Chinese Bring Patent Suits In U.S. Courts


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Bring war material with you from home, but forage on the enemy... use the conquered foe to augment one's own strength.
-Sun Tzu, the Art of War

As China's economy continues to grow at an amazing 11%, Chinese companies are starting to flex their muscles outside there own borders. First content to settle, circumvent, or lose and move on in patent suits, they're now ready to bring the battle to American companies.

This year, Netac, a manufacturer of computer flash memory products based in Shenzhen, China, brought a patent suit against a New Jersey rival in a federal court in Texas, in what is believed to be the first time that a mainland Chinese company has sued an American one for patent infringement.

The United States has been outsourcing manufacturing to China for decades, giving China a most-favored nation trading status, even in the face of Tiananmen Square. It has been suggested that the best way to defeat communism in China is to get them to embrace capitalism. Well, it seems they are teaching us a lesson about it.

The Chinese government has been notoriously lax in enforcing intellectual property rights within its borders, not allowing such issues to stand in the way of the unprecedented growth they've experienced.

Meanwhile, our trade deficit with China continues to transfer American wealth into Chinese hands to the tune of $200B a year. Couple that with the astounding $260B in U.S. Treasury bills held by the Chinese government, and the U.S. is in a tough spot. If you add private investment, the amount of U.S. debt in Chinese hands is an astounding $527B. A sell-off of U.S. Bonds by the Chinese would produce a spike in the yields on those bonds which would, in turn, drive up interest rates and put the U.S. Economy into a stall if not a dive.

It is unclear what can be done about this situation in our current political climate. For example, the U.S. insists on only dealing with North Korea through Six-Party talks that include China. Many continue to obsess about China's communist government and believe that getting them to embrace open markets and capitalistic mechanisms will be their undoing. But, will it be our undoing first?

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