Allegations of intellectual property theft by China

Last updated

China is regularly accused by the United States and several other nations of state-organized economic espionage and theft of intellectual property, in violation of international trade agreements.[ vague ] The espionage and theft would not be limited to business, but also include academia [1] and government. [2] The Ministry of State Security (MSS), united front groups, and their affiliates have been reported as frequent perpetrators of such theft. [3] [4] China has repeatedly and vigorously denied the allegations, stating that Western companies willingly transfer technology to get access to China's market. China however also state they are taking steps to address the concerns. [5] In 2019, China banned forced technology transfers [6] via the Foreign Investment Law. [7] : 108 

Contents

Overview

According to Derek Scissors of the American Enterprise Institute, Chinese firms have been able to spend more on production, undercutting the prices of global competitors, by leapfrogging the often costly research and development phase through intellectual property theft. [8] According to James Lewis, senior vice president and director of the Center for Strategic and International Studies’ Technology Policy Program, "Chinese policy is to extract technologies from Western companies; use subsidies and nontariff barriers to competition to build national champions; and then create a protected domestic market for these champions to give them an advantage as they compete globally". [9] After acquiring intellectual property, Chinese government subsidies and regulations helps Chinese companies secure market shares in the global markets at the expense of the U.S. [8]

Japanese and European rail businesses have, for example, stated that Chinese rail companies used technology from shared ventures to become big in high-speed rail. [10] Another example is in wind power, where Spanish wind power producer Gamesa was required to manufacture parts using Chinese domestic producers; within years, the same manufacturers produced parts for domestic producers who soon eclipsed Gamesa through favorable loans and support. [5] Besides recruiting foreign employees to share trade secrets, another method involves cyber espionage and hacking. [9] One of the methods involves massive, broad hacks, such as 2021 Microsoft Exchange Server data breach, before sifting through the acquired data in search of valuable information. According to Microsoft, the large-scale hack was probably sponsored by the Chinese government. [11]

According to William Schneider Jr., "China has institutionalized a system that combines legal and illegal means of technology acquisition from abroad". [2] The issue is not limited to the United States, but is also reported in Europe, [12] and according to William Evanina, director of the National Counterintelligence and Security Center, China directs similar efforts towards other NATO members. [9] According to CNN, some U.S. officials and analysts have pointed to China's Made in China 2025 plan as "a rubric for the types of companies whose data Chinese hackers have targeted". [13]

In 2015, Chinese President Xi Jinping and U.S. President Barack Obama had agreed neither government would "conduct or knowingly support cyber-enabled theft of intellectual property". [13] This led to an 18-month decrease in Chinese hacking, ending with the increased trade conflicts under the Trump administration. [14]

According to Adam Meyers, working for the cyber-security firm CrowdStrike, China's campaign of global cyber-espionage has increasingly targeted big repositories of data, like internet or telecom service providers, making it "more difficult to really pinpoint that they were doing economic espionage". [13] Co-founder of CrowdStrike, Dmitri Alperovitch, stated in 2018 that China appeared to have ramped up its intellectual property espionage, after a decrease during the end of the Obama administration. According to Alperovitch, there has been an increase in hacks by China's Ministry of State Security, which he considers more skilled than the People's Liberation Army, which previously stood for most of the hacking. [15] This shift from the PLA to the Ministry of State Security, as well as an increase in sophistication, has also been noted by U.S. intelligence officials. [14]

A congressional estimate in the U.S. placed the cost of Chinese intellectual property theft at 225–600 billion dollars yearly. [12] According to a CNBC survey, 1 in 5 corporations say China has stolen intellectual property within the previous year, while 1 in 3 said it had happened some times during the previous century. [16] In 2020, FBI director Christopher Wray claimed Chinese economic espionage amounted to one of the largest transfers of wealth in human history. [12] According to CBS, Chinese state-actor APT 41 has conducted a cyber operation spanning years, stealing intellectual property worth trillions of dollars from about 30 multinational companies. [17]

Hacking allegations

According to the New York Times, China's hacking campaigns first came to prominence in 2010, with attacks on Google and RSA Security, then later with a 2013 hack on the New York Times itself. [14]

A 2018 report by the Australian Strategic Policy Institute, looking at incidents from Germany, Australia and the United States, including the Rio Tinto hack, stated that China was likely to be in breach of its bilateral cyber espionage agreements. [18] According to professor Greg Austin, from UNSW Canberra Cyber, the more concerning problem is not intellectual property espionage, which he believes is also practiced by the United States, but Chinese laws pressuring foreign corporations in China to hand over intellectual property. "That's a practice that Australia needs to pay more attention to, not the almost unstoppable practice of Chinese government theft of commercial secrets through espionage". [18]

In 2022, the security firm Cybereason announced it had discovered Chinese government-linked hackers targeting sensitive data from over thirty technology and manufacturing firms in Asia, Europe and the United States since 2019. The Chinese embassy in Washington denied the allegations. [13] The attacks were linked to the Winnti group, and is alleged by Cybereason to have seized hundreds of gigabytes of "sensitive documents, blueprints, diagrams, formulas, and manufacturing-related proprietary data". [19]

Responses

Chinese enforcement efforts and litigation

The number of IP cases prosecuted criminally in Chinese courts has been on a significant upward trend from 2005 to 2015, [20] suggesting tougher enforcement of IP laws. [6]

According to academic Scott M. Moore, Foreign firms have been increasingly successful in litigating patent infringement suits in China, winning approximately 70% of the time in the period 2006 to 2011, and rising to approximately 80% in the late 2010s. [6]

A joint China-United States customs action in 2017 uncovered 1600 instances of intellectual property theft in goods exported to the United States. China's customs office issued a statement saying it would "actively promote increased cooperation with customs administrations of all countries and regions to jointly fight and comprehensively manage" intellectual property rights. [21]

In 2019, China adopted new Foreign Investment Law banning forced technology transfers. [6]

Despite making efforts in intellectual property protection in China, a major obstacle in prosecution is corruption in courts; local protectionism and political influence prohibits effective enforcement of intellectual property laws. [22] To help overcome local corruption, China established specialized IP courts and sharply increased financial penalties. [6]

U.S. enforcement efforts and litigation

Intellectual property theft was one of the reasons behind the China–United States trade war. [23] [12] [24]

In 2019, University of California, Santa Barbara sued Walmart, Amazon, IKEA, Bed Bath & Beyond and Target for selling Chinese-made light-bulbs using illegally acquired patented U.S. technology. [25]

In 2020, Huawei was indicted on charges of a decade-long operation to steal U.S. trade secrets, with the U.S. Justice Department stating Huawei has a "long-running practice of using fraud and deception to misappropriate sophisticated technology from US counterparts". [26]

After the Equifax breach, U.S. Attorney General William Barr stated "Unfortunately, the Equifax hack fits a disturbing and unacceptable pattern of state-sponsored computer intrusions and thefts by China and its citizens that have targeted personally identifiable information, trade secrets, and other confidential information". [9] Deputy director of the FBI, Paul Abbate, alleged in 2022 that China runs "a massive, sophisticated cyber theft program", and that it "conducts more cyber intrusions than all other nations in the world combined." [13]

The FBI had more than 1,000 cases of intellectual property theft involving individuals associated with the People's Republic of China open in 2020. [9] According to Christopher Wray, the FBI opens a new Chinese counterintelligence investigation every 12 hours. [17] According to the U.S. Department of Justice, 80 percent of its economic espionage cases involve the People's Republic of China. [8]

See also

Related Research Articles

<span class="mw-page-title-main">Industrial espionage</span> Use of espionage for commercial purposes rather than security

Industrial espionage, economic espionage, corporate spying, or corporate espionage is a form of espionage conducted for commercial purposes instead of purely national security.

<span class="mw-page-title-main">Economic Espionage Act of 1996</span>

The Economic Espionage Act of 1996 was a 6 title Act of Congress dealing with a wide range of issues, including not only industrial espionage, but the insanity defense, matters regarding the Boys & Girls Clubs of America, requirements for presentence investigation reports, and the United States Sentencing Commission reports regarding encryption or scrambling technology, and other technical and minor amendments.

The Government of China is engaged in espionage overseas, directed through diverse methods via the Ministry of State Security (MSS), the Ministry of Public Security (MPS), the United Front Work Department (UFWD), People's Liberation Army (PLA) via its Intelligence Bureau of the Joint Staff Department, and numerous front organizations and state-owned enterprises. It employs a variety of tactics including cyber espionage to gain access to sensitive information remotely, signals intelligence, human intelligence as well as influence operations through united front activity targeting overseas Chinese communities and associations. The Chinese government is also engaged in industrial espionage aimed at gathering information and technology to bolster its economy, as well as transnational repression of dissidents abroad such as supporters of the Tibetan independence movement and Uyghurs as well as the Taiwan independence movement, the Hong Kong independence movement, Falun Gong, pro-democracy activists, and other critics of the Chinese Communist Party (CCP). The United States alleges that the degree of intelligence activity is unprecedented in its assertiveness and engagement in multiple host countries, particularly the United States, to which various US officials contend economic damages, prosperity and stolen innovations have resulted in $US320-445 billion annually since its inception and activities.

Technical Intelligence (TECHINT) is intelligence about weapons and equipment used by the armed forces of foreign nations. The related term, scientific and technical intelligence, addresses information collected or analyzed about the broad range of foreign science, technology, and weapon systems.

Operation Aurora was a series of cyber attacks conducted by advanced persistent threats such as the Elderwood Group based in Beijing, China, with ties to the People's Liberation Army. First publicly disclosed by Google on January 12, 2010, in a blog post, the attacks began in mid-2009 and continued through December 2009.

An advanced persistent threat (APT) is a stealthy threat actor, typically a state or state-sponsored group, which gains unauthorized access to a computer network and remains undetected for an extended period. In recent times, the term may also refer to non-state-sponsored groups conducting large-scale targeted intrusions for specific goals.

<span class="mw-page-title-main">Chinese espionage in the United States</span>

The United States has often accused the government of China of attempting to unlawfully acquire U.S. military technology and classified information as well as trade secrets of U.S. companies in order to support China's long-term military and commercial development. Chinese government agencies and affiliated personnel have been accused of using a number of methods to obtain U.S. technology, including espionage, exploitation of commercial entities, and a network of scientific, academic and business contacts. Prominent espionage cases include Larry Wu-tai Chin, Katrina Leung, Gwo-Bao Min, Chi Mak and Peter Lee. The Ministry of State Security (MSS) maintains a bureau dedicated to espionage against the United States, the United States Bureau.

Cyberwarfare is the use of computer technology to disrupt the activities of a state or organization, especially the deliberate attacking of information systems for strategic or military purposes. As a major developed economy, the United States is highly dependent on the Internet and therefore greatly exposed to cyber attacks. At the same time, the United States has substantial capabilities in both defense and power projection thanks to comparatively advanced technology and a large military budget. Cyber warfare presents a growing threat to physical systems and infrastructures that are linked to the internet. Malicious hacking from domestic or foreign enemies remains a constant threat to the United States. In response to these growing threats, the United States has developed significant cyber capabilities.

Cyberwarfare by China is the aggregate of all combative activities in the cyberspace which are taken by organs of the People's Republic of China, including affiliated advanced persistent threat groups, against other countries.

There is no commonly agreed single definition of “cybercrime”. It refers to illegal internet-mediated activities that often take place in global electronic networks. Cybercrime is "international" or "transnational" – there are ‘no cyber-borders between countries'. International cybercrimes often challenge the effectiveness of domestic and international law, and law enforcement. Because existing laws in many countries are not tailored to deal with cybercrime, criminals increasingly conduct crimes on the Internet in order to take advantages of the less severe punishments or difficulties of being traced.

A cyberattack is any offensive maneuver that targets computer information systems, computer networks, infrastructures, personal computer devices, or smartphones. An attacker is a person or process that attempts to access data, functions, or other restricted areas of the system without authorization, potentially with malicious intent. Depending on the context, cyberattacks can be part of cyber warfare or cyberterrorism. A cyberattack can be employed by sovereign states, individuals, groups, societies or organizations and it may originate from an anonymous source. A product that facilitates a cyberattack is sometimes called a cyber weapon. Cyberattacks have increased over the last few years. A well-known example of a cyberattack is a distributed denial of service attack (DDoS).

<span class="mw-page-title-main">PLA Unit 61398</span> Chinese advanced persistent threat unit

PLA Unit 61398 is the Military Unit Cover Designator (MUCD) of a People's Liberation Army advanced persistent threat unit that has been alleged to be a source of Chinese computer hacking attacks. The unit is stationed in Pudong, Shanghai.

PLA Unit 61486 is a People's Liberation Army unit dedicated to cyberattacks on American, Japanese, and European corporations focused on satellite and communications technology. It is a unit that takes part in China's campaign to steal trade and military secrets from foreign targets.

Cozy Bear, classified by the United States federal government as advanced persistent threat APT29, is a Russian hacker group believed to be associated with one or more intelligence agencies of Russia. The Dutch General Intelligence and Security Service (AIVD) deduced from security camera footage that it is led by the Russian Foreign Intelligence Service (SVR), a view shared by the United States. Cybersecurity firm CrowdStrike also previously suggested that it may be associated with either the Russian Federal Security Service (FSB) or SVR. The group has been given various nicknames by other cybersecurity firms, including CozyCar, CozyDuke, Dark Halo, The Dukes, Midnight Blizzard, NOBELIUM, Office Monkeys, StellarParticle, UNC2452, and YTTRIUM.

Cyber spying on universities is the practice of obtaining secrets and information without the permission and knowledge of the university through its information technology system. Universities in the United Kingdom, including Oxford and Cambridge, have been targets, as have institutions in the US and Australia.

Red Apollo is a Chinese state-sponsored cyberespionage group which has operated since 2006. In a 2018 indictment, the United States Department of Justice attributed the group to the Tianjin State Security Bureau of the Ministry of State Security.

Charming Kitten, also called APT35, Phosphorus or Mint Sandstorm, Ajax Security, and NewsBeef, is an Iranian government cyberwarfare group, described by several companies and government officials as an advanced persistent threat.

Double Dragon is a hacking organization with alleged ties to the Chinese Ministry of State Security (MSS). Classified as an advanced persistent threat, the organization was named by the United States Department of Justice in September 2020 in relation to charges brought against five Chinese and two Malaysian nationals for allegedly compromising more than 100 companies around the world.

References

  1. ↑ Kolata, Gina (4 November 2019). "Vast Dragnet Targets Theft of Biomedical Secrets for China". New York Times. Archived from the original on 4 November 2019. Retrieved 26 May 2022.
  2. 1 2 Magnusson, Stew (22 November 2019). "Expert Details What China Does After Stealing IP". National Defense. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  3. ↑ Perlroth, Nicole (2021-07-19). "How China Transformed Into a Prime Cyber Threat to the U.S." The New York Times . ISSN   0362-4331. Archived from the original on 2023-05-13. Retrieved 2023-05-13.
  4. ↑ Joske, Alex; Stoff, Jeffrey (2020-08-03), Hannas, William C.; Tatlow, Didi Kirsten (eds.), "The United Front and Technology Transfer", China’s Quest for Foreign Technology (1 ed.), Milton Park, Abingdon, Oxon ; New York, NY: Routledge, 2021. |: Routledge, pp. 258–274, doi:10.4324/9781003035084-20, ISBN   978-1-003-03508-4, S2CID   225395399 {{citation}}: CS1 maint: location (link)
  5. 1 2 Bradsher, Keith (15 January 2020). "How China Obtains American Trade Secrets". New York Times. Archived from the original on 25 May 2022. Retrieved 26 May 2022.
  6. 1 2 3 4 5 Moore, Scott (2022). China's next act : how sustainability and technology are reshaping China's rise and the world's future. New York, NY. pp. 169–170. ISBN   978-0-19-760401-4. OCLC   1316703008. Archived from the original on 2022-07-24. Retrieved 2022-07-26.{{cite book}}: CS1 maint: location missing publisher (link)
  7. ↑ Jin, Keyu (2023). The New China Playbook: Beyond Socialism and Capitalism. New York: Viking. ISBN   978-1-9848-7828-1.
  8. 1 2 3 Scissors, Derek (16 July 2021). "The Rising Risk of China's Intellectual-property Theft". American Enterprise Institute. National Review. Archived from the original on 17 June 2022. Retrieved 26 May 2022.
  9. 1 2 3 4 5 Gates, Megan (1 July 2020). "An Unfair Advantage: Confronting Organized Intellectual Property Theft". asisonline. Archived from the original on 5 April 2022. Retrieved 26 May 2022.
  10. ↑ Tejada, Carlos (22 March 2018). "Beg, Borrow or Steal: How Trump Says China Takes Technology". New York Times. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  11. ↑ Conger, Kate; Frenkel, Sheera (6 March 2021). "Thousands of Microsoft Customers May Have Been Victims of Hack Tied to China". New York Times. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  12. 1 2 3 4 "America is struggling to counter China's intellectual property theft". Financial Times. 18 April 2022. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  13. 1 2 3 4 5 Lyngaas, Sean (4 May 2022). "Chinese hackers cast wide net for trade secrets in US, Europe and Asia, researchers say". CNN. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  14. 1 2 3 Perlroth, Nicole (19 July 2021). "How China Transformed Into a Prime Cyber Threat to the U.S." New York Times. Archived from the original on 25 May 2022. Retrieved 26 May 2022.
  15. ↑ Dilanian, Ken (9 October 2018). "China's hackers are stealing secrets from U.S. firms again, experts say". NBC News. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  16. ↑ Rosenbaum, Eric (1 March 2019). "1 in 5 corporations say China has stolen their IP within the last year: CNBC CFO survey". CNBC. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  17. 1 2 Sganga, Nicole (4 May 2022). "Chinese hackers took trillions in intellectual property from about 30 multinational companies". CBS News. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  18. 1 2 Oriti, Thomas (24 September 2018). "China is still stealing intellectual property — but that's not the biggest problem". Australian Broadcasting Corporation. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  19. ↑ Klovig Skelton, Sebastian (4 May 2022). "Intellectual property theft operation attributed to Winnti group". ComputerWeekly. Archived from the original on 25 May 2022. Retrieved 26 May 2022.
  20. ↑ Bao, Yingyu (2018). "Statistics and Characteristics Analysis of China's Intellectual Property Crimes". MATEC Web of Conferences. 228: 05013. doi: 10.1051/matecconf/201822805013 . ISSN   2261-236X. Archived from the original on 2022-11-05. Retrieved 2022-07-26.
  21. ↑ Letts, Stephen (2018-03-10). "Intellectual property theft, not metal, is the real trade war in US sights and it's a much bigger worry". ABC News . Archived from the original on 2023-04-05. Retrieved 2022-07-26.
  22. ↑ Rechtschaffen, Daniel (11 November 2020). "How China's Legal System Enables Intellectual Property Theft". The Diplomat . Archived from the original on 27 June 2022. Retrieved 26 May 2022.
  23. ↑ Letts, Stephen (10 March 2018). "Intellectual property theft, not metal, is the real trade war in US sights and it's a much bigger worry". Australian Broadcasting Corporation. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  24. ↑ Huang, Yukon (16 October 2019). "China's Record on Intellectual Property Rights Is Getting Better and Better". Foreign Policy. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  25. ↑ Debter, Lauren (31 July 2019). "Walmart, Amazon And Target Sued Over Unauthorized Sales Of Popular Vintage Light Bulbs". Forbes. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
  26. ↑ "Huawei hit with fresh charges of sabotage and intellectual property theft from US tech firms". France24. 13 February 2020. Archived from the original on 26 May 2022. Retrieved 26 May 2022.
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.