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China Defends Its IP Practices, Says 'We Paid Up'

hackingbear writes "Countering accusations that China's high-speed rail technologies are knockoffs, the head of China's Intellectual Property Administration in a conference said (paraphrasing): "We bought technologies from German, Japan, France, and Canada. We paid up. It is perfectly legal. We then innovate on top of them like most other inventions in the world. Why is that pirating?' (Link is to a Google translation; here is the original.) He cited China's ability, the world's first, to build high-speed rail in a high mountain area as an example of additional innovation."

33 of 214 comments (clear)

  1. Human Translated Links and More POVs by eldavojohn · · Score: 5, Informative

    I don't know why we are relying on a Google translated article when Xinhua News Agency (state run) offers their own English translations (second copy) of this exact news release. And they're much more readable. Such news sites often offer me periodic enjoyment.

    Patent and innovation discourse aside, it should be noted there's an interesting piece comparing the locality of populations in the US vs China. Let's face it, China (and the Southeast Asia region this connects them with) have a higher population density and a greater need for this high speed lengthy rail. It's also going to bring much needed economic development via freight shipments to very poor areas that the United States probably wouldn't experience on a corresponding scale.

    Oh, also, there's some pretty entertaining rail-envy springing up.

    And before you call it outright theft, consider the history of the "technology transfer" program that seeded all this. It sounds like there's going to be lengthy lawsuits lasting a decade or more and that the companies have reason to sue -- good reason. I wonder how this is going to affect future "technology transfer" programs to China. Also, one last bit of praise: NPR's radio coverage of this has been top notch.

    --
    My work here is dung.
    1. Re:Human Translated Links and More POVs by khallow · · Score: 2, Insightful

      It sounds like there's going to be lengthy lawsuits lasting a decade or more and that the companies have reason to sue -- good reason.

      They aren't going to collect. China is a sovereign nation and can as a result do whatever it wants. That trumps justice in this age.

    2. Re:Human Translated Links and More POVs by eldavojohn · · Score: 3, Insightful

      It sounds like there's going to be lengthy lawsuits lasting a decade or more and that the companies have reason to sue -- good reason.

      They aren't going to collect. China is a sovereign nation and can as a result do whatever it wants. That trumps justice in this age.

      You're right unless you upset another nation's technology on such a level that you jeopardize your status in some special group that gives you benefits with other nations. Also consider this fact (outlined in the above NPR interview): Siemens of Germany, Alstom of France, Bombardier of Canada and Kawasaki of Japan exported technology to China in order to ensure that third world peoples in Asia could benefit from it. Now, they did make money off of that export but those same companies are now are staring down Chinese competition everywhere in the world from Russia to Brazil to the United States! How are they going to compete with lax Chinese labor and pollution? I don't know what the license contracts read but I highly doubt these companies signed away complete rights to their bread and butter for a few hundred million.

      Let me ask you this: if China sends the above companies a big "F U" in response to their desire for justice, what are the chances that any more technology transfer is going to be allowed into China by anybody when four years after you are competing with your own technology plus Chinese improvements? Being a sovereign nation is fine and dandy but if China wants any part in maintaining their image as a just sovereign nation, then they better see this court case through.

      --
      My work here is dung.
    3. Re:Human Translated Links and More POVs by memyselfandeye · · Score: 5, Interesting

      To continue this point, SOP with China especially, and Asia in general, is to surrender IP via technology transfer agreements and consulting agreements. This is bad philosophically, but necessary practically as a business can get something for teaching and training, or nothing at all. Either way, you will have your IP stolen so most shops have decided to get what they can while they can. This was all tolerable before, but now that China is competing in primary markets with effectively stolen technology lots of industries are getting pissed, not just train builders.

      The whole point behind patents is to encourage innovation by granting an inventor time-limited monopolies on their ideas so long as they teach their invention to the world. Using trains as en example, Siemens figures out how to build a better flim-flam widget inside the boffin-tube to make the ding-dang wheel spin faster... which somehow improves the Train. By agreeing to tell the world how it all works, they are allowed to prevent others from selling this thing to the world for a two decades. The idea being, Alstom researchers can use that knowledge to make an even smaller flim-flam that leads to an even better train.

      What China is encouraging is businesses to no longer patent certain processes and methods, instead opting for the trade-secret route. While the /. population in general probably feels less patents are good, it isn't. Instead of teaching the world about flim-flams and boffin-tubes, Alstrom and Siemens will lock up their technology inside a vault as "Trade Secrets", jealously guard it from outsiders and even insiders who don't need to know. Innovations stumbles and we all suffer as a whole.

    4. Re:Human Translated Links and More POVs by eln · · Score: 4, Insightful

      It's an English translation made by the Chinese government of a press release put out by...the Chinese government. Why would the English translation be any more or less suspect than the original Chinese document? It's not like there aren't any bilingual Chinese/English speakers out there who could translate it independently, so there would be no purpose to making the text different in any meaningful way.

      Also, calling China a "tin-pot dictatorship" is silly. A tin-pot dictator is one who, despite delusions of grandeur, is ultimately of little significance to the world at large. However you might choose to characterize China, "of little significance to the world at large" it is not.

    5. Re:Human Translated Links and More POVs by eldavojohn · · Score: 4, Insightful

      Just a question, if "four years later you are competing with your own technology plus Chinese improvements", then why haven't you improved it yourself just as well or better? If during those four years, the Chinese improvements are so advanced that you can't compete, then it's your own fault, not "lax Chinese labor and pollution".

      Okay with this sort of logic, you're not going to see any company willing to invest into R&D more than four years of return from that innovation.

      It's fine if you want to draw the line at four years or four decades or four days, I don't care. But you have to realize that this will severely affect R&D if it's your own fault that you failed to improve past what you just innovated. Justifying someone using your patents to directly compete with you is only unfair when you were granted those patents assuming a longer time to recoup the money you invested into those patents.

      I'm not arguing for or against patents and I'm not arguing to lengthen or shorten the time they are in effect. What I'm trying to do is get you to understand the repercussions of doing any of the above.

      Corruption, lax pollution laws and questionable labor practices make China very difficult to compete with. We've exported so much manufacturing there because of this. Is it a bad thing? Only when you're a company that's facing brutal competition because you engaged in "technology transfer." If you're telling those companies it's "their fault" for not out-innovating the Chinese, I would argue that the Chinese could pay someone 1/10 to manufacture the technology and bribe a local official to ignore that excess acidic precipitate from the mine making the rail and come out underbidding you on any contract the world over. Regardless of whether they improved on your design or not.

      In my opinion, pure unbridled capitalism is a very devastating force and responsible IP laws are a good thing. IP infringement is Chinese culture. They play by their rules and if you're not prepared for it, do not engage in business with them.

      --
      My work here is dung.
    6. Re:Human Translated Links and More POVs by Beyond_GoodandEvil · · Score: 2, Insightful

      They aren't going to collect. China is a sovereign nation and can as a result do whatever it wants. That trumps justice in this age.
      This age? I missed that time the Senate of Rome and the Council of Carthage got together in a court preceeding overseen by the Parthians to solve their land dispute over territory that is now called Spain. Oh right, b/c that never happened, in every age force will trump justice.

      --
      I laughed at the weak who considered themselves good because they lacked claws.
    7. Re:Human Translated Links and More POVs by magarity · · Score: 2, Interesting

      The only reason the United States doesn't do more with mass transit including rail is the government is a sell out to to auto and airline industries.

      More likely a combination of several other factors:
       
      1. The central government in China just says 'build a rail line there' and construction starts next month. In the USA it would take five years of environmental impact studies, lawsuits from Friends of the Little Frogs Who Live in the Way of the Proposed Rail Line, lawsuits from people who don't want their land condemned and/or a big loud train rumbling through the neighborhood.
      2. Americans want the convenience of personal transportation.
       
      Combine the aggravation of part 1 with the lack of demand in part 2 and you get the state of mass transit in the USA.

    8. Re:Human Translated Links and More POVs by magarity · · Score: 4, Insightful

      Oh, and I forgot:
      3.China's population density is many times that in the USA. Most people in China live in the strip of land along the coastline and there are 1,600,000,000 of them. The subway in Beijing for example runs 6 car trains every 2 minutes during rush hour and it is standing room only. The light rail here in Denver is a 3 car train every 15 minutes and you can usually sit. (yes, I've ridden both) One of these public transportation systems pays its own way on ticket sales and one of them is HEAVILY subsidized by taxpayers. Your guess which one is a sensible public mass transit system and which one exists mainly to make people feel good about some abstract idealized notion of public transportation.

    9. Re:Human Translated Links and More POVs by zeroshade · · Score: 2, Insightful

      I only said 'four years' because that is what you said. The point I was making is just as someone else mentioned, if the companies didn't license their patents with a "Do Not Compete" clause then they cannot complain when the Chinese come back and compete against them. If they've innovated during those four/ten/fifteen years, then why haven't you? It doesn't matter what you assume, if you license your patents to someone, you can expect them to compete against you. If it wasn't a long enough time period then either you underestimated how long it would take them to bring it to market or underestimated how long it would take to recoup your money.

      Also, R&D should be continuous. You do your R&D until you have something to bring to market, while that gets put into production and is rolled out, you continue to do R&D to continue to innovate past what you've just come up with. If you don't continue to do R&D then don't complain when someone else improves upon what you've come up with before you do.

      It's common knowledge that you can pay someone in China 1/10 of the cost of someone in most anywhere else. You factor this into your decision making. Essentially, as you said, "they play by their rules and if you're not prepared for it, do not engage in business with them" is the point. There is no reason for any of these companies to be complaining because 1) nothing 'illegal' happened here as the Chinese paid for the patents, 2) the companies knew or should have known what they were getting into and dealing with as it is all common knowledge, especially for a business.

      Also, you would have to define what you mean by 'responsible IP laws' before I could agree with you that they are a good thing. Though I do agree that pure unbridled capitalism is very devastating.

    10. Re:Human Translated Links and More POVs by khallow · · Score: 2, Insightful

      What China is encouraging is businesses to no longer patent certain processes and methods, instead opting for the trade-secret route. While the /. population in general probably feels less patents are good, it isn't. Instead of teaching the world about flim-flams and boffin-tubes, Alstrom and Siemens will lock up their technology inside a vault as "Trade Secrets", jealously guard it from outsiders and even insiders who don't need to know. Innovations stumbles and we all suffer as a whole.

      I don't buy it. There's two things to consider here. First, if the technology gets used, then it can be reverse engineered. And if valuable technology is locked up and not used, then it provides a huge incentive to the people who developed the technology to leave the business for one that will develop the technology. This sort of environment favors companies which can quickly turn a concept into product.

    11. Re:Human Translated Links and More POVs by hedwards · · Score: 3, Interesting

      And as they start to do that, the costs of labor are going to start to seem exorbitant. Between the US and China the cost of labor is shockingly close in price to the point that we're starting to see companies pulling out of China because the savings they were promised aren't there. The firms they're doing business with decide they want to renegotiate the terms of the contract as soon as you've set up shop and the quality and productivity of the labor is crap.

      If they then have to deal with a substantial loss in IP that would be a very, very serious blow to the Chinese government's efforts to draw in foreign investment as they're cheap, but they're not that cheap.

    12. Re:Human Translated Links and More POVs by sjames · · Score: 2, Informative

      What China is encouraging is businesses to no longer patent certain processes and methods, instead opting for the trade-secret route. While the /. population in general probably feels less patents are good, it isn't. Instead of teaching the world about flim-flams and boffin-tubes, Alstrom and Siemens will lock up their technology inside a vault as "Trade Secrets" [wikimedia.org], jealously guard it from outsiders and even insiders who don't need to know. Innovations stumbles and we all suffer as a whole.

      Actually, it would be a preferable state of affairs at this point. It's been a while since patents actually served their intended purpose anyway. There's an entire legal specialty dedicated to producing over-broad patents that at the same time don't ACTUALLY provide the information needed to reproduce the technology. Likewise, they're far too good at the game of interlocking patents to make sure that even when the first expires there is a thicket of newer patents to make sure nobody can use the supposedly unencumbered invention years after the patent expires.

      The nice thing about trade secrets is that they only work for genuine innovators. There are no trade secret trolls. Someone else's trade secret can't claim ownership of my own work just because they one time considered a similar solution to a similar problem (or they just thought it up but couldn't solve the last problem needed to make it practical). If they want to sue me, they have to show that I actually stole their trade secret, not just that the solution I came up with happens to be similar to the one they came up with. Trade secrets automatically fail if they are obvious.

      By all means, let Bezos lock the one click "innovation" up in a vault and watch as a zillion others independently re-invent his "non-obvious" trade secret in about as long as it takes to type in the php code.

    13. Re:Human Translated Links and More POVs by pantherace · · Score: 2, Insightful

      To be fair usually it's "software patents are evil"

      As far as patents being evil. They aren't inherently evil. Just that what is allowed to be patentable, is way more than the set of useful inventions. It may be to the point where the only way to make them actually promote ideas is, where we throw them all out because of abuses, and start with a much stricter set of rules. (Yes, that sucks for some people/companies)

    14. Re:Human Translated Links and More POVs by h4rr4r · · Score: 2, Informative

      We did the same damn thing for a long time. The USA was the IP infringer of the day as we built our nation. Everyone goes through this.

    15. Re:Human Translated Links and More POVs by straponego · · Score: 3, Interesting

      "what are the chances that any more technology transfer is going to be allowed into China by anybody when four years after you are competing with your own technology plus Chinese improvements?"

      I would say very near 100%. Corporate executives are compensated based on quarterly performance. They got to where they are by being sociopaths, and power makes people more sociopathic. They don't give a rip about destroying their company two years from now; they can move on to their next victim, with a nice golden parachute on the way out-- see Carly Fiorina or Jonathan Miller.

      We could mitigate this by requiring that most executive bonuses be deferred and scaled to performance of the company over, say, three years. This would have some nice side effects-- companies would have to reconsider layoffs and offshoring, for example.

    16. Re:Human Translated Links and More POVs by mabhatter654 · · Score: 2, Insightful

      the issue is that "China" bought the patents, not "Chinese companies". Sure a company bought them, but the GOVERNMENT passes out the manufacturing where needed, meaning those engineers get a big pile of patents from all the companies at once!! That's something impossible to get in First World. In the first world, to build something like the train, it would take a hundred contractors bickering with each other, to get half the results. Each company would petition the government to use it's proprietary motor, gears, tracks, etc, etc so the finished system is a poorly constructed mash of a bunch of stuff companies grudgingly allowed to work together.

      In China they skim the best of the patents (and they manufacture all this for the first world anyway so they know the cost/benefits better than anyone) and build THAT. In the next decade they're going to get SO far ahead of everyone else it will be silly.

  2. high speed tail? by Foobar+of+Borg · · Score: 2, Funny

    From TFS: "He cited China's ability, the world's first, to build high-speed tail in high mountain area as an example of additional innovation."

    Where can I find some of this high-speed tail? Or, are Chinese girls in the mountains just desperate?

    1. Re:high speed tail? by commodore64_love · · Score: 4, Insightful

      ANY girl in a remote area is desperate.
      No need to visit China - just to Appalachia (like west virginia).

      --
      "I disapprove of what you say, but I will defend to the death your right to say it." - historian Evelyn Beatrice Hall
  3. No surprise. by DarkDust · · Score: 4, Insightful

    When the deal regarding the Transrapid was announced in Germany most people didn't take notice that the deal involved China wanting to eventually build the trains themselves which of course means licensing the technology and transferring a lot of know-how. So people who now accuse China of stealing obviously didn't pay attention back then because at least to me and a few of my friends it was immediately obvious that eventually we would get cut out of the picture. So what, we've got the Transrapid for over 20 years now and all we have in Germany is a test course. In Shanghai, at least it's really transporting people even if in the long run it won't be our technology any more. Better than not making use of it at all.

  4. If you "own" intellectual property by circletimessquare · · Score: 5, Insightful

    you own the means of production in a limited and short term fashion. pretty soon, your claim and your basis for ownership evaporate

    if you own the factory, you actually own the means of production, and therefore you actually are in power

    the usa has moved all of its production to china, retaining the intellectual property "keys". these keys will rapidly become useless and unenforceable, and all the purple faced tirades about piracy will be met with a shrug. and the usa will find itself locked out of those factories, and without power

    the pursuit of profit has resulted in a very short sighted situation where all the means of production are being moved to an autocracy that does not share our values. it will take a number of years, but this will not end well. and it is all because the captains of industry want fractionally higher stock market returns, and joe six pack wants more cheap plastic crap at walmart. for these empty goals, the common man and the man in power in the usa are selling their country's soul

    --
    intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
    1. Re:If you "own" intellectual property by Anonymous Coward · · Score: 2, Insightful

      On the other hand, without outsourcing production and the resulting enormous price-drops, the equally enormous developments in all kinds of areas, like smartphones, probably wouldn't have happened.

    2. Re:If you "own" intellectual property by erroneus · · Score: 2, Insightful

      I'm sorry, but while I agree with you, this is actually old news. This has been a chief complaint of many Japanese and other nations who have shifted their manufacturing to China and neighboring countries.

      Your "predictions" are actually already happening and has been happening for quite some time. Quite often, it would be a factory "owned" by another nation's company and is shut down and seized by the Chinese government who "never actually gave up their rights to ownership."

    3. Re:If you "own" intellectual property by homer_s · · Score: 2, Interesting

      "joe six pack wants more cheap plastic crap at walmart"

      We all want cheap things (or rather, things made more affordable) - that is how wealth is created.
      Insisting that all things be produced by 'ourselves' (whether as a family, city, county, state or nation) make us poorer - think of all the things you are using now and think about how hard it would be for all of it to be made by yourself. Or your family. Or with just people in your town. Or with just people in your state.

      Division of labour is what creates wealth.The borders of a city or state or country do not change this fundamental fact.

  5. Re:Standing on the Shoulders of Giants by Ogive17 · · Score: 3, Insightful

    In my experience with Chinese "innovation", they take a product that is well known to the more developed areas of the world and create a shitty copy and sell them as the original. They get a higher profit margain because consumers believe the goods to be the real thing while the original manufacturer gets screwed over because the junk products are being sold on the market with their company name attached to it.

    That is the Chinese innovation that I know.

    --
    "Action without philosophy is a lethal weapon; philosophy without action is worthless."
  6. Re:Innovation? by Midnight+Thunder · · Score: 4, Insightful

    I'm sure China has done just as much innovation on those rails as the Soviets did with the Tu-4 (http://en.wikipedia.org/wiki/Tupolev_Tu-4)

    We could also cite how USA and Russia innovated rocket technology, thanks to the Germans. I am not saying this is any better or worse, what I am saying is that if you comb through history then you will probably see many more cases of technology ending up in other countries without some sort of 'due' being paid. While it is only fair to compensate the original inventor or innovator, there are limits to doing so.

    --
    Jumpstart the tartan drive.
  7. Not us! by Anonymous Coward · · Score: 5, Interesting

    I knew a fellow that was an engineer working for Siemens in China on HSR and he had some wonderful stories about how their computers grew legs while working in China.

    Apparently, from what I remember, the Siemens folks would return to work in the morning and all of the computer cables (monitor, keyboard, power, etc...) would be disconnected from the machines. Sometimes the computers would just pile into a group inside the office. They changed the locks to the office, locked down cpus, etc... but without fail the machines just moved on their own. Unable to get any useful response from their Chinese contacts they set up a camera and found it was the folks they were working on the project with who were taking the computers. When confronted with the evidence, the response was a merely 'Not Us!' And business continued as if none of this was happening.

    1. Re:Not us! by shadowofwind · · Score: 4, Insightful

      I've noticed a tendency of most people to define ethics in a way that gives their own group an edge, and using that standard to measure everyone else's behavior. For example, black people 'steal' at a higher rate than white people, but white people actually steal vastly more wealth, they just do it through white collar tricks that they don't consider stealing. For example, they get money for R&D that never pans out, and which they could have known from the outset would never pan out, but they didn't ask the relevant questions because they didn't want to endanger the flow of money. Then they pretend that's just how R&D is. Or, the let their money "work for them" in the stock market, and pretend that they deserve high returns because their money is making the economy more efficient. They ignore the dynamics where they're getting richer because someone else in a less advantageous position is seeing their savings evaporate through inflationary effects that they can't protect themselves against.

      So yes, Chinese people are dishonest, and have some other traits that are even worse, as well as virtues that compare favorably to Europeans. But in the graduate school I went to, all the Americans except myself were cheating, and professionally most of the Americans I've worked with have effectively been stealing. So I'm tired of hearing how corrupt other peoples are when our own culture is destroying itself. We are the reason our economy has been going down the shithole, its not the immigrants.

    2. Re:Not us! by DriedClexler · · Score: 2, Insightful

      Uh, wait, so shoplifting is morally equivalent to buying a portfolio of voting rights in productive enterprises (that those enterprises knowingly issued for that purpose) and to failing to speak up soon enough about your negative estimate of R&D success?

      No. Just ... just, no. That is about fifty different kinds of wrong.

      --
      Information theory is life. The rest is just the KL divergence.
  8. Good for them by Anonymous Coward · · Score: 3, Insightful

    The Chinese built the American rail system, it's only fitting they now build their own. I for one applaud them.

  9. no by unity100 · · Score: 3, Interesting

    he means where you brought over those german nazis, who have presided over factories in which slave labor was employed to the point of death, gave them jobs, citizenship, and a chance to ........ well not exactly continue the practice of slave labor, of course.

    http://en.wikipedia.org/wiki/Wernher_von_Braun#Slave_labor

    just like how you have employed ex gestapo as an anti-eastern bloc spy net during cold war, leading to the impeccable shit cia and similar organizations perpetrated, thanks to their influence in their ranks.

  10. well by unity100 · · Score: 3, Insightful

    you have lived off of others' souls, while maintaining that american dream of yours, thanks to the colonial empire you built over blood.

    http://www.thirdworldtraveler.com/US_ThirdWorld/dictators.html

    1. Re:well by unity100 · · Score: 2, Interesting

      its not about 'revenge'. its about practical reality.

      your country have mooched off of the resources of the world, by making it into a dominion, installing puppet dictators to repress the people for its own benefit, and even setting up super-secret organizations to do very filthy shit in 1st world countries in order to protect its 'interests'.

      http://www.google.com/search?q=gladio&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

      so, usa has been living the 'american dream' at the cost of people's lives and freedoms around the world. and it didnt pay a single dime for it, if you dont count repression by petty dictators, or assassinations as payment. and now, you come up complaining, talking about rights, paying back etc ?

      if you talk about 'justice' one would expect all the generations that grew up living the 'american dream' to pay back to the world.

      maybe thats exactly what they are doing, with all that outsourcing, offshoring their jobs. karma alleviation eh ...

      not to mention that, china has bought that technology transfer with the deal they made 20 years ago.