Jacob Schindler

After plenty of bluster, the Trump administration finally announced its trade policy agenda last week. As expected, China loomed large in the document, which continued to focus on the somewhat nebulous concept of IP theft. More interestingly, it made specific mention of the profits US companies earn from their patents and other IP in an agenda that, like much of Trump's rhetoric, takes explicit aim at China. "Ensuring that US IP owners have a full and fair opportunity to use and profit from their IP" is one of 10 key principles laid out at the beginning of the document. 

Also last week, Acting Federal Trade Commission chairwoman Maureen Ohlhausen appeared on a China-focused panel at the Conservative Political Action Conference in Washington, where she expanded upon previous critiques of China’s antitrust approach to IP owners. On her priorities for the FTC, she said: “I'm trying to be very sure that we aren't doing things here that are giving cover to regimes, like China, that don’t have the same respect for any intellectual property rights.” Ohlhausen warned that countries such as South Korea, Taiwan and India were following China’s lead, adopting a policy she summed up as: “Yeah, we too want to be able to kind of take intellectual property and say it should be at a much lower payment rate or not paid for at all and we’re going to use our antitrust tools as a way to justify that.”

Ohlhausen seems to be alluding to the experience of Qualcomm in China and other countries across the region. In dissenting from the FTC’s January decision to investigate the chipmaker’s licensing practices, she warned that it would undermine US IP rights in Asia. Qualcomm executives would probably agree that an FTC investigation doesn’t help matters when it’s still facing down a probe in Korea and antitrust litigation filed by Apple in Beijing and now the UK. But while its settlement with Chinese authorities certainly resulted in a discount on royalty rates Chinese companies pay, on the whole Qualcomm seems to have made it through to the other side, as evidenced by its litigation-driven settlement with Meizu. At the company’s annual meeting this week, CEO Steve Mollenkopf pointed to its ability to secure licenses with “all the large OEMs” in China as one of 2016’s key highlights.

But the National Development and Reform Commission (NDRC), the body that investigated Qualcomm, is still actively looking into the patent licensing business. Well-informed market sources have told IAM that NDRC officials have met with a number of other US and European companies to discuss their licensing practices over the last year. If any new investigations were to become public, it seems like it could potentially prompt some kind of response fromthe Trump administration, if the priorities laid out in its trade agenda are to be believed.

Europeans, too, are drawing attention to China’s regulatory actions in the IP space as a key concern. The EU Chamber of Commerce in China issued a 70-page critique of Chinese industrial policy on Tuesday, highlighting the “intense pressure” on European companies to turn over advanced technology. Sharing battery technology, for example, is reportedly the price of access for companies that want to produce or sell their electric cars in the country. On the whole, it seems that both US and European busnesses have moved past initial fears of a potential trade war with China in the wake of Trump's electoral victory and would welcome a slightly more assertive approach from their home governments.

That means regulatory and trade-related issues may well be at the top of the agenda for foreign IP owners in China for quite some time. But antitrust issues aside, the Trump administration might be surprised to find that by and large, US companies do have a “full and fair opportunity to use and profit from their IP” in China - at least when it comes to patents. Damages for infringement may be low, but if an injunction is its key goal, a US company would much rather be filing a case in Beijinhg or Shanghai than in a federal district court. In certain areas like software patents, meanwhile, China can make a claim to be much more pro-IP than the United States. If giving cover to patent-unfriendly regimes is really a concern to the US executive, the place to start making changes could well be the USPTO.