That turns both advantages – they’ll drain US innovation capacity, AND steal US IP through the disclosure process
Charles Duan, 2023 – Adjunct Professor, Assistant Professor (starting fall 2023) and senior policy fellow with the Program on Information Justice and Intellectual Property, American University Washington College of Law; Postdoctoral Fellow, Cornell Tech; member of the Patent Public Advisory Committee, U.S. Patent and Trademark Office. Testimony Before the Subcommittee on Courts, Intellectual Property, and the Internet of the Committee on the Judiciary U.S. House of Representatives “INTELLECTUAL PROPERTY AND STRATEGIC COMPETITION WITH CHINA PART I”, 3/8, https://judiciary.house.gov/sites/evo-subsites/republicans-judiciary.house.gov/files/evo-media-document/duan-testimony.pdf //DH
Besides complicating American companies' freedom-to-operate determinations, Chinese-held U.S. patents could be directly asserted against American companies, tying them up in potentially years of costly litigation. The Chinese telecommunications giant Huawei, for example, is reportedly the fourth most prolific patenting company in the United States, receiving 2,836 U.S. patents in 2022 alone.29 In 2020, Huawei sued Verizon for infringement of several telecommunications patents; that lawsuit followed a 2016 suit against T-Mobile US.30
Huawei has close ties with the Chinese government,31 and the idea that a national government might sponsor or coordinate patent litigation against American firms is not farfetched. Countries including France, Japan, and South Korea have established "sovereign patent funds" intended to aggregate and often monetize a country's patents around the world.32 State-sponsored entities such as Australia's Commonwealth Scientific and Industrial Research Organisation have vigorously asserted patents against American companies.33 And the U.S. Chamber of Commerce has warned about the possibility that China could use a sovereign wealth fund to instigate a "suit against an American company in a sensitive industry such as military technology," and thereby obtain "highly confidential documents containing proprietary information regarding sensitive technologies" through the ordinary and compulsory discovery processes of litigation.34
To be clear, the holder of a valid U.S. patent has and ought to have a right to assert that patent against infringers in the United States, regardless of the patent holder's nationality. The concern here is that state-sponsored entities could strategically take advantage of the costs and procedures of protracted litigation to the detriment of American firms, regardless of the merits of the underlying patents in suit.35 Given the wave of low-quality patent applications already present as discussed above, that concern is especially potent.