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Thursday, October 1, 2020

Patents, Copying and IP Protection -- October 01, 2020

 




Patents, Copying and IP Protection

By LARRY ROMANOFF – October 01, 2020


 

The area of IP protection is one that deserves more international attention by voices other than American ones. American belligerence on the subject notwithstanding, IP and patents are neither a religious nor a moral issue, but are inherently a cultural matter that should never have been permitted to become so embroiled in legalism. China's pluralism makes it much more a kind of 'open-source' or 'public domain' society, while the Americans live in a black and white world where - back to Galbraith - individuals have a higher standing than does society as a whole, and where private wants and ownership are inherently superior to those of the public good. It isn't that the Chinese have no patent laws, nor that China's government or the Chinese people don't respect 'intellectual property rights'; it's just that their pluralism gives them a very different perspective of society's priorities. The Chinese have much less concern about the absolute ownership of ideas, concepts and creations, much like you telling me a humorous story and not being offended if I fail to credit your 'ownership' when repeating it to someone else. This is not a moral failing but just a different way of looking at the world, and there is no basis on which we can claim the American way is morally 'better' than anyone else's. In fact, China's approach is true of much of the world, mostly the parts that are not politically Right-Wing and embroiled in Christianity.

 

In China, when someone sets about commercialising a new product, many other people may be taken with the idea and do the same, and in the resulting flurry of activity we have true competition, rapid evolution of ideas and products, and the greatest resulting social good. To the extent there is any social utility in the creation, it will have been expanded to the maximum by virtue of the Chinese system, and society as a whole will derive the most benefit. The first attempt in the invention of any new item will almost certainly be primitive and not fully formed. It is precisely at this stage that the thoughts and ideas of many others can contribute to a desirably short evolutionary process, creating a multitude of improvements that would never otherwise occur, as we saw when PC architecture became open-source.

 

In 2012, the Atlantic magazine reported on a group that called itself DIY Drones, which was an online community of individuals working without pay in their spare time, and who produced a UAV that possessed 90% of the functionality of the US military's $35,000 Raven drone, but which could be produced for $300. The article ended by noting that this result was typical for open-sourced projects that were not limited by the multiple self-serving restrictions and legalities of the American individualistic IP and patent system.

 

And this development is precisely what the American system now prevents. In the American way, nobody benefits except the one person who created the original because the focus is on the individual rather than on society or the overall good of the nation. American claims about fierce IP protection fostering creativity and competition or creating the highest good, are complete rubbish belied by all the facts. We need only open our eyes and look. This is just one more example of the utopia syndrome in action, where false ideals are substituted for reality.

 

Americans obtain patents, copyrights and registration not only for an original idea, but have also succeeded in patenting what they call the "look and feel" of an item. Consider a hammer: to be effective and useful, this tool can have only one 'look and feel'; if the look and feel is totally different to escape a claim of patent infringement, it will also be useless. In the US system, if an American were to patent a hammer and its look and feel, no other person would be able to design or produce any kind of hammer without paying extortionate royalty fees to the inventor. How does this fit with the American claim that their brutal pursuit of IP protection is for the purpose of fostering competition and innovation? In fact, it prohibits all competition and terminates innovation. How can it be otherwise? The same pattern is true for all American patents and inventions, and the claims of high-sounding morality are just rubbish propaganda and 180 degrees from the facts. If you think my claim too strongly-worded, please explain to me the benefits to society and the encouragement for innovation and competition when the US system permits Apple to patent "a rectangle with rounded corners".

 

 Chinese society, by contrast, is much more about the group, the family, the community, society and the nation, and it is difficult to argue that this is not the best way. Why should the interests of one individual take precedence over those of the community or of society as a whole? American individualism is ideology and religion, not a law of the universe. There is no valid moral or philosophical argument to support this American position of the supremacy of the individual, and their belief in it does not make it true. By contrast, it is very easy to argue that the reverse should be true - that the interests of society will almost always trump those of the individual. This means China must develop its own laws relating to things like patents and copyrights which accurately reflect the culture and traditions of China and its people. Regardless of the forceful US political push, it would be senseless and a betrayal for China to relent to US pressure and duplicate US IP laws. Those laws were created for, and enacted by, Americans, according to their society and supremacist ideology, and no valid reason exists for these laws to be promulgated worldwide. It is really only recently that China began to enact copyright and patent legislation, not because China is backward but because the matter was not so important to the Chinese as to Americans. The US complains that IP is not adhered to as rigorously in China as it would like, and superficially that may be true but the reasons are worth examining and understanding. The current heated IP environment has been fostered by the extremism in both American society and US-style capitalism, further stoked by US delusions of world domination of the entire IP universe. This is a case where once again the Americans are attempting to choose the game everyone will play, then set all the rules and determine how the score will be kept.

 

The proposed universal extension of US copyright law to all nations is not to protect a nation's domestic creativity, but only to serve the interests of deep-pocketed European bankers and their large corporations who will use each nation's courts to stifle innovation and eliminate competition. Individual designers, writers and inventors rarely can enforce copyrights or patents, and are at the mercy of the large multi-nationals. US laws on patents and copyrights are very different from those in most nations and are used mostly as weapons to prevent competition from new players, and indeed we have seen many instances in China where American firms have abused their rights to extort money from, or gain power over, smaller domestic competitors. While large companies with big legal teams can (and do) patent even trivial innovations, small companies struggle to contend with the legal fees, procedures and other roadblocks even for major inventions. And even then, the large players will either kill the innovation outright or force a sale. Again, this is not fostering creativity and competition, but domination. These large firms often attempt to create a kind of defensive wall around a useful discovery by filing for hundreds of patents on every tiny part of a product to prevent anyone from even attempting further development. If Apple were a car manufacturer, they would sue other firms for having round steering wheels. And in fact, Apple did almost precisely that. They obtained a US patent on "a rectangle with rounded corners", then sued Samsung for violating their "invention" and IP. In spite of all the American propaganda to the contrary, this process serves only to eliminate innovation and competition, not to encourage it.

 

Patents were originally granted to a designer or inventor to give him a short time to profit from his creation, either by commercialising it himself or by selling his rights to other parties. The protection under these patents was granted for only three years, and even then only for products that were deemed to be "of social value". The creation of yet another shampoo had no protection at all. Those original stipulations make a great deal of sense even today. We can argue that an inventor should be given a bit of time to profit from his handiwork only if his invention is useful to society. Most 'new' products today are not. Patents were never intended to perpetuate royalties for Barbie's plastic breasts or to permit the US-based courier UPS to have perpetual legal protection for the charming excrement color of UPS delivery trucks. Copyrights to written or artistic material are essentially the same, and in the US this has been carried to a ridiculous extreme, to the point where Disney has had its copyrights extended for what I believe will total some 120 years, but if Disney didn't milk enough money from the world's bank accounts in the first 60 years of "protection", I see little justification for giving them yet another 60 years to continue trying. And in any case, how does giving an additional 60-year copyright to a dead man encourage competition or innovation? American ideology tells us that US patents and copyrights are necessary and valuable because they protect the originator of a work and encourage competition and innovation. Both claims are false. The only purpose of American patent and copyright ideology is to ensure that no competition ever occurs, stifling product evolution in the process. As with almost everything else, the Americans never know when to stop, and obsessively push things to a ridiculous extreme.

 

Most people are aware that the Mattel Corporation owns the 'Barbie' brand of dolls. A few years ago in Canada a young woman named Barbie opened a small clothing shop named "Barbie's Store". The honeymoon was a short one. The shop had barely opened before a swarm of Mattel's lawyers swooped on this unsuspecting young woman with enough lawsuits to terrify Attila the Hun, and enough potential expense to intimidate the Bank of England. Fortunately for Barbie (the live one), a Canadian court threw out Mattel's claims of IP theft, brand infringement, loss of income and value, etc., and awarded the real Barbie recovery of her court costs for what was seen as a vicious and unjustified intimidation example of US corporate terrorism. These examples are common and not all end happily, but we need to ask where was Mattel's devotion to competition and to increasing innovation and creativity?

 

MNC's are often surprisingly belligerent in defending their copyrights or logos even when no apparent damage exists, and are altogether vicious in even small instances of actual infringement. It's primarily the Americans and companies from a few politically Right-Wing countries who have this rather savage approach to intimidating competitors while flying a flag of morality. Disney is one of the worst for pursuing anything it imagines as a violation of its IP. One thing people need to know about the Disney Company and its executives is that the nice man who draws the cute Bambi cartoons is not the same rotten son of a bitch who calls the lawyers when you appear to have copied one of those cartoons. But not all humans are American. In early 2014, a Chinese father produced an accurate scale model of a Lamborghini for his 6-year-old son to drive. Lamborghini said they were flattered and had no intention of prosecuting the man, even though his work was technically an IP violation.

 

Copying is not sinister, immoral or evil, but simply part of a natural human process with stages that almost every individual, company and nation will experience. Consider this:

 

Let's assume I have a supply of good clay and want to make teapots. My first attempts will most likely be amateurish and primitive, and quite possibly pathetic. As I persist, it readily occurs to me that my task would be much easier if I had a model to work from. I therefore find a teapot, or a photo of one, and attempt to reproduce whatever is represented by my model. I am copying. Eventually, I acquire enough skill and know-how to repeatedly duplicate this one item in acceptable fashion. I then proceed to other models - copying again - and acquire more knowledge, skill and know-how, until I eventually master the processes from initial design to forming, and from firing to glazing. At some point in this process, I begin to lose interest in copying things others have made. I now have sufficient skill and confidence to step out independently and begin to create my own designs and perhaps to even refine methods and materials. I may even discover something new. I am now a master in my own right and no longer have need to look elsewhere for ideas or designs. If we think about it, this is what we all do, with each new thing we try. We look to see what others have done before us, and attempt to duplicate their actions or results. This is neither immoral nor deserving of admonishment; it is a perfectly human process. And when we eventually acquire sufficient skill to become creative and innovative, there is nothing especially moral or praiseworthy in our actions. It is simply part of the process.

 

And let's be realistic. Some copying is harmless, and some is not. The young girls who buy the $5 pink Gucci wallet made of 'real leather' are not prospective Gucci customers, at least not today. They would not, and could not, purchase the genuine items anyway, so Gucci is not losing any sales. And one could argue that this is little more than one kind of free advertising for Gucci. And yes, it's wrong to use the name, but in the overall scheme of things the amount of harm done is exceedingly close to zero. On the other hand, to copy another person's work down to the last fine detail and attempt to pass it off as a genuine item, is another matter involving the legal definition of fraud.

 

In early 2013 the China Daily carried an article on innovation in which the writer claimed that despite leading the world in patent applications, China was still far from being an innovative country. Shanghai's IPR College claimed that only by increasing what it called "the technology transfer rate", the frequency with which academic research can produce inventions that succeed in the commercial marketplace, can China stake its claim as "a creative country". An official of China's State Intellectual Property Office said that the growth in patents proved that Chinese were paying more attention to intellectual property and used this as evidence of China "making great strides toward becoming an innovative economy". All of these statements are untrue and unfair, reflecting not an understanding of creativity and innovation but merely pollution from American propaganda and so-called values.

 

The so-called “technology transfer rate” is a Jewish-American disease that should not be permitted to infect China. A university exists to educate our young people in important aspects of knowledge and life; it is not an incubator for corporate profits. Philosophy and logic, culture and history, languages and humanity, have disappeared almost entirely from American universities because of this disease. China cannot betray its own people by following the Americans in a race for profitable patents.

 

It is disturbing to watch the progress Americans are making in inflicting their warped capitalist values onto Chinese society. It is the US that concocted the idea of using academia for commercial and military research, with both the large multi-nationals and the military extensively funding university research departments and projects, but this thrust had little to do with a desire for creativity or innovation. It was primarily a drive to discover new weapons of mass destruction, nothing more. I have described elsewhere the fact that MIT was created entirely for the purpose of military research and for most of its life was funded almost entirely by the US military. And it is only the US that has perverted its institutions of higher learning into mere incubators of commerce, whose major purpose today is not to educate but to groom unwitting students into priests for Goldman Sachs and missionaries of predatory capitalism. There is nothing here about creativity or innovation within the common meaning of these terms. Innovation in the US today is a badly-perverted concept.

 

There are probably thousands of ways to measure creativity and innovation. Patent application numbers are far from being the most important metric, and many of humanity's most important discoveries cannot be patented. The irrational focus on patents is due entirely to the intense US pursuit for legal control and domination of industry sectors, evidenced by their determination to patent everything including the human genome and extending their copyrights to 100 years. This is not about innovation; it is about domination. It is true that China must patent its discoveries in all areas, perhaps especially in Traditional Chinese Medicine, not from a drive for innovation but to protect China from the predation of American and other firms. This is not creativity, but self-defense. And self-defense is necessary because the Americans have become crazy, to the point where they are attempting to patent the human genome. Each time they decipher a portion of the DNA code, they try to patent it so no one in the entire world will ever be able to do anything genetic without paying royalties to either the bankers or their MNCs. The medical profession used to share widely all information on new methods of treatment or surgery, but no more. The Americans are now patenting hospital operations and their methods, with the intent that if a surgeon anywhere in the world wants to perform an operation he will have to obtain permission and pay royalties to some banker or hedge fund.

 

The above article went on to say that while Huawei led China in the number of new patents it failed to make Reuters' list of the top 100 global innovators because all the measurement criteria were patent-related, including the "influence" of one's patents evidenced by their being cited in journals and "the global reach" of one's patent portfolio. This is hardly surprising. It is just one more case of the US moving the goalposts and revising the scoring system to ensure they win the game. When the US was leading the patent game, the metric was numbers of patents; when China surpassed the US on this metric, the Americans quickly moved to much less measurable nonsense metrics like the "influence" of patents and their "global reach", and the number of times a patent was cited in some (American) publication. And of course the Americans continually adjust the meanings and definitions of these terms to ensure they win the game.

 

Again, it is true that China must, entirely for reasons of self-defense, patent everything within reach, because the Americans with their new TPP are effectively declaring war on the world and exercising an intense determination to force the entire globe to accept US supremacy in the definition and control of intellectual property. But the Americans are not the whole world; they are only 4% of it, and both their ambitions and greed need to be resisted. The worst thing China can do is agree to play a game where the rules are so one-sided that the opponent is virtually assured of victory. But self-defense is not innovation and patents are more about control than about creativity.

 

The above article also stated that of the millions of patent invention applications filed in China during the past 25 years, about 40% were filed by foreign multinationals and only about 30% from Chinese firms. And this is a much more important place to focus attention than on adopting American values or playing the US innovation game. Chinese individuals, especially those involved in research, should make every effort to ensure that their work and the eventual benefits of their work will flow to Chinese firms and to the overall benefit of China. China absolutely cannot afford to have its best and brightest individuals invest their future in producing inventions that US firms will then use to take advantage of China.

 

In recent news reports, officials of the (US-created) World Intellectual Property Organization and the UN stated that China was "moving in the right direction" by agreeing to establish dedicated courts to resolve IP conflict cases, stating that this would "promote the protection of intellectual property throughout the world", a claim that is largely nonsense. Whenever praise emanates from the West, it is a sure sign that the person or country being praised is in the process of making a big mistake. Every nation has provisions in place to protect those elements of IP they believe are important, but they apply these provisions to themselves only. What is happening now, and the reason the US has a problem with the world in the area of IP protection, is that it is attempting to force its rules, values and system, including these dedicated courts, onto an entire planet that doesn't want them. The US is attempting to bully every other nation into accepting a system of rules designed solely for its own benefit. It would be tragically naive for anyone to believe American claims that their methods reflect what AmCham is so fond of referring to as "best practices". In fact, these practices have been shrewdly designed to entrench the US and its commercial enterprises in a position of supremacy to the detriment of every other nation.

 

And it isn't only the simple matter of establishing a court dedicated to a single purpose. The Americans are already hammering officials in many parts of China's governments and agencies to accept US values and parameters for the rules and methods of operation of these IP courts, to ensure that judgments will be made according to American preferences and 'values' and that the final advantage will always accrue to American firms. It shouldn't be necessary to state that the Americans should be firmly excluded from playing any part in the design of these courts because their input will in no way reflect any "best practices" that would be to China's benefit. The reason the Americans are now so intensely bullying Asia-Pacific nations to sign the IP portion of their TPP is that they hope to have irrevocable agreements in place before these nations realise the extent to which they have signed over their sovereignty to American multi-national firms. From what I can see today, the dangers of dealing with the Americans on any aspect of IP are still not all in the clear. There is still much of their intent that is hidden, and any decision regarding IP, including the dedicated courts, should be delayed until all is in the open.

 

Today, the entire American drama about IP is just a cheap attempt to export US so-called "rule of law" as part of a colonisation process, looking to force a foreign ideology onto other nations and to achieve cultural and commercial domination through the use of intellectual property rights. And it does so while continuing to conduct both state and corporate sponsored industrial espionage on a grand scale, certainly the largest scale in the world. These American colonisation efforts are disastrous because they often force weaker states to abandon the industrial and agricultural policies necessary for their own development, while the US continues to heavily support its own agriculture and industry at home. The US uses economic, military and political coercion to enforce a uniform commercial ideology that will ensure the perpetuation of economic dependence and poverty in other nations.

 

In one of the many efforts to denigrate China and perhaps also in an attempt to derail China's progress, the European Chamber of Commerce in China - no doubt as a favor to their good friend AmCham - produced a report trashing China's patent progress. From this study, we learn that China's desire to move from a "made in China" to "designed in China" economic model "will curtail innovation standards", meaning that the more new things you invent and patent, the less innovative you are, and that China should really forget about designing and stick to making. The study further dismissed China's success as "overhyped", claiming that the country's patent applications have come with a price in quality, the Chamber having defined many of China's patents as mere "utility models" or "incremental developments that can advance an existing product but rarely result in technological breakthroughs". European Chamber Secretary-General Dirk Moens moaned with disappointment that "This is not in the right direction." The study further informed us that one cannot drive or force creativity, but only nurture it", suggesting that China should back off its drive to discover and patent new ideas and shift from "innovation" mode to "nurture" mode. Of course, the volume of China's patents might fall to zero, but then that's the plan. And in any case, it is the Americans who specialise in the so-called "utility" patents, which is how they create their defensive walls of hundreds of patents surrounding every useful product in attempts to forestall any evolutionary development without the collection of exorbitant fees.

 

But then, another gentleman, Elliot Papageorgiou, an intellectual property expert at Rouse Legal in Shanghai, permitted a bit of sunshine into this room when he said that utility model patents were good for China. "In developing economies, you're not going to get a new wheel, you're going to get an improved or cheaper wheel." And that is precisely correct. The entire business of inventiveness and the eventual appearance of patent applications, like so many other things, is simply part of the process of development of a nation. At different stages of development, nations exhibit different characteristics appropriate to that stage and it is both ignorant and foolish to directly compare two nations at different stages, and especially to assess moral judgments. Comparing China today to the US or Germany today is silly; comparing China today to the US 50 or 75 years ago might be appropriate. National development is a process, not an event. Someone needs to tell Dirk Moens.

 

We have also seen floods of accusations in the US media about China "stealing" American IP. This multitude of articles is always long on claims but surprisingly short on facts. Indeed, I have yet to see a valid case where the Government of China or one of its agencies "stole" IP or anything else. So "China" isn't stealing anything from anybody, and it isn't China's NSA so heavily engaged in industrial espionage. It may be true that some Chinese companies have illegally or otherwise copied US products or technology, but then this happens constantly within the US itself, witnessed by the steady stream of claims and lawsuits about IP infringement. In fact, the only reason Microsoft is alive today is because Bill Gates stole the 'Windows' concept as well as the mouse, from Apple, and had sufficient financial resources and political connections to eventually get away with it. The moral outrage exhibited serves to make good theatre, but most cases are based on legal opinions in which courts could easily decide in favor of either party. In most cases, these are not moral issues or criminal ones, but questions of interpretation of contract wording and application of civil law. All multi-national companies copy each other by studying each other's patents and publications and look for loopholes to justify copying, and not always legally. They see no shame in this, and do it routinely, which is why most patents and products are virtual duplicates of each other.

 

Regarding inventions and innovations, China has been forced to do its own research and make its own innovations in key areas since about 1950 because of a US-engineered international boycott on almost all useful products and processes. China accomplished all its rocketry and space technology, its nuclear ability and so much more, not only independently but beginning from a third-world industrial base. Today, with its science and technological base so much more advanced, and with its increasing emphasis and expenditures on R&D, China will produce many more inventions and innovations. And it should be pointed out that these successes have been accomplished independently of 'freedom' or 'democracy', which in any case contributed nothing whatever to Western inventions.

 

In any case, a single Chinese firm committing an offense is not a valid reason to condemn the entire nation as the Western media are so fond of doing. It also should be said that Chinese firms are also victims of these same acts by American firms, the only difference being that the US media suppress the information and Americans hear only one side of a two-sided story. We also hear many reports that China fails to protect the IP of American firms, permitting Chinese companies to freely copy American IP. But these reports are often flame-baiting, intended to mislead readers, because China's domestic IP system provides protection only if that IP has actually been registered in China. In many cases, foreign companies have failed to register their patents or copyrights and cannot therefore claim infractions or violations. The media neglect to tell us that the US doesn't recognise foreign patents either.


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Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai's Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He can be contacted at: 2186604556@qq.com

 

Larry Romanoff is one of the contributing authors to Cynthia McKinney's new COVID-19 anthology ''When China Sneezes''.




Copyright © Larry RomanoffMoon of Shanghai, 2020