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."

Comments

Human Translated Links and More POVs

[eldavojohn]

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.

Re:Human Translated Links and More POVs

[eldavojohn]

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.

Re:Human Translated Links and More POVs

[memyselfandeye]

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.

Re:Human Translated Links and More POVs

[eln]

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.

Re:Human Translated Links and More POVs

[eldavojohn]

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.

Re:Human Translated Links and More POVs

[magarity]

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.

Re:Human Translated Links and More POVs

[hedwards]

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.

Re:Human Translated Links and More POVs

[straponego]

"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.

No surprise.

[DarkDust]

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.

If you "own" intellectual property

[circletimessquare]

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

Re:Standing on the Shoulders of Giants

[Ogive17]

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.

Re:high speed tail?

[commodore64_love]

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

Re:Innovation?

[Midnight Thunder]

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.

Not us!

[Anonymous Coward]

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.

Re:Not us!

[shadowofwind]

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.

Good for them

[Anonymous Coward]

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

no

[unity100]

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.

well

[unity100]

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