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A Long Long Way to Win-Win? -- IPR Issues in Technology Transfer from US to P.R

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A Long Long Way to Win-Win? -- IPR Issues in Technology Transfer from US to P.R Nan Zhang 2006 Comments Welcome A Long Long Way to Win-Win? -- IPR Issues in Technology Transfer from US to P.R. China Nan Zhang1 Abstract: Our world is full of technology export and import stream. Today under the trend of globalization it’s the time for both developed counties in and developing countries to play important roles in the global stage. The best perspective is so-called win-win situation2—in my understanding, every participant will gain benefits and it’s a matter of fact that some of them benefit more and some do less. The IPR issues are so important because they relate to every person’s everyday life. People in China could enjoy the happiness from the latest-launched i-pod by Apple, a famous American IT company who built its far east headquarter in the CBD of Beijing. And by technology transfer, many companies with more advanced technology power in the US absorb considerable profits all over the world, especially in the tremendous market in China. As we see, intellectual property rights (IPRs) are really crucial guarantees for those right holders who pay lots of efforts into their technology. Recently, the Win-Win situation is a very frequent phrase quoted in Chinese President Hu Jintao’s public speeches3 on his diplomatic visit to US. However, for both US and China, the reality about IPR issues is far more complex. In this article, I will explore my discussions and findings from the aspects of the past, the current and the future then answer these questions: z With the booming rise of its national technology industry, is China still remaining as an IPR victim in the technology transfer from US? z What approaches, in my view, are able to bring US and China to “a happy ending”—Win-Win in reality? Especially based on the second question above, my research only focus on the current 1 Nan Zhang, LLM(University of Southampton), Herchel Smith Doctoral Associate at Queen Mary Intellectual Property Research Institute, University of London. 2 Please refer to http://edition.cnn.com/2006/POLITICS/04/21/hu.visit.ap/index.html Also, the whole speech content of Chinese President Hu Jintao at Yale University on 21 April 2006 can be found at the website of Chinese Central People’s Government http://www.gov.cn/ldhd/2006-04/22/content_260592.htm 3 Ibid. 1 Nan Zhang 2006 Comments Welcome Chinese IP legal policies and framework, but also on a recent merger of two well- known industrial enterprises as a case study involving both US and China to predict the future panorama. And, as normally not contained in US-Sino IP analysis, I adopt ancient Chinese sages Confucius’ and Sun Tzu’s theories as methodology to analyze both legal culture and enterprise strategy issues. And I need to emphasize that a better understanding in each other’s social and legal culture under the superficies is a key point to reach eventual “happy ending”. Finally at the end of this article, legal-wise, commercial-wise and cultural-wise, I will bring forward my own suggestive approaches to achieve Win-Win situation for both US and China. I. Introduction 1 Definition and Forms of Technology Transfer If we put in the key word “technology transfer” onto the search engine at www.google.com, instantly we will get hundreds of web links that contain their definitions. The definition from Wellcome trust4, for example, technology transfer is defined as “the process of transferring research into the commercial environment.”5 However, in my article, the thorough study of issues related to this concept in the international scope will focus on the communication or transmission of a technology from one country to another6. The forms of technology basically are carried out directly or indirectly, and there are some instances as follows: • Foreign licensing; • Technical consultancy; • Acquisition of capital goods, international subcontracting, and joint ventures; • Foreign direct investment — operate in two steps. First, there is the transfer to an initial acquiring organization (usually a multinational subsidiary); • Trade journals and technical papers in international journals, and through technical visits and participation in seminars, conferences and trade fairs.7 4 http://www.wellcome.ac.uk/aboutus/whatwedo/ 5 http://www.wellcome.ac.uk/node7351.html 6 http://www-personal.umich.edu/~alandear/glossary/t.html 7 These five forms are summed up from an article in general knowledge of technology transfer on the website of Science and Development Network. http://www.scidev.net/quickguides/index.cfm?fuseaction=dossierfulltext&qguideid=6 2 Nan Zhang 2006 Comments Welcome 2 Significance: Why Does Technology Have to Be Transferred into Developing Countries such as China? A. From Poverty to Profits Most developing counties hold agriculture and manufacturing as their pillar industries and their economics are mainly relying on the income from export trade. Meanwhile, the existence of IP accelerates a huge profit-making and economic-rising possibility for nations who keep in leading positions in technology innovation. In my view, transferring technology into China could strengthen its national manufacturing capacity, increase its technology innovation and create an opportunity to make property history. B. The Globalization Trend Generally speaking, I reckon China takes the trend of globalization as a chance instead of a threat. From a recent governmental report regarding the strategy of informatization from 2006 to 2020, we can see China is very motivated and determined in its industrial restructuring procedure and this has been recognized as the first step on the road to Globalization. 8 In 2002, in a report concerning globalization from International Monetary Fund, four aspects of globalization have been pointed out as trade, capital movements, movement of people and spread of knowledge (technology).9 Especially, on the last aspect, this report predicts spread of technology in globalization will be very important for developing countries: Information exchange is an integral, often overlooked, aspect of globalization. For instance, direct foreign investment brings not only an expansion of the physical capital stock, but also technical innovation. More generally, knowledge about production methods, management techniques, export markets and economic policies is available at very low cost, and it represents a highly valuable resource for the developing countries.10 3 The Poking Angles of This Article 8, The Strategy on the National Informatization Development from 2006 to 2020, March19, 2006, General Office of the CCCPC and the General Office of the State Council and the content of this report is written in Chinese. http://www.gov.cn/gongbao/content/2006/content_315999.htm 9 By IMF staff, Globalization: Threat or Opportunity? April 12, 2002 http://www.imf.org/external/np/exr/ib/2000/041200.htm#II 10 Ibid. 3 Nan Zhang 2006 Comments Welcome A. Research Scope: US-Sino Trade Relations China and US has built up a tight connection by their interactive trader relations. And these relations contain many aspects of industries, such as electrical machinery, power generator equipment, cotton, iron and steel etc.11 In a recent report from International Information Programs of US government, it has been recognized that US-Sino trade has been played a significant role in development of both countries: Even while the U.S. bilateral trade deficits with China soars to the dismay of import-sensitive domestic industries and their representatives in Congress, China has become the fast-growing market for U.S. good exports …… China has become the world’s third-larges exporter and third-largest importer, an economic power importing raw materials and scrap from all the world’s region, drawing vast amounts of foreign investment and changing the economic landscape around the world, especially in Asia.12 Thus, the research in this article is based on the IP issues in technology transfer in US- Sino scope and I also regard it as a typical reflection of the same issue occurred in the technology transfer from developed countries to developing countries. B. The Focal Points For a long time, tons of debates and arguments have been poured onto the complicated issues in the US-Sino IP issues. The focal points in this article will demonstrate some fresh air on a combination of different elements mainly on theories and facts from China’s perspective. All in all, I hope this analysis will bring people a more open and rational understanding regarding the topic. II. China’s IPR--Started from Zero 1 The Condition of IPR Review--China’s National Characteristic When we are studying a nation, actually we could focus on its people. In China there live 56 ethnic groups with a total population of 1.248 billion13. Honestly speaking, every single Chinese is unique and different from others. Meanwhile, inevitably, each Chinese carries more or less the characteristic of the local racial, cultural and geographical environments etc. Currently, people from Han Race make China's and 11http://www.uschina.org/statistics/tradetable.html 12 See Bruce Odessey, Swiftly Expanding U.S.-China Economic Relations Stir Debate—Fast growing export market also accounts for biggest trade deficit http://usinfo.state.gov/eap/Archive/2005/Mar/03-588739.html 13 The figure of the population is counted at the end of 1998 and it does not include figures of Hong Kong, Macao and Taiwan. http://www.china.org.cn/e-groups/shaoshu/mix.htm 4 Nan Zhang 2006 Comments Welcome the world's largest ethnic group--91.96 per cent of the country's population. 14 Therefore, my analysis of cultural factor of Chinese IPR will base on the characteristic of Han race. There are two men with great influences in China generation after generation--Confucius and Sun Tzu. I reckon, they are supposed to be the founders of Chinese way of thinking and doing and they are still influencing people's living nowadays at every corner of modern China.
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