China’s lax protection of intellectual property rights cost IP-intensive companies in the United States nearly $50 billion in 2009, according to the International Trade Commission, and it may have cost the broader US economy more than twice that amount. But it often goes unmentioned that the pain actually goes both ways — hampering prospects for innovative enterprise in China, too.
This is why it was notable that Vice President Joe Biden emphasized the US and China’s mutual interest in protecting IP rights in a speech at Sichuan University during his recently concluded diplomatic trip. Lest it be overlooked, here is an excerpt:
But it’s also why we are troubled when American investors are prohibited from having wholly owned, fully owned subsidiaries of their own company in many sectors in China and excluded from sectors, entirely excluded from competing in other sectors; restrictions that no other major economy in the world imposes on us or anyone else so broadly. That’s why we have pushed Chinese officials to protect intellectual property rights. We have welcomed the Chinese State Council’s recent campaign to enforce intellectual property rights, a commitment that President Hu made when he visited and he’s keeping. But the effort must be strengthened and extended.
According to the International Trade Commission, American companies lose $48 billion a year and tens of thousands of jobs because of pirated goods and services. These protections — intellectual property protections not only benefit the United States and United States workers, United States companies, but I would argue Chinese companies, as well, as they increasingly seek to safeguard their own creations.
You’re here at this great university. It’s very much in your interest that intellectual property be protected because some of you are the future artists, the future entertainers, the future innovators who will want to be able to have a market for what you do. But if it can be acquired cheaply and pirated, why would anybody pay you for the same service?