[Senate Hearing 118-64]
[From the U.S. Government Publishing Office]


                                                      S. Hrg. 118-64

                FOREIGN COMPETITIVE THREATS TO AMERICAN
                   INNOVATION AND ECONOMIC LEADERSHIP

=======================================================================

                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON INTELLECTUAL PROPERTY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                          UNITED STATES SENATE

                    ONE HUNDRED EIGHTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 18, 2023

                               __________

                          Serial No. J-118-11

                               __________

         Printed for the use of the Committee on the Judiciary
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                               __________

                                
                    U.S. GOVERNMENT PUBLISHING OFFICE                    
53-114 PDF                 WASHINGTON : 2023                    
          
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                       COMMITTEE ON THE JUDICIARY

                   RICHARD J. DURBIN, Illinois, Chair
DIANNE FEINSTEIN, California         LINDSEY O. GRAHAM, South Carolina, 
SHELDON WHITEHOUSE, Rhode Island             Ranking Member
AMY KLOBUCHAR, Minnesota             CHARLES E. GRASSLEY, Iowa
CHRISTOPHER A. COONS, Delaware       JOHN CORNYN, Texas
RICHARD BLUMENTHAL, Connecticut      MICHAEL S. LEE, Utah
MAZIE K. HIRONO, Hawaii              TED CRUZ, Texas
CORY A. BOOKER, New Jersey           JOSH HAWLEY, Missouri
ALEX PADILLA, California             TOM COTTON, Arkansas
JON OSSOFF, Georgia                  JOHN KENNEDY, Louisiana
PETER WELCH, Vermont                 THOM TILLIS, North Carolina
                                     MARSHA BLACKBURN, Tennessee
             Joseph Zogby, Chief Counsel and Staff Director
      Katherine Nikas, Republican Chief Counsel and Staff Director

                 Subcommittee on Intellectual Property

                 CHRISTOPHER A. COONS, Delaware, Chair
MAZIE K. HIRONO, Hawaii              THOM TILLIS, North Carolina, 
ALEX PADILLA, California                 Ranking Member
JON OSSOFF, Georgia                  JOHN CORNYN, Texas
PETER WELCH, Vermont                 TOM COTTON, Arkansas
                                     MARSHA BLACKBURN, Tennessee
             Aaron Stanislawski, Democratic Senior Counsel
               Seth Williford, Republican General Counsel

                            C O N T E N T S

                              ----------                              

                       APRIL 18, 2023, 2:32 P.M.

                    STATEMENTS OF COMMITTEE MEMBERS

                                                                   Page

Coons, Hon. Christopher A., a U.S. Senator from the State of 
  Delaware.......................................................     1
Tillis, Hon. Thom, a U.S. Senator from the State of North 
  Carolina.......................................................     3

                               WITNESSES

Witness List.....................................................    31
Cohen, Mark, senior fellow, Berkeley Center for Law and 
  Technology, and director, Asia IP Project, University of 
  California Berkeley School of Law, Berkeley, California........     5
    prepared statement...........................................    32
Harrison, Suzanne, founder and principal, Percipience LLC, and 
  chair, Patent Public Advisory Committee, San Francisco, 
  California.....................................................    10
    prepared statement...........................................    66
Kilbride, Patrick, senior vice president, Global Innovation 
  Policy Center, U.S. Chamber of Commerce, Washington, DC........     6
    prepared statement...........................................    75
Turpin, Matthew, visiting fellow, Stanford University's Hoover 
  Institution, and senior advisor, Palantir Technologies, 
  Washington, DC.................................................     8
    prepared statement...........................................    86

                               QUESTIONS

Questions submitted to Mark Cohen by Senator Tillis..............    96
Questions submitted to Suzanne Harrison by Senator Tillis........   102
Questions submitted to Patrick Kilbride by Senator Tillis........   108
Questions submitted to Matthew Turpin by Senator Tillis..........   114

                                ANSWERS

Combined responses of Mark Cohen and Suzanne Harrison to 
  questions submitted by Senator Tillis..........................   120
Responses of Patrick Kilbride to questions submitted by Senator 
  Tillis.........................................................   131
Responses of Matthew Turpin to questions submitted by Senator 
  Tillis.........................................................   146

                MISCELLANEOUS SUBMISSIONS FOR THE RECORD

Submitted by Chair Coons:

    American Apparel & Footwear Association, letter, April 25, 
      2023.......................................................   161
    Invent Together, letter, April 17, 2023......................   165
    National Association of Manufacturers, letter, April 19, 2023   167
    National Association of Manufacturers, letter to the U.S. 
      House Select Committee on Strategic Competition Between the 
      United States and the Chinese Communist Party, Feb. 27, 
      2023.......................................................   169
    National Association of Manufacturers, letter to the Office 
      of the U.S. Trade Representative, Jan. 30, 2023............   178

Submitted by Senator Hirono:

    Fechner, Holly, Fortune, op-ed article, April 18, 2023.......   216

 
                      FOREIGN COMPETITIVE THREATS
                         TO AMERICAN INNOVATION
                        AND ECONOMIC LEADERSHIP

                              ----------                              


                        TUESDAY, APRIL 18, 2023

                      United States Senate,
             Subcommittee on Intellectual Property,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice at 2:32 p.m., in 
Room 226, Dirksen Senate Office Building, Hon. Christopher A. 
Coons, Chair of the Subcommittee, presiding.
    Present: Senators Coons [presiding], Durbin, Hirono, 
Padilla, Welch, Tillis, Cruz, and Blackburn.

        OPENING STATEMENT OF HON. CHRISTOPHER A. COONS,
           A U.S. SENATOR FROM THE STATE OF DELAWARE

    Chair Coons. This hearing will come to order. I'd like to 
thank our four witnesses for participating today. I'd like to 
also thank Ranking Member Tillis and his staff for working so 
closely together with me and mine on a consensus basis. You and 
your team, Senator, have been a great partner on these issues 
and I thank you for your partnership and leadership.
    Today, we're going to explore foreign threats to American 
innovation and economic leadership. This is a timely and 
critical topic and I'm looking forward to a productive 
conversation. America's leadership on the global stage depends 
on our ability to foster and protect innovation and creativity, 
both at home and abroad. Our competitors and adversaries 
recognize this fact.
    China, for example, has been trying now for decades to 
unseat America as the world's innovation superpower. To do so, 
Chinese governments and companies collaborate to acquire 
foreign technology and create domestic innovation industries. 
This isn't a surprise, as IP drives economic growth. The USPTO 
reported that in 2019, IP-intensive industries--things like 
computer technology, pharmaceuticals, entertainment--accounted 
for nearly 50 million American jobs and $7.8 trillion in 
economic value, representing 40 percent of our GDP.
    Innovation is a key driver for our competitiveness and our 
national security. China's focus on IP raises national security 
concerns and questions about how China is manipulating rules-
based international systems to its own advantage. We'll explore 
those concerns and questions today with our panel of witnesses.
    China has pursued innovation and economic supremacy in part 
by using illegal means. Brazen trade, secret theft, and 
economic espionage by China is well documented. According to 
the Department of Justice, approximately 80 percent of the 
economic espionage cases it prosecutes involve trade secret 
theft by the Chinese government or its agents.
    Trade secret theft has touched my own State of Delaware. 
Our oldest or perhaps best known company, DuPont--Chinese 
nationals stole trade secrets protecting their innovative 
titanium dioxide production technology and sold these secrets 
to a Chinese state-owned company for $30 million.
    We also need to be concerned about the threats posed by 
counterfeit goods often sourced from abroad. In 2021, four-
fifths of all counterfeit goods entering the United States 
originated in China. Although we seized $3 billion of 
counterfeit goods at the border in the last year, this amounts 
to a small fraction of the total. These counterfeit products 
can be unsafe and harm consumers. As Co-Chair of the 
Congressional Trademark Caucus, alongside Senator Grassley, I 
know just how challenging and dangerous counterfeits can be.
    For example, prescription drugs that are counterfeit may 
not contain the active ingredient, or can contain even worse, 
deadly elements like fentanyl. Fake airplane parts widely found 
in service centers around the world can increase the chances 
that a plane malfunctions or crashes.
    Beyond illegal means, China has increasingly used legal 
processes to unseat America as the world's economic and 
innovation leader. Although these means haven't received as 
much media attention as illegal activities, they're equally as 
harmful and more difficult to combat. China has manipulated 
standards-setting boards and flooded the USPTO with trademark 
and patent applications to slow down all of its work.
    The threats to our economic leadership and our innovation 
ecosystem aren't just from China. Other countries like India 
have also been inconsistent in their IP protection and 
enforcement, for example.
    At the same time, emerging weaknesses in our own IP system 
have made it more difficult for rights holders to assert their 
rights, protect themselves, and safeguard their IP from either 
domestic or foreign threats. Patents are today easier to 
challenge in the PTAB in trials than in district courts. Patent 
owners who prevail in litigation can no longer rely on securing 
permanent injunctions to prevent ongoing infringement.
    I also remain concerned about unresolved issues around the 
scope of eligible subject matter or patentability. More than a 
decade after the Supreme Court waded into patent eligibility 
law, confusion reigns about what areas of innovation are still 
eligible for patent protection. Critical technologies like 
medical diagnostics and software have been excluded from 
protection here, but qualify for patent protection in Europe 
and China.
    These and many other challenges have led to the slipping 
stature of our IP system on the global stage and jeopardize 
long-term investments in research. I worry that China and other 
adversaries and competitors will exploit our system for their 
advantage.
    So I've worked hard on a variety of bills, bipartisan 
legislative proposals to address these concerns, and I will 
reference them today and look forward to exploring them with my 
Ranking Member and other Members of this Subcommittee. With 
Senator Tillis's cooperation--bless you, Senator--we've 
assembled a great panel with a diversity of views and 
perspectives to grapple with these and other issues. I'll 
introduce them shortly, but we'll now turn over to Senator 
Tillis for his opening statement. Senator.

             OPENING STATEMENT OF HON. THOM TILLIS,
        A U.S. SENATOR FROM THE STATE OF NORTH CAROLINA

    Senator Tillis. Thank you, Chairman. It's good to get the 
band back together. I've enjoyed working with you on the 
Intellectual Property Subcommittee and alternating statuses as 
Chair and Ranking Member. And I'm very optimistic that we're 
going to pick up where we left off and I look forward to that. 
I also want to thank my staff, the folks who do a lot of the 
work, have all the technical details. And especially, and also, 
your staff because they've been great to work with.
    I'm looking forward to what we can accomplish in this 
current Congress, but I think we can be proud of what we've 
accomplished over the past several years together. And I would 
also like to thank Senator Leahy for the work that he did. A 
special thanks to Senator Hirono. Senator Hirono, I think you 
may actually have a perfect attendance record for IP 
Subcommittee hearings. So, Senator Welch, that's an aspiration 
for you. But we do appreciate your engagement and the 
opportunity to work for us together. And Senator Welch, thank 
you for being here. Welcome to the Subcommittee.
    You know, whether it's patents, trademarks, copyrights, or 
trade secrets, a strong, reliable, and predictable IP right is 
paramount to incentivizing U.S. innovation and creativity. 
Innovation and creativity fuel economic growth for a great 
country and it has to be protected and nurtured so that it 
continues to do so well in the future. Based on the USPTO's 
latest edition of their IP and U.S. economy report, an 
estimated 63 million U.S. jobs directly or indirectly relied on 
IP-intensive industries. And these industries accounted for 
nearly 41 percent of our GDP.
    Our purpose today is to explore the ways in which foreign 
adversaries threaten U.S. economic innovation dominance through 
intellectual property theft and abuse. As the Chair said, the 
most notable threat, of course, is the Chinese Communist Party. 
But to be clear, they're not the only foreign bad actor 
undermining U.S. intellectual property. In fact, I could cite a 
few, particularly in the IP space for pharmaceuticals and 
biotech that some of our greatest friends and partners have 
disagreements in just exactly how far our IP protection should 
go.
    But the reality is, China is the greatest violator of theft 
and it has catapulted them into an economic powerhouse. I'm 
always reminded of what almost looks like a movie set of a 
Pipe. It's called Charlotte Pipe, in North Carolina. About 100-
year-old business. Foundry is very modern, but looks like the 
foundry when it was first established. You can go to a province 
in China and see what looks like a movie set. Charlotte Pipe. 
Stamped Charlotte Pipe on counterfeit goods are on, well, 
obviously, counterfeit goods.
    That has to stop. A lot of their success is based on the 
innovation and the creativity of this Nation. Their goal is to 
assume the title as a global innovation leader regardless of 
the methods employed. Methods such as theft via espionage and 
counterfeiting which cost the U.S. hundreds of billions of 
dollars each year. And beyond theft, a significant concern for 
all of us here today should be the CCP overtaking the United 
States in domestic innovation, rather than a current reliance 
on theft, using past theft to become a competitor head-to-head.
    We've got to do better. We've got to incent innovation. And 
I believe that the foundation or the bedrock for our success is 
making sure that we protect intellectual property rights. Given 
the urgency of the threat to the United States and our IP 
community, it is appropriate that we kick off this Subcommittee 
with this topic.
    I'm happy once again to be working closely with the Chair. 
I look forward to your testimony. And I do think there may be a 
vote, depending upon how long this Committee goes, but we will 
continue to push forward. And, Mr. Chair, I'm happy to either 
miss the vote, or have the vote happen after the hearing so 
that we can hear all of your testimony. Thank you.
    Chair Coons. Thank you, Ranking Member, Tillis. Would 
Chairman Durbin like to make a brief statement?
    You are fine. But thank you so much for joining us. And, 
Senator Welch, welcome to the Subcommittee.
    Senator Tillis. I thought he was just taking roll, that's 
why I didn't thank him. Thank you, Chair.
    Chair Coons. We now will turn to our witness panel. Today, 
we welcome four witnesses to testify to us about Foreign 
Competitive Threats to American Innovation and Economic 
Leadership.
    Our first witness, Mark Cohen, is distinguished senior 
fellow and director of the Asia IP Technology Project at the 
Berkeley Center for Law and Technology. Prior to teaching, 
Professor Cohen served as senior counsel to the U.S. Patent and 
Trademark Office and was the Office's first attache in China.
    Next, we have Patrick Kilbride, senior vice president of 
the Global Innovation Policy Center at the Chamber of Commerce. 
Mr. Kilbride oversees the Center's multilateral and 
international programs promoting the enforcement and protection 
of IP rights. He served in the Bush administration as Deputy 
Assistant U.S. Trade Representative for Intergovernmental 
Affairs and Public Liaison.
    Next, we have Matthew Turpin. Mr. Turpin is a visiting 
fellow at the Hoover Institution and senior advisor at Palantir 
Technologies. He served at the U.S. National Security Council 
as the director for China and senior advisor on China to the 
Secretary of Commerce under the previous administration. He 
also served in the Obama administration as an advisor on the 
People's Republic of China to the chairman and vice chairman of 
the Joint Chiefs of Staff at the Pentagon.
    Last, but certainly not least, we have Ms. Suzanne 
Harrison, founder and principal, Percipience LLC, a board level 
advisory firm focused on IP strategy and management, and 
quantifying and mitigating IP risk. Ms. Harrison also serves as 
chair of the Patent Public Advisory Committee.
    Let me just briefly lay out mechanics. After we swear in 
the witnesses, each witness will have 5 minutes to provide 
their opening statement. Then we'll proceed to a first and 
possibly second round of questioning of 5 minutes each. And 
with that, if you would all stand. Could you please raise your 
right hand?
    [Witnesses are sworn in.]
    Chair Coons. Thank you. Let the record reflect all swore in 
the affirmative. Mr. Cohen, you may proceed with your opening 
statement.

STATEMENT OF MARK COHEN, SENIOR FELLOW, BERKELEY CENTER FOR LAW 
 AND TECHNOLOGY, AND DIRECTOR, ASIA IP PROJECT, UNIVERSITY OF 
    CALIFORNIA BERKELEY SCHOOL OF LAW, BERKELEY, CALIFORNIA

    Professor Cohen. Thank you very much, Chairman Coons, 
Ranking Member Tillis, Senators and staff. It's a pleasure to 
be here today. Senators, China's rise did not occur overnight. 
Rather, we have made profound mistakes in not identifying 
China's increasing innovative capacity. And we need to proceed, 
now, without the bureaucratic myopia, antique organizational 
structures, and indifference to data that have haunted prior 
administrations. And we need to develop approaches that are in 
our long-range best interests. The needs are urgent.
    During the past 10 years, U.S. competitiveness in key 
technologies has eroded. Various studies based on such measures 
as patents, scientific publications, widely cited papers, or 
technology clusters have shown that China's capacity to 
innovate in many areas now exceeds the United States. I begin 
today my brief talk with some immediate steps. I follow this 
with two long-range issues: talent and transparency. In terms 
of immediate steps, there are three sub-issues: unfilled 
positions; self-strengthening our IP system; and the need for a 
whole-of-U.S. Government approach.
    First, we need to fill the IPEC role. We should also 
establish a Deputy USPTO Director for International Affairs who 
could marshal the PTO's resources to better serve the inter-
agency. There's also an important role for our Solicitor 
General and/or the PTO to educate our courts when they come 
into conflict with actions from Chinese courts. This role 
becomes more acute in light of China's stated goals of becoming 
a center for resolving international IP and commercial 
disputes. And it's reflected, I believe, in the Defend Courts 
Act from this Committee.
    Second, we also need to clean up our own legal house. Our 
IP system has weakened as China has strengthened its own, often 
in the same precise areas. Here are several issues. One of them 
was just identified--creating stable and predictable 
eligibility outcomes, including fixing 101 issues. Another, is 
addressing low-quality IP filings, particularly in trademarks 
from China. Another, is to have China and other countries 
disclose government subsidies of USPTO patent and trademark 
filings. And another, is to develop better data driven 
approaches to China's technological challenges. I also note 
that the TRIPS waiver extension for therapeutics and 
diagnostics should also be carefully considered, if we're going 
to go forward on that. I personally oppose it.
    Third, we also need to create a whole-of-Government 
approach to deal with these challenges. I would like to see a 
kind of task force of leading tech executives, academics, and 
officials with a broad mandate that could address the kind of 
multidisciplinary challenges that we face. I should say, China 
doesn't say, ``Let's infringe on U.S. patent.'' They say, ``How 
we are going to acquire that technology?'' And that really 
demands a whole-of-Government approach because it's 
interdisciplinary in nature.
    With my remaining time, I will focus on non-competes and 
transparency. A proposed FTC rule banning non-competes will 
make trade secrets much harder to enforce in local markets. 
Non-compete agreements give companies critical time to adjust 
to the possible loss of proprietary technology from employee 
mobility. They permit a company to protect its trade secrets 
without being forced to disclose it to judicial bodies. They 
are simply easier to enforce.
    Today in China, there's a 30 percent chance of winning a 
trade secret case. However, the odds change to 66 percent if a 
non-compete is involved. Why would we deprive our companies of 
a better and fairer chance to win a trade secret case?
    Professor Denis Simon from UNC, testifying before Congress 
a few months ago, noted that Chinese employees in the 
semiconductor sector are often offered triple their salary in 
order to migrate to a competing company. And is this what we 
want with our CHIPS Act funding? That teams of U.S. employees 
are poached by China or other countries as has happened in 
California? Giving our companies the ability to staunch the 
poaching of tech talent is critical to our efforts to develop 
greater technological self-sufficiency.
    My final concern is transparency, particularly transparency 
of judicial decisions. I've been involved in this area my whole 
career. Yet, if you ask me today if the Chinese judicial system 
is biased against foreigners, I could not comprehensively 
answer you. If you ask me if the Phase One Agreement and its 
commitments to improve China's IP system such as providing a 
patent linkage regime for pharmaceuticals are being fully 
implemented, I could not answer you. Most of the cases are not 
published.
    I can answer you that based on available data and dozens of 
studies, that foreign parties do very well in IP litigation in 
China. But these studies are based on Chinese government 
curated databases. We need full transparency, not curated 
transparency. Part of the reason that China may not be living 
up to its commitments is that we have no way of monitoring 
China's implementation of them. Part of the responsibility for 
that also rests with us for not adequately prioritizing 
transparency. Thank you for your attention to these important 
issues.
    [The prepared statement of Professor Cohen appears as a 
submission for the record.]
    Chair Coons. Thank you very much, Professor Cohen. Mr. 
Kilbride.

 STATEMENT OF PATRICK KILBRIDE, SENIOR VICE PRESIDENT, GLOBAL 
INNOVATION POLICY CENTER, U.S. CHAMBER OF COMMERCE, WASHINGTON, 
                               DC

    Mr. Kilbride. Thank you, Mr. Chairman, Senators. Appreciate 
it. We're here on behalf of the U.S. Chamber because we see the 
U.S. IP-based innovation ecosystem under duress. This is a 
multi-stakeholder ecosystem that, more successfully than anyone 
else in the world, advances knowledge and develops tests, 
regulates, and delivers new technologies in a useful form to 
end users.
    The National Science Foundation has found that three-
quarters of the R&D performed within this ecosystem comes from 
the private sector, an investment that relies on intellectual 
property rights backed by the rule of law. IP is so critical 
because it enables those investments in long-term, high 
capital, high risk projects. It enables owners to assign a 
value to their intangible assets and enables them to engage in 
exchange of assets with other stakeholders within the ecosystem 
on mutually agreed and enforceable terms.
    And yet, this innovation ecosystem is under threat, 
systemically, in a multilateral level and in piecemeal national 
level attacks. It takes the form of online piracy, 
counterfeiting, trade secret theft, erosion of legal rights, 
forced technology transfer, political stigmatization of IP, and 
outright waiver of global IP commitments creating an 
environment where American innovation and creativity is 
vulnerable.
    These threats come from every corner of the globe. 
Certainly China, where forced technology transfer is part of 
the exercise. But also closer to home, where the EU Data Act, 
for instance, could force American companies to share trade 
secrets with governments and possibly even competitors. Here at 
home, we see self-inflicted wounds, such as U.S. support for 
the TRIPS waiver, the FTC non-competes attack that Professor 
Cohen mentioned, and the proliferation of abusive practices, 
and third-party litigation financing that make the cost of 
prosecuting patents far more expensive.
    Americans are encountering these harms at home in the form 
of counterfeiting and piracy. The Chamber has studied this. The 
OECD has finding illicit trade on the order of half a trillion 
dollars each year, with obvious implications for health and 
safety, including cybersecurity, and American jobs and growth. 
The businesses tell us if we can make it, they can fake it. It 
impacts everything with some obvious--you know, fake 
pharmaceuticals were mentioned, food, cosmetics, toys, medical 
equipment, and chemicals, for instance.
    In the COVID-19 pandemic, the increase in online shopping 
led fakes being delivered directly to Americans' front door in 
the form of small parcels, which exacerbates the enforcement 
challenge. The Chamber is working to address these challenges 
with our public sector partners through groundbreaking public-
private partnerships. Including, an MOU signed with the U.S. 
Customs and Border Protection and a detailee project to the 
National IPR Center, where we're helping companies to share 
information directly with customs agents, HSI investigators so 
that they can stop seizures from getting in, identify the bad 
actors, and prosecute the crimes.
    We believe a similar model could be applied in the 
streaming piracy space, and we're pursuing conversations with 
relevant agencies to that end. I want to thank Congress and the 
Senate for passage of the INFORM Consumers Act in the last 
Congress, which brings important transparency to the e-commerce 
space. We see our members in those industries doing important 
work to do proactive vetting and monitoring of sellers, 
prosecuting of bad actors, cooperating with brand owners, and 
raising consumer awareness together with the Chamber.
    The streaming piracy threat, similarly to counterfeits, 
costing us 290,000 creative professional jobs in 2020--costing 
just those people $30 billion in revenue, but economywide, up 
to half a million jobs and $115 billion in GDP, undermining a 
creative sector that employs 5 million Americans and provides 
nearly 12 percent of the U.S. economy. One of the challenges we 
have that makes our creative sector more vulnerable is that 
U.S. Government does not currently provide the tools to shut 
down foreign-based infringing websites. We can shut down U.S.-
based websites, and criminal and civil penalties apply, but we 
cannot do it for foreign-based infringement.
    We talked a lot about China, and obviously, I think the 
scope of counterfeits from China is known to everyone. The 
Chairman mentioned 80 percent of seizures at the U.S. border. 
With piracy, the challenge with China is more the market access 
barriers that prevent a legitimate market from providing access 
to consumers there so creating, you know, a pirate market. We 
see rule by law instead of rule of law. This creates an 
environment of public policy risk that's anathema to investment 
and innovation and creativity. The Chamber has a new study on 
that, which I'd be happy to share with the Committee. Thank you 
very much, Mr. Chairman.
    [The prepared statement of Mr. Kilbride appears as a 
submission for the record.]
    Chair Coons. Thank you, Mr. Kilbride. Mr. Turpin.

    STATEMENT OF MATTHEW TURPIN, VISITING FELLOW, STANFORD 
 UNIVERSITY'S HOOVER INSTITUTION, AND SENIOR ADVISOR, PALANTIR 
                  TECHNOLOGIES, WASHINGTON, DC

    Mr. Turpin. Chairman Coons, Ranking Member Tillis, and 
other Members of the Committee, thank you for inviting me 
today. While I'm a senior advisor at Palantir Technologies and 
a visiting fellow at Stanford's Hoover Institution, the views I 
express today are my own, and they're shaped by my last dozen 
years focused on U.S./China policy during both the Obama and 
Trump administrations.
    A decade ago, Admiral Dennis Blair and Governor Jon 
Huntsman chaired the Commission on Theft of American 
Intellectual Property. Their work revealed that on an annual 
basis, United States suffered approximately $300 billion in 
economic loss due to economic espionage, primarily by the 
People's Republic of China, along with the loss of millions of 
jobs. Over a decade, that's $3 trillion in losses.
    In 2017, the U.S. Trade Representative conducted an 
investigation under Section 301 of the Trade Act to examine 
whether the PRC government actions harm the United States. That 
investigation revealed four elements of Beijing's technology 
transfer regime.
    First, the use of opaque administrative processes, joint 
ventures requirements, foreign ownership and limitations, and 
other mechanisms to require or pressure the transfer of 
valuable U.S. technology to the PRC.
    Second, the PRC government's actions and policies that 
deprive U.S. companies of the ability to set market-based terms 
and technology-related negotiations.
    Third, the government's direction and unfair facilitation 
of outbound and Chinese investment targeting U.S. companies and 
assets in key industry and technology sectors.
    And fourth, the PRC government conducts economic espionage 
using both human and cyber tradecraft, including the direct 
participation of PRC intelligence services like the Ministry of 
State Security.
    The IP Commission, the Section 301 investigation, and 
dozens of criminal prosecutions over multiple administrations, 
expose a truth that many have found reluctant to acknowledge. 
That the United States is the victim of a comprehensive, 
intentional campaign by the PRC, which results in grave 
economic and national security harms. In many ways, the cost of 
these harms exceed the benefit that Americans gain from our 
economic relationship with China.
    This comprehensive state-sponsored campaign strikes at the 
very heart of our economy, and the economies of our allies, and 
endangers the qualitative military advantage that constitutes 
our deterrence against both Beijing and Moscow. Our economy, 
while broad and diverse, relies upon a foundation of innovation 
and technology leadership. That foundation, reinforced by a 
constitutional and legal superstructure supervised by this 
Committee, that guarantees property rights and builds 
transparency which incentivizes innovation and free markets 
over mercantilism and state control. Our legal and social 
structures create the environment for prosperity innovation 
that is the envy of the world.
    Our national security is built upon a qualitative military 
advantage which offsets the quantitative and geographic 
advantages of our potential adversaries. This qualitative 
advantage persuades potential adversaries that the costs of 
military aggression will far exceed the benefits that they 
could gain. To create this qualitative military advantage, the 
U.S. military relies upon unequal access to the technological 
advantages generated by our innovation economy.
    The Chinese Communist Party is attacking this dynamic 
economic and national security system with its comprehensive 
campaign of forced technology transfer and economic espionage. 
Beijing abuses its access to the globalized economic system to 
undermine the United States and other open societies.
    As this Subcommittee well knows, the United States has 
extensive layers of protection. Dedicated and hardworking 
Americans across departments and agencies work every day to 
protect us from this hostile campaign. Unfortunately, the PRC 
adapts its strategy and tactics to exploit gaps and seams in 
our protective layers more rapidly than we can adapt.
    Additionally, PRC entities acting at the direction of the 
PRC government weaponized the U.S. legal system in ways that 
are against the interests of Americans. And to date, we have 
been relatively little to impose costs on those PRC entities 
that benefit from this campaign.
    The United States must consider a shift to holding the PRC 
and its commercial entities collectively responsible. Episodic 
and uncoordinated responses by individual departments and 
agencies, no matter how well meaning, are no longer sufficient.
    I have four recommendations. First, identify the 
beneficiaries of IP theft, forced technology transfer, and 
economic espionage.
    Second, enable closer coordination across the U.S. 
Government and the private sector to understand the tactics and 
techniques that the PRC uses.
    Third, compel corporate and other private sector victims to 
be transparent about IP theft and other forced technology 
transfer requirements.
    And fourth, stop the importation of goods produced with, or 
which benefits from, this harmful campaign.
    Chairman Coons, Ranking Member Tillis, other Members of the 
Committee, thank you for this opportunity to testify. I look 
forward to addressing your questions.
    [The prepared statement of Mr. Turpin appears as a 
submission for the record.]
    Chair Coons. Mr. Turpin, thank you for your testimony. Ms. 
Harrison.

     STATEMENT OF SUZANNE HARRISON, FOUNDER AND PRINCIPAL, 
 PERCIPIENCE LLC, AND CHAIR, PATENT PUBLIC ADVISORY COMMITTEE, 
                   SAN FRANCISCO, CALIFORNIA

    Ms. Harrison. Chairman Coons, Ranking Member Tillis, 
Senators, it's an honor to discuss three ways this Committee 
can utilize IP to ensure our national security and increase our 
economic competitiveness. I'm here testifying in my personal 
capacity, and all the views and opinions expressed today are my 
own.
    My background is in executive corporate management with 
emphasis in strategy, finance, and organizational behavior. 
I've spent the last 30 years advising multinational 
corporations, small companies, inventors, and patent officers 
around the world how to use IP to increase value for 
organizations and economies. I have created, defined, and 
benchmarked best practices for intellectual property 
management, and I've written three seminal books on the 
subject. Many of the strategies that you see nation-states 
employing were learned by watching how companies deal with 
their competitors.
    I am currently the chair of the USPTO PPAC, where we submit 
a report to Congress in the White House every year with our 
view of what is happening in the USPTO and the IP ecosystem, 
along with recommendations for both the USPTO and Congress on 
how to improve the IP system. In 2020, with co-authors Jeanne 
Suchodolski and Bowman Heiden, we identified that the Chinese 
government is currently utilizing a competitive strategy which 
is a systematic and coordinated effort to achieve technical and 
economic dominance through both legal and illegal means to 
misappropriate U.S. technology, undermine our innovation 
ecosystem, economic stability, and national security. We named 
this Chinese strategy Innovation Warfare.
    The U.S. needs an effective counterstrategy to address this 
new competitive threat. IP is the newest tool in our 
comprehensive defense toolbox, and we must do a better job of 
utilizing it to keep our country safe and grow our economy. I 
would now like to discuss the three ways this Committee can 
help.
    First, create and disseminate a new IP narrative. For the 
past 17 years, the narrative around IP has focused on 
optimizing the IP system for one set of industries over 
another. This ultimately led to the formation and 
implementation of PTAB at the USPTO. Unfortunately, this also 
led to a lack of public confidence with the USPTO as this set 
up a false and damaging narrative that either the USPTO 
examiners were granting patents that should not have been 
granted, or that PTAB judges were invalidating patents that 
were rightfully granted. Redirecting that narrative is 
necessary to strengthen public perception of IP. Describing how 
IP can help the Nation economically, technologically, and as a 
vital part of our national security strategy is needed.
    Two, shore up our IP ecosystem. In the Innovation Warfare 
paper, we discuss using patents as technology control 
positions. The concept of a technology-controlled position only 
works if patents can actually exclude. Over the past 17 years, 
the Supreme Court has significantly eroded the ability of a 
patent to exclude others. Congress needs to restore this 
fundamental right and reduce ambiguity created by the judiciary 
across the IP ecosystem in areas such as obviousness, 
eligibility, claim construction, damages, and more. This time, 
Congress should account for the role of IP in maintaining 
economic and technological competitiveness, and optimize the 
system in ways which allow for different industries to use and 
value patents differently. Successfully growing our economy 
requires all industries to utilize IP in ways that are 
advantageous to their growth.
    Finally, clearly define the leadership role of the USPTO in 
this new environment. While it is true that the Defense 
Department has the statutory authority to keep our Nation safe, 
the needed expertise to bring this counterstrategy to fruition 
is scattered widely across multiple agencies, as our panelists 
here today can attest. The USPTO has data that can be useful to 
enable other agencies to visualize these new and emerging 
battlefields, and feed into a predictive forecasting model such 
as future-oriented technology analysis.
    This Committee should work with Director Vidal to define 
and authorize the USPTO's role in working with the DOD on FTA 
matters, specifically, and on a counterstrategy more broadly. 
I'd like to conclude my remarks by briefly reflecting on what 
the other witnesses have shared.
    Data matters a lot. And we need more of it, and we need to 
use it more consistently. We need a defined holistic strategy 
and not incremental changes to our IP system which requires a 
different way of thinking about this problem. Our freedoms and 
values that are embedded in our legal system are at stake, and 
we are under attack. That needs to be thought through very 
carefully. Thank you for your attention, and I look forward to 
answering any questions you may have.
    [The prepared statement of Ms. Harrison appears as a 
submission for the record.]
    Chair Coons. Thank you, Ms. Harrison. Thank you, all four 
of you, for your thoughtful testimony. I appreciate the various 
perspectives you've brought to bear about foreign threats to 
American IP and potential ways to counter them. I'll start my 
questioning by exploring China's plans to become an innovation 
superpower, and the illegal methods they're using to advance 
their goals. And if we run out of time in this round, I'll 
likely take a second to explore how we can strengthen our IP 
system.
    Professor Cohen, if I might start with you. In 2015, the 
Chinese government announced its Made in China 2025 Initiative, 
which identified key industries and technologies for which it 
hoped to supplant U.S. global leadership. Can you briefly 
explain China's strategic IP plans, and how you expect their 
strategy to evolve in the coming years?
    Professor Cohen. Yes. It's a great question, and it could 
be the subject of many hearings unto itself. I think most 
Americans, most individuals from market economies, would be 
shocked at the level of industrial policy planning that goes 
behind not only manufacturing, but innovation and, more 
specifically, intellectual property.
    So, in addition to Made in China 2025, we have the national 
IP strategy, which is usually in tenure, increments. And we 
also have local and national ministerial-level policies 
governing IP, innovation, manufacturing, and related areas. You 
know, most of these--the concerning areas are in sectors that 
we would consider strategic or emerging industries: robotics; 
AI; 5G; 6G; high-tech genomics; advanced manufacturing 
techniques; etc.
    In many cases, they seek some degree of dominance. 
Sometimes it's measured in terms of patents, or technology, or 
exports, or talent. And talent programming is also a 
significant part of these industrial policies. I don't know any 
counterpart to that in the United States about how to develop 
talent through the universities or even bringing in foreign 
talent. And that feeds into a lot of these national talent 
concerns that the FBI and our police agencies have problems 
with--luring talented professors, corporate officials, 
technologists to China, to help China advance its economy.
    My own belief is a lot of what happens in China that is 
nefarious is not so much government-mandated, but government-
inspired. There's a difference. If China wants to acquire 
technology, it will do it at the lowest cost, with the least 
publicity possible. And in many cases, that means that 
individuals want to try to satisfy these mandates in order to 
get incentives, subsidies, promotion, recognition. And that 
feeds into, really, a vast plan to increase innovative capacity 
and technological and national security capacity in a wide 
range of sectors.
    Chair Coons. Thank you. Mr. Kilbride, if I might, just the 
economic impact of online piracy and counterfeiting interest 
me. It's been reported four-fifths of the U.S. population shops 
online. Nearly all of us do. And a significant proportion of 
the counterfeit markets moved to online. Have e-commerce 
platforms provided effective initiatives to assist in 
identifying and removing counterfeit products, the majority of 
which are coming from China?
    Mr. Kilbride. Thank you, Mr. Chairman. Great question. And 
the answer is, it's a mixed bag. Some are doing better than 
others. We see some real best practices, and we're working to 
benchmark those. They include some of the steps that I 
mentioned in my testimony, including very significant work to 
proactively vet, you know, sellers, which is assisted by 
passage of the INFORM Consumers Act, but also proactive steps 
on behalf of the industry.
    We see some companies investing in units that enable them 
to use their own data to share with prosecutors, and 
essentially, hand over cases ready to prosecute when they've 
identified bad-actor networks. And we see much more cooperation 
with brand owners. That's been a real improvement, but 
obviously there's more work to be done.
    Chair Coons. Well, thank you. The INFORM Consumers Act was 
an important step forward, Mr. Chairman. I'll mention that I 
have also worked with Senator Tillis on the SHOP SAFE Act that 
would hold platforms liable for the sales of harmful 
counterfeits unless they've adopted a set of best practices for 
evaluating sellers and products.
    Mr. Turpin, if I might, briefly, and then in the next 
round, I'll come to you, Ms. Harrison. Trade secret and IP 
theft through economic espionage disadvantage our companies, 
our national security, our global competitiveness. I'm 
concerned we're not doing enough to counter this theft, to 
impose costs on the beneficiaries. That's why I've worked on 
the SECRETS Act with Senator Cornyn, to help prevent goods made 
with stolen trade secrets from entering our market. Do you 
agree that preventing goods from being imported to the U.S. 
would help deter state-encouraged or state-sponsored IP theft?
    Mr. Turpin. Mr. Chairman, thank you. Absolutely. I think 
without the perception of a significant cost, it is unlikely 
that we would see a change in behavior. Right? So, 
fundamentally, we would need to see the imposition of costs. 
And that would mean that they don't gain access to this market 
for them to begin to view that largely this illegal behavior is 
not beneficial to them, and for them to even comprehend 
changing their behavior and doing something else.
    Chair Coons. So finding some way to impose sustained costs 
on the beneficiaries of IP theft is something I suspect all of 
you would recommend.
    [Witnesses nod their heads affirmatively.]
    Chair Coons. Let me defer now to my Ranking Member, Senator 
Tillis.
    Senator Tillis. Again, thank you all for being here and the 
time you took to prepare for the hearing. I think, Mr. Cohen 
and Ms. Harrison, you touched on it particularly based on your 
professional history. But if you're an early stage innovator, 
and you have uncertainty, or you define a fairly short period 
for protection of your IP rights, what does that do to 
innovation at that level of the ecosystem? I mean, it would 
seem to me that it would make it very difficult for some of 
these innovators to even get some of the funding that they 
would need to move forward. Do you agree?
    Ms. Harrison. I guess I'll go ahead and take that.
    Senator Tillis. We'll go in reverse order.
    Ms. Harrison. The answer is, it depends. Right now, there 
are certain industries where there are a few patents for a 
product--pharmaceuticals, chemicals--where you are required to 
have a patent before you'll get funding. But in high-tech in 
particular, investors are in and out so quick. They're not 
around long enough for the patent to take place, and so they 
don't require it. And most small inventors aren't bothering to 
get it, not recognizing that it could be helpful----
    Chair Coons. A downstream risk.
    Ms. Harrison. Well, it's not a tool that is currently 
helpful in their toolbox----
    Chair Coons. Okay.
    Ms. Harrison [continuing]. And the technology is moving so 
fast.
    Professor Cohen. If I may add, instability and duration are 
important concerns in the U.S. system. Certainly, 101 
instability has been a concern, I think, in driving capital and 
new enterprise formation. I would also note that the U.S. 
system, the IP system, particularly patent filings, tend to be 
highly corporatized. Oddly enough, even though we think of, you 
know, China Inc., China has a larger cohort of small inventors, 
both as a percentage and in absolute terms than the United 
States. I think if you lined up the individual inventors in 
China, they would be greater than the total number of 
applicants than the USPTO in a given year.
    So how do you incentivize those smaller enterprises to 
create and develop high quality IP is a really important issue 
for the future of this economy.
    Senator Tillis. Ms. Harrison, I think you did a good job of 
explaining at this early stage, our new innovators. But I can 
tell you that the lack of certainty and the risk of having your 
IP rights stripped has an absolute chilling effect on 
businesses. It has a chilling effect on innovation. And you 
all, at least two of you, maybe three, mentioned TRIPS waivers. 
That, to me--I want to hear from someone who thinks that TRIPS 
waivers are a good idea.
    But I can tell you congressional action here, there's a 
direct map between congressional action and a dramatic 
reduction in research in the very space that we own a 
leadership position. That's in life sciences, biotech, pharma. 
We've seen actions in this Congress that has had a direct 
measurable impact on small molecule research, for example. I 
mean, really the holy grail for some of the most challenging 
diseases that American citizens are experiencing. And I think 
the TRIPS waiver is a bad policy. Is there anybody on the panel 
who thinks that there's a good version of a TRIPS waiver?
    [Witnesses turn their heads negatively.]
    Senator Tillis. All right. Happy with that answer. How big 
of a threat do you see China's involvement with standard 
essential patents, SEPs, especially in light of their 
connection to critical international technical standards such 
as 5G? We'll start with you, Mr. Cohen.
    Professor Cohen. Sure. So, much as China subsidizes 
patents----
    Senator Tillis. Your speaker may be off. Red means that 
it's off.
    Professor Cohen. Yes, I got it. Sorry about that. Much as 
China subsidizes patent filing, it also subsidizes 
participation in standardization bodies. And certainly, China 
has also had goals to minimize its outpayments and royalties. 
Although, some companies like Huawei are starting to, you know, 
also receive royalties. So that's changing a little bit.
    But for a very long time, I would say over 20 years, China 
has sensed that it has to dominate standard-setting bodies, 
file as many patents in these bodies as possible, reduce 
outbound royalty payments, and drive the narrative. And, I 
think, in some areas they've succeeded, or at least they've 
certainly increased their presence.
    And we also have the threat of litigating in China and the 
possibility of anti-suit injunctions. That threat is diminished 
in recent years. But it is a real problem for companies that 
could risk forfeiting their China market, or their ability to 
license in China.
    Senator Tillis. Anything to add, Mr. Turpin?
    Mr. Turpin. Yes, Senator. I think one of the critical 
points to keep in mind is that standard essential patents 
essentially form the operating system of how our world works. 
And fundamentally, the values, norms, and processes of how our 
international system will work and all of our technical 
standards are going to be set by certain ways in which 
companies approach them. And certainly, I think, the PRC views 
an open, democratic, transparent international system is 
something that they would want to adjust in the direction that 
is more fitting of their authoritarian model. Right? And 
therefore use those standard essential patents to----
    Senator Tillis. More closed and opaque.
    Mr. Turpin. Correct. That's how they see it. And so I think 
there's very much a very political aspect of their involvement 
in this.
    Senator Tillis. Well, thank you, all. I'm going to ask a 
few other questions. And the good news for you all is I love 
your testimony. The bad news is, I've got a lot of questions 
for the record. Thank you, Mr. Chair.
    Chair Coons. Thank you, Senator Tillis. Chairman Durbin.
    Chair Durbin. Thanks. It's an honor to be here, and thank 
your Committee for its good work on a very important topic.
    The INFORM Act was the result of a conversation I had 10 
years ago with Home Depot, who said, ``They're selling our own 
home drills--the drills that we make just for our customers--on 
the internet in volume. They are either stolen or counterfeit. 
They've got to be one of the two. We only make them in China 
and sell them in the United States.'' Well, you'd think if they 
were stolen or counterfeit, the vendor would like to know that, 
too? They didn't want to hear anything about it, and they 
refused to identify the source of that drill being sold on the 
internet.
    It took us 10 years to create a law which we finally passed 
in December, which moves us in the right direction. Bill 
Cassidy was my Co-Sponsor on it. But it's an indication of what 
we have faced in the past and what American businesses faced in 
the past. Four minutes left. Not enough time to ask, let alone 
ask and answer the questions I have here. But I'll throw a few 
of them out there.
    First one, are any other countries in the world engaging in 
economic espionage? Maybe you can think about that for a 
second. Please identify them if you know them.
    Second, what is the impact of artificial intelligence on 
intellectual property? What is going to happen as we venture 
into this brave new world of AI and the information gathering 
that it's capable of?
    Third, did anybody read Tom Friedman's article in The New 
York Times over the weekend--on China? Please do. He went to 
the largest chip manufacturer in the world, and the most 
respected in Taiwan, and said, ``Why are you different? Why 
across the Taiwan Strait aren't the Chinese producing similar 
products?'' And the owner of the company said one word, 
``Trust. Businesses come to us and believe they can trust us to 
follow through with the assignment, whatever it happens to be, 
without compromising the integrity of their own property rights 
to that information. Trust. And they don't have it in China.''
    Which brings me to the final question. As I step back and 
try to reflect on the fact that we are just 50 years--a little 
over 50 years beyond ping-pong diplomacy, I'm trying to figure 
out what the hell happened in ``Red China''? ``Red China,'' we 
used to call it. Now we call it the Chinese Communist Party. 
What happened there? This wasn't supposed to happen. Not a 
market economy, not a democratic nation, and yet they are 
competing with this. Did they mandate innovation? Did they 
steal innovation? Is there something else going on there? What 
is happening in China now that makes them so competitive with 
the United States when they apparently have so many obstacles 
to overcome in an authoritarian government, nonmarket economy, 
and dealing with a democracy like our own and a capitalist 
economy? Just a few questions, and anybody who could be 
interested can tackle them.
    Chair Coons. Thank you. And, Mr. Chairman, you'll be 
pleased to know we're going to have an entire hearing on the 
impact of artificial intelligence on patents and innovation.
    But please take your time and answer Chairman Durbin's 
questions.
    Mr. Turpin. So, Chairman, maybe I'll take the first one and 
the last real quick. On the first one, I think it's pretty 
clear that the lion's share of it, of economic espionage, you 
know, as defined as a state actor pursuing it, is being 
conducted by the PRC. There are probably other examples, but in 
many ways those are quite minimal.
    And then, sort of what happened, I think fundamentally our 
strategy of using economic engagement to drive political 
liberalization absolutely scared the Chinese Communist Party. 
And so, for them to adopt the kinds of things that we would 
expect to be a responsible stakeholder in a liberal rules-based 
international system, would undermine their rule.
    And so, they have chosen to compete in a very different 
way. And that's the path, unfortunately, that we're down. I 
think we are on a pathway to a much more turbulent relationship 
with the PRC than even we see now.
    Mr. Kilbride. If I may, Leader Durbin, thank you, again, 
for INFORM. Extremely important. It's application both to 
organized retail crime and the threat of counterfeits is really 
going to have an impact. We're looking forward to monitoring 
how it's being implemented by the June deadline and working 
with companies to share best practices in that space. In terms 
of--I'd like to speak to your question about AI.
    I think, you know, initially we're going to see a real 
threat to our system in terms of rampant infringement. And 
ultimately, I would go on a limb to predict that we're going to 
see AI potentially become a savior of our system, because it's 
going to give us the technological tools to tackle some of the 
challenges that Ms. Harrison outlined that are extremely 
important in terms of being able to manage IP rights at the 
speed and scale that's necessary to reflect the technologies 
that we have today.
    Chair Coons. If anybody else wants to comment on the 
Chairman's questions, please feel free.
    Professor Cohen. I'd like to comment briefly, Mr. Chairman. 
A few points on this trust and what we missed with China. I 
think Taiwan is a unique model because of the fabless 
manufacturing for semiconductors that takes place there. That 
makes Taiwan a significantly large importer of U.S. technology 
that they pay for, or that is used to produce semiconductors on 
demand for manufacturers.
    So to do that, you have to have a legal system that you can 
rely upon that trade secrets won't be stolen. By the way, there 
is a lot of trade secret theft intermediating through Taiwan, 
but Taiwan has a decent enough legal system to handle it. So 
it's really a unique example of how you can develop a good IP 
system using licensing, and technology, and cooperation with 
the rest of the world, especially the United States. China is 
not a good example of that. Historically, China was a highly 
underlicensed environment. Actually, China paid about as much 
for our technology as Taiwan did in a given year just a few 
years ago.
    I think one of the reasons we went astray with China is we 
relied a lot on platitudes. Frankly, we assumed too much. We 
assumed that the internet would create democratic and open 
societies. That was not true. It can equally be used as a tool 
of repression. We assume that when a country begins to own IP, 
it would protect IP for everybody.
    And this goes back to the question that Ranking Member 
Tillis raised about China. Which was that in a state-controlled 
economy, it's not necessarily true that improving IP will 
necessarily raise all the boats. It may only affect the 
domestic participants or favor them over the foreign 
participants. So, I think there are a lot of things that we 
missed the boat on simply because we applied general 
perceptions of the rest of the world of market-oriented 
economies, applied them to China, and we found that really did 
not quite work the way we anticipated. At least, that's my 
observation.
    Ms. Harrison. I would just add on to Mark's comments that 
we cannot use history to predict the future. And that's what we 
did with the Chinese IP system. Because every other country, 
when they created an IP system, followed the same predictable 
steps. And we expected China to do that, and they did not.
    But what we can do is we have data. We have a lot of it. 
The USPTO has an immense amount of patent data, and we can 
actually begin to predict where the technology battles are 
going to be in the future. And rather than deal with them 
today, when we don't have very many tools in our toolbox, we 
can anticipate where they're going to be when we have time to 
make changes and actually stop the issue before it happens.
    And that's what this future technology-oriented analysis 
type of technology can do. We are not leading in that 
technology. Actually, South Korea invented it. China is 
currently utilizing it and giving it to all of their companies. 
We do not. It is not clear where in the United States DOD 
system that's being created. It's certainly not using patent 
data to predict those technology battles. We need to do a 
better job of taking the data we have and utilizing it in ways 
that we need to do.
    Chair Coons. Fascinating. Thank you all. Thank you to the 
members of the panel. Ms. Harrison, if I might just follow up 
on what Senator Tillis was asking, and I think something 
implicit in what Chairman Durbin was just asking. How do we 
strengthen U.S. leadership in standard-setting bodies? Standard 
essential patents and standard-setting bodies are critical, and 
foreign governments have taken a stronger and stronger role in 
this, in particular, Chinese. How do we strengthen the United 
States' role in standard setting?
    Ms. Harrison. I think there are a few ways that we could 
actually do that. The first thing is, I think, we are naive and 
thinking that people that show up at standard-setting bodies 
are the people who we think they are. There's a real party and 
interest issue. We have nation-states packing the panels, 
packing what's being said in the voting, and we don't know, nor 
do we understand who people are really representing. That's 
something that needs to change.
    Two, I think that we have a very hands-off approach to 
standard-setting bodies. That is not something that we've 
always done in our history. We've taken a more hands-on 
approach in prior administrations, and I think we need to 
reconsider what that actually means. And I think we really need 
to focus on ensuring that many of the activities that nation-
states deal with in terms of standard-setting bodies happen 
outside of the body. There are special meetings held in their 
own countries packed with people that they know will vote the 
way they want, and those are used as precursors of opinions or 
guidance that come into the bodies.
    Again, I think we need to really be careful of how that's 
happening and pay attention to that.
    Chair Coons. Let me follow up on one other thing you 
mentioned about standing. I'm concerned that a country like 
China that has a coordinated, focused, nationally funded IP 
strategy can exploit the fact that there's no standing 
requirement in inter partes review in PTAB to swamp it, with 
basically unlimited resources. Flood the PTAB with a tax on 
U.S. patents in the same way they've been flooding the PTO with 
patent applications.
    To counter this threat, would you support a standing 
requirement or limits on the number of PTAB petitions per 
patent than a particular party could file?
    Ms. Harrison. Thank you for the question. So, I think that 
standing is an important query as is real party and interest. I 
believe that that is the type of ambiguity that is a legal 
means which Chinese government and others exploit within our 
current systems. Yes, I would encourage a standing requirement.
    I also think, in terms of going back to the IP narrative, 
why is it fair to allow people with no standing to bring suits 
against patent owners? That just is an equitable problem. And I 
think that is what the kinds of things that are having 
inventors lose faith with our system. And that's not what we 
want. We want our system to be fair and equitable.
    Chair Coons. Professor Cohen, if I might, you referenced 
the critical issue around transparency, there being only 
curated insights into the outcome of litigation in China. You, 
in fact, cited lack of transparency as the most important 
reason. We know so little, really, about how China's IP system 
works. And you described that as the biggest missing tool in 
our IP arsenal against China. What could we do to ensure that 
China increases transparency so right holders can actually 
protect their interests, and so we can make better informed 
policy decisions?
    Professor Cohen. Well, there are a number of tools. I 
think, frankly, one of them is the WTO. The TRIPS Agreement 
says that cases of general application and final judicial 
decisions should be published. And the U.S. brought a case in 
2007 which we didn't quite see to completion. We should have, I 
think, appealed that case, where we're trying to compel China 
to publish all cases since it had joined the WTO in 2001. So I 
actually think the WTO has an important role here.
    China does publish a lot of cases. Cases are sometimes 
removed from the database for political or other reasons. And 
there are efforts among academics to try to track that. The 
cases themselves do provide insights. So it's not to be totally 
discounted. It's widely used. I think there's something like 
140 million legal documents on the official China database 
right now. And there's well over--I forgot the exact number, 
but it's billions of page views. I mean, perhaps over 100 
billion of page views since the database was set up.
    So the database can be mined. And there are useful 
observations that come from it. I mentioned that non-compete 
agreements have a 66 percent chance of success. Trade secrets, 
30 percent. That's drawn from that database. So even if it's 
curated, there's useful information to abstract from it. And I 
think at such time as we begin to have dialogue again with 
China, we should be working individually and with our partners, 
trading partners, to insist on greater disclosure.
    It's not what makes China look good that matters in that 
database. Frankly, it's the exact opposite. And this goes 
against China's own inclinations to use cases as kind of a 
propaganda tool.
    Chair Coons. Understood. Thank you, Professor. Senator 
Tillis.
    Senator Tillis. Thank you, Chairman. I wanted to come back 
to the non-competes as well. I think if you were to eliminate 
those, you would open a wide door of intellectual property 
theft. You would go away from maybe somebody that works for a 
firm for some number of years decides to move. Maybe they wade 
into a violation of their non-compete. But you'll have a whole 
cadre of people that will go work somewhere until such time 
they have the trade secret, and they move on. I mean, that to 
me, is about as obvious as the bad policy of the TRIPS waiver. 
I may have mentioned that before.
    But approximately 80 percent of all espionage prosecutions 
brought by the DOJ alleged conduct that would benefit the 
Chinese state, and approximately 60 percent--so, 80 percent 
would benefit the Chinese state, 60 percent of all trade secret 
cases involve China. What steps can the DOJ do with the current 
tools they have, or what more do we need to do to enable them 
to address this challenge if you agree that it is a critical 
issue?
    Professor Cohen. I believe, and I'm sure Mr. Turpin also 
has some observations, but let me just share my own 
observations from the time I was at the PTO. I think that the 
FBI, and the other law enforcement, and science and technology 
institutions in the Government should have a much more risk-
based approach to technology misappropriation. China publishes 
its industrial policies. We know what areas are targeted. We 
can even break it down sometimes by patent classification or 
subcategory of technology.
    And I think focusing on those areas--and that would also 
mean not only bringing cases but educating our companies that 
they're under threat if they don't already know it. It has to 
be a big part of the toolbox. I doubt we can stop all trade 
secret misappropriation or IP theft, but we should really 
address it in areas that are of core critical concern to us.
    Senator Tillis. Yes. But if you want to open the door--I'm 
sorry. Go ahead, Mr. Turpin.
    Mr. Turpin. Yes, Senator. I mean, I think the DOJ obviously 
cannot be the sole entity that seeks to go after these things. 
There has to be a degree of linkage across other----
    Senator Tillis. I heard the whole-of-Government, I think, 
from Mr.----
    Mr. Turpin. Right.
    Senator Tillis. I think that that's critically important.
    Mr. Turpin. Absolutely. So understanding that you may not 
be able to essentially prove it in court because largely the 
PRC government is going to prevent you from having the 
transparency that would allow you to do that. But, of course, 
that isn't the bar that you have to cross to use other 
authorities on other departments. Right? So the Commerce 
Department has its own authority to be able to put sanctions on 
activities. The Treasury Department has.
    And in this sense, the executive branch has to actually 
work together to pursue these things, as opposed to viewing an 
intellectual property or an economic espionage case as solely 
just something that is the purview of the Justice Department.
    Senator Tillis. Thank you, all. I see that Senator Padilla 
is here. So I'm going to live up to my promise of sending 
questions for the record. But I'd also like to reserve the 
right to maybe schedule some time to speak with you all in my 
office or over the phone. Whatever is most convenient for you.
    [The information appears as submissions for the record.]
    Thank you, Mr. Chair.
    Chair Coons. Thank you, Senator Tillis. Senator Padilla.
    Senator Padilla. Thank you, Mr. Chair. Senator Tillis, if 
you would have taken a few more minutes then I would have had 
more time to ask more questions----
    Chair Coons. I'm happy to ask another question, too.
    Senator Padilla [continuing]. But I'll do some follow-up in 
writing.
    Good afternoon. Let me begin by thanking Chairman Coons for 
holding this hearing. We're here to speak about foreign threats 
to American innovation. But I'd be remiss if I didn't 
acknowledge a couple of areas where we're actually doing harm 
to ourselves.
    First, we need to do more to ensure that our innovation 
ecosystem is welcoming and reflective of the creative 
capabilities of all of our communities, even within the United 
States. There are some communities, some populations, they're 
very active and represented in innovation, and others that we 
have by a long shot not begun to tap. Their talent, their 
creativity, and future expertise, and leadership.
    We also need an immigration system that allows us to much 
more effectively not just recruit talent but retain talent. And 
that may be a worthwhile topic for a hearing another day.
    I do want to jump into a specific item that I don't think 
gets as much attention as it deserves. And that's our efforts 
to fully understand the avenues that nation-state actors are 
using to take advantage of patents and our legal system. I 
think it's essential to identifying systemic vulnerabilities.
    For example, it can be difficult to identify the direct 
financial interest at play in patent infringement litigation. 
What do I mean by that? Well, let me just say I'm concerned 
that the funding obfuscation may be shielding nation-state 
conduct that is meant to harass American firms or attempt to 
force the disclosure of sensitive information. So start with 
Professor Cohen. Do we know whether or how much, not just the 
Chinese government, but any foreign government for that matter, 
funds or subsidizes patent infringement litigation against 
American firms?
    Professor Cohen. Thank you, Senator. If I may back up a 
little bit. I think we don't even know how much foreign 
ownership and investment there is in our patent and trademark 
applications. So the underlying rights themselves are not 
identified if there is a government subsidy or support. We do 
require that in Bayh-Dole. If there is a U.S. Government-funded 
patent application, then that would be disclosed and available 
on the PTO database. That does not apply to foreign applicants.
    So I also think this is particularly critical. It's caused 
a lot of disruption in the PTO with government subsidies from 
China of trademark applications. And I think a disclosure 
requirement could be immensely helpful, at least, in 
identifying the magnitude of the risk. I do not think we have 
that data available for government-funded or subsidized patent 
assertion entities whether they're from China or elsewhere. And 
I think that would also be useful, again, in determining the 
risk. Although, I doubt that, you know, private entities have 
to disclose the nature of their investors either.
    I would like to begin, really, with the right themselves. 
Personally, I think that's a very high priority because 
patents, as you mentioned, can be an agent of influence in our 
system. And right now, there is no disclosure requirement.
    Senator Padilla. So it sounds like you do agree that it 
would be helpful----
    Professor Cohen. Yes.
    Senator Padilla [continuing]. Valuable to have this 
information. And if so, any other ideas or recommendations that 
you would urge Congress to consider?
    Professor Cohen. I think disclosure of Chinese or foreign 
government investment, or support for the underlying research, 
or the application itself, if it's a patent or trademark, will 
be extremely useful.
    Senator Padilla. Okay. Mr. Kilbride, you seem eager to add 
here.
    Mr. Kilbride. Thank you, Senator. I would just agree that 
we're concerned about the problem. In my case, I'll refer to 
foreign investment in U.S. litigation. So the problem of third-
party litigation financing. And while we don't have good 
numbers to attach to that, I think there's an increasing 
anecdotal body of evidence that we need to get our hands around 
it.
    Senator Padilla. Okay. And if the Chair would indulge me 
just one more question and that's regarding economic espionage 
and trade secret theft, this is something that Senator Tillis 
raised a few minutes ago.
    The Department of Justice last year announced a shift from 
its earlier China Initiative to a broader strategy for 
countering nation-state threats. In announcing that change, 
Assistant Attorney General Olsen cited both concerns about 
threats from other countries--including Russia, Iran, North 
Korea--as well as concerns from the civil rights community, 
that the China Initiative fueled a narrative of intolerance and 
bias. At the same time, he stated, the government of China 
stands apart in threatening U.S. security through its 
considered use of espionage, theft of trade secrets, and other 
tactics to advance its interests.
    What policy approaches would enable Congress to try to 
prevent foreign entities from gaining too much access to U.S. 
intellectual property and technical know-how while still 
fostering beneficial international research and business 
collaborations? Again, we'll start with Professor Cohen.
    Professor Cohen. Research integrity is a critical issue, 
particularly vis-a-vis China. I think in the past, inadequate 
attention had been paid to that. And that includes not only the 
ongoing research itself but the follow-up research.
    An example of that is China permits the filing of patents 
anonymously. So, in some cases, a trade secret could be 
misappropriated, and then the misappropriator can take it to 
China, file a patent anonymously, and the underlying technology 
is thereby disclosed. Sort of a double whammy. You own the 
technology that you've stolen and it's publicly disclosed.
    So there are some issues we really do need to take up with 
China in terms of the environment, which sometimes does not 
foster legitimate technology cooperation. We had some 
improvements. We brought a WTO case on China's technology 
transfer rules which discriminated against foreigners.
    But a lot of the integrity issues are really going to be 
left to the universities and companies that undertake them. And 
imposing higher standards, including best practices for 
separating out of technology, who gets cooperated, vetting of 
parties we collaborate with. China is leading the way in many 
areas. In many areas it's leading in laboratories and other 
facilities. So not engaging with China in certain areas could 
impair our technological competitiveness and has to be factored 
in as well.
    Senator Padilla. Thank you very much. Thank you, Mr. Chair.
    Chair Coons. Thank you, Senator Padilla. Senator Hirono.
    Senator Hirono. Thank you very much, Mr. Chairman. Thank 
you for convening this panel and holding this hearing. Our IP 
system has long been the engine that drives American leadership 
and innovation, and we must ensure that our system encourages 
American innovation and does not allow bad actors to stifle or 
steal it. Unfortunately, we know that some of the bad actors at 
the head of that list is the Chinese government, as we have 
heard today.
    It is important to deter Chinese government wrongdoing and 
prosecute espionage and theft, but our concern is with the 
Chinese government and not with the Chinese people. We must 
avoid misguided prosecutions like some of those undertaken by 
the previous administrations in their China Initiative.
    Going after professors on shoddy evidence will hurt, not 
help, American innovation by sending the best minds elsewhere. 
Indeed, expanding the pool of innovators can only grow our 
economy. Which is why I have sponsored the IDEA Act, which many 
of my colleagues here have joined in on that would, on a 
voluntary basis, have the information that goes to who is 
actually applying for patents in our country.
    And I do acknowledge, and I thank the panelists, and my 
colleagues also for acknowledging that there is a distinction 
that needs to be made against what the Chinese government is 
doing and not create a situation wherein Chinese people come 
under assaults and attack--not to mention prosecution--under 
the so-called China Initiative. So, thank you, Mr. Chairman.
    The Chinese government--this is for all of the panelists--
has undertaken a widespread and systematic campaign of stealing 
American intellectual property to advance the Chinese economy.
    The Justice Department has initiated a number of 
prosecutions, some warranted and some misguided, as I 
mentioned. What proactive steps should our Government agencies 
be taking to protect American intellectual property and 
businesses? I know that you have noted some things, but what is 
one thing that we ought to be doing?
    We'll just go down the list, anyone who wants--well, for 
all the panel.
    Mr. Turpin. Well, Senator, I'd say identify the ultimate 
beneficiaries of economic espionage and IP theft as opposed to 
focusing solely on those who might have been caught up in the 
conduct. But all too often, the benefits of that theft go back 
into a Chinese state-owned enterprise or within a Chinese 
entity. And then they gain significant material benefit from 
that theft, and we don't do enough to transfer costs onto those 
entities.
    And largely, I think, they then conclude that this is an 
effective strategy. Right? That there is only minimal cost, and 
it's often paid by third-parties. And they benefit from this 
activity.
    Senator Hirono. So, you're basically saying it is the 
Chinese government itself, or certainly an entity that is 
supported by the Chinese government, that is the beneficiaries. 
Do the rest of the panelists agree that that is a very critical 
thing that we ought to identify, and somehow impose some costs, 
basically, onto the Chinese government? Do you agree with that?
    Mr. Kilbride. I'll go ahead. Thank you, Senator. You know, 
I think it's important that the U.S. Government use the tools 
that are at its disposal. Some of those include imposing costs 
when bad actors from any source, you know, infringe our 
intellectual property. But I think what's most important to 
your initial question is that we get the system right at home. 
And I think we're very concerned that there's been a sort of 
political shift, and that IP has become out of fashion all of a 
sudden. And that's very alarming.
    I think Ms. Harrison put it very well in her testimony that 
you've got this conflict between whether good patents are 
coming out of the USPTO, or the PTAB has it all wrong. And 
until we can resolve that, we're going to have a real dilemma 
in the United States. So I think it's critical that we restore 
the foundations of our own IP system. That's going to do more 
than anything that we can impose on foreign actors.
    Professor Cohen. Thank you, Senator. I tend to agree with 
Mr. Kilbride's perspective. I think the first place to clean up 
is our home because it's more under control. It's more 
transparent. We know how to adjust it and titrate it as best we 
can. I think that utilization of the U.S. and even the Chinese 
system by small businesses in the U.S. is extremely low, and I 
think that contributes to a very large sense of frustration in 
that community.
    Sometimes they have no presence in China, but they're 
affected by counterfeits or pirated goods coming into this 
market or into third markets. So with no revenue coming in, you 
don't have the resources to fight it. And I think having low 
cost mechanisms in the U.S. for small businesses to address 
infringement and to utilize the low-cost methods that exist in 
China.
    Because, actually, China has very inexpensive methods of 
protecting IP if they fail to have government resources to 
support them. I'm a little worried about systems that say that 
we'll impose certain costs on China because who's going to 
adjudicate that----
    Senator Hirono. Yes.
    Professor Cohen [continuing]. In the U.S.?
    Senator Hirono. The question of jurisdiction comes to mind.
    Professor Cohen. Yes.
    Senator Hirono. Thank you. Ms. Harrison, would you like to 
add?
    Ms. Harrison. Yes.
    Senator Hirono. Do you mind, Mr. Chairman?
    Chair Coons. No.
    Ms. Harrison. I was just going to say, I think that we 
should be focusing on our IP system because it increases our 
GDP, first and foremost. Right? Let's get our own house in 
order to make sure our numbers, and our economy, and our 
technology competitiveness are robust. So I think we really 
need to talk about how IP affects GDP.
    The USPTO recently came out with some numbers from 
Professor Lisa Cook that said if we quadruple the number of 
inventors and we bring those inventions to market, we could 
increase GDP 4\1/2\ percent. That is a very large number. 
That's like a trillion dollars. And if we could add that to our 
economy, that's a massive engine of growth.
    So first and foremost, get our own house in order. Second, 
companies are unwilling foot soldiers in this battle--they're 
the ones who are having to deal with nation-states. No company 
will ever win against a nation-state. They do not have enough 
resources. They do not have the money, know-how.
    So one of the questions should be, knowing that nation-
states are taking advantage of our companies, what mechanisms 
can we provide them to help them win that battle? Also, we have 
not told companies this is happening, that there's a defined 
concerted effort by the Chinese government to go after them. So 
how do we expect them to be prepared? How can they know when 
they see certain activities in a marketplace whether that's a 
competitor company or whether that's a nation-state?
    We must message this to them. We must give them tools. We 
must give them data. We must help them. We have no plan. We 
need to get one.
    Senator Hirono. Thank you, everyone. Just one more thing, 
Mr. Chairman. I would like to ask unanimous consent to enter 
into the record an op-ed that was written by Holly Fechner, who 
is the executive director of Invent Together. Wherein the title 
is, ``To understand why America's lead in tech and innovation 
is eroding, look at China's investment in women inventors.'' 
And that is very much along the lines of Ms. Harrison.
    Chair Coons. Thank you, Senator Hirono. Without objection, 
it will be entered into record.
    [The information appears as a submission for the record.]
    Senator Hirono. Thank you.
    Chair Coons. Senator Blackburn.
    Senator Blackburn. And thank you, Mr. Chairman. And thank 
you all for your patience, as we have all been up and down and 
back and forth today during this hearing. But as a Tennessean, 
this is a very important hearing to us. Protecting against 
infringement and IP theft from the CCP and from Chinese 
companies.
    And see, we see it not only in music, which the music 
industry loses about 12 and a half billion dollars a year 
because of this, but concert merchandise, sport team 
merchandise. You see it in guitars, you see it in aftermarket 
auto parts, and in some of the patents that are held for new 
eco-friendly automobile engines and different things.
    So it is a frustration. And I think one of the things--and 
I'm glad that Senator Hirono mentioned the PTAB process. 
Because this is frustrating to see companies like ByteDance 
with TikTok using PTAB. Seeing Huawei, ZTE using PTAB, and 
filing their complaints.
    And Ms. Harrison, you touched on this with getting things 
in order and strengthening our process. So I'd like to start 
with you. If you were sitting here and you said, ``These are 
the things that we need to do''--because this is costing us 
billions and billions--tens of billions of dollars every single 
year. So what are the three things that you would first and 
foremost do?
    Ms. Harrison. Thank you very much for that question, 
Senator.
    I think the first thing I would do is that I would ensure 
that every Government agency that deals with IP and the 
Government has the same view and is employing the same 
yardstick to measure success.
    Senator Blackburn. So consistency across----
    Ms. Harrison. Consistency across----
    Senator Blackburn [continuing]. All agencies.
    Ms. Harrison [continuing]. All agencies. And that national 
security and economic and technological competitiveness are the 
metric we should be using.
    Two, I think that we have long held and allowed the 
judiciary to make decisions about intellectual property cases. 
Oftentimes, by the time they go to the Supreme Court, they're 
corner cases that have been informing our innovation policy. 
That is not the appropriate place for innovation policy to 
happen. I think Congress should take a very proactive approach 
in deciding how we want to use our innovation ecosystem to our 
economic advantage. That would be the second thing.
    And the third thing would be to look at all of our choices, 
PTAB, the USPTO, other things, and say, are we holistically 
achieving what we're trying to do? We have 200-plus years of an 
intellectual property system that we have been making 
incremental changes to over time, and no one has looked at the 
entire system and says it doesn't meet our needs. Why don't we 
take a new look and actually come up with some comprehensive 
viewpoints about what is required for this new metric?
    Senator Blackburn. Okay. Anyone else want to add something 
to that? Mr. Cohen.
    Professor Cohen. Thank you, Senator. It's an excellent 
question and obviously one that's hotly debated. Just a few 
observations. One is that I think when it comes to issues 
involving state actors, particularly from China PTAB 
proceedings, I think it's very difficult for ALJs to balance 
those foreign policy interests, to recognize what is the 
significance of a state-owned enterprise, to recognize whether 
a particular industry in the United States might be targeted. I 
think those kinds of issues might be more appropriately decided 
by an Article III judge just due to the complexity and the fact 
that it extends beyond the narrow confines of a patent.
    I would also note that with regard to these concerns about 
the real party of interest or standing issues in PTAB 
proceedings, that there is a phenomenon in China in IP. And 
frequently, Chinese phenomena appear in the U.S. where 
sometimes there's artificial litigation or straw men litigation 
in administrative proceedings. Artificial litigation is a case 
where the parties are not really adverse. They want the court 
to make a decision that would benefit one of them. Perhaps the 
plaintiff or perhaps the defendant.
    I sometimes wonder whether the Huawei v. ZTE case in the EU 
involving standard essential patents may have been an 
artificial case in order to obtain a certain decision from the 
European Union that would benefit China, in China, in Europe, 
the United States, and others countries.
    Senator Blackburn. Okay. In that regard, let me ask you 
this. Last year, the WTO gave a TRIPS waiver when it came to 
manufacturing COVID vaccines. Do you see it as a wet blanket, 
or do you see that as unfriendly to fostering innovation if 
somebody producing a vaccine without the rights holder being 
able to take that and move forward?
    Professor Cohen. Yes. I think earlier in this panel we were 
tallied for who supported that. I think no one raised their 
hands both with respect to the TRIPS waiver and the proposed 
extension to diagnostics and therapeutics. Obviously, 
unfriendly to IP rights, and also a door opener to a range of 
other concerns, whether it's green technology, non-COVID 
vaccines, or certain forms of technology that may have other 
applications other than in dealing with the pandemic. 
Addressing the pandemic itself, obviously, an international 
public health concern, and the remedies for that are not 
limited to and not necessarily dependent upon violating our IP 
rights.
    Senator Blackburn. All right. Thank you all. Thank you, Mr. 
Chairman.
    Chair Coons. Thank you very much, Senator. I understand 
there may be one other Senator seeking to join us, but the 
Ranking Member said if there wasn't by the time I finished my 
last question, I was welcome to simply gavel us to a close. Let 
me ask just a few closing questions, if I could, of the panel 
about ways in which, I believe, that our IP system has been 
strengthened--excuse, has been weakened, and proposals that 
might strengthen it.
    I'd just be interested in hearing, if I could, Ms. 
Harrison, about what role you think an intellectual property 
enforcement coordinator could play, the urgency of filling that 
position, whether it be important to have a coordinator across 
the administration. You talked about identifying a central role 
in the PTO. In my view, this currently unfilled position is an 
important one, but I wondered if you had any views on that.
    Ms. Harrison. Thank you, Chairman. I think that it's an 
important role to fill because it is the closest role to the 
White House that deals with intellectual property. It has not 
historically had a unified view with the USPTO, or with other 
USTR, and other organizations about how to handle IP in the 
economy.
    And so, I think that, you know, what we're hearing today is 
IP is becoming more important to what's happening to our 
Nation. And so it needs to be at a higher level position and 
discussion within the administration. So I think filling that 
is our only hope at this moment. But I do think that having 
more coordination between the USPTO and that position would be 
helpful.
    Chair Coons. Based on your previous testimony, I assumed 
you would say that having USTR, PTO, commerce broadly, and the 
IPEC have a common view about the value of strengthening U.S. 
IP is as important, if not more important, than actually 
filling the position.
    Ms. Harrison. Correct.
    Chair Coons. Mr. Cohen, if I might--Professor Cohen, what's 
been the impact of the eBay decision which made it difficult to 
get injunctive relief in terms of strengthening the fundamental 
rights of patent holders?
    Professor Cohen. Thank you very much. It's a critical 
question. And again, you know, my area of expertise is 
comparative. And I can tell you that in China, injunctions are 
automatic. Injunction rates are 95 percent or higher, and the 
only reason they're not 100 percent is sometimes the patents 
are no longer in effect by the time the court decision comes 
down. So, basically, it's a rare instance where an injunction 
is not granted for any kind of IP infringement.
    This is a comparative disadvantage for the U.S. because 
it's not a certainty that an injunction will be awarded. Our 
damages are high, but litigation takes time in the U.S. and 
it's quite expensive. In China, you're 6 months first instance, 
3 months appeal--so, 9 months and your case is done. In most 
cases in the U.S., they haven't initiated discovery at that 
point. So you have an injunction, and if you have a global 
litigation scenario, that injunction--if the goods are 
manufactured or sold in China--could be extremely valuable, not 
only in compelling a resolution in China but a global 
resolution. And this has happened many times.
    Chair Coons. And would having a restored right to 
injunction or an assumption of injunctive relief in the United 
States help balance that out?
    Professor Cohen. Well, I think it would certainly. But it 
wouldn't necessarily collapse the amount of time till a final 
adjudication, but the availability of a preliminary injunction 
could certainly help in that regard.
    Chair Coons. There's also been reference here, and in the 
previous hearings that I've held with then-Chairman Tillis, 
about the impact of a lack of clarity about patent eligibility. 
To be generous, the Supreme Court's jurisprudence has wandered 
a bit in terms of clarity. What are the consequences of having 
a yawning lack of clarity about patent eligibility?
    Professor Cohen. Well, lack of clarity decreases the 
attractiveness of patents as a basis for investment and capital 
formation, manufacturing, everything else attendant to that. I 
view lack of clarity as, at least, as big a problem as the 
substantive eligibility issues. Again, to make the comparison, 
China generally grandfathers prior decisions that are more 
respective of property rights.
    So they will rarely run into this problem where their court 
has made a decision that is uncertain and narrows rights 
because you'll generally be grandfathered, at least, with 
respect to the rights you have. But if you have instability, it 
not only affects you prospectively but for previously granted 
rights, they could be invalidated.
    Chair Coons. Thank you, Professor Cohen. I'm about to close 
the hearing. Any other concluding comments? Mr. Kilbride.
    Mr. Kilbride. Thank you. Because I think your last question 
was so important, I want to say how important, I think it is to 
afford our intellectual property the characteristics of a 
private property right with all of the, you know, all of the 
benefits that accrue to that.
    If you want to think about why that's so important, we need 
only ask ourselves how much would any of us pay for a car if we 
had to leave it on the curb with the keys in it every night? 
You know, probably just enough to use it for a few hours. And 
that's exactly how much, you know, American entrepreneurs and 
creators will invest in their innovation and creativity if we 
allow our intellectual property rights to continue to be 
eroded.
    Chair Coons. That is a good and frankly, in some ways, 
painful metaphor in which to close, Mr. Kilbride. I view it as 
a constitutionally created and worthy-of-protection property 
right.
    Thank you to all four of you. I appreciate your time and 
your diligence, your patience with our delayed start because of 
votes. I'm also grateful to the Members and their staff who 
attended, to my own staff who helped prepare me for this, and 
to Ranking Member Tillis for being a great partner in choosing 
such capable and talented witnesses and holding this hearing 
today.
    I think it's important for us to understand that although 
nation-states use both legal and illegal means to threaten our 
IP, they are seeking to unseat us as the world's innovation and 
technological leader. And in some cases, they are succeeding. 
And so, you've offered us some pointed answers about how we 
should respond to that. You've reinforced there's much more we 
can do to maintain our competitive edge, to strengthen our own 
IP rights, and to get our own house in order.
    I am in a wrap-up, Senator Tillis, my Ranking Member. If 
you have any closing comments, you're welcome to make them as 
well. I look forward--I was just saying--to working with my 
colleague, Ranking Member Tillis, on solutions that will allow 
us to both think critically about the important role IP plays 
in our national security and our economy and to address some of 
the critical ways in which our own IP system has been weakened 
in recent years.
    Members can submit questions for the record for the 
witnesses due at 5 p.m., 1 week from today, on April 25th. I 
know the Ranking Member has a number he intends to submit. Any 
other closing comment? Senator Tillis.
    Senator Tillis. Yes. And actually, we may be able to make 
that easier rather than having you all respond to the written 
questions, we can just get on a conference call. Maybe we'll do 
that, and submit some other ones where you don't have an 
immediate response.
    But I really do--I just had to step out briefly for an 
interview, and surprisingly, it was about China. It was about 
TikTok, actually, and the exploitation of the Chinese Communist 
Party of about 120 million--potential exploitation of 120 
million U.S. citizens who are users of TikTok--a third of our 
country. And I really believe that that idea of the whole-of-
Government when it comes to enforcement, when it comes to 
commerce, that we need to sit down and stop playing checkers 
and start playing Go.
    The Chinese Communist Party is extraordinarily 
sophisticated. And we are playing an old game and old rules. 
And we have to think creatively about how we can--in an area 
like this where we have bipartisan consensus, as we often do in 
the IP Subcommittee, we need the best minds and perspectives on 
what actions we need to take. And we look forward to your 
continued engagement. Thank you all for being here.
    Chair Coons. I agree. I look forward to working with you, 
Senator Tillis. I agree. We need to change the narrative about 
American intellectual property but we also need to change the 
trajectory, coordination, enforcement, and taking the 
initiative. I look forward to our next hearing and with that, 
this hearing is adjourned.
    [Whereupon, at 4:04 p.m., the hearing was adjourned.]
    [Additional material submitted for the record follows.]

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