KOL282 | No, China Is Not “Stealing Our I.P.”

Kinsella on Liberty Podcast, Episode 282. From Free Man Beyond the Wall, Ep. 379, with host Pete Quinones: Episode 379: No, China Is Not 'Stealing Our I.P.' w/ Stephan Kinsella Feb 19, 2020 66 Minutes Suitable for All Ages Pete invited Stephan Kinsella to return to the show. Stephan is an American intellectual property/patent attorney, author, and anarcho-capitalist. Pete asked Stephan to come on and share his opinion that China is in fact, NOT "stealing our I.P." Stephan gives a primer as to why intellectual property laws are immoral and devious and explains in detail the issue with I.P. and China. Stephan's Anti-IP Books and Articles Stephan's Articles and Speeches The Case Against I.P. 0 A Concise Guide How I.P. Hampers the Free Market The I.P. Commission USTPO and Commerce Dept. Distortions: I.P. Contributes 5 Trillion and 40 Million Jobs to the Economy The Mountain of I.P. Legislation Susan Houseman on Manufacturing - EconTalk Independent Institute on the "Benefits of Intellectual Property Link to Richard Grove's Autonomy Course TakeHumanAction.com Donate at the Libertarian Institute Pete's Link to Sign Up for the LP Lions of Liberty Podcast Pete's Patreon Pete's Books on Amazon Pete's Books Available for Crypto Pete on Facebook Pete on Twitter Below are some comments related to this topic which I sent a friend who had some questions about this issue: *** Here are my thoughts on this matter. I've been thinking about, discussing, and wrestling with these issues for many months now. I have yet to read or speak to anyone who satisfies me that they have "the whole picture" so I have been forced to work without net, mostly. First. Let's understand the basic background of American IP law--mostly, patent and copyright, but sometimes also less impactful variants such as trademark and trade secret (I would count defamation law too, but most legal scholars don't seem to see the connection). Copyright is rooted in censorship, and today is entrenched primarily in industries that think they rely on it--namely, the music and movie industry. Software is now also covered by copyright but oddly many software systems intentionally opt out of copyright through the use of various licenses. In any case, the publishing, music, and movie industry, the latter two largely based in the US, are huge lobbying forces to maintain or expand US copyright law--both domestically (such as with continual lobbying "by Disney" to keep expanding the term of US copyright, to keep Mickey Mouse from becoming public domain, such as with the Sonny Bono copyright term extension at in the 90s --to the point where copyright, originally 14 years [the term of two consecutive apprenticeships] is now life of the author plus 70 years--usually well over a century. And, they also push for the US to use its hegemony to force other companies to ratchet up their IP law to match US terms etc. Case in point: the US told Canada it couldn't participate in the TPP negotiations unless it increased its copyright terms, and Canada did so, by 20 years (in selected cases). Just for the privilege of negotiating in the TPP--which Trump nixed... Similar things have happened with patent, which originated as crown-granted protectionism. Now many industries lobby to keep patent law alive too. Most of this lobbying pressure comes from US industries or western industries, such as hollywood and music and publishing houses in the case of copyright, and pharmaceutical industries in the case of patents. Even some Cato scholars were opposing free trade with Canada a decade or so ago--namely, the "reimportation" of drugs from Canada since they are sold at a lower price there, due to Canadian government price caps, and reimporting them back into the US would undercut Big Pharma's ability to sell at a high monopoly price in the US market. The whole thing is absurd. In any case, the other background to understand, is this. Free trade is one thing; foreign direct investment is another. To have free trade between countries merely requires lowering tariffs. This has happened in fits and starts via managed trade, as you no doubt know, since WWII, including the WTO, NAFTA, and various trade agreements. One can argue whether this is good or bad. I think it's good, since it has resulted in more transnational free trade and lower overall trade barriers, since WWII, even though it's managed trade and not as free as it could be. But the point is, the alleged purpose of such agreements is to mutually lower tariffs. It's *NOT* about internal property rights policies--those are domestic matters that have little to do with international trade per se. And many of these trade agreements are in fact negotiated privately (in secret) and finally the details are released and the agreements are confirmed, as with the recent USMCA. Not in recent decades the US and other western powers have adorned these agreements with conditions like internal labor standards and environmental standards and so on, but this is just the messy business of trade negotiations. But the point is: the main purpose of trade agreements has to do with tariffs imposed by each state on the others' imports. Of course you and I prefer lower tariffs, or no tariffs, and oppose managed trade, but still. If it results in more free trade, you could argue this is an improvement. On the other hand countries have long represented their own nationals or citizens when they are treated in some ways by foreign governments--in particular, if a large western corporation invests in a developing economy, there is a danger of various forms of expropriation. I dealt with this in some books, including the one forthcoming next month from Oxford. (http://www.kinsellalaw.com/iipr/ ) Sometimes countries have have treaties with each other to deal with this issue--FCN (friendship, navigation, commerce) or other treaties, "bilateral investment treaties" (BITs), and so on. The point of these is to try to make each party (each host state) treat the other state's nationals with some minimum standards, if they do business in or invest in that state. For example a US BIT with Brazil might try to prevent Brazil from nationalizing or expropriating an Exxon refinery operating in Brazil, without due process and paying just compensation. These agreements sometimes overlap with trade agreements, but their purpose has to do with the internal property rights law of the member states. And these agreements are usually negotiated by the State Department, in the open, not secretly. There is a model BIT that the US tries to use, for example. And it is true that in many of these agreements, as with trade agreements, with NAFTA, with WTO, with the new USMCA, with the aborted TPP, and so on--various IP provisions are snuck in. In the former agreements, it's done under the guise of property rights, since the common misconception in the west is that IP rights are part of property rights. So Brazil has to respect not only Exxon's physical property rights but its trademarks etc--under the investment treaties. Under trade agreements, just as Brazil (and China etc.) are expected to agree to ratchet up their minimum wage laws, and other laws like environmental, child trafficking, and even IP law--as the price of getting a free trade deal. So I call this IP imperialism, and it's a way that both trade and investment treaties/agreements are used to slowly push US style IP law onto other countries. In the meantime, we often hear claims that China doesn't enforce IP law as well as the US does--that "piracy" is "rampant". Now China does have patent and copyright law, and agrees by virtue of various treaties, such as those mentioned above, and IP-specific ones such as IP related aspects (TRIPS) of GATT and WTO things--it has agreed to have local law respect patent and copyright law to a certain degree. This is also part of some treaties such as the Paris Convention (patents), the Patent Cooperation Treaty, the Berne copyright convention, and also the Madrid Protocol (trademarks). Now no countries enforce IP law perfectly just as drug laws are never enforced perfectly. There might be "more" "piracy" in China but China has an IP system, like the US does.  [See The Mountain of I.P. Legislation] The point here is this: when China is more lax or allows more piracy of IP law, it is NOT IP theft of US corporations; it is ONLY a violation of their own local law. I bring this up because nowadays, as a backdrop to Trump's trade negotiations with China, you will often hear complaints that "china steals US IP". I think part of this complaint simply has to do with the fact that DVD piracy etc. is more rampant in developing countries, and in fact in most non-US countries, simply b/c the system is still developing, the people are poorer, or it's becoming easier to pirate (with technology), and so on. But while international treaties and organizations like GATT/WTO are often used to try to pressure less draconian states to become more US-style draconian in their copyright and patent enforcement, in my view, as far as I can tell, this has almost nothing to do with the current trade negotiations and complaints that China is "stealing US IP". From my reading on this and discussions with people, as best I can tell, when people complain about China's stealing IP from US companies, and wanting this remedied by China in the current trade agreement talks--they are talking about something totally unrelated to "piracy" or China's copyright terms not being as long as the US terms. I think what they are talking about is "forced technology transfers." This is why I mentioned above the distinction between trade and investment agreements. The former, which is presumably what Trump is trying to negotiate with China, has to do with tariffs, with trade.