The literature was replete with analyses of the US and China trade threat in regard to the poor safeguarding and enforcement of intellectual property in China more than 20 years ago. The reason was China was not a part of WTO at that time. In recent years we have once more faced repeated threats of trade, this time in the form of a trade war. This essay begins by unfolding the global threat to big agencies and businesses popularly knowns as IP theft. It then explores the US-China trade war that soon turned into a tech war which is likely to be seen in the next few years. Despite the fact that this essay’s length and scope prevent a thorough examination of the goodness of the report published by the USTR and the agreements made between both countries. But the author has tried to cover the perspective of the developing nation. Also, the past and current scenario of the IPR regime in India.
An important challenge for the US is China’s possession of intellectual property (IP) and its usage of supervisory and financial subsidies to make products with the use of that IP to kick out the US of world markets. Both sides intend to win this war by using IP law as their defense. Trademarks and patents come under IP protection but to address issues at micro and macro levels patents may a significant role. Theft of IP including transfer of technology, unjust licensing restrictions, cycle attack, and sharing of trade secrets, are all violations of principles set under international and domestic trade and are the cause behind tariff imposition and actions taken by the US against China. China on the other hand has various techniques for IP theft and it is very tough for the US to combat. In this essay, we will discuss the IP theft dispute that brought two big economies to the battlefield, why it is the reason for concern, How India can become a beneficiary, and what lessons can be drawn from the developing technology rivalry between the US and China.
1) Introduction to IP theft and why is it important to prevent IP theft
The definition given by WIPO of IP refers to “creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names, and images used in commerce. Any artistic innovation or materialistic, innovative technique or method with commercial use, distinctive design, name or symbol are all examples of intellectual property. Patents on innovations, for films, designs, and music the right given is copyright, trademarks on branded goods, as well as state and central regulations, all serve to safeguard intellectual property. Intellectual property is one of the most precious advantages your business owns. In that sense, protecting Intellectual protect and preventing its theft is important for your business’s well-being and preserving a competitive advantage. But first let us understand what IP theft is: From unauthorized borrowing to reusing original concepts or other materials by third parties comes under the definition of IP theft. In the present era where the world is transitioning to a knowledge-based financial system, businesses are finding that their intellectual property (IP) and their ideas, discoveries, and methods have an increasing value. IP is not the fixed data that is static same after it is collected. It is produced by the marketing team every day, along with product designs by engineers. It may consist of source code, and go-to-market strategies and remains on an ultimate point and in a variety of cloud apps.  It is inexpensive and simple to steal intellectual property. The thief only needs to mimic the concepts or goods of another person. The work has already been done by the victim (other person or business)- but criminals can still make significant gains. IP theft can result in job losses, harm to the reputation of the true owner or manufacturer of the copied product, illness and physical harm, loss of vital tax income for governments, and even the growth of groups of criminal and organized crime, which can further endanger lives and devastate communities. It isn’t a crime with no victims.
2) What sparked a war between the US and China
Trump’s government’s focus from the beginning was on reversing the dominance of China in the trading sector, in order to stop unfair practices and to reconsult the economic relationship between US and China. In 2018, the US. President Mr. Trump declared to impose additional tariffs on steel and aluminum export from China to the USA. Trump administration also accuses China of its unfair trade, its IPR policies that badly affect the US, and coerced technology transfer to China which is the major aspect of US-China relations. After a series of tariffs were imposed by the Trump administration. China in retaliation increases tariffs on different American products, one such example is pork. The US administration disclosed a list of 1,333 products worth $50 billion to which it intends to apply a 25 percent tariff. The goods on which the tariffs were applied are of strategic sectors such as robotics, IT, health care, medicine, etc. The Chinese government just after a few hours responded with 25 percent tariffs on products worth $50 billion in trade.  Trump ordered the United States trade representatives to find out if the Chinese steel imports are a threat to US national security. The results of an investigation carried out by the USTR compelled President Trump to take measures that lead to a broad tariff war between the two. The Trump administration has also been fairly forceful in the area of intellectual property. The Section 301 inquiry into laws, regulations, practices, and policies of China in the fields of intellectual property, technology advancement, and innovation was started by the USTR in august 2017, prior to the commencement of the trade war. The report was released in march 2018 by the USTR, it mainly centered on topics like coerced technology, discriminatory licensing, theft of trade secrets, and industrial espionage.
2 (a) Special 301 report USTR
Section 301 was modified in 1984 to allow the imposition of trade sanctions by the president on the nation that did not effectively safeguard IP rights, and this is the trade bar that the trump government used against China. However, it is a very strict way of enforcing policy by imposing sanctions. They may be effective in the relatively rare circumstance where a country’s legal system cannot hold onto the subject matter or rights essential for a governing treaty, but they are very less effective as a weapon against individual violations of the law, which are traditionally better addressed through the enforcement of civil or criminal law. 
2 (b) China’s aim of becoming techno leader by using unfair means:
Trump administration filed a claim in WTO against China, alleging unjust IPR and licensing operations, and even ordered the US agencies to limit Chinese investment in important technologies and impose tariffs. China on the other hand warned the US of a counterattack and put two WTO claims, questioning the legality of the sanctions and the tariffs applied on steel. One of the serious concerns for the US is intellectual property theft by China which negatively affect US-based companies, not just that but also becomes an instant threat to the world as the world economy is dependent on innovation and creativity which is vitally supported by Intellectual property. China is a big manufacturing hub around the globe and has the capacity of duplicating products and selling them worldwide at fewer prices. A company can reach new heights with the help of trademarks and patents or can even fail. As per WIPO’s report, China is responsible for more than 10% and half of 3.3 million patent and trademark applications. It was also a part of the “phase-one” trade agreement between them. The main focus between the US and China is centered on technology, and it is a focus that counts. American goal has shifted to technology from reducing the bilateral trade shortfall. Economics plays a more vital role than geopolitics. Concerns from the US center on sectors where technology is dominant, such as IP protection, access for American businesses to the quickly expanding market of China, and parity with local Chinese champions. China had always focused on two important sectors Artificial intelligence and 5G wireless network and the key is intellectual property. China’s aim of becoming independent by 2025 in the high-tech industry and creating dominance over the tech market globally by 2049. There are two different ways in which China steals US IP – Corporate intelligence and coerced technology transfer. Technology transfer is the best example of why US-based companies like Facebook and Google have not been able to smack China.
- Coerced Technology Transfer: not abiding by Chinese law will result in police raids in the firm’s offices if they refuse to give their tech secrets. This raid is carried out by the government under the pretense of a probe as a violation of the law.
- Industrial espionage: People recruited by Beijing within selective companies– frequently enticing workers who identify as Chinese– to share secrets with China.
- Cybercrime: In late 2015 when Obama met Xi these types of attacks were denied by the companies. (the attacks by China to steal Ip)
The second major threat to the American military, by stealing the design of some American military resources through different cyber-attacks China has managed to reach their computer systems and get other pieces of information on the US as well as its F-35 and F-22 jets. Two Chinese conspirators with an individual who was accused of stealing military data of these two jets. Washington-based research organization The Center for Strategic and International Studies said Beijing’s “J-20 has the power to increase regional strength of China’s military. J-20 might be utilized to attack American airfields or Taiwan or as a warplane in a dogfight with the Unites states.  Chinese hackers are accused of hacking designs, business ideas, and technology with the intent to smash competitors in different industries. These industries include US big companies such as Westinghouse Electrical Company, U.S. Steel, etc. 
3) World Trade Regime and TRIPS: Developing Nations Perspective
When it comes to international trade, the world can be divided into two broad categories, the developed countries, and the developing countries. Developing countries or developing nations can further be classified into more divisions, developing and least developed countries. For the purpose of this paper, the classification which will be considered is the one stated above, that is, the developed nations, the developing nations, and the least developing countries. This classification is based on the income level of countries. The Gross National Income or GNI is one of the most common criteria taken into consideration for this purpose. Other important criteria include the Human Development Index or HDI, access to technologies, quality of life, etc.
Currently, the most important body related to international trade is the World Trade Organization or WTO. The WTO identifies itself as an “organization for liberalizing trade”In simpler terms, it is a forum where governments of different countries negotiate trade deals. The WTO was preceded by General Agreement on Tariff and Trade or GATT which functioned as an organization from 1948 to 1994 (it still exists as an agreement). The WTO came into existence when negotiations of the Uruguay round were signed by 123 countries at Marrakesh on April 15, 1994. The fundamental difference between GATT and WTO is that while GATT dealt mainly with goods trade, the WTO included several other areas which included services and Intellectual Property.
A very important purpose behind establishing WTO was to discourage the protectionist policy of the member countries. The protectionist policy is a trade policy where the government of a country focuses on promoting domestic products and producers and thus helping and giving an advantage to the local or domestic producers. This is done by imposing tariffs or limiting the import of foreign goods or services. To counter the protectionist policies of governments across the world, the concept of “Harmonization” was introduced. Harmonization was introduced to eliminate legal differences among countries that had adopted protectionist policies in international trade and thus, to reduce barriers at the legal or policy level in international trade.
In the field of Intellectual Property Rights, harmonization was sought through the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS. Negotiations for TRIPS were part of the Uruguay Round of Negotiations. The TRIPS negotiations were completed in 1993 and the Agreement was adopted on April 15, 1994. There are five major areas covered by the TRIPS Agreement:
- Application of general provisions and principles of multilateral trading system to intellectual property
- Defining the minimum standard of protection for intellectual property rights which are to be provided by member nations
- Defining procedures for enforcement of those rights by member countries in their territories
- Settlements of disputes on intellectual property between members of WTO
- Special Transitional Agreements for implementation of TRIPS provisions
Another important cause behind arriving at a new agreement on intellectual property rights was the growth of manufacturers in developing countries. These manufacturers in developing countries were capable of penetrating into distant markets of traditional industrial products. This had forced the developed countries to increase their reliance on comparative advantage in producing intellectual goods than they used to do in the past.
Now, coming to negotiations for the TRIPS agreement, it was the United States government, supported by the European Commission and Japan, which led the push to make Intellectual Property a part of TRIPS negotiations. The main concern of the US behind this was that US intellectual property did not have adequate safety measures abroad. The protections were ineffective and inadequate. Now, when the Uruguay round of negotiations started in 1986, the TRIPS mandate was a part of 13 subjects that were to be dealt with during the negotiations.Although the Uruguay round of negotiations was completed in 1994 at Marrakesh, certain negotiations related to TRIPS continued. This included those developing nations as parties that were not actively participating during the Uruguay round. Uruguay’s round of negotiation for TRIPS had lesser participation than developing countries. As stated earlier, the developed countries demanded protection of IP as they believed the then regime of protection was inefficient and inadequate, the developing countries, on the other hand, argued against possible monopolization. Developing countries also opposed the negotiations on the issue of internal enforcement and substantive standards. According to them, there was a need to strike balance between domestic interests had to be found.
Another difficulty that developing nations faced was that most of them were not parties to the Paris Convention for Protection of Intellectual Property Rights (1967) or the Berne Convention for Protection of Artistic and Literary Works (1971). Now, after TRIPS came into force, a number of such countries had to amend their IP law to bring them in conformity with those provisions which were based on the above conventions. Another important problem with the TRIPS WTO agreement is that it lacks clear provisions with respect to Special and differential treatment. Similarly, there are no “general exceptions” in the TRIPS agreement when it comes to national treatment and the most favored nation status. This is in contravention to other WTO-related agreements like the GATT and GATS, both of these have demarcated general exceptions related to Most Favored Nation and National Treatment. In case of the presence of general exceptions, the governments would have still been able to protect aspects of IP like public health. The absence of public interest exceptions gives an advantage only to the producers of technical knowledge and not its users. It is for these and other similar reasons, scholars like Birdsall, Rodrik, and Subramanian have argued that “the TRIPS Agreement is the most egregious example of how the developed world uses international trade agreements to impose costly and onerous obligations on poor countries.”The United Kingdom Report on Intellectual Property and Development pointed out challenges posed by TRIPS to development, as well as the development-friendly provisions of TRIPS. Some of the points from the report are:
(a) Article 7 provides that IPRs should contribute to the “transfer and dissemination of technology” (
(b) the statement that measures may need to be taken to prevent the abuse of IPRs (Article 8)
(c) the fact that TRIPS primarily sets the criteria for patentability, however, it does not prescribe how these criteria are to be defined;
(d) the fact that TRIPS permits the member countries the exclusion from patentability of plants and animals and essentially biological processes for producing them
(e) the fact that TRIPS lets the member countries to choose an “effective sui generis” plant variety protection system
(f) the fact that TRIPS allows countries to design their regimes for exhaustion
(g) Article 82 permits to exclude diagnostic, therapeutic and surgical methods and new uses of known products from patentability
Now, coming to China, it was not a party to the GATT. However, it did participate in the Uruguay round of trade negotiations where it argued that it should be admitted as a developing country status as it wanted to receive benefits of the TRIPS agreement’s delayed implementation. This argument of China was countered by the United State which argued that China was able to curtail Intellectual Property violations and thus, it should be given the status of a developed country. However, as on March 2012, China is a part of 35 member Asian Developing Countries group of WTO in TRIPS negotiations.
4) IP Push in India amidst US-China Trade War
The patent regime in India dates back to the East India Company days. The first legislation related to patents in India was enacted in 1856 (Act VI of 1856). However, this Act was repealed by Act IX of 1857 as this Act was enacted without being approved by The British Crown. A new Act was enacted in 1859 as Act XV of 1859. The Act was largely based on the 1852 Act of the United Kingdom, although there were certain differences. Further, in 1872 the Act was renamed “The Patterns and Designs Protection Act” under Act XIII of 1872. This legislation introduced a provision to protect the novelty of the invention. In the first half of the twentieth century, the patent law in India again went through a number of changes. First, in 1911, all the previous legislation was replaced by the “Indian Patents and Designs Act” (Act II of 1911). Under this Act, the patent administration in India was brought under the control of the office of Controller of Patents for the first time. Further, in 1920, the Act was amended to include reciprocal arrangements with the UK and other countries. The amendment in 1930 increased the term of the patent from 14 years to 16 years. After independence, in 1949, a committee was formed under the chairmanship of Justice Bakshi Tek Chand to review the patent law to ensure that the patent regime works in the national interest. Based on the recommendations of the committee, the 1911 Act was amended in context to the working of inventions and compulsory licenses. However, no new legislation could not be enacted on the basis of the recommendations of this committee due to various political factors. Then, in 1972, the Patents Act of 1970 along with the Patents Rules, was enacted which repealed and replaced the 1911 Act. This legislation was based on the recommendation of Justice N Rajagopala Ayyangar’s committee which was formed in 1957. Since its enactment in 1970, the Act as well as its Rules have been amended multiple times, the latest being in Patent (Amendment) Rules in 2021.
In recent years, especially after 2015, India has seen significant growth in terms of innovation and intellectual property. In the 2021 Global Innovation Index which is published by World Intellectual Property Organization (WIPO), India stood at rank 46 among 132 countries. In 2015, India stood at rank 81 in the index. As per the 2021 index, India stood in 2nd rank among 34 lower-middle-income economies and India stands in the first rank among 10 economies in Central and South Asia. This is due to the government’s efforts in the field of Intellectual Property. These include concessions on online filing, a significant concession for start-ups, educational institutions, small entities, etc. there has been more than a 50% increase in patent filing between 2014-15 to 2021-22, 42,763 in 2014-15 to 66,440 in 2021-22. Similarly, the grant of patents has also seen a significant jump, from 5978 in 2014-15 to 30,074 in 2021-22. Time taken to grant a patent has also been reduced. It took 72 months for patent examination as per 2016 data. Now, as of 2021-22 5 to 23 months are taken to grant patents. In the year 2021, a 16% growth was registered in patent grants in India.
Apart from improving the IPR regime in the country, India has played a significant role in vaccine availability in the world during the COVID crisis. India along with South Africa had requested a patent waiver in the WTO forum. India argued that if the patents related to COVID vaccines are not waived, only rich countries would benefit from the vaccines and poor countries would be devasted by the effects of the pandemic due to the non-availability of vaccines. This proposal was supported by a number of Low and Middle-Income Countries (LMICs) and a few rich countries like the UK, USA, and Canada opposed the proposal arguing that the absence of an IP system will affect innovation in Vaccine manufacturing.As a result of this proposal, at the 12th Ministerial Conference of WTO in Geneva in June 2022, an agreement was reached to partially waive off patents related to COVID-19 vaccines.
Intellectual property has played important in contributing to the development of developing countries and least-developed countries. Although the push to bring the protection of IP within the WTO was initiated by developed countries in their own interest of protecting their intellectual property, the TRIPS has helped in sharing IP with developing and least-developed countries. In the assessment of the impact of TRIPS on development, most studies focusing on intellectual property protection in developing countries do not offer a clear picture. This is because there are no set indicators to measure development in terms of the consequences of intellectual property protection. According to Daniel Gervais, there are two major indicators that help in analyzing the impact of increased IP protection
1) An increase in the trade flow of goods that includes a significant intellectual property component
2) an increase in FDI(foreign direct investment) related to goods or services that require a high level of IP protection.
He suggests that FDI gains in higher knowledge or goods and service may lead a country on the path of innovation.– this means that while a uniform system to assess development on basis of IP protection is not yet derived, FDI inflows related to IP protection can be one of such indicator.
China, which is a part of a group of developing nations in Asia as per WTO has been at loggerheads with the United States. The US has been alleging that countries like China and India. According to the Special 301 report of the United States Trade Representative Office (USTR) in 2018, China, followed by India, is leading the list of Intellectual Property theft and violations. In 2018, the US proposed a $50 billion retaliation tariff on imports from China. However, this move by the US government was opposed by India and seven other countries at the WTO Dispute Settlement Body.
However, since then, there has been some improvement in US-China trade relations. US and China have recently signed a trade agreement that is aimed at resolving US allegations against China regarding trade practices which included infringement of Intellectual Property Rights. As per the agreement, China has improved its IPR laws in order to deter IPR violations 
Now, coming to India, it has further shown improvement in Global Innovation Index and was placed at 40th position in the report in 2022, a 6 place improvement from 46 in 2021 report. India aims to reach in top 25 in the Global Innovation Index in the coming years. India has also played a major role in securing patent waiver for COVID-19 vaccines which strengthens its position as a leader in IP diplomacy among developing countries.
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 Ibid 8
 Ibid 8
 Ibid 8
 Ibid 9
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 (n 38)
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 (n 34)
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 India Opposes US Proposal to Penalize China for IPR Violation https://www.thehindubusinessline.com/news/world/india-opposes-us-proposal-to-penalise-china-for-ipr-violation/article23763565.ece 2018 (accessed on 08 December 2022)
 India Opposes US Proposal to Penalize China for IPR Violation https://www.thehindubusinessline.com/news/world/india-opposes-us-proposal-to-penalise-china-for-ipr-violation/article23763565.ece 2018 (accessed on 08 December 2022)
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The author is Ms. Nivedi S. Dutta, a student of Maharashtra National Law University Mumbai.
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