April 26 was both the 23rd World Intellectual Property Day and the 50th anniversary of the start of China’s cooperation with the World Intellectual Property Organization. By contrast, the U.S. is aiming to employ the law to preserve its own global technological dominance and economic yields. On Jan. 5, President Joe Biden signed the Protection of American Intellectual Property Act. To block Chinese innovation from growing and surpassing that of the U.S., the U.S. is applying every tool in its legal toolkit. What gives me pause is that the U.S. has been introducing a stream of new legislation that grants the executive branch extreme power to crush foreign businesses.
First, the U.S. legislative and judicial branches are increasingly subordinate to executive power. The International Emergency Economic Powers Act provided the crucial legal foundation for granting the executive branch the power to impose sanctions due to “unusual and extraordinary threat[s] to the national security, foreign policy, and economy of the United States.” This grants the president a series of powers, including blocking foreign business transactions and freezing assets. During Donald Trump’s presidency, he utilized the IEEPA to issue numerous executive orders, imposing sanctions on more than 3,700 entities. When it comes to safeguarding national interests, the legislative and judicial branches willingly yield, giving unrestricted authority to the executive branch, which removes obstacles to fully achieving the aims driving the sanctions.
The principles of “separation of powers” and “checks and balances” have been cast away like a pair of old shoes. Not only is there a lack of checks and balances; the legislative and judicial branches conspire to provide support and cover for the government’s sanctions and methods that lack bases. The politicization of the law has led to the creation of legal mechanisms that are flexible and convenient for the president, with Congress passing legislation that expands the scope of presidential bans. This is coupled with adjustments to the rules and regulations of the departments in the executive branch, facilitating the enforcement of these bans, making them a useful tool for containing rival nations.
Second, the principal component of the PAIP Act is the authorization of presidential sanctions on foreign entities that have stolen U.S. trade secrets. This increases the executive branch’s authority to enforce and oversee intellectual property matters. The act adopts a broad definition of “trade secrets,” effectively allowing use of all available measures designed to protect trade information. Additionally, Congress chose not to clearly define a series of important terms such as “major threat,” “national security,” “economic stability” and even “substantial” in the act, leaving it up to the executive branch to determine, thus granting the executive branch broad sanctioning powers. China is on the Office of the United States Trade Representative’s Priority Watch List alongside other nations of concern for violating intellectual property rights.
As a result, the U.S. has ushered in a new model for protecting intellectual property, which tremendously strengthens the executive branch’s agencies’ ability to extrajudicially impose severe punitive sanctions directly on individuals or legal entities accused of stealing trade secrets. The IEEPA powers that the PAIP Act transfers to the president further limit judicial review and oversight. The presidential sanctions, freed from the judicial process, will not only save judicial resources and costs but also be applied quickly and frequently, undoubtedly sowing hidden seeds of danger for the rule of law.
Sanctions are not mandatory upon the president’s notifying Congress and will not necessarily be lifted even if a court rules that theft of trade secrets did not occur. The act also undoes the automatic termination of sanctions once the sanctioned entity has stopped or corrected the wrongful behavior. These changes have also greatly narrowed the channels for seeking judicial or administrative remedies to lift sanctions. Once an enterprise is entangled in sanctions, it will be difficult to break free.
Third, respecting intellectual property rights and the proper application of international rules is vital. China’s technology industry unfortunately resorts to “crossing its fingers” when heading abroad; the U.S.’ “national security review” seriously impedes the progress of scientific and technological exchanges and will affect the long-term development of global technology in a big way. The sustainable development of China’s technology industry is contingent upon creating a conducive environment. Domestically, China must strive to follow intellectual property rights and establish a good system for managing trade secrets. Abroad, China is “crossing its fingers” while also working with scholars and think tanks that understand geopolitics to improve litigation strategies. Safeguarding our rights demands that we possess courage, competitiveness and a mastery of international regulations.
The author is the director of the Intellectual Property and Technology Security Research Center at the University of International Relations. This article is based on a speech at a seminar on “The Five-Year Trends of the Trade War the U.S. Launched on China and the Evolution of China-U.S. Relations.”