Why Is the U.S. Surrendering the Global IP System to China?

A paramilitary policeman stands guard at Tiananmen Square in Beijing, China, in 2013. (Kim Kyung-Hoon/Reuters)
Don’t put the Chinese fox in charge of the global intellectual-property henhouse.

NRPLUS MEMBER ARTICLE P resident Trump has wisely identified intellectual-property theft as a key tension between the U.S. and China, and he has properly pressured China to fully respect America’s intellectual property (IP).

So why, then, is the Trump administration risking Chinese control of the global IP system? The threat is real and immediate, but understanding it requires some background.

Different nations have their own IP systems, with varying procedures and degrees of protection for patents, copyright, and trademarks. But in a global economy, a patchwork of patent systems means that without some sort of harmonization, an inventor would have to file hundreds of different patent applications, each with its own terms, costs, and conditions.

So the developed nations set up the World Intellectual Property Organization (WIPO) in 1967 to set international IP norms, coordinate several key IP treaties, and establish a streamlined patent application, the Patent Cooperation Treaty (PCT), which allows a single patent application to be filed and respected in hundreds of countries. (My organization is an accredited non-governmental organization with WIPO.)

Over time, WIPO has invited developing countries, which tend to be weak on IP, to join the organization and its treaties in order to encourage them to improve their own IP regimes. That’s of benefit to those developing countries and critical to the United States, since in any given year around 60 percent of U.S. exports are from the IP-intensive industries. Our economy depends on the products of innovation protected by patents, trademark, and copyright, and WIPO is key to encouraging member nations not only to respect U.S. intellectual property, but also to raise their own standards of IP protection.

The director general of WIPO is a critical if unappreciated position in a critical if unappreciated organization. When WIPO’s directorship has fallen into the hands of bureaucrats from countries without strong IP rights, bad things have happened. But for the last 12 years, the U.S. has been fortunate that WIPO has been in the hands of Francis Gurry, a patent lawyer from Australia, who has skillfully guided the organization through difficult and controversial debates and managed the concerns of developing countries while keeping the interests of IP owners and creators paramount (since patent-filing fees fully fund WIPO’s budget).

The Trump administration has been skeptical of the value of the United Nations in general to an America-first agenda, and I myself would be fine if most of the United Nations fell off a cliff. But some UN agencies, especially WIPO, matter a great deal to the U.S. economy, as well as to the rest of the developed world. Neglect of this agency by Rex Tillerson, John Bolton, and the rest of the Trump foreign-policy team helped contribute to Francis Gurry’s decision to retire, and that has created a vacuum that China has been happy to fill by nominating Wang Binying to replace him.

By most standards Ms. Wang has been an efficient bureaucrat at WIPO, but WIPO executives are nominated by their governments, so Ms. Wang is an appointee of the Chinese Communist Party. And since China’s global investment in the developing world buys a lot of votes at UN organizations such as WIPO, Ms. Wang is considered the leading candidate to replace Gurry. Using similar strategies, China has recently gained influence over several UN agencies, including the International Telecommunications Union (ITU), the UN Food and Agriculture Organization, and the International Civil Aviation Organization. All of these moves should concern the U.S., but none more than the threat to the global IP system from Chinese control of WIPO.

Under a Wang directorship, would China have improper access to pending patent applications during the critical 18 months while WIPO conducts an international patent search? During that period, secret information is now held securely in Switzerland, but where will pending PCT patent applications be stored under Binying’s directorship? In a Chinese cloud? Will the servers be moved to China “to reduce costs”? Will they be connected to equipment from Huawei? As WIPO advises developing countries on equipping their patent offices, will Huawei be a recommended supplier? And will U.S. companies such as Intel, Qualcomm, Pfizer, and Boeing be able to trust their most secret inventions to such a system? You’re kidding yourself if you think China will not take full advantage of having control over the organization that stewards the global IP system.

China has already placed key personnel at WIPO in the PCT system and the Madrid Treaty bureau that manages trademark and design. With Ms. Wang as director general, China will have an entire team in place, with access to the most sensitive new technologies and global innovations.

What a coup it will be for China to gain control over the global IP system at the same time that the U.S. is pressuring China over IP theft — and what a monumental miscalculation by those President Trump has trusted to further one of his key foreign-policy goals. Talk about playing the long game vs. the short game.

The election for WIPO’s top spot is on March 7. Candidates for the directorship remain from Japan, Singapore, and Colombia, and all of these would be superior choices from the perspective of the U.S. and other nations that create the kinds of innovative products that are targets of Chinese espionage and theft. But only immediate attention from the White House can prevent WIPO from becoming dominated by China, which would pose risks to the entire global IP system, and thus to U.S. security and innovation.

Tom Giovanetti is the president of the Institute for Policy Innovation (IPI), a public-policy think tank in Dallas that is an accredited NGO with the World Intellectual Property Organization (WIPO).

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