Thought Leadership on US-China Affairs and the Theft of Intellectual Property
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The US government has taken the Chinese government to task for inadequately protecting US-owned intellectual property (IP). As a member of the WTO, China is required to enforce IP rights in the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. Yet, the US Trade Representative has found China to be consistently non-compliant with the TRIPS agreement, ultimately initiating formal investigations of China's trade practices and IP rights violations.
Why would China voluntarily enter into agreements that it persistently fails to satisfy? There is little consensus in the IP literature explaining this behavior, with some researchers citing the absence of the rule of law, and others calling out US hypocrisy, since it, too, stole others' IP a century earlier. Perhaps differences between China and the West regarding their political and cultural institutions can provide insight into this inconsistency between China’s public expression of intention and its actions.
The actions of any government are influenced by both the formal institutions (statutory laws, individual rights) and informal institutions (community taboos, social customs) of the society it governs. Both sets of institutions are influenced by religious creeds, ethnic traditions or other common belief systems that have historically proven effective at attaining community benefits. IP analysts have primarily focused on critiquing China’s formal institutions that influence IP rights protection regimes, noting recent increases in both domestic patent filings and IP theft lawsuits. However, the influence of informal institutions may be driving the persistent ineffectiveness of these public actions. Disregarding the role of informal institutions and their interplay with formal institutions paints an incomplete picture of how China’s IP policies are developed and implemented over time.