Every 10 Hours: China’s Systematic Infringement upon American Intellectual Property

Benjamin Zelnick, ’23

On February 27, 2020, United States Green Card holder and Chinese citizen Hongjin Tan received a twoyear prison sentence in the U.S. after conspiring to transfer billiondollar trade secrets to a Chinese company.1 One month earlier, an ex-employee at the Los Alamos National Laboratory—a highsecurity government facility known for its role in the top-secret Manhattan Project— confessed to having worked for the Chinese government.2 Earlier this year, Chinese technology company Hytera Communications was indicted for bribing employees at Motorola to steal and share confidential research.3 These instances are only three in the multitude reported on the FBI website, all relating to China’s theft of American intellectual property. The Department of Justice (DOJ), in fact, claims that four out of every five economic espionage cases are tied to China, and in February of 2020, FBI Director Christopher Wray announced that the bureau was managing around one thousand open investigations into the country’s “attempted theft of US-based technology … spanning just about every industry sector.”4 As the Chinese Communist Party pirates American intellectual property (IP) by strategically infiltrating organizations and government agencies, the United States must educate the public and proactively develop plans to deter and remediate these transgressions by an authoritarian foreign power.

One of China’s most dangerous strategies for stealing American ideas is its widespread use of hacking operations. The 2017 Equifax breach, perpetrated by members of the Chinese People’s Liberation Army (PLA), not only exposed a trove of confidential data but also allowed China to glean information on the credit agency’s infrastructure design. Then-Attorney General William Barr characterized the incident as part of a larger “pattern of state-sponsored computer intrusions and thefts by China,” warning that Chinese hackers sought not only data on American citizens but also “trade secrets and other confidential information.”5 The American government also reports that cybercriminals routinely attack healthcare and research facilities and search for information that could benefit their country. Tonya Ugoretz, a high-ranking official at the FBI’s Cyber Division, commented that when medical research corporations publicized their activities during the coronavirus pandemic, they became “a mark for other nation-states that are interested in … what exactly they’re doing.”6 Foreign countries, she

warned, are more likely to steal information from companies that tout their studies. In the digital age, China’s rapidly expanding technical prowess—particularly in the area of computer hacking—renders it a serious threat to American corporations. In addition to its cyber espionage campaigns, China uses the age-old tactic of on-the-ground spies to accomplish its goals. For instance, in 2020, the American government discovered that Yanqing Ye, a Chinese woman with a student visa to study in Boston University’s high-profile physics, chemistry, and biomedical engineering programs, was actually a lieutenant in the PLA who was illegally sharing information with authorities at home.7 Even if a Chinese citizen is not working for the government like Ye, China’s 2017 “National Intelligence Law” requires them to “support, assist, and cooperate with state intelligence work.”8 William Schneider, Jr., former chair of the Defense Science Board, warned that under this law, the country’s authoritarian regime could compel the 350,000 Chinese students in America’s academic institutions to abscond with classified information stolen from research projects. China’s farreaching intelligence operations have proven to be highly effective means of stealing American IP. Perhaps the most subversive strategy that the Chinese government uses to exploit U.S. intelligence is what the Communist Party terms “talent plans”—programs that recruit and lavishly compensate American researchers and academics for sharing their expertise. For example, the Senate Committee on Homeland Security and Governmental Affairs reported that the “Thousand Talents Plan” was launched in 2008 to encourage experts to “transmit the knowledge and research they gain here [in the U.S.] to China in exchange for salaries, research funding, lab space, and other incentives.”9 According to the FBI, although many countries run talent plans, China continues to invest in them more heavily than any other nation.10 In 2019, for instance, the Chinese Ministry of Science and Technology allocated $44 million to paying participants in these recruitment operations.11 In a recent case, the DOJ discovered that Harvard University professor Charles Lieber, who had received over $15 million of U.S. federal research grants, had failed to disclose his position as “Strategic Scientist” at the Wuhan University of Technology (WUT) under the Thousand Talents Plan. WUT was transparently attempting to funnel Lieber’s The DOJ’s press release stated that WUT paid him $600,000 per year, allocated $158,000 for his living expenses, and knowledge away from granted $1.5 million for him to lead a America and toward its own new research laboratory in China. The students. true motive behind this arrangement was evident from one line of the contract: Lieber was obligated to “cultivat[e] young teachers and Ph.D. students” in Wuhan.12 WUT was transparently attempting to funnel Lieber’s knowledge away from America and toward its own students. His contractual requirement to report findings to his foreign benefactor was by no means atypical: the FBI confirms that a caveat in the majority of Chinese talent programs is an obligation to “[s]

hare new technology developments or breakthroughs only with China.”13 This condition allows China to make itself the sole beneficiary of valuable American knowledge.

The coordinated effort to siphon American ideas to China’s advantage has had a detrimental effect on America’s corporate and economic progress. In 2018, the United States Trade Representative reiterated earlier findings that the yearly cost of Chinese IP theft might be as much as $600 billion, which is more than the impact of every other nation combined.14 In a 2019 survey of CNBC’s Global CFO Council (whose current membership includes the CFOs of Verizon, Paypal, Target, and even the NASDAQ itself), one in five corporations reported that China had stolen proprietary information from them within the year.15 In a July 2020 speech, Christopher Wray bluntly concluded that “the greatest long-term threat to our nation’s information and IP, and to our economic vitality, is the counterintelligence and economic espionage threat from China.”16 The FBI website clarifies that “the adversary is not the Chinese people or people of Chinese descent or heritage,” but it affirms that “an authoritarian government … is seeking to become the world’s greatest superpower through … systematic theft of intellectual property, and brazen cyber intrusions.”17 These warnings must be heeded, as the devastating impact of China’s intellectual theft on American enterprises has soared to harrowing levels in the past two decades.

Despite the seemingly bleak circumstances, several strategies to raise academic, public, and corporate awareness have proven effective in securing American information against China’s attacks. For instance, U.S. National Counterintelligence and Security Center Director William Evanina launched a sweeping awareness and training campaign for high-ranking officials in academic institutions and corporations. The government presented cases of “strategic plans by the Chinese” to steal IP in a confidential meeting with 150 university presidents.18 Other activities assisted companies in creating information security strategies and rehearsing protocols for a breach of proprietary data.19 The FBI is also teaching the workforce to recognize the indicative behaviors of Chinese government employees, including abnormal interest in sensitive company activities and atypical digital access patterns.20 For years, the bureau has used a network of special agents to conduct training exercises and successfully protect sensitive corporate information.21 Non-governmental organizations such as the National Bureau of Asian Research (NBR) have also recommended new strategies. In an eightynine-page report, the NBR’s IP Commission compiled a list of innovative ideas to discourage China from stealing American intelligence. Among the document’s suggestions were unaffiliated IP evaluation organizations, programs to improve counterfeit detection, stricter evaluation of IP diplomatic attachés, and retaliatory sanctions for violations by the Federal Trade Commission. These proposals, the report holds, would fortify the U.S. government’s stance on IP theft, provide enhanced measures to protect American innovation, and pressure China to punish offenders.22 The United States must continually improve upon its existing strategies and develop new methods to counter the evolving threat from China.

In 2020, the FBI told the press that it was launching a new investigation into Chinese spying “every 10 hours”23 — clear evidence that Americans must be vigilant and proactive in safeguarding their IP against piracy. The victims of this theft have extended from academic institutions and sprawling corporations to the U.S. government itself: only a few months after the FBI statement, a government article admitted that ninety-three percent of the scientists under investigation at the National Institutes of Health were tied to China.24 In its educational film, Made in Beijing: The Plan for Global Market Domination, the FBI warned that if Americans fail to recognize this threat, the “efforts by the government of China to undermine … American industry, and … ingenuity” will succeed.25 What is truly terrifying, ultimately, is that China will claim a more sinister victory: the triumph of an authoritarian state over American democracy and economic liberty.

1 “Chinese National Sentenced for Stealing Trade Secrets Worth $1 Billion,” Office of Public Affairs, Department of Justice, February 27, 2020, accessed April 22, 2022, https://www.justice.gov/ opa/pr/chinese-national-sentenced-stealing-trade-secrets-worth1-billion. 2 “Former Scientist from Los Alamos National Laboratory Pleads Guilty in Federal Court to Making False Statement about Involvement with Chinese Government Technology Program,” U.S. Attorney’s Office for the District of New Mexico, Department of Justice, January 24, 2020, accessed April 21, 2022, https:// www.justice.gov/usao-nm/pr/former-scientist-los-alamos-national-laboratory-pleads-guilty-federal-court-making-false. 3 “Federal Indictment Charges Telecommunications Company with Conspiring with Former Motorola Solutions Employees to Steal Technology,” U.S. Attorney’s Office for the Northern District of Illinois, Department of Justice, February 7, 2022, accessed April 21, 2022, https://www.justice.gov/usao-ndil/pr/ federal-indictment-charges-telecommunications-company-conspiring-former-motorola 4 David H. Laufman, Joseph M. Casino, and Michael J. Kasdan, “The Department of Justice’s National Security Division Chief Addresses China’s Campaign to Steal U.S. Intellectual Property,” National Law Review, last modified August 24, 2020, accessed April 21, 2022, https://www.natlawreview.com/article/ department-justice-s-national-security-division-chief-addresses-china-s-campaign-to; quoted in Reuters, “China Theft of Technology Is Biggest Law Enforcement Threat to US, FBI Says,” The Guardian, last modified February 6, 2020, accessed April 21, 2022, https://www.theguardian.com/world/2020/feb/06/ china-technology-theft-fbi-biggest-threat. 5 Megan Gates, “How to Confront Intellectual Property Theft by Employees,” Society for Human Resource Management, last modified July 12, 2020, accessed April 21, 2022, https://www. shrm.org/resourcesandtools/hr-topics/risk-management/pages/ how-to-confront-intellectual-property-theft-by-employees.aspx. 6 Gates. 7 “How the Chinese Communist Party Steals Science,” U.S. Embassy in Georgia, last modified August 19, 2020, accessed April 21, 2022, https://ge.usembassy.gov/how-the-chinese-communistparty-steals-science/. 8 Murray Scot Tanner, “Beijing’s New National Intelligence Law: From Defense to Offense,” Lawfare (blog), entry posted July 20, 2017, accessed April 21, 2022, https://www.lawfareblog.