdR3KA](https://outline.com/UdR3KA)

~~~
xvilka
UBS got an approval for buying back their stocks up to 51%.

------
ggm
While the world economy worked on real goods property had good understanding.
services and intellectual property are challenging because ideas are ephemeral
yet persist, and we have only social constructs to constrain them.

"I have the cake you don't unless you pay me" is very distinct from "You are
not allowed to sing happy birthday without paying me"

One is an absolute. The cake _is_ and moves. The other is an idea. You get
rent from me expressing an Idea. Do I have to pay if I hum it inside my head?
Do I have to promise not to tell anyone in written form? What if I change more
than 90% of the notes but keep one theme?

I know this is a reductionist example, but IPR is like this: it has the
terrible quality which goes to Patent process or patents over mathematics or
physics. If you discover a specific dopant applied for a specific period of
time in a specific way to silicon increases yield by 10%, Once the world knows
this, why are you paid for the IPR licence time? If its to profit on the
investment for research, remember that a huge amount of research is paid out
of tax, not by investment returns. What if the counter parties invent a minor
twist, or a related IPR moment? Yes.. people trade IPR rights, and collect IPR
rights into agencies like the MP3 assciation.

This is a huge cancer on society. Its like CFDs. Its leveraging money moments
out of thought.

International trade in real goods demands cheap. IPR demands rent which is
"not cheap" -So the US demands for IPR rents on goods made in china, is like
cutting your nose to spite your face: If you drive China to pay IPR taxes, you
will drive china to seek IPR inside itself to avoid the taxes and charge YOU
to copy them.

Better to have no IPR taxes than enforce payment.

~~~
criley2
I feel like your (and most) anti-intellectual property arguments are built on
terrible strawman, so let's go through your terrible strawman.

>One is an absolute. The cake is and moves. The other is an idea. You get rent
from me expressing an Idea. Do I have to pay if I hum it inside my head?

Obviously not, and to suggest that intellectual property laws would require
rent payments for thinking about a song is so odious and unfair that the
speaker must be assumed to be acting outside of the realm of honest discourse.

>Do I have to promise not to tell anyone in written form?

? How is your concept of intellectual property so divorced from reality? In
what country does one make a promise not to hum a song to a rights holder in
written form? This beggars belief that you are anything other than some
uninformed radical.

>What if I change more than 90% of the notes but keep one theme?

As with all of intellectual property, unless you are attempting to
commercialize your idea, you aren't going to be seriously targeted for using
someone's intellectual property.

I struggle to treat this post as anything but the uninformed ramblings of a
true radical. I mean, could you at least pretend to have a real world
understanding of intellectual property when you create your examples?

Here's a question for you: Have you ever created anything in your life with
value that could be protected by intellectual property laws (copyright,
trademark, patent, etc)? Have you ever created anything of value and given it
away? Or are these ruminations about intellectual property purely
hypothetical?

~~~
Bored5809
Are you sure you're on the right track? The least you can do is not make the
same mistake that you're accusing other of.

> How is your concept of intellectual property so divorced from reality? In
> what country does one make a promise not to hum a song to a rights holder in
> written form? This beggars belief that you are anything other than some
> uninformed radical.

Fallacy: 1) Ad Hominem

> As with all of intellectual property, unless you are attempting to
> commercialize your idea, you aren't going to be seriously targeted for using
> someone's intellectual property.

Fallacy: Appeal to probability

> I struggle to treat this post as anything but the uninformed ramblings of a
> true radical. I mean, could you at least pretend to have a real world
> understanding of intellectual property when you create your examples?

Fallacy: Ad Hominem

> Here's a question for you: Have you ever created anything in your life with
> value that could be protected by intellectual property laws (copyright,
> trademark, patent, etc)? Have you ever created anything of value and given
> it away? Or are these ruminations about intellectual property purely
> hypothetical?

Fallacy: Ad Hominem

You could have ended your post by pointing out the fallacies, but Internet has
taught you to go a step further (Look at me doing the same thing)

~~~
criley2
Fallacy: Fallacy fallacy.

The worst kind of munchkin is the one that thinks A) a fallacious argument is
a wrong one B) that reducing arguments to fallacies is a beneficial way to
communicate and C) who misuses fallacies as a tool to avoid arguing merits.

For shame. Utterly, you provided the worst response possible. Meta, petty,
inherently fallacious and ultimately pointless.

------
baybal2
1\. Patent violation is already a commerce code offence

2\. Same for trademark violation

3\. Same for media products reproduction rights

The only thing that this changes is that anybody indicted is automatically
distanced from the state system, something you can consider a privilege
actually...

I knew an expat chemist here who had hard time declining very assertive
solicitations for investments into her company from all kinds of state run
funds, including ones ran by Norinco and PLAF out of all things. Her product
was a variable viscosity fluid that was said to have a world record for
vibration dissipation.

So vexatious they were, she had to hire a lawyer to find good excuses for not
taking their money, without losing any of perks, and access to government
tenders.

In the end, she went on taking money and facilities access from the infamous
"plan 3315," and now has to spend more time hauling legal papers than actually
running her factory.

~~~
progers7
What is plan 3315?

~~~
baybal2
A borderline bribe like incentive program for foreign scientists, and
businessmen to set up shops in second tier cities in China, a part of this
initiative [http://www.1000plan.org/](http://www.1000plan.org/)

Effectively free 3 million bucks for a pretty business plan and reputation for
as long as you are a foreigner. For this very reason people call it out for
throwing money away, and questioning why they can't spend that much on China's
own talent.

------
danimal88
I'm 100% as interested in Market Access as I am with IP theft. I'm sure there
are small and large companies with IP concerns but overwhelmingly, this is a
large companies game since they are the ones doing really heavy R&D lifting on
new materials and technologies. For startups, genuine market access to China
would be such a fantastic opportunity.

~~~
westiseast
As a real world example, the fashion industry in China is hopelessly awash
with fakes and copies. There’s very little enforcement of that kind of
intellectual property, and also such high barriers to entry for say
small/medium European fashion brands that they have no options. Chinese
counterfeiters make money hand over fist ripping off US/EU designers, often
working with the same factories producing the legitimate products for export.

When a small/medium EU clothing company can setup their own Taobao store
easily and cheaply, sell online without overwhelming competition from
counterfeiters, repatriate their earnings without significant issues, then
perhaps we can consider the playing field levelled somewhat.

~~~
ryacko
Sounds like the Chinese are only selling defective products that westerners
won’t accept.

~~~
westiseast
That’s not correct.

Especially with low-tech products like clothing, you can easily buy fakes that
have equivalent (or better) quality than originals at 1/5th of the US/EU
price. You’re not paying expensive EU/US staff wages, company taxes, export
costs, duties, design fees, branding and marketing costs. The base cost of a
$120 pair of NIKE shoes is around $10 - it’s easy to find counterfeit Nike
that cost $20 with great quality.

~~~
paganel
> Especially with low-tech products like clothing, you can easily buy fakes
> that have equivalent (or better) quality than originals at 1/5th of the
> US/EU price.

As a consumer I 100% approve of this practice, go Chinese clothes
manufacturers! And I can use the $110 that I saved by purchasing a
product/service from an industry that doesn't rely on rent-seeking (IP is
mostly rent-seeking nowadays).

~~~
westiseast
I kind of agree.

Western consumers are so removed from clothing production that they’ve lost
sight of how vast the gulf is between real and perceived value. Paying 10x or
20x the manufacturing cost for what is essentially a commodity item with zero
technology or innovation is insane.

That said, brand and design do have some value. There’s a reason why Chinese
consumers and counterfeiters have insane appetite for western brands, but
western consumers would struggle to name a single Chinese clothing company.

------
naringas
digital property should not work under exclusive principles (unlike physical
property which has to).

to force exclusionary constrains upon digital property means we choose to
abandon one of the key advantages of digital information.

it means we favor owning things over being free.

~~~
rayiner
Why not? There is more merit to exclusive ownership of digital property than
physical property. My entitlement to my yard is pretty comical—that land was
there a billion years before I was born and will be there a billion years
after I’m dead. But Captain Marvel? That’s a thing that only exists in the
universe due to the labor of certain humans. Why shouldn’t they own it?

~~~
harryh
A person can enforce ownership of their physical property by themselves.
Intellectual property enforcement requires the massive power of the state.

One might argue that we should prefer a world in which that sort of massive
power is used sparingly.

~~~
sonnyblarney
"A person can enforce ownership of their physical property by themselves"

Except in reality, you don't. The state very strongly enforces your property
rights that's a good chunk of why the police exist, and most people do not own
guns.

The OP argument is not unreasonable.

To wit: in Canada, there is actually no enshrined right to own property. The
far left party opted to keep it out of the new constitution written in the
1980's so Trudeau Sr. was forced to keep it out if we were to have a new
constitution at all. So it's an intellectual concept.

~~~
harryh
I'm not sure if I completely agree with "Except in reality, you don't."

In some sense I enforce ownership of my house just by living here. Someone is
here most of the time. The lights are on. There is activity. That keeps others
out.

If I just abandoned the place, eventually someone might poke their head in and
see if there was anything to take. Sure, that would be illegal, but the cops
aren't going to post a guard for me under most circumstances.

You actually see this happen in downtrodden neighborhoods where whole blocks
get abandoned. In theory that property is still owned by someone, but without
anyone actually there, eventually houses get stripped of valuable goods and in
some cases squatters move in.

[https://en.wikipedia.org/wiki/Defensible_space_theory](https://en.wikipedia.org/wiki/Defensible_space_theory)
is an academic theory of this point of view.

Another good example is house sitters. When traveling for extended periods of
time, people will let trusted 3rd parties stay in their house for free. Why?
Enforcement of property ownership.

~~~
sonnyblarney
If there were no state, your 'occupation' of the residence would be
meaningless, guys with guns would take it from you.

It's feudal based on hard power in one way or another.

The way it's set up now is the cops enforce a common set of rules we agree
upon.

You don't have the power to enforce your property rights. Nobody really does.

~~~
harryh
Again, I don't think that's really true historically. Even in pre-state
societies or in present day societies with failed or weak states people still
have homes that they live in consistently from day to day.

Sure, sometimes the dudes with guns show up and force them out, but that isn't
a constant occurrence.

------
soyoha
China also just scheduled fentanyl as a controlled substance. This is after
China promised the Obama administration they’d curb the supply of the drug.

The NYTimes said that tens of thousands of Americans have died from Chinese-
sourced fentanyl.

I don’t understand how American startups can take money from China, or how
Google and others can work with them. They’re in a soft war with us, have a
100 year plan yet we’re all so naive.

~~~
disinfo_chk
Re: the soft war, I think perhaps the biggest threat is the disinformation
campaigns being run by various worldwide entities, including the Chinese.

This is one of the best summaries I've seen about democratic governments as
they contrast to 'soft' totatalitarian countries like Russia and China. This
is why we all want to live in democracies.

[https://warontherocks.com/2018/01/contrasting-chinas-
russias...](https://warontherocks.com/2018/01/contrasting-chinas-russias-
influence-operations/)

 _The operational differences, for all their practical implications, may be
less important than the simple recognition that Beijing and Moscow both
approach influence operations and active measures as a normal way of doing
business. The United States approaches covert action as something distinct
from the routine business of foreign policy, requiring special authorities and
oversight or legal arguments over whether Title 10 or Title 50 applies. This
is simply not the case for the contemporary Chinese or Russian states._ They
still bear the hallmarks of their totalitarian and Leninist pasts.*

I was going to comment on The Epoch Times and China Daily (two English
language papers that are tools to run influence operations), but let's leave
that one for another day and just recognize that we need real, honest, truth-
seeking media to have a democracy, and democracies need to figure out how to
deal with our new media environment that is penetrated by disinformation.

~~~
yourbandsucks
It's very recent that there's even a fiction of oversight for US covert
actions. Look at the history of Latin America.

"The strong do what they can and the weak suffer what they must" \-- still
true 2400 years later.

------
s3r3nity
I'm a bit confused, as the Bloomberg article _hints_ at this, but then quickly
moves on: is this related to the US tariffs / "Trade War" situation?

~~~
istorical
The US and China agreed to a temporary ceasefire in escalating their
retaliatory tariffs, a day later they make this announcement.

Seems a bit too timely to be a coincidence, no?

~~~
sonnyblarney
It's absolutely not a coincidence as IP theft is a primary demand of the US
side at this time. The other being the overall imbalance.

Ironically, the bigger one is not arbitrary theft of IP, it's the requirement
of many actors to willingly give up their IP when going into China and the de-
facto closed market given all of the challenges foreign entities have to face.

Some arbitrary IP theft of XMen films and fashion labels could be tolerable,
as could a permanent trade imbalance as America still wins huge surpluses even
in an imbalanced exchange.

------
mrbonner
Really? How about this: [https://www.wsj.com/articles/china-maneuvers-to-snag-
top-sec...](https://www.wsj.com/articles/china-maneuvers-to-snag-top-secret-
boeing-satellite-technology-1543943490)

~~~
mips_avatar
Yeah I don’t think Xi is really going to tell the PLA that they have to stop
their corporate espionage/stealing American fighter plans.

------
fspeech
If you are curious about what is actually announced, here is the original
document:
[http://www.ndrc.gov.cn/gzdt/201812/W020181204527760656065.pd...](http://www.ndrc.gov.cn/gzdt/201812/W020181204527760656065.pdf)

~~~
yorwba
Thanks, very interesting.

It appears that there are no direct financial penalties, only indirectly
through restrictions on government subsidies and issuing stock, as well as
increased scrutiny in general and especially regarding patent applications,
all mediated via the social credit system, including the much-discussed travel
restrictions.

At least that's my take based on my middling understanding of Chinese.

~~~
fspeech
This is mostly pertaining to administrative cases, which can be quickly
resolved. I am surprised there is actually such a thing in China. These are
not court cases so they don't have the same power. It seems here they are
trying to enhance the power of administrative resolutions through the credit
system.

You are entitled to whatever financial penalty you can get from the courts if
you go through the court system, but court cases will take longer. In the US
patent cases, which are highly technical in nature, can take a very long time
to resolve, the upside being that very large damages could be awarded. In
China it seems they aim for smaller awards (mainly injunctive relief) and
quicker resolution.

------
slics
What about when the Chinese country itself violates the IP rules? They can’t
just punish themselves. So ironic, they will punish a few on the cover, but
they will continue their old practice of steeling under the covers.

~~~
fspeech
Chinese trademarks, patents and copyrights are monopolies granted by the
Chinese government (note, not the US government) to rights owners and have
power only within China.

------
jostmey
Until I read about actual punishments being handed out, I'm skeptical that
China will actually enforce rules on intellectual property theft.

~~~
rhizome
To be fair, China _is_ a signatory to all of the major copyright treaties of
the past 60+ years.

[https://en.wikipedia.org/wiki/List_of_parties_to_internation...](https://en.wikipedia.org/wiki/List_of_parties_to_international_copyright_agreements#Table_of_parties)

~~~
reaperducer
_To be fair, China is a signatory to all of the major copyright treaties of
the past 60+ years._

And I clicked on "I Accept" on hundreds of EULAs. That doesn't mean I'm going
to abide by the terms I "agreed" to.

Because of its manufacturing sector, China can sign onto whatever it wants and
still not enforce the rules. What are the other signatories going to do? Make
iPhones in Brussels?

~~~
sanxiyn
Samsung makes its phones in Vietnam just fine. I think Apple should follow if
it can.

------
jorblumesea
What good is any IP law(s) if we know they won't be enforced?

The idea that China is going stop their IP theft is ridiculous.

------
netcan
The china-ip stuff is curious, and the conclusions (if this does conclude) are
likely to be impactful for a generation.

Why would a country want to make laws that creates a type of property which
they don't have as much of?

The US & Europe had been framing it as a necessary system, which China needs
as much as they do. At some point, the frame changed to more of a moralistic
one. This has been convincing (in the west) largely because China had no
declared position. They unenthusiastically nod along but avoid enforcement.

Now, we have a more trumpish dealmaking frame. This implies that ip laws are
not good for China, and that it'll take carrots or sticks to get agreement.

Me... I don't think up as it is is anywhere near optimal, from either a moral
or economic dynamism perspective. Curious to see how this all works out.

~~~
groestl
> Why would a country want to make laws that creates a type of property which
> they don't have as much of?

Because, as you say yourself, it hopes to create that kind of property?

~~~
netcan
Well.. they definitely hope to create intellectual output. I'm not sure they
need to wrap it around an IP system inspired by the western one.

------
SuperNinKenDo
Of all the issues with China, this is the one I least support a "solution" to.
Adding to the arsenal of pretexts the Chinese government can selectively hold
over its subject's heads.

------
bloak
I read the article, but I still can't work out what it's talking about. What
does "Intellectual-Property Theft" mean? Are we talking about trade secrets,
copyrights, or what? (Surely they can't mean patents?) Are the writers stupid,
or are they deliberately trying to confuse the readers?

------
known
Isn't IP governed by
[https://en.wikipedia.org/wiki/World_Trade_Organization](https://en.wikipedia.org/wiki/World_Trade_Organization)

~~~
anticensor
It is governed by World Intellectual Property Organization, which is a UN
body.

------
zachguo
hmm. China gonna play the IP game. Watch more patent trolls coming out of
China.

------
doombolt
I didn't know you could just skip this bullet point, get away with it.

Makes me wonder why we ever did it. After all, "Intellectual Property" is just
a way to siphon money from my country while making our lives miserable. It's
not like we ever got anything useful in the return.

------
AdmiralAsshat
Does that mean they'll revise their song pick for the official 2022 Olympic
Games?[0]

[0][https://www.nytimes.com/2015/08/04/world/asia/to-some-
song-o...](https://www.nytimes.com/2015/08/04/world/asia/to-some-song-of-
beijing-games-is-suspiciously-similar-to-a-disney-ballad.html)

------
fipple
LOL, Trump is Xi’s 365-day Christmas present.

