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Republican Sen. Jim Inhofe this week rolled out legislation that would make China “play by the same rules as everyone else,” and would protect the United States from intellectual property theft.
The bill, titled “Protecting American Innovation and Development Act of 2021,” seeks to ensure the “continued strength and leadership” of the U.S. in the research and development of key technologies for future wireless telecommunications standards and infrastructure, by providing additional authority for sanctions against certain foreign entities that pose a threat to the country’s national security.
Inhofe’s office told Fox News that many Chinese companies are selling wireless products, like phones, laptops, and televisions, in the U.S. market using American-patented wireless technology, but are refusing to pay licensing or royalty fees to the developers. Inhofe’s office said the risk of doing nothing could have free-market companies falling behind China, and giving China control of 5G technology.
But Inhofe’s bill gives authorities to the U.S. Department of Commerce to hold bad actor companies responsible, and directs the agency to create a watch list of “bad actor” Chinese companies that are selling wireless products without paying licensing or royalty fees.
Under Inhofe’s legislation, if passed, once a “bad actor” company is on the watch list, they have 12 months to engage in negotiations or arbitration with free-market developers to set appropriate licensing or royalty rates. However, if the companies continue to refuse to work out the dispute, the legislation would block them from access to the U.S. market to sell their products.
However, if a company engages in the process to pay the fees, they will be removed from the entities list.
Fox News spoke with the Oklahoma senator about the bill and his views on the threat of intellectual property theft.
What is the main objective with this legislation?
The objective is to make China play by the same rules as everyone else; we can’t let them keep cheating. It also has real consequences that put our homegrown companies that hold patents to new and innovative wireless technology at risk.
How did the issue of Chinese companies refusing to pay licensing fees in the U.S. come to your attention?
Since 2000, I’ve been the leading voice in the Senate working to make sure we are countering the growing rise of China and sounding the alarm about their deceptive trade practices. Go back and listen to my speech against allowing them a free trade treaty – everything I predicted, from engaging in a massive military build up to brutal repression of dissidents, has come true.
As the leading Republican on the Senate Armed Services Committee, I’ve worked a lot to mitigate the threat our reliance on Chinese telecom companies pose to our national defense and how their providers, like ZTE and Huawei could be used by the Chinese government to spy on us or carry out cyberattacks. As a result, I’ve talked with a lot of U.S.-based wireless technology companies and they brought this issue to my attention.
Is this a national security risk?
Absolutely — mostly because we can’t allow all of the wireless infrastructure to be built by Chinese companies and allow us to depend on them for these products and standards. Furthermore, the American free market system has always led the way when it comes to innovation in wireless technology, and we want those companies to continue to thrive. They have to invest a lot of resources into technology and development of standards, and we can’t afford to see it stolen by Chinese companies — it just won’t be possible for them to stay in business and that would risk countless American jobs. The answer isn’t special favors; it’s just making China play by the same rules of international law as everyone else.
How can a U.S. company tell which companies are “bad actor companies?” Can you define a “bad actor” company? And/or provide any examples?
A few companies that have raised concern include ZTE, Huawei, Oppo and Xiami — but any Chinese company that does not pay licensing or royalty fees for the use of standard essential patents would be a bad actor company.
Under this legislation, what would prompt the Commerce Department to add a company to the watch list?
It is pretty clear — a company that doesn’t pay royalties or licensing fees for use of standard essential patents would be added to the list and given 12 months to correct their behavior. If they don’t change their behavior, they will be shut off from the U.S. market.
This is a big deal because right now, the only remedy companies have to try and make China play by the rules is to take them to court or to file a dispute with the International Trade Commission and that can take decades. This legislation would put them on notice and give us the capability to take action much faster.
How do you think U.S.-China policy will be different under the Biden administration, versus under the Trump administration?
To be frank, I hope it won’t be that different. The previous administration understood that our biggest threats, both militarily and economically came from China and took steps to address that. Just because the president has changed doesn’t mean the threats have. I’m going to keep China in my sights and make sure the Biden team does too. I won’t hesitate to hold them accountable, because we need to challenge the regime at every turn and make sure our allies in the region know we’re behind them.
Intelligence community officials have warned that one of the largest threats facing the U.S. today is Chinese malign influence campaigns, as well as intellectual property theft, and economic espionage. What can the U.S. do to maintain an offensive position in regard to this threats?
These are our top threats – as well as the military threat by China – but I think what is important is to note that they are all wrapped up together. As a capitalist country with free enterprise, we tend to separate out the actions of the government from private businesses, but that isn’t the case in Communist China. They can wield their economy as a weapon, just as they can with other more conventional threats.
The best way to maintain our offensive position is to have a strong wireless infrastructure to make sure we aren’t reliant on them, call them out for their behavior and make them play by the same rules as everyone else — not to mention keeping our military’s strategic focus on China and maintaining a credible deterrent. I created the Pacific Deterrence Initiative in last year’s NDAA to do just that.