IP: The Dragon Awakens

Ah, the Law of Unintended Consequences. It is both universal and infallible.

What gives it such a robust life is that we seldom consider context in our predictions or expectations. If anything, we project events within the context that we have known and experienced.

A recent case in point. The world has been demanding that China tighten up its Intellectual Property (IP) protection for years. It was one of the conditions on which China was admitted to the World Trade Organization.

And it has started to, just as it promised. Only things are quite working out the way everyone predicted. In the last year or so Apple, for example, has lost two critical IP cases in the China courts, which found that two Chinese companies legitimately held the IP in question. In the most recent case, Apple has been banned from selling the iPhone 6 in China, although it has not disappeared from the shelves to date.

What gives?

For starters, IP law is probably the most complicated area of law there is. It is almost impossible to protect a single patent or idea. Slight variations in design can generally skirt the original IP. That is why companies who rely heavily on IP generally file what IP lawyers call “a forest of patents” to protect a single idea. That helps, for sure, but the very practice gives you an idea of just how complicated this area of law can be.

The context issue, in this case, has to do with the collectivist perspective of Chinese culture versus the individualist perspective of Western culture. IP law, as we currently know it, has been developed in a highly individualistic context. It will no doubt look very different when remapped onto a collectivist mindset.

Perhaps the biggest issue at play here is mere prejudice. Many Westerners, I suspect, simply assumed that there was little IP already in existence in China. Most Westerners assume that China makes toys and widgets and that’s about it. But that, of course, is not the case and the Chinese tech industry is expanding geometrically by the day.

Are the Chinese playing fair? How can we say that any court is playing fair? The job of a court is to interpret and that always comes with baggage. As Socrates taught us, we don’t know what we don’t know. The truth is seldom obvious to all.

I have no doubt that the Chinese courts will again rule against Western tech giants in the future. Be careful what you wish for, my mother used to say. China has four times the population of the US. By the numbers, therefore, we can expect the Chinese to be prolific in their production of patents and other forms of IP.

Perhaps, in other words, by insisting so strongly on IP protection in China we have handed the Chinese economy the most powerful weapon possible in its future economic arsenal.

The Chinese economy may not return to double-digit growth. It’s not going away, however. Any Western company that ignores China either as a market or a competitor does so at its peril.

Note: You may contact the writer at understandingchina@yahoo.com