China Turns From 'Pirate' Nation To Giant Patent Troll

from the what-goes-around,-comes-around dept

Mon, Oct 20th 2014 11:26am — Glyn Moody

The West's constant push for stronger patent protection in agreements like TPP and ACTA is based on the belief that they will then be able to deploy their supercharged patents against the rising economic might of China. What this completely overlooks is the fact that China will be able to turn the self-same strengthened patent regime against the West by acquiring patents and suing Western companies. Techdirt has already reported on how China is providing financial incentives for its companies to file huge numbers of patents overseas. Now it has taken another step in bolstering its patents strategy against the West by setting up a company called Ruichuan IPR Funds. Here's a press release that the site Citizen Outreach has issued on this move:

With China's creation of Ruichuan IPR Funds, imagine the assault that U.S. companies will face. Reports are that this government-sponsored troll has been seeded with $50 billion to acquire patents that will be used in actions against U.S. companies. Inasmuch as trolls aren't sticklers for the quality of the patents they purchase, Ruichuan IPR Funds will be able to build a massive arsenal for use in harassment litigation.

China will now be in a better position to manipulate markets, handicap the overseas competition, and push itself to the head of the pack in the global patent wars.

A little hyperbolic perhaps, but essentially correct -- and completely foreseeable. The Chinese government's move is part of a larger story that recapitulates America's own evolution from a "pirate" nation that fuelled its industrial revolution by ignoring the law and appropriating Western Europe's patented ideas, to one using the same legal instruments against European companies.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: china, competition, innovation, patent troll, patents, trade agreements, trolling

33 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Binko Barnes (profile), 20 Oct 2014 @ 11:41am

The great economic and political delusion of the 21st century is that we will shift most of the world's manufacturing to china allowing them to grow an immensely strong and powerful economy and then they will play by all the rules that western societies have built up over the centuries.
[ link to this | view in thread ]
Mason Wheeler (profile), 20 Oct 2014 @ 11:50am

So basically the Chinese government just set up their own version of Intellectual Ventures?
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 12:06pm

Maybe it was the belief that just because the United States has the lion's share of the world's lawyers, that it will be the country dominating the international patent-troll game.

Of course lawyers are just hired guns, and will be more than willing to take China's money to submit frivolous patents and file extortionary lawsuits. It's "the American Way."
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 12:15pm

Damn those Chinese for copying our trolling techniques!
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 12:21pm

I love it , Maybe we'll see Patent Wars I hope copyright wars will follow ...soon, maybe ..just maybe, they'll sue each other out of existence.
[ link to this | view in thread ]
Inwoods (profile), 20 Oct 2014 @ 12:27pm

Re:
Actually, it sounds like they're playing EXACTLY by our rules. We just always assumed we'd be further ahead for some reason.
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 12:31pm

The best way to induce change in the patent system is to get another country to beat us at the game?

Woah woah woah woah now, what do you mean the US is infringing on all of China's patents? We can't have that going on then.
[ link to this | view in thread ]
william (profile), 20 Oct 2014 @ 12:41pm

I think this could be a blessing in disguise.

Maybe, just maybe when the Chinese government is at your door with a ram, ready to bust it open, meaningful changes to the law will be made.

One can only hope.
[ link to this | view in thread ]
SJ, 20 Oct 2014 @ 1:32pm

@william

There one problem regarding meaningful changes. The US has imposed that total perverted patent system on a lot of other countries through international treaties... even if the US wants to change it, they simply can't (do it easily).
[ link to this | view in thread ]
wereisjessicahyde (profile), 20 Oct 2014 @ 1:32pm

What goes around, comes around.
[ link to this | view in thread ]
Shmerl, 20 Oct 2014 @ 1:33pm

It can be useful
May be for once it will clear the mind of politicians who are too weak to make a useful patent reform.
[ link to this | view in thread ]
Jeremy2020 (profile), 20 Oct 2014 @ 2:38pm

Re:
then if we change Patent laws, the company can sue the US government with ISDS provisions!
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 3:05pm

I can only laugh

Maybe we'll get saner patent legislation when the big players are being eaten alive via their own bullying tactics.
[ link to this | view in thread ]
pouar (profile), 20 Oct 2014 @ 3:10pm

the phrase "Karma Bloody Karma" comes to mind
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 3:48pm

Re:
Couldn't they do it about as easily just through another set of international treaties?
[ link to this | view in thread ]
Shmerl, 20 Oct 2014 @ 4:29pm

Re:
They can easily. Congress has the power to cancel or modify those treaties.
[ link to this | view in thread ]
Anonymous Coward, 20 Oct 2014 @ 4:31pm

Re:
The scary bit is to follow.

You know the part where private corporations can sue a government for damages regarding rejected patents etc? And how the US is trying to get that into all treaties?

Imagine a world where China owns patents involved in just about everything. One of their private corporations then has the power to overrule pretty much any other country on the planet on pretty much any topic.

Don't like melamine in your baby formula? Well, the FDA can't do a thing about it, because preventing China from selling their patented melamine-included baby formula in the US would cause irreparable harm to their private corporation that specializes in developing and producing the formula.

Think about it.
[ link to this | view in thread ]
That One Guy (profile), 20 Oct 2014 @ 4:39pm

Re: Re:
Power and Spine are two very different things. They may have the first, but they seem to sorely lack the second.
[ link to this | view in thread ]
Paraquat, 20 Oct 2014 @ 8:38pm

TPP
This is why China was not invited into the TPP negotiations. The USA knows that China is one country that will push back when absurd US laws are extended overseas via the TPP. Better to sign up some country like Chile or New Zealand that can be pushed around.

So go China - troll away! But please file all your ridiculous patent claims against US companies, while sparring those smaller countries from grief. If China does this, they'd be doing the world a favor, even if few yet realize it.
[ link to this | view in thread ]
Misha Springfield, 20 Oct 2014 @ 8:45pm

Response to: Anonymous Coward on Oct 20th, 2014 @ 12:15pm
It's unfortunate that Intellectual Ventures et al took what many online commenters suggested as a joke and didn't opt to patent the process of patent trolling when they had the chance. You reap what you sow.
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 12:39am

maybe china will do the us a favor,
SHOW the us government software patents are useless.
And they just encourage legal extortion via patent trolling.
They do nothing to help innovation or grow the economy .
And china was the country that forced microsoft to publish its android patents which will allow other
mobile phone companys to work around them or to challenge them in court .

Maybe china is not stupid enough to
adopt stupid us laws on patents ,corporate
whistleblowers ,
which only help large companys or encourage patent trolling and increase drug prices .
What other large country seeks to force other countrys to adopt its laws ,apart from the us?
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 1:13am

Just to make sure I've got the general idea of how the USG has been helping out over the past decade or two...

Our patent system could wind up letting China hold US based R&D hostage through patents held on component technology.

Any US-developed tech that happens to escape China's control won't be trusted by anyone anyway, thanks to the NSA's collect-it-all overreach.

Even something novel and secure could result in massive lawsuits by corporations based in friendly nations via ISDS, if it could potentially harm their future profits in some tangential way.

Yay, progress!
[ link to this | view in thread ]
Prisoner 201, 21 Oct 2014 @ 1:30am

Re: Re:
That would be costly, what with the huge Corporate Sovereignty penalties that would result in.
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 1:41am

Yes, let's all fear the long history of Chinese inventions.

Let's start with... um well... wait, uh... maybe you can go first here? Please?
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 1:46am

Re: Re: Re:
1) That just more treaty terms to be canceled out by congress.
2) There is also the problem of collecting against a nuclear armed bully.
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 1:52am

Re:
There is gunpowder, rockets (fire arrows) and movable type for a start.
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 6:52am

Re: Re:
Don't like lead in your toys? Well any ban prohibiting a Chinese manufacturer from selling us products potentially containing lead until they can reasonably show the problem has been fixed will be subject to these disputes because they could cause irreparable harm to the business.
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 7:00am

Re: TPP
I think what may happen is that US courts would declare many Chinese patents invalid if they attempt to enforce them. The Chinese government would retaliate by declaring US patents invalid. The losers would be the smaller and weaker countries without the strength to stand up for themselves.
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 7:49am

Re:
What does number of patents have to do with level of inventiveness.

Anyways here is a list of Chinese inventions.

http://en.wikipedia.org/wiki/List_of_Chinese_inventions
[ link to this | view in thread ]
Anonymous Coward, 21 Oct 2014 @ 9:51am

Re: Re:
Interesting, but it sort of drives the point home that it's been many centuries since China has been able to be considered an "inventive" society.
[ link to this | view in thread ]
John Fenderson (profile), 21 Oct 2014 @ 10:07am

Re: Re: Re:
I'm not sure what makes a society an "inventive" one, but I do find it interesting that there's quite a lot of talk in business journals lately about how China is becoming an "innovation powerhouse."

http://www.foreignpolicy.com/articles/2014/02/06/its_official_china_is_becoming_a_new_in novation_powerhouse
http://online.wsj.com/articles/SB10001424052702303819704579320544231396168

I'm not commenting on whether or not that characterization is accurate (I have no way of knowing), but there does seem to be a lot of people who disagree with the notion that nothing innovative comes from China.
[ link to this | view in thread ]
Alexa Jackson, 21 Oct 2014 @ 8:25pm

China becoming an innovative country probably would start a patent war but maybe this will also encourage Western countries to push further more when it comes to innovations. A blessing in disguise indeed.
[ link to this | view in thread ]
Pragmatic, 23 Oct 2014 @ 3:05am

Re: Re:
That depends on who you mean by "We."
[ link to this | view in thread ]