China Flouting International Law While Asking for Special Treatment, Says Former Ambassador
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Locke detailed how Chinese industries have for years gotten around paying the royalty rates for standard-essential patents (SEPs). These are licenses for technology that allow devices, such as computers, phones, and cars, to operate on a standard technology, like connecting to the same Wi-Fi and 5G networks, he said.
At a time when Chinese companies are touting technological breakthroughs in electric vehicle EV batteries and artificial intelligence, “some Chinese policymakers and business leaders are flouting international law—and acting as if China were a poor developing country whose companies need special treatment,” Locke wrote.
Locke said Chinese industries have undermined this licensing system in several ways, one being outright refusal to pay.
“Through China’s industry trade association, CATARC, these automakers have effectively organized a group boycott of securing licenses for standard-essential patents,” including for 5G and previous 4G and 3G technology, Locke wrote.
“It'd be like a group of highly paid, highly competent Wall Street bankers collectively deciding that restaurants charge too much—so they’re going to simply walk in, eat their meals, walk out without paying, and wait to see if anyone does anything about it.”
Another issue is the Chinese regime’s handling of licensing within China, Locke said, highlighting an often-obscured cost of doing business in the communist state.
The Chinese regime has more than once required foreign businesses to license their technology to Chinese companies at a steep discount.
Locke said the Chinese regime’s handling of royalty rates encourages Chinese companies to flout international law, as in the case of CATARC.
He warned Chinese industries that this may disadvantage them in the future.
“While avoiding SEP licensing fees may give Chinese automakers an unfair cost advantage over their foreign rivals in the short term, the flagrant defiance of international norms will give other countries more reason to block imports of Chinese vehicles. That would deny Chinese firms, in the long run, the lucrative new markets they seek,” he wrote
It may also deny Chinese inventors fair rates on future use of their technology outside China in the future, Locke wrote.
“Top policymakers in Beijing believe that China deserves more respect on the world stage. But respect is a two-way street. If China hopes to help shape the 21st century and steer the global economy, it has to stop acting like a poor developing nation that cherry-picks which international norms it will follow,” he wrote.
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