Of all nations, China has been perhaps the most aggressive in stealing intellectual property, especially from U.S. companies a key issue in U.S. President Donald Trump’s Trade War with Beijing.
Now, Beijing has its sights on leading the global organisation that is supposed to protect IP, and which sets international standards for patents, trademarks, and copyrights.
Earlier this month, China nominated a candidate to head the United Nations World Intellectual Property Organisation or WIPO, signalling its desire to more actively shape the international system for defining Intellectual Property Rights.
Given China’s long track record of corporate espionage, rampant IP theft, and support for U.S. enemies, many trade experts are wary, to say the least. Several years ago, the United States even opposed the creation of a patent office in China on the grounds that stringent safeguards for protecting the confidentiality of trade secrets in patent applications might be subject to intrusions in China, according to James Pooley, a former Deputy Director General at WIPO who managed the agency’s international patent system.
A WIPO official said the agency has no intention of opening a patent office outside the agency’s high-security office in Geneva. Under WIPO rules, patent applications remain confidential for 18 months before they are approved and then made public.
“Protecting the applicants’ trade secrets was a core part of what we were doing,” said Pooley, who became a WIPO whistle-blower in 2014. “The Trump administration’s view of China is that it is a thief. Why would you want to put the fox in charge of the henhouse?”
Ironically, one reason for Beijing’s move is that China is now producing a great deal of IP of its own. For years, China had shown little interest in carving out a leadership role at WIPO. But it has been quietly deepening its relationship with the agency, which sets the rules for international patents, trademarks, and copyrights.
Today, more than a decade after Beijing launched its drive to boost indigenous innovation, China has become a major innovator in its own right and is taking a stronger apparent interest in protecting intellectual property its own, at least.
U.S. Officials have reached out to friendly countries to try to persuade Beijing to reconsider its bid for the top WIPO job and instead accept another senior management post at the agency, according to diplomatic sources. So far, Chinese Officials in Geneva have demurred, those officials told.
The Chinese bid poses a challenge for the United States, which has been pushing to contain China’s rise as a technological superpower while checking its growing diplomatic clout at the U.N. and other international organisations.
China’s potential challenge to the stewardship of global intellectual property standards comes at a time when Beijing is also seeking to rewrite the rules of the road for much bigger swaths of the global economy, including the role of state-owned enterprises and the use of state financing to achieve other geopolitical gains.
The United States has repeatedly charged China with violating its commitment to a rules-based system that ensures open markets and respects the sanctity of intellectual property rights.
A team of economists and government experts found the United States loses up to $50 billion a year from Chinese theft of trade secrets, counterfeiting, and other unfair trade practices, the Office of the U.S. Trade Representative says. In an address to the U.N. General Assembly in September, Trump accused China of the “theft of intellectual property and also trade secrets on a grand scale.”
The election effort comes as China is emerging as a leading force in artificial intelligence and next-generation 5G mobile phone technology, and as the world’s most prolific filer of patents, accounting for nearly half of the more than 3.3 million global patents in 2018, according to WIPO figures in October.
In comparison, U.S. companies filed just under 600,000 applications, though they did file more patents 230,000 in foreign countries last year than China or any other country. The controversial Chinese telecommunications company Huawei led the way, filing applications for 5,405 patents in 2018, more than any other company.
China Enters the Game
Beijing’s Foreign Minister Wang Yi formally proposed earlier this month that Wang Binying, a Chinese national who currently serves as Deputy Director General for WIPO’s Brands and Designs Sector, succeed the agency’s Australian Director General, Francis Gurry, after he steps down in September 2020, having served for 12 years on the job. The election is scheduled to take place next March 5 and 6.
According to her CV, Wang, 66, did postgraduate work in law in the United States. She held a number of Chinese government positions, including as managing director of the China Trademark Service in the State Administration for Industry and Commerce, before joining WIPO in 1992.
Wang will compete against six other candidates: Daren Tang, Head of Singapore’s Intellectual Property Office; Kenichiro Natsume of Japan, Senior Official in WIPO’s Legal and International Affairs Department; Kazakhstan’s Saule Tlevlessova, President of the Eurasian Patent Organisation; the Ghanaian Civil Servant Edward Kwakwa, Senior Director in WIPO’s Department for Traditional Knowledge & Global Challenges; Colombia’s Marco Alemán, WIPO’s top Patent Lawyer; and Argentina’s Dámaso Pardo, the President of Argentina’s National Institute of Industrial Property.
The United States is said to favour Tang, in part because he is not a career WIPO official.
“I am convinced that Ms. WANG is the right person to serve as the Director General of WIPO,” Wang Yi wrote in a November 12 letter to the chair of the agency’s Coordination Committee, noting that she has “decades-long experience” in the intellectual property field.
“As a leading nation in innovation and intellectual property, China has been endeavouring to build its capacity in the development, application, protection and management of intellectual property and related services,” China’s top diplomat wrote in the letter.
The prospect of a Chinese leader at the organisation has rattled some U.S. policymakers, who feel that WIPO’s current Australian leader has already been too accommodating to Chinese interests, setting up a Chinese branch office in Beijing in 2014, promoting China’s Belt & Road initiative, and proposing a plan to set up a patent arbitration office in Shanghai.
In April, Gurry travelled to China for a major conference on the Belt & Road Initiative, where he signed a memorandum of understanding with the China National Intellectual Property Administration to establish Technology and Innovation Support Centres in China.
Several weeks ago, Gurry informed WIPO Member States that China had asked the agency to set up an office in the Pilot Free Trade Zone in Shanghai to arbitrate patent disputes.
“The Center would be the first non-Chinese entity providing alternative dispute resolution services for the Zone,” Gurry said. “Both of these developments will provide foreign enterprises participating in the Chinese market with an additional choice of an independent and neutral service for dispute resolution.”
But the United States pushed back, effectively killing the proposal to open a new office.
“We urge the director general to refrain from moving forward with these plans at this time,” Howard Solomon, the acting U.S. Deputy Chief of Mission at the time, responded.
But Solomon offered a warm send-off to the outgoing WIPO leader, citing “his vision and service” and the “extraordinary progress” WIPO has made under his leadership.
A WIPO official said that the agency has no current plans to open a new Shanghai office. It will, however, offer arbitration services from its Beijing office.
Gurry has forecast that China’s rise would inevitably meet resistance from the United States.
“Whenever we have seen a rise of a new competitor in the past, we have seen tensions from existing competitors,” Gurry told the Australian Financial Review last year.
“China is here as a major technological power,” he added. “Now we have a new competitor, and the game changes.”
A History of Tensions
The WIPO election provides an opportunity for the United States to repair a relationship with an agency that has been strained by allegations of improper technology transfers to nuclear and ballistic missile proliferators in North Korea and Iran, and crackdowns on whistleblowers who flagged concerns about such activities.
U.S. lawmakers raised concerns as far back as 2013 about WIPO’s sale of “high-end computers” to North Korea and Iran through a Chinese middleman at a time when the two countries were subject to U.N. Security Council sanctions.
But Australia’s ambassador to the United States at the time, Kim Beazley, dismissed the allegations against Gurry, saying that WIPO had only provided North Korea and Iran with “standard office equipment.”
The United States, which is the principal financial donor to most other U.N. agencies, has limited financial leverage over WIPO; the latter is largely self-financed, raising its operating budget through the levying of patent fees.
Brett Schaefer, a U.N. expert at the conservative Heritage Foundation, said the election of a Chinese official at the head of WIPO isn’t likely to inspire confidence. “China is consistently friendly with countries that are proliferators and sponsors of international terrorism, including North Korea and Iran,” he said. “China has also shown a propensity to clamp down on dissidents and whistleblowers.”
Safeguarding Trade Secrets
The Trump administration has sought to push back against what it sees as the downside of China’s economic rise, imposing tariffs on hundreds of billions of dollars’ worth of Chinese exports to the United States.
But it has also tried to secure commitments from China to stop stealing U.S. trade secrets and using the power of the state to orchestrate a campaign by Chinese firms to demand the transfer of vital technologies as a price for gaining access to Chinese markets.
In an effort to keep trade talks on track, China has pledged to punish intellectual property bandits and expand the range of infractions that would face criminal punishment though it’s not clear how serious or far-reaching those changes will be.
Access to the facility where the patent applications are housed has been restricted to employees of the department. Staff members are cut off from the internet while working in the secure patent facility and prohibited from taking their most sensitive work home.
For much of the organisation’s history, the department has been led by a U.S. national serving as deputy director-general. In 2012, Gurry prepared a “secret plan” to establish a patent outlet in Shanghai, Pooley, the former WIPO Deputy Director General, told the U.S. House Foreign Affairs Committee in 2016.
The plan “would involve opening one or more WIPO offices in China, where some confidential patent applications would be processed outside of Geneva for the first time,” Pooley told the House committee.
“Naturally, this involved serious operational risks, and so I organised a team to analyse and report to him on what could go wrong with that project.” Among those risks, Pooley told Foreign Policy, was the threat of hacking.
“That effectively killed the idea,” Pooley told.
Best Keep China in the Tent
Justin Hughes, a Loyola Marymount University law professor who served as a senior advisor in the Commerce Department under former President Barack Obama and as chief U.S. negotiator at WIPO, said that concern that China poses a threat to WIPO’s ability to safeguard trade secrets is overblown.
“I don’t buy that,” he said.
Companies that apply for patents don’t reveal their most treasured secrets, and the underlying information included in patent applications ultimately becomes public, he said.
The United States, he said, should welcome China’s engagement in WIPO, because it demonstrates it has become “vested in the system.” In contrast to the World Trade Organisation, where Beijing has taken a more confrontational approach to trade, China has been a more cooperative participant at WIPO.
As for any suggestion that China might be prevailing in the competition for soft power, Hughes said consider this: At least five of the seven candidates for the top WIPO job, including Wang, have been educated at U.S. universities. “How much soft power do you want?”
Still, a victory by Beijing would place a Chinese national at the head of five of the U.N.’s 15 specialised agencies. Chinese nationals currently lead the International Telecommunication Union, the International Civil Aviation Organisation, the U.N. Industrial Development Organisation, and the Food and Agriculture Organisation.
No other country, including the United States, has more than one of its own nationals in a leadership position in a specialised U.N. agency. David Malpass, who previously served as undersecretary for international affairs at the Treasury in the Trump administration, leads the World Bank.
The Chinese announcement comes just months after Beijing’s candidate, Qu Dongyu, won a crushing victory in the June 23 election to lead the Food and Agriculture Organisation, trouncing the U.S. backed Georgian candidate.
The 108 to 12 rout stunned Senior State Department Officials, who vowed to do more to avoid a repeat in the future.
“We’ve got some lessons to learn from that experience that we’re now applying to some of the other battles coming up,” David Hale, the U.S. undersecretary of state for political affairs, told a gathering of State Department officials in August.
The State Department did not respond to a request to explain whether it was taking any measures to thwart the Chinese campaign at WIPO. But China has had its share of losing.
Two years ago, a French national, Audrey Azoulay, beat out a Chinese candidate, Qian Tang, for the top job at UNESCO.
And just last week, U.N. Secretary-General António Guterres passed over a Chinese nominee, former Hong Kong Police Chief Andy Tsang for the job of Executive Director of the U.N. Office on Drugs and Crime, awarding it instead to Egypt’s Social Solidarity Minister, Fathi Waly, who developed Cairo’s National anti-drug Strategy.
So far, China, which entered the election race late in the game, has yet to mount a vigorous lobbying campaign on behalf of its WIPO candidate, leading some diplomats to speculate that they are simply playing for concessions.
The United States is still hoping that China can be convinced to withdraw from the race, if they receive assurances that they can maintain their influence at WIPO for years to come. One idea is that a New Director General would promise to reserve a senior post for a Chinese national when Wang retires. For now, China appears committed to Wang.
“Left to her own devices, Wang Binying is a good manager. Those who work for her like her, by and large,” said one former WIPO staffer.
“The problem is that she might come under very strong pressure from her government to hand over the keys, so to speak. … She may be forced into taking a pro-China approach.”