    [House Hearing, 119 Congress]
    [From the U.S. Government Publishing Office]

                          FOREIGN ABUSE OF U.S. COURTS

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

                                    HEARING

                                   BEFORE THE

                      SUBCOMMITTEE ON COURTS, INTELLECTUAL
                     PROPERTY, ARTIFICIAL INTELLIGENCE, AND
                                  THE INTERNET

                                     OF THE

                           COMMITTEE ON THE JUDICIARY

                         U.S. HOUSE OF REPRESENTATIVES

                        ONE HUNDRED NINETEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                             TUESDAY, JULY 22, 2025

                                   __________

                               Serial No. 119-32

                                   __________

             Printed for the use of the Committee on the Judiciary

    [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                   Available via: http://judiciary.house.gov

                                    __________

                       U.S. GOVERNMENT PUBLISHING OFFICE
    61-247                     WASHINGTON : 2025

    -----------------------------------------------------------------------------------

                           COMMITTEE ON THE JUDICIARY

                            JIM JORDAN, Ohio, Chair

    DARRELL ISSA, California             JAMIE RASKIN, Maryland, Ranking
    ANDY BIGGS, Arizona                      Member
    TOM McCLINTOCK, California           JERROLD NADLER, New York
    THOMAS P. TIFFANY, Wisconsin         ZOE LOFGREN, California
    THOMAS MASSIE, Kentucky              STEVE COHEN, Tennessee
    CHIP ROY, Texas                      HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia
    BEN CLINE, Virginia                  ERIC SWALWELL, California
    LANCE GOODEN, Texas                  TED LIEU, California
    JEFFERSON VAN DREW, New Jersey       PRAMILA JAYAPAL, Washington
    TROY E. NEHLS, Texas                 J. LUIS CORREA, California
    BARRY MOORE, Alabama                 MARY GAY SCANLON, Pennsylvania
    KEVIN KILEY, California              JOE NEGUSE, Colorado
    HARRIET M. HAGEMAN, Wyoming          LUCY McBATH, Georgia
    LAUREL M. LEE, Florida               DEBORAH K. ROSS, North Carolina
    WESLEY HUNT, Texas                   BECCA BALINT, Vermont
    RUSSELL FRY, South Carolina          JESUS G. ``CHUY'' GARCIA, Illinois
    GLENN GROTHMAN, Wisconsin            SYDNEY KAMLAGER-DOVE, California
    BRAD KNOTT, North Carolina           JARED MOSKOWITZ, Florida
    MARK HARRIS, North Carolina          DANIEL S. GOLDMAN, New York
    ROBERT F. ONDER, Jr., Missouri       JASMINE CROCKETT, Texas
    DEREK SCHMIDT, Kansas
    BRANDON GILL, Texas
    MICHAEL BAUMGARTNER, Washington
                                     ------

                 SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY,
                   ARTIFICIAL INTELLIGENCE, AND THE INTERNET

                        DARRELL ISSA, California, Chair

    THOMAS MASSIE, Kentucky              HENRY C. ``HANK'' JOHNSON, Jr.,
    SCOTT FITZGERALD, Wisconsin              Georgia, Ranking Member
    BEN CLINE, Virginia                  ZOE LOFGREN, California
    LANCE GOODEN, Texas                  TED LIEU, California
    KEVIN KILEY, California              JOE NEGUSE, Colorado
    LAUREL LEE, Florida                  DEBORAH ROSS, North Carolina
    RUSSELL FRY, South Carolina          ERIC SWALWELL, California
    MICHAEL BAUMGARTNER, Washington      SYDNEY KAMLAGER-DOVE, California

                   CHRISTOPHER HIXON, Majority Staff Director
                      JULIE TAGEN, Minority Staff Director

                                C O N T E N T S

                                  ----------

                             Tuesday, July 22, 2025

                               OPENING STATEMENTS

                                                                       Page
    The Honorable Darrell Issa, Chair of the Subcommittee on Courts,
      Intellectual Property, Artificial Intelligence, and the
      Internet from the State of California..........................     1
    The Honorable Henry C. ``Hank'' Johnson, Ranking Member of the
      Subcommittee on Courts, Intellectual Property, Artificial
      Intelligence, and the Internet from the State of Georgia.......     3
    The Honorable Jamie Raskin, Ranking Member of the Committee on
      the Judiciary from the State of Maryland.......................     4

                                   WITNESSES

    Emily de La Bruyere, Senior Fellow, Foundation for Defense of
      Democracies
      Oral Testimony.................................................     8
      Prepared Testimony.............................................    11
    Julian G. Ku, Maurice A. Deane Distinguished Professor of
      Constitutional Law, Hofstra University
      Oral Testimony.................................................    17
      Prepared Testimony.............................................    19
    Bradford Muller, Senior Vice President, Charlotte Pipe and
      Foundry
      Oral Testimony.................................................    27
      Prepared Testimony.............................................    29
    Jacques deLisle, Stephen A. Cozen Professor of Law and Political
      Science, Director, Center for the Study of Contemporary China,
      University of Pennsylvania
      Oral Testimony.................................................    37
      Prepared Testimony.............................................    39

              LETTERS, STATEMENTS, ETC. SUBMITTED FOR THE HEARING

    All materials submitted for the record by the Subcommittee on
      Courts, Intellectual Property, Artificial Intelligence, and the
      Internet are listed below......................................    73

    Materials submitted by the Honorable Henry C. ``Hank'' Johnson,
      Ranking Member of the Subcommittee on Courts, Intellectual
      Property, Artificial Intelligence, and the Internet from the
      State of Georgia, for the record
        An article entitled, ``Litigation Finance Doesn't Pose a
            Security Risk: Legal Insight,'' May 3, 2023, Bloomberg
            Law
        An article entitled, ``A `Boogeyman' National Security Threat
            in Litigation Funding,'' Jul. 21, 2023, Law360
    Materials submitted by the Honorable Darrell Issa, Chair of the
      Subcommittee on Courts, Intellectual Property, Artificial
      Intelligence, and the Internet from the State of California,
      for the record
        A statement from the Alliance for American Manufacturing
            (AAM), Jul. 22, 2025
        A statement from the American Property Casualty Insurance
            Association (APCIA), Jul. 22, 2025

                          FOREIGN ABUSE OF U.S. COURTS

                                  ----------

                             Tuesday, July 22, 2025

                            House of Representatives

               Subcommittee on Courts, Intellectual Property, and

                   Artificial Intelligence, and the Internet

                           Committee on the Judiciary

                                 Washington, DC

        The Committee met, pursuant to notice, at 10 a.m., in Room
    2141, Rayburn House Office Building, the Hon. Darrell Issa
    [Chair of the Subcommittee] presiding.
        Members present: Representatives Issa, Jordan, Fitzgerald,
    Cline, Kiley, Lee, Fry, Johnson, Raskin, and Ross.
        Also present: Representatives Knott and Moore of North
    Carolina.
        Mr. Issa. [Presiding.] The Committee will come to order.
        I want to thank the witnesses today for joining us to deal
    with a number of important issues. I apologize, I'm having a
    Ronald Reagan teleprompter moment here. Let me get the script.
        One page off. The difference between being here too long
    and not being too long is that I still recognize when the
    opening statement and the script have been reversed--for now.
        The Subcommittee will come to order. Without objection, the
    Chair is authorized to declare a recess at any time.
        We welcome everyone here today on a hearing on foreign
    abuse of U.S. courts. I want to include that this is the title,
    but not by any means the limitation, and there are a multitude
    of bills which have been made available to everyone here that
    we believe are open and available for discussion. We have a
    distinguished panel, and I recognize that you are able to go
    into areas beyond any one piece of legislation.
        I will now recognize myself for that opening statement.
        Again, I want to thank the witnesses and make it clear that
    the Chinese Communist Party is waging what they call ``legal
    warfare'' using the U.S. courts. Although this is not new, the
    previous administration elevated it by covering repeatedly a
    number of the areas in which the CCP has been, in fact, using
    our system against us.
        This is over and above the 10,000 attacks a day that occur
    on the internet. This is over and above their spying. This is
    over and above the abuses that occur on companies in China.
    This is, in fact, using our patent system, our trademark
    system, and our courts to their advantage. We take this
    seriously, so that we will not be abused any longer.
    Legislation and rule changes by the administration need to
    happen and happen now.
        Let's make it clear, there are legal actions that Chinese
    businessmen and others do, and we want to make sure they are
    protected, just as we want to make sure that American
    companies, European companies, and individuals all over the
    world have access to our courts, to our patent, and trademark
    system, and to our economy.
        In fact, some of our own laws have made it easier for the
    Chinese to take advantage of us. Our courts are the backbone of
    our Constitution, and we will protect it. Legislation that
    sanctions the PRC alone cannot be enough. We also have to
    strengthen the system itself from this type of activity.
        One of them is, in fact, an open and transparent disclosure
    of who is truly behind a litigant. That includes third-party
    funding of litigation. It also includes, and should include a
    thorough recognition that often there are a series of shell
    companies, even U.S. subsidiaries, that, in fact, have little
    to do with anything except covering their true source.
        All of that is not new. We see it in criminal operations,
    in human trafficking, in drug smuggling, in commercial fraud,
    and that is not limited to any one country. The fact that it is
    backed by a power country who is using and weaponizing this is
    particularly disturbing.
        As we all are aware, often we are just a few weeks, a few
    months, or maybe a few hours in new technology ahead of China
    compromising it and using it. That includes a lookalike of the
    F-13. That includes a duplicate of the CERN supercollider new
    version. That one will be out before ours is built here in the
    United States.
        We are not going to be able to fix it here all today and it
    is not all within our jurisdiction. What is within our
    jurisdiction is to look at and to make available greater
    transparency to empower our judges to order that transparency
    and, in fact, to make it clear that a case should not go
    forward if, as is Constitutional, a person accused of anything
    criminally is entitled to be faced by their accusers, their
    true accusers, which would include those who have people step
    forward. That is our law.
        In civil matters, that often is a one-way street.
    Defendants, under Rule 26, have to disclose if they are
    insured, have to disclose, quite frankly, their own financial
    condition, and even the financial condition of their
    principals. That is not always the case in the case of the
    plaintiff, and we need to have that.
        In preparation for this hearing, I have met with a great
    many companies and law firms who use third-party litigation
    funding or who partner with other companies. None of them
    object to, in fact, the transparency of disclosing that. Many
    of them have cautioned that the discretion by the judge as to
    admissibility to the jury is a different story. I want to make
    that clear because it is not the intention of this Chair or of
    any legislation I have yet seen to interfere with a judge's
    decision on admissibility. When it comes to the right to know,
    whether in camera or otherwise, this information is critical in
    making the decision about protective orders and the conduct of
    the case.
        The Subcommittee has broad jurisdiction as to the courts,
    but we want to use it wisely. In this case, recognizing that
    transparency is one of the most important tools that we have,
    we want to make sure that it is brought to the attention of
    everyone.
        As I said earlier, this hearing does include a number of
    other pieces of legislation that I believe our panel is able to
    answer, and we appreciate your indulgence when those questions
    are asked.
        With that, I recognize the Ranking Member for his opening
    statement.
        Mr. Johnson. Thank you, Mr. Chair. Thank you to the
    witnesses for being here today.
        This Subcommittee has held a series of bipartisan hearings
    over the last few years on the threat from the government of
    China. As a strategic competitor, China is seeking to develop
    cutting-edge technology to win the so-called AI arms race with
    the United States. It also competes for soft power around the
    world, competes for economic predominance, and competes for
    strategic resources. There is nothing wrong with competition.
    There is a problem with breaking the rules to get ahead, and
    that is what China has sought to do.
        Over our hearings, we have examined cases of economic
    espionage, threats to American intellectual property,
    cybersecurity risks, and the different ways these actions by
    China threaten U.S. national security.
        Today, we are here to examine the use of our court system
    by Chinese actors. We absolutely agree that China is seeking to
    gain ground in our strategic competition by encouraging Chinese
    businesses to harm American companies, and that can include
    through our court system.
        I have enjoyed working with Chair Issa and my colleagues on
    these bipartisan hearings, and I sincerely hope we can continue
    to examine the threat from the government of China to our
    national security, our economy, and our power abroad on a
    consensus basis.
        There are areas where we have disagreed. Last Congress,
    this Committee slated a partisan bill for markup that would
    have prevented companies on certain sanctions lists from
    obtaining new U.S. patents or enforcing the ones they already
    own, devaluing U.S. patents and violating international
    agreements. While the Preventing Adversarial Patents Act was
    removed before it could be considered by the Committee, the
    bill was a reminder that there are significant disagreements
    between the two parties on this issue.
        I worry that this hearing on China's, quote, ``abuse'' of
    the U.S. courts maybe a Trojan horse to disguise a different, a
    very different agenda. I fear that, as a so-called solution to
    the China threat, I will hear proposals like:
        First, you can only file a case if you disclose all the
    funders of your cause.
        Second, you can file a suit if you are rich enough to pay a
    huge bond in case you lose.
        Third, let's start limiting discovery rules and make them
    more restrictive.
        Fourth, we'll flip the presumption of enforcing foreign
    judgments wholesale and adopt China's restrictive approach.
        The answer to a threat cannot be Republicans' tort reform
    wish list. Our constituents deserve better than a system where
    only the well-connected and the rich survive. That is exactly
    what we would get from that list. This world I just outlined
    would mean that the big guys, the oligarchs, get their day in
    court, but the little guys, the Davids to those Goliaths, would
    be shut out.
        America's justice system has for so long been a shining
    light of equality in the world, and we must safeguard this
    impartial justice system now more than ever. Becoming more like
    China won't stop China. It won't work in our court system, and
    it won't work in our trade practices.
        It is a reasonable concern. Our democracy has been under
    fire by want-to-be authoritarian Donald Trump and his White
    House cronies--the very big guys who could benefit from all the
    proposals I just mentioned, who do not care about justice and
    the rule of law.
        These folks are the ones who let Democratic Senators get
    tackled to the ground at news conferences and who block Members
    of Congress from Federal facilities. These are the leaders who
    tell the DOJ to investigate Members of Congress who dare
    criticize the President and who nominate far-Right MAGA
    loyalists like Emil Bove to Federal judgeships, knowing that
    these sycophants will put Trump's whims above the Constitution.
        If we start chipping away at our impartial justice system
    and make it harder to access, Americans will lose their ability
    to challenge these assaults on our rights against these rich,
    connected oligarchs. We cannot let our system become the
    playground for the big guys, the oligarchs like Donald Trump
    and his cronies. That's not justice, and we must protect the
    system where, no matter their status, anyone can walk into a
    U.S. courtroom and be treated as an equal.
        Again, I thank the Chair and our witnesses, and I look
    forward to exploring this important issue.
        With that, I yield back.
        Mr. Issa. The gentleman yields back. I now am pleased to
    recognize the Ranking Member of the Full Committee for his
    opening statement.
        Mr. Raskin. Thank you very much, Mr. Chair. Thanks to the
    witnesses for joining us today.
        Like its ally, the authoritarian government of Russia, the
    authoritarian government of China presents a serious threat to
    American democracy. Our economy and our national security, and
    China's intensifying economic and technological competition
    with the United States, has at times led to pitched battles in
    courtrooms across America. We have seen cases affecting our
    national security, intellectual property, and the safety of
    Chinese dissidents living here in the United States.
        It would be great if we had a partner in the White House to
    help us respond to the threat of these repressive, autocratic
    regimes, but Donald Trump has consistently bragged about his
    marvelous personal relationships with Vladimir Putin, whom he
    has called a genius for invading Ukraine and has consistently
    praised, and President Xi, who Trump called a brilliant guy who
    controls 1.4 billion people with an iron fist, and whom he has
    praised for sending Uyghurs to labor camps, saying this was
    exactly the right thing to do.
        Trump has been systematically dismantling the programs that
    protect America against espionage, propaganda, and malign
    political and intellectual interference by Russia and China,
    while simultaneously dismantling the domestic programs that
    make us strong. His administration has been deleting the
    programs designed to combat malign foreign power interference
    in our elections, including the Foreign Influence Task Force at
    the FBI, the Global Engagement Center at the Department of
    State, the Critical Infrastructure Partnership Council at the
    Department of Homeland Security, while simultaneously cutting
    billions of dollars in critical foreign aid to poor countries
    for development and democracy assistance and for humanitarian
    programs, which China is now gladly taking up in our place.
    They are filling the void left by Donald Trump's abandonment of
    the space of foreign assistance.
        Trump, in the meantime, has been systematically destroying
    Radio Liberty, Radio Free Europe, Radio Free Asia, and other
    broadcast vehicles that we use to counter Chinese and Russian
    propaganda and disinformation all over the world. Trump has put
    Kari Lake in charge of world communications--an election
    denier, a January 6th denier, and all-around mindless repeater
    of garbage conspiracy theories and lies, totally consistent
    with the Chinese and Russian agendas for the destruction of
    American democracy.
        This hearing is important, but it ignores the structural
    shift in our government in favor of the autocracies and
    kleptocracies who are Donald Trump's political soul brothers.
    It is also, of course, a distraction from the mounting
    failures, scandals, and embarrassments of this administration.
        Republicans this month passed a bill to throw 17 million
    Americans off their Medicaid health insurance. The rescission
    package Congress passed last week cuts a billion dollars from
    public broadcasting and billions more from foreign aid--all
    which is nothing but music to the ears of propagandists and
    foreign recruiters for China and Russia.
        Meantime, Trump is refusing to release the Epstein files--
    more than 100,000 documents which he was demanding for years to
    blow the lid off of what he, Pam Bondi, Kash Patel, Dan
    Bongino, and the MAGA media were describing as a massive global
    child sex abuse and human trafficking ring for the rich and
    powerful.
        Bondi, acting under the direct supervision of Donald Trump,
    ordered more than 1,000 FBI agents to work as part of
    continuing 24-hour shifts pouring over more than 100,000
    documents in the Epstein file--photographs, videos, emails, and
    texts. They were instructed to immediately flag all references
    to Donald Trump, all appearances of Donald Trump, all images,
    likenesses, pictures, and videos of Donald Trump. At the same
    time, Kash Patel has been administering loyalty tests and lie
    detector tests to FBI agents.
        This is a profoundly troubling and suspicious turn of
    events, as Donald Trump seeks to sweep the whole thing under
    the rug. Our colleagues in the Majority have now canceled all
    bills because they don't want to go before the Rules Committee
    to have to face more votes on whether or not to release the
    Epstein files.
        We are examining the threat from China as though Donald
    Trump is not ceding more global power to China every single
    day, but he is. During his first term, he received millions of
    dollars personally from the Chinese Government and State-owned
    companies--to say nothing of the valuable trademarks Chinese
    authorities rushed to grant him and Trump family members. In
    exchange, he opposed sanctions against Chinese telecom
    companies and banks, even when they threatened our national
    security. He even tried to cancel military exercises with Japan
    and South Korea because Russia and China voiced objections to
    it.
        His second term has seen more catering and appeasement for
    the autocrats. Over the last six months, the administration has
    weakened America's soft power abroad by defunding foreign aid
    programs systematically and closing embassies. It has hurt
    America's economy with illegal and arbitrary tariffs that leave
    us isolated and hapless in the world.
        In this second administration, Trump appears to be hellbent
    on remaking his administration in the image of Xi's regime--
    cracking down on media outlets he disapproves of; destroying
    academic freedom with attempted hostile takeovers of colleges
    and universities, including America's oldest university,
    Harvard; attacking attorneys for representing clients or causes
    he disfavors; purging libraries and censoring books; sending
    masked agents in unmarked vans to arrest foreign students
    without arrest warrants for voicing opinions he disagrees with;
    shipping people to El Salvador's notorious prison of torture,
    and using AI to surveil individuals' social media posts and to
    create a mega-database of all Americans' information.
        Look, in America, everyone is allowed to petition the court
    for relief, regardless of the depth of their pockets or their
    country of origin. Making it harder for litigants to access the
    courthouse doors, even in the name of strategic competition
    with a foreign power, would make us less like America. That's
    not acceptable, obviously. Yet, that is exactly what some have
    suggested, instead of actually developing government policies
    that make us strong versus China and prevent illegal subversion
    and interference from China and Russia.
        In the context of our competition with China, we should
    never forget that,

            Those who would give up essential liberty to purchase a little
            temporary safety deserve neither liberty nor safety.

    That is Ben Franklin.
        This has been a matter on which there has been strong
    bipartisan agreement in the past. I hope Republicans and
    Democrats on this Committee can continue to uphold this basic,
    yet vital framework, as difficult as Donald Trump has made it.
        I yield back the balance of my time.
        Mr. Issa. I thank the gentleman for his opening statement.
        I will note that, in September, we have both the FBI
    Director and the AG coming. We are not ignoring any of your
    concerns, and I thank the Ranking Member.
        Without objection, all other opening statements will be
    included in the record.
        It is now my privilege to introduce our witnesses. If you
    don't mind, I would like to go out of order a little bit.
        We have the gentleman from North Carolina, Mr. Moore, here
    to introduce his witness. You don't get that on this Committee,
    but we would like you to introduce your witness.
        Mr. Moore of North Carolina. Well, thank you and good
    morning.
        It is an honor to introduce a constituent of mine, Brad
    Muller, who is going to be testifying before the Committee. I
    will read briefly about his bio, and then I will just talk like
    we do from North Carolina about him.
        Brad is the marketing and communication strategist with
    more than 35 years of experience, and he works presently for
    Charlotte Pipe and Foundry. If you like pipes, if you have ever
    drunk water, then you have probably drank out of one of their
    pipes. They are the leading producer of pipes in the United
    States. They are a fifth-generation company based in Charlotte.
    They were founded, I believe, in 1901.
        Mr. Muller. Correct.
        Mr. Moore of North Carolina. You weren't there, though,
    then, I don't think?
        Mr. Muller. No.
        Mr. Moore of North Carolina. Brad has got a very
    distinguished background. He actually was in Washington for 10
    years, where he worked for USAID in the Bush Administration
    handling the--he was the desk officer and managing foreign aid
    programs for Afghanistan, and later, for Central and Eastern
    Europe after the 1989 fall of the Berlin Wall.
        He later went to work for the late Michael Deaver, who was
    the former Deputy Chief of Staff to President Reagan, on a
    variety of public affairs, international relations, and trade
    issues.
        He is extremely active in the community. He is known
    internationally really as an expert on trade issues. I can tell
    you, I consider it a real honor to have Brad back home to be
    one of my constituents. This company has such an amazing
    reputation.
        If you want to find out information about how trade is
    affecting businesses right here, how unfair trade is hurting
    businesses and causing job loss, you have an amazing expert to
    testify today.
        I am proud to have a fellow Tar Heel from the great State
    of North Carolina here with you today and appreciate the
    Committee hearing from him. Treat him nice, if you don't mind.
    Thank you.
        [Laughter.]
        Mr. Muller. Thank you, Congressman.
        Mr. Moore of North Carolina. Thank you, Mr. Chair.
        Mr. Issa. Thank you, and I promise to treat him nicely. As
    a matter of fact, I consulted with JM Eagle of California and
    they believe that you are a superb witness, since you are the
    two competing top two.
        With that, I would like to introduce Ms. de La Bruyere--
    hopefully, I got that close to right--who is a Senior Fellow at
    the Foundation for Defense of Democracies, a think tank
    focusing on national security and foreign policy. Her work at
    FDD focuses on China policy. Ms. de La Bruyere also is the Co-
    Founder of Horizon Advisory, a consulting firm focused on the
    implications of China's approach to geopolitics. Welcome.
        Mr. Julian Ku is the Faculty Director of International
    Programs, and the Maurice A. Deane Distinguished Professor of
    Constitutional Law, at Hofstra Law. Professor Ku's research is
    focused on the relationship of international law, the U.S.
    Constitution, and China's relationship with international law.
        Mr. Bradford Muller has been well-introduced, and we are
    thrilled to have you here today.
        Last, we go to Mr. deLisle, who is the Stephen A. Cozen
    Professor of Law at the University of Pennsylvania. Professor
    DeLisle also holds appointments as a Professor of Political
    Science and Director of the Center for the Study of
    Contemporary China at Penn. His research focuses on China's
    engagement in international order, law, and legal institutions
    and their relationships to the politics and policies of China
    and the U.S.-China relationship.
        We welcome all our distinguished witnesses. Pursuant to
    Committee rules, I would ask that you rise to take the oath.
    Customarily, raise your right hand.
        Do you swear or affirm under penalty of perjury that the
    testimony you are about to give is true and correct to the best
    of your knowledge, information, and belief, so help you God?
        Thank you. Please be seated.
        Let the record reflect that all witnesses answered in the
    affirmative.
        For all the witnesses, please be aware that, although we
    ask that you stay within five minutes, your entire opening
    statement, along with additional material that you either have
    today or that you can supplement, will be made in order and a
    permanent part of the record.
        I thank you.
        Ms. de La Bruyere, it is your five minutes.

                    STATEMENT OF EMILY de La BRUYERE

        Ms. de La Bruyere. Thank you for the opportunity to testify
    today. It's an honor to be speaking before you and the
    Committee and alongside my distinguished co-witnesses.
        Beijing competes with cooption, not confrontation. The
    Chinese Communist Party does not directly attack its
    adversaries' systems. Instead, Beijing seeks to supplant them,
    subvert them from the inside, such that they advance Beijing's
    agenda rather than obstructing it.
        In the military domain, for example, China positions to
    control critical information systems, value chains, even
    political stakeholders, such that it can decide where missiles
    are positioned and how they're perceived rather than having to
    launch them itself.
        In trade, China has not sought to supplant the World Trade
    Organization, for example. Instead, Beijing has sought to
    manipulate it by holding others to its rules without following
    them itself, such that China can weaponize international free
    trade.
        Inside the United States, the Chinese Communist Party uses
    the American legal system to advance Beijing's agenda, punish
    its opponents, and neutralize U.S. defenses. Benefitting from
    the reality that China's centralized, opaque system allows it
    to out-resource competitors in courts, to coopt key
    stakeholders, and to manipulate information, this poses a
    threat to American security and prosperity.
        Offensively, Beijing works to shape U.S. laws and
    regulations and their implementation--in many cases, via U.S.
    entities that have been coopted by dependence on or resources
    from the PRC.
        Beijing has also proven its willingness to use the U.S.
    legal system to punish those who stand in its way. Beijing does
    so, for instance, with SLAPP lawsuits that are intended to
    censor and intimidate critics by burdening them with costly
    legal defenses.
        Beijing also does so with IP lawsuits that, through the
    discovery process, granted access to valuable technology. On
    the flip side, China provides IP litigation funding for its
    companies to protect them from facing the consequences for
    their tech theft.
        Beijing also defensively games U.S. laws and regulations,
    circumventing and neutering American efforts to defend against
    Chinese bad practices. In response to U.S. tariffs and other
    trade restrictions, for instance, China transships through
    third-party countries, often obscuring country of origin. China
    also localizes in countries that have preferential trade
    relationships with the United States, and China localizes in
    the United States.
        Doing so allows Beijing not only to avoid U.S. trade
    restrictions, but it also allows China to benefit from
    preferential policies that are intended to support U.S.
    domestic and partner industry. Moreover, localization in the
    United States allows Beijing to maintain and to expand its
    united front--the network of coopted stakeholders through which
    it undermines the U.S. system from the inside.
        This entire program, offensive and defensive, benefits from
    Chinese Government resourcing. Directly and indirectly, the
    Chinese State provides the resources necessary for its agents
    to outlast and outspend their competitors and their targets in
    U.S. courts.
        The Chinese State also provides subsidies and guidance for
    go-out companies, such that they can expand their presence
    abroad.
        The Chinese State provides policy insurance mechanisms that
    are intended to derisk investments that might be vulnerable to
    regulatory hurdles, as well as instructions for navigating U.S.
    procurement and policy.
        Because Chinese abuse of the U.S. legal system is systemic,
    it demands a systemic response. Tactical measures, like anti-
    SLAPP legislation and protections to defend American companies
    from exposing their IP to China via discovery are important.
        The U.S. response cannot end there. Chinese and Chinese-
    backed entities should have increased information-sharing and
    transparency requirements when bringing cases. Those receiving
    direct or indirect funding from the Chinese Government should
    face a higher pleading standard in the U.S. Should American
    entities that work with them. The U.S.-based actors that engage
    with Chinese State-backed and government-linked players
    operating in or importing into the U.S. market should have to
    disclose as much.
        The law firms and lobbyists that work with those entities
    should not be eligible for U.S. Federal Government funding or
    Defense Industrial Base procurement.
        More generally, sovereign immunity should not be extended
    to PRC entities. Foreign entity of concern provisions should be
    expanded to apply to all government authorities and support
    programs and strengthened with presumptions of denial.
        Across the board, the definition of a Chinese entity should
    be tightened, such that Beijing cannot circumvent through shell
    companies, joint ventures, or localization.
        China is an adversary. This has been internalized in the
    United States, if belatedly, has the strategic imperative of
    decoupling from China economically and industrially. To do
    that, the United States also has to decouple its legal system.
        Thank you.
        [The prepared statement of Ms. de La Bruyere follows:]
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        Mr. Issa. Thank you. Professor Ku.

                       STATEMENT OF JULIAN G. KU

        Mr. Ku. Thank you, Mr. Chair, Ranking Member Johnson, and
    the distinguished Members of this Committee. Thank you for this
    opportunity to address what I call China's asymmetric lawfare
    challenge to the United States judicial system.
        I just want to define lawfare as a term for us to
    understand here. Lawfare is the systematic use of judicial
    proceedings to accomplish strategic or military goals and
    political goals. This involves manipulating legal processes to
    undermine, discredit, or impose substantial financial burdens
    on adversaries through judicial mechanisms.
        The Chinese party-State lawfare demonstrates consistent
    patterns. Initiating entities maintain a sensible independence
    from the Chinese Government. Chinese plaintiffs often retain
    most prestigious, the best U.S. law firms to represent them. If
    their litigation is often in the preliminary phase and it
    doesn't impose substantial costs on defendants.
        I call these tactics asymmetric lawfare because China is
    exploiting the weaknesses in its own legal system to gain
    advantages in U.S. courts while the U.S. and U.S. plaintiffs
    cannot reciprocally use China's legal system for its own
    strategic goals. These tactics that we're going to discuss here
    can only really be employed by China and never by the United
    States.
        Obviously, China's lawfare raises particular concern
    because China's unique control over its private sector through
    its data and banks, Communist Party cells, and united front
    partnerships means ostensibly private Chinese companies are
    vulnerable to being co-opted to serve the party-State's
    political goals.
        Now, I want to give two examples of what I call Chinese
    party-State lawfare to illustrate the problem: The first case
    is from Long Island where I'm from. It involves Ma Ju, a Hui
    Muslim activist who has testified before Congress and the U.N.
    against China's repression of his ethnic minority within China.
    He was served papers in Nassau County Court in New York State
    seeking enforcement of a $12.5 million judgment that was issued
    in China. Ma claimed that this judgment was fraudulently
    obtained and that he couldn't defend himself before fleeing
    China. Despite this the court in Nassau County ordered Ma to
    pay the full $12.5 million court judgment based on the Chinese
    court's ruling.
        This is not isolated. The U.S. authorities have identified
    at least seven similar lawsuits filed by Chinese entities over
    six years with three under FBI investigation that's reported.
    More broadly, Chinese companies have increasingly pursued
    commercial litigation in U.S. courts as plaintiffs, not as
    defendants, and often against Chinese nationals who happen to
    also be wanted by the Chinese party-State for either claims of
    corruption or maybe for political opposition to the party.
    That's one example of the kind of lawfare that we're up
    against.
        Another case from California: Mao Zedong's former Chair of
    the Communist Party--his secretary Li Rui became a prominent
    critic of the Communist Party at the end of his life. Mr. Li
    agreed with--through his daughter to donate his personal
    diaries to Stanford's Hoover Institution. After his death in
    2019 though, the widow of Mr. Li in China filed suit in Beijing
    claiming ownership of the diaries. The Beijing court ruled in
    Ms. Zhang's favor ordering Stanford to return the original
    diaries despite Stanford's attempt to defend itself. Stanford
    argues that it received inadequate notice in Chinese courts and
    was denied an opportunity to contest when it tried to appear.
        Ms. Zhang, who has recently passed away but sued in U.S.
    court alleging copyright infringement and seeking title based
    on the Beijing court judgment. The U.S. trial court allowed
    some of her claims to proceed and the case dragged on for over
    six years,
    5-6 years. It demonstrates even if it doesn't result in a
    positive judgment or a successful judgment for Ms. Zhang, it
    demonstrates some of the ways the Chinese party-State uses
    lawfare for ideological purposes beyond just harassing
    opponents.
        Furthermore, it raises a different problem, which is Ms.
    Zhang was very unclear of the sources of her funding. She was a
    widow without any sort of obvious means of wealth, and she
    funded a six-year massive lawsuit in California courts which
    went on for years where Stanford has the resources to defend
    itself, but not all U.S. defendants would necessarily be able
    to do so.
        I want to close by discussing some possible solutions. One
    would be taking on the American Law institute's proposal to
    change the rules in the United States for enforcing foreign
    court judgments to require reciprocity before enforcing a
    foreign judgment or at least change the rules to require the
    foreign--someone like defendants to essentially allow
    defendants a better chance to defense against Chinese court
    judgment enforcement.
        Finally, there are things we can do to bolster disclosure
    of foreign funding of litigation through third-party litigation
    or through amendments to the Foreign Agent Registration Act to
    address litigation funding. These enforcements will protect
    American courts' integrity from manipulation by the Chinese
    party-State while preserving what makes our legal system
    exceptional and valuable. Thank you for your attention.
        [The prepared statement of Mr. Ku follows:]
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        Mr. Issa. Thank you. Mr. Muller?

                      STATEMENT OF BRADFORD MULLER

        Mr. Muller. Chair Issa, Ranking Member Johnson, and the
    Members of the Committee, thank you for inviting me to testify
    today.
        Charlotte Pipe and Foundry is the Nation's leading maker of
    cast iron and plastic pipe and fittings for plumbing. We're a
    fifth-generation family owned business. We've been in
    continuous operation in the United States for 124 years.
        We employed 1,800 associates and through our wholly owned
    subsidiary Neenah Foundry we have another 1,000 employees
    spread across 11 plants across the United States.
        In 2017, we filed AD/CVD petitions through our trade
    association against imports of cast iron pipe and fittings. The
    Department of Commerce determined that Chinese exporters had
    undersold and subsidized cast iron pipe in the United States up
    to 345 percent less than fair value. For cast iron fittings
    Commerce determined the Chinese had undersold those products up
    to 494 percent. Duties to counteract these unfair trade
    practices have been in place since August 2018.
        Over the last seven years unscrupulous foreign entities
    have turned to transshipping pipe and fittings through third
    countries and deploying other forms of evasion and customs
    fraud to obscure the true origin of their products to avoid
    paying these duties.
        The Enforce and Protect Act, or EPA, grants U.S. Customs
    and Border Protection tools to combat customs fraud. In the
    seven-years since our orders were issued, we have received 10
    positive EPA determinations of transshipping against producers
    of our products, primarily in Malaysia and Cambodia. When
    Customs investigated the locations of these alleged producers,
    they found an empty warehouse, a bus stop, even a massage
    parlor, but no foundries.
        Despite Customs' good faith efforts, they have been unable
    to stop the illegal flow of imports. These entities have no
    intention of ever paying the duties. When caught transshipping
    these companies simply dissolve and the bad actors reconstitute
    under a new shell company and resume their unlawful activity.
        Chinese shippers have been so successfully evading U.S.
    trade enforcement that they freely advertise their capabilities
    to, quote, ``avoid high duties by exporting goods from China to
    Southeast Asian countries where we change containers and then
    re-export to the best Nation country.''
        Multiple news outlets are reporting on the many ways
    Chinese companies exploit gaps in domestic enforcement to
    bypass tariffs, duties, and other trade restrictions. I was
    quoted in the front page story of The New York Times on May
    27th, lamenting the whack-a-mole nature of the process of
    tracking down these fraudulent shell companies and shutting
    them down only to see them right back in business under a new
    name. CNBC uncovered a, quote, ``web of illicit activity that's
    propping up these shipments from China.'' Reuters wrote about,
    quote, ``Chinese exports offering sweet deals to U.S.
    businesses that come wrapped in fraud.'' The Financial Times
    reported on how, quote, ``Chinese exporters are stepping up
    efforts to avoid tariffs by shipping goods via third countries
    to conceal their true origin.''
        Evasion and transshipment have been so successful that
    Customs' effort to collect duties has become futile. Based on
    our calculations Chinese producers of our products have
    successfully evaded more than $44 million of dumping duties,
    money that they have robbed of the U.S. Treasury, and we have
    spent $7 million of our own money filing trade cases and EPA
    petitions in an unsuccessful attempt to enforce U.S. trade law.
        Customs simply does not have the tools to overcome this
    determined fraud and current penalties for such behavior are
    woefully inadequate. To address this Representative Ross and
    Representative Sewell have referred to the House Ways and Means
    Committee the Fighting Trade Cheats Act to strengthen
    enforcement against trade fraud.
        This bill attacks evasion of AD/CVD orders by increasing
    penalties, denying a person and their affiliates engaged in
    fraud an importer of record number, and allowing private
    enforcement action to gain immediate injunctive relief against
    illegal trade flows.
        To put it bluntly, the AD/CVD process is broken. Without
    far stronger remedies industries will be reluctant to undertake
    these cases. The cost to file and win these cases is
    exceedingly high and the promise of relief has become
    nonexistent in the face of lax trade enforcement.
        I'd like to thank Chair Issa, Ranking Member Johnson, and
    the Committee again for investigating these threats to American
    economic security and for allowing me to testify today.
        [The prepared statement of Mr. Muller follows:]
        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Issa. Thank you. Professor DeLisle?

                      STATEMENT OF JACQUES deLISLE

        Mr. deLisle. Thank you. Chair Issa, Ranking Member Johnson,
    and the Member of the Committee, thank you for the opportunity
    to testify.
        I'm going to address two types of concerns that I think
    arise in the context of what would be described as problematic
    uses of U.S. courts and legal processes more broadly by
    entities linked to the PRC or the Chinese Communist Party.
        The first category is essentially what one might call
    abuse, targeting individuals and entities in lawsuits brought
    against in the U.S. and U.S. courts. For example, against
    exiled dissidents or U.S. companies that are rivals of favored
    Chinese companies, that attempt to deny U.S. parties access to
    U.S. courts, to the application or the attempted application of
    Chinese law, and enforcement of Chinese judgments in ways that
    harm such U.S. parties' interests.
        The second kind of problem is what one could call avoidance
    of accountability. That is, Chinese parties seek to avoid the
    application or challenge the validity of U.S. laws either
    through keeping cases or evidence out of U.S. courts, or by
    avoiding the application and enforcement of U.S. law.
        How to address these problems? Well, it's challenging. The
    challenge stems in part from the fact that the problematic
    cases; and they do exist, are not facially or easily
    distinguishable, certainly not at a wholesale level, from many
    ordinary claims that should be allowed to proceed in the U.S.
    under principles of applicable U.S. law and fair access to
    justice. These are things that should be heard in our courts
    and often align with the interests of U.S. parties, indeed of
    U.S. nonparties the cases that have similar interests.
        The U.S. courts have a number of tools available to deal
    with these problems. Some of them might be sharpened; some of
    them might be used better, but they exist and they have been
    used often quite well and are better than many of the
    alternative more broad-brush or wholesale tools that might be
    contemplated.
        In terms of vexatious litigation targeting dissidents in
    exile or disfavored companies for the benefit of Chinese
    companies U.S. courts can and have evaluated the claims in
    individual cases, sometimes finding them credible; sometimes
    finding them not. The U.S. courts can dismiss cases and impose
    Rule 11 sanctions, something which perhaps they should do more
    often. They can deny abusive or burdensome discovery requests;
    easy enough to do under the usual rules of U.S. discovery in
    proceedings in the U.S., and requests for production of
    evidence for use in Chinese proceedings especially when they
    come from parties or individuals rather than courts in China
    could be scrutinized more closely, tightening in effect the 28
    U.S.C. 1782 process.
        The U.S. can and is increasingly going to have to deal--
    U.S. courts are going to have to deal with the question of
    recognizing or not recognizing antisuit injunctions. China
    started to issue these particularly in the FRAND SEP cases for
    technology.
        Forum nonconveniens motions, which are often attempted by
    Chinese parties to get cases out of U.S. courts, can be denied,
    and are often denied on the grounds of the public interest in
    the U.S. and having U.S. parties bring their cases and applying
    U.S. law, or on the basis of the burdensome effect on U.S.-
    based parties of litigating in China, or on a judgment in the
    particular context, in which case would be litigated in China
    given the parties, the courts, and the nature of the claims can
    decide that this would not be an adequate or available
    alternative forum in a Chinese court.
        The U.S. courts can also use choice of law rules to deny
    the application of Chinese law, whether it's inappropriate or
    where such law would offend U.S. public policy. We see this
    going on with respect to blocking statutes where U.S. courts
    have been unwilling to allow Chinese parties to plead State
    secrets law, data, or cybersecurity laws, or personal
    information protections laws as reasons for not to comply with
    discovery requirements.
        The U.S. courts can decline to enforce problematic Chinese
    court judgment rules and can invoke notions of reciprocity and
    comity to restrict such enforcement, either retail or
    wholesale, given the lack of Chinese enforcement of U.S.
    judgments in many cases, and U.S. courts have and do uphold
    relevant U.S. regulatory laws and their application against
    Chinese parties' challenges. Think of CFIUS decisions, PCAOB
    disclosure requirements, Huawei exclusion from markets for
    national security reasons, the TikTok ban, and so on.
        Here I would note the U.S. sovereign and official immunity
    doctrines that limits the extraterritorial reach of U.S.
    statutes have taken away some methods that might be available
    for dealing with problematic Chinese behavior.
        The point here in all this is the problem of abuse and
    avoidance of accountability. The tools are there and the legal
    tools we have or can readily imagine being available are quite
    suited to the kind of granular fact- and case-specific analysis
    that courts are suited to do. A more broad-brush approaches
    have challenges and problems. They risk embedding in U.S. law
    the idea that because abuses by Chinese actors can and
    sometimes do occur U.S. law and courts must assume that they
    occur. That is at odds with notions of due process and fair
    access to justice and harms the interests of U.S. parties.
        Disclosure requirements or other measure that would impede
    access to U.S. courts would create quite messy mini trials on
    collateral issues of the degree of entanglement with the
    Chinese State. That is a very complicated issue that could be
    over-expansive and chill the bringing of legitimate claims even
    by U.S. parties that happen to have some limited connection to
    China.
        Measures that explicitly are clearly targeting China risk
    accelerating a spiral of tit-for-tat moves by China that would
    indeed adversely affect the interests of the U.S. and U.S.
    parties. Those may be costs worth bearing, but they are costs
    that need to be calculated. They also risk making more credible
    China's narrative that U.S. law and courts are political tools
    wielded to keep China down and serve U.S. geopolitical--
        Mr. Issa. I thank the gentleman.
        Mr. deLisle. Thank you.
        [The prepared statement of Mr. deLisle follows:]
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        Mr. Issa. The remainder of your opening statement will be
    placed in the record.
        Without objection, Mr. Knott will be permitted to
    participate in today's hearing for the purpose of questioning
    the witnesses if a Member yields him time for that purpose. We
    welcome the gentleman.
        Mr. Knott. Thank you.
        Mr. Issa. I now recognize the Chair of the Full Committee,
    Mr. Jordan.
        Chair Jordan. Pursuant to the rules, the gentleman is
    recognized.
        Mr. Knott. Thank you, Mr. Chair. It is my privilege to be
    here. I am familiar with one of the witnesses and the company
    that he comes from, Charlotte Pipe and Foundry. I have had the
    privilege of touring their facilities. I know them well. This
    is a company that does it the right way. They put their heads
    down. They do great work. They deliver world-class products
    that will compete against anybody. What any company cannot
    compete against is fraud, manipulation, unfair markets, and
    lack of free markets.
        Mr. Muller, thank you for coming and testifying today. I
    want to be quick and to the point. What legislative proposals
    are you familiar with that could protect industries like yours
    that benefit not only just North Carolina, but the entire
    country and then the world by extension?
        Mr. Muller. Thank you, Congressman. In addition to the
    Fighting Trade Cheats Act which I mentioned, which would impose
    stiffer penalties on these bad actors, take import licenses
    away, and allow us a private right of action to enforce U.S.
    trade law there is also the Protecting American Industry and
    Labor from International Trade Crimes Act. I urge Congress to
    pass and fund that would stand up a trade fraud crime unit at
    the Department of
    Justice.
        The bill calls for $20 million in funding. As I mentioned
    in my testimony, on our two products alone we believe more than
    $40 million has been uncollected in duties by Customs. If they
    just had been able to collect on our products we could double
    the funding of this trade crime unit to $40 million.
        We believe that to stop this behavior we have to start
    prosecuting some of these bad actors because they continue to
    set up these shell companies. When confronted they dissolve
    them and they're right back in business with a new shell
    company.
        Mr. Knott. In your experience, sir, how do these foreign
    entities gain entry into the United States? Do they have
    participants in the United States? Are they blind actors? Are
    they willing and knowing? What is your experience?
        Mr. Muller. There are U.S.-based importers that engage in
    this fraud. We know some of those. Glendale Fire in California
    is one. Wells in Chicago. Wells Plumbing is another. These are
    U.S.-based importers that are engaged in this illicit activity.
    Those are the companies that we should be targeting with
    something like the PAIL Act.
        Mr. Knott. With your experience, sir, given the amount of
    fraud and sort of the suppressed pricing that the Chinese
    Communist Party engages in how responsive have the United
    States authorities been fielding your complaints in this area?
        Mr. Muller. Well, we tip our hat to Customs. In fact, we
    met with them last week, our trade association, and we have
    engaged very cooperatively with Customs. They do their best to
    enforce the law. We try to educate them on our products, how to
    spot the fraudulent products coming in. We are very pleased
    with Customs. They just don't have enough tools to stop this
    behavior.
        Mr. Knott. Right. Professor Ku, let me transition to you
    quickly. What are ways that we can disincentivize the Chinese
    Communist Party on a macro level from continuing to engage in
    this? Because it is not just Charlotte Pipe and Foundry
    obviously. It is everything from biopharma, to engines, and to
    computing. The theft and obstruction are real and across every
    sector. How do we dissuade them from continuing this?
        Mr. Ku. Thanks. There is no easy answers here. I wish there
    was a silver bullet. I think passing the legislation could
    certainly help.
        I do think that making clear that the first and foremost
    that we take these things seriously, then that we force bad
    actors to disclose the network of funding. The problem in
    transshipment is some of the bigger problems we see is the way
    the Chinese party-States intertwine with each other.
        Mr. Knott. Yes.
        Mr. Ku. We have to assume unfortunately that a lot of what
    look like normal private companies we want to welcome here to
    the United States have to unfortunately play by different rules
    because we can't trust them, because they're intertwined with
    the party-State at home.
        It's just unfortunate. That's the way we have to be
    tougher. We have to demand greater disclosure of connections
    between Chinese companies and the party sort of work
    partnership groups that they're involved with.
        Mr. Knott. Is there a way to separate doing business with
    Chinese companies from the Chinese Communist Party?
        Mr. Ku. I think there is. We should do business with
    whoever, but we have to assume that those companies which are
    private much of the time can be co-opted very quickly in a way
    that we can't in the United States--
        Mr. Knott. Right.
        Mr. Ku. --force a private company to do something that the
    government wants us to do. Once it's due--you have to proceed
    cautiously. It's really just--it's not the United States
    Government's fault; it's China's government's fault for
    creating this weird web of influence and control that makes
    unfortunately even honest Chinese companies suspect.
        Mr. Knott. Yes. To the witnesses, thank you. Mr. Chair, I
    yield back.
        Mr. Issa. I thank the gentleman.
        I would note for everyone in attendance the reference to
    H.R. 1284, which is a bipartisan bill for the private right of
    action, just to make sure everyone can look that up. Thank you,
    Mr. Muller, for mentioning it.
        With that, we go to the Ranking Member, Mr. Johnson, for
    five minutes.
        Mr. Johnson. Thank you, Mr. Chair. For many years the
    American judicial system has been a shining light of fairness
    and impartiality to the world, a system independent from undue
    influences or of the other branches with checks and balances
    that promote accountability.
        Professor deLisle, can you please walk me through some of
    the specific attributes in the U.S. judicial system that
    broadly speaking make it a fairer venue to resolve disputes
    compared to the Chinese court system?
        Could you turn your mic on, please?
        Mr. deLisle. I'm sorry. There are--yes, the contrasts are
    quite strong. The U.S. judicial system is of course open to
    pretty much anyone who has a cognizable claim, who has a claim
    that is covered by U.S. civil law regardless of national
    origin, regardless of perhaps the motives behind the lawsuit.
    The U.S. courts have historically been quite insulated from
    political pressure.
        Of course, in every system there is some link between
    politics and courts. Courts apply the laws adopted by political
    bodies; Congress in our case, and judges of course are selected
    even in our system by political processes. The contrasts remain
    profound.
        One of the unfortunate developments in China in recent
    years has been a ratcheting up of the position that courts
    should take into account party policy and national interests
    and should be accountable to the party; and should be subject
    to various forms of toeing the line as it were. There are--
        Mr. Johnson. Well, let me stop you right there because now
    we are starting to see some blending. Unfortunately, many of
    our judges have been under vicious attack from our Executive
    Branch and MAGA-loving Members of Congress. When judges make a
    ruling Donald Trump doesn't like, our felon-in-chief takes to
    social media and he bashes and slanders that judge in a way
    that often leads to threats of violence from Trump's base. At
    the same time his cronies in Congress race to file articles of
    impeachment against that judge without a legitimate shred of
    evidence of a crime, a high crime or a misdemeanor.
        Professor deLisle, you have spoken about the unique--you
    were speaking about the unique qualities of the Justice
    Department of the United States that make it among the fairest
    systems in the world, but if we keep politicizing our courts
    like threatening to punish or fanning the flames of violence
    against judges who dare rule against President Trump or his
    interests, how could this impact the impartiality and
    dependability of our courts in the long term?
        Mr. deLisle. That obviously is a concern. I have spent a
    great deal of time watching Chinese courts for the last 30 or
    40 years and I have seen progress and backward motion on this
    issue. The form in which the erosion of the shoots of judicial
    independence and fair-mindedness of Chinese courts have been--
    here the accomplishments were quite impressive for several
    decades--under threat because of the demand that courts take
    political concerns more directly into account.
        At one point the President's Supreme People's Court in
    China several years ago said that party policy was one of the
    principles along with law that should decide cases. We've seen
    judges face lifetime responsibility for so-called erroneous
    decisions. We've also seen populist pressures on courts, how
    people in the streets expressing opposition to the way courts
    are ruling. Those are the hallmarks of threats to court
    independence and judicial independence.
        Stepping outside my lane as a Chinese law expert here,
    there are things that look to me disturbingly familiar now
    going on in the United States.
        Mr. Johnson. Thank you. Some proposals I have heard from my
    colleagues during my tenure on this Committee would diminish
    access to the U.S. court system putting logistical and huge
    financial barriers in place for folks for trying to bring a
    lawsuit. This would mean effectively that only the wealthy or
    the well-connected could fully take advantage of our judicial
    system to resolve their disputes and the little guys would be
    left behind.
        Professor deLisle, you are an expert in the civil judicial
    system. Is it a good idea to make this system harder or
    exponentially more expensive to access? If we start mandating
    that anyone who wants to bring a suit has to pay exorbitant
    fees to get in the door how could that impact our impartial
    system of justice in this country?
        Mr. deLisle. I see my time is expired. May I answer?
        Mr. Issa. Of course.
        Mr. deLisle. OK. A cornerstone of the U.S. judicial system
    is fair access to justice. You should be able to go to court if
    you have a legitimate claim. That applies to Chinese parties as
    well as U.S. parties. We've talked about how to screen that
    out. There are many things either in the form of fees or in the
    form of creating barriers where you must prove the legitimacy
    of your claim. We talk about some of the disclosure
    requirements which could chill and impede access.
        One of the things I think that U.S. courts, as I mentioned
    earlier, could do to deal with problematic issues from China is
    to take measures to dismiss claims before they proceed to a
    point of being highly burdensome to parties. I would advocate
    that we look at that stage rather than closing off litigants
    wherever they're from before they can get through the
    courthouse door.
        Mr. Johnson. Thank you and I yield back.
        Mr. Issa. I thank the gentleman.
        If I could ask your indulgence for just one clarification.
    Professor, you mentioned political pressures in the nature in
    both countries. Briefly can you simply say is there any real
    comparison between our lifetime appointment of Federal judges
    and their likelihood to rule against the politics that may have
    got them the job and the Chinese Government broadly?
        Mr. deLisle. I'm not sure there's a simple answer to that
    question. These are obviously matters of degree. I don't think
    either system exists at a complete pole. As I suggested
    earlier, there had been welcome signs of progress in China and
    there's been some, but not complete backsliding. I don't think
    in my personal opinion, the U.S. is where it has been or should
    be. Judges are human beings, and they worry about the way they
    are addressed and discussed by the politically powerful. That's
    probably something universal. I certainly see it in China.
        Mr. Issa. Thank you. We are now go to the gentleman from
    Wisconsin, Mr. Fitzgerald, for his questioning.
        Mr. Fitzgerald. Thank you, Chair.
        Professor Ku, the United States maintains a number of
    sanctions, export controls, or other measures to prevent
    certain individuals or entities affiliated with an adversarial
    nation from gaining access to strategic technologies or to
    prevent equipment produced by such persons from being utilized
    in sensitive U.S. industries. A lot of times the sanctions
    include restrictions on certain property rights and generally,
    however, these do not apply to a sanctioned entity's patent
    portfolio, meaning a sanctioned entity can continue to license
    its patents to U.S.-based companies, or assert them in court.
    Some see the circumvention of sanctions and the subsidization
    of the activities of a sanctioned entity.
        Let me ask you why have IP rights generally been excluded
    from other property rights restrictions under U.S. sanctions
    and how could adversarial nations like China, which I know we
    have been talking about, take advantage of that loophole to the
    detriment of U.S. innovation, or obviously the other thing
    discussed is our national security?
        Mr. Ku. This is a complicated question. I agree that it's a
    strange thing. Obviously, it depends on how we design our
    sanctions regime which this body Congress has designed, but
    also which is implemented by the Commerce Department.
        You could have sanctions that are much stricter and that
    are completely across the board which in some cases would
    prevent even property licensing from occurring. That what's
    going on here is that people have--the Commerce Department or
    entities essentially try to make compromises to account for
    different interests, right? Licensing is very valuable.
        It's very valuable for U.S. companies in many companies. To
    lose that revenue is a substantial and significant cost.
    There's no legal reason why we cannot impose such rules across
    the board. It's more of a practical problem of balancing the
    different economic and political interest that we have here in
    the United States.
        Mr. Fitzgerald. Thank you. Ms. de La Bruyere, you've
    written extensive on China's military civil fusion, I guess
    you'd call it. China has utilized companies like Huawei and DT
    to advance its Made in China 2025 initiative or plan I guess
    you'd call it.
        Huawei held over 3,300 active U.S. past patents in 2024
    which is unbelievable to me. It's generated the company
    hundreds of millions of dollars in annual licensing revenue.
    When we allowed some of these State sponsored companies like
    Huawei to profit off the U.S. patent system, either through
    licensing agreements or injunctions, obviously we're
    subsidizing the continued kind of theft of American
    intellectual property and certainly helping to advance China's
    industrial agenda.
        What should Congress do about this, if anything,
    considering eliminating and licensing of asserting the U.S.
    patents while uncertain national security related sanctions
    list?
        Ms. de La Bruyere. One big challenge about fighting back
    against China's military-civil fusion strategy and general tech
    offensive is that we haven't as a system quite caught up to how
    advanced Beijing is. Therefore, the leverage it acquires and
    the risks of not only China stealing technology, but also the
    U.S. becoming increasingly dependent on Chinese technology. The
    way that alongside, say, U.S. investment into the Chinese tech
    program and more concrete U.S. tech partnerships with China end
    up fueling our adversary.
        We haven't recognized that as a system, we haven't imposed
    restrictions on things like tech licensing from Chinese
    entities that are very real threats. One potential avenue that
    the U.S. could take is that where we through fiat restrictions,
    for example, impose barriers on U.S. tech partnerships with
    China. Those could also cover tech licensing partnerships, and
    other IP agreements beyond simply formal drug ventures, formal
    export of technology, et cetera.
        Mr. Fitzgerald. Thank you. Right now, I'm Chairing the
    Subcommittee on antitrust. We've been investigating kind of
    this cartel-like behavior at a number of U.S. industries where
    there's collusion. However, with foreign companies, you can
    have an American corporation working with someone in China, and
    it kind of falls into a different category. I was wondering if
    you had any thoughts on that.
        Ms. de La Bruyere. Well, China's entire industrial and
    we'll call it private sector, but it's not a private sector is
    a cartel because fundamentally Beijing and the Chinese
    Communist Party control that through incentive shaping and
    through direct directives for lack of a better word. That means
    that we should think of Chinese companies, including their
    outpost in the United States, as being arms of the Chinese
    system and colluding.
        Mr. Fitzgerald. Thank you. Chair, I'm out of time. I yield
    back.
        Mr. Issa. I thank the gentleman. We now go to the Ranking
    Member of the Full Committee, the gentleman from Maryland for
    five minutes.
        Mr. Raskin. Professor deLisle, you said that in China, the
    courts are supposed to decide according to party policy as well
    as the law which is kind of amusing. I just finished reading
    Alexei Navalny's book Patriot where he said in Russia, they
    talk about telephone justice to describe either the literal or
    metaphorical coercion that the government plays in the decision
    of particular cases. I'm wondering is this the same thing
    happening in academia in China where scholars and deans are
    intimidated or coerced into deciding things according to
    official government edict.
        I ask, of course, because we're in a situation now where
    Donald Trump is trying to coerce colleges and universities,
    including Harvard, to accept his dictates with respect to
    student admissions, faculty hiring, and curricular and academic
    content. I'm wondering if that's something you find in China
    too.
        Mr. deLisle. The short answer is yes. Before talking to
    that, I want to stress that in many cases in Chinese courts,
    many Chinese judges and lawyers admirably apply the law fairly
    and play their roles the way one would hope they would play
    them and sometimes do so against the kinds of pressures that
    have been long present in China and that seem increasingly
    present in the United States. I've been dealing with Chinese
    counterparts in academia, in law, political science, and other
    fields for many years.
        There have always been restrictions. The restrictions have
    gotten tighter. The ability to publish one's work, to express
    one's views, is definitely under pressure. The reach of the
    party and State into universities has shrunk, what was once
    more capacious academic space.
        There have also been restrictions on Chinese scholars
    coming to the U.S., which has been a place where they are able
    to express ideas more freely and gather information. All those
    pressures are there. As with courts, some of this gets a little
    closer and more personal. What we're feeling now on American
    university campuses resonates in uncomfortable ways with what
    I've seen in China. That is the pressure of not only the
    concern about whether you will harm your university by saying
    certain things, or the concern about the loss of the resources
    necessary to do research are real as well as the interventions
    in what we hire and what we teach.
        Mr. Raskin. Are there attempts to impose government edicts
    and dictates on lawyers and on law firms?
        Mr. deLisle. In the United States or in China?
        Mr. Raskin. In China.
        Mr. deLisle. In China. Yes, there are always restrictions
    on law firms and lawyers. Those who have represented dissidents
    or targets of repressive policies have faced threats to their
    law licenses. Chinese courts do have significant discretion not
    to take cases that people might bring that are politically
    disfavored. While this is not Soviet style justice and many,
    many cases are handled in perfectly ordinary ways, the more
    politically sensitive the case, the more party and State
    officials take interest in the case, the less likely it is to
    get to court or to be handled fairly once there.
        Mr. Raskin. I see. I had the impression that there was very
    little traditional independence. You're saying that in a lot of
    cases in China, the courts operate relatively free from direct
    governmental coercion or control?
        Mr. deLisle. It depends on the type of case, the type of
    court, and the type of parties. The kinds of things that your
    question points to, the politically sensitive areas, things
    which would be deemed adverse to the interest or preferences
    are--
        [Simultaneous speaking.]
        Mr. Raskin. We could very easily in America slide into that
    kind of system where the vast majority of contract, tort,
    property disputes are handled without any direct political
    interference. When it comes to Constitutional cases, the
    interpretation of Executive powers or Legislative powers, there
    could be much more political interference.
        Mr. deLisle. That kind of bifurcation is a hallmark of
    systems which have only made limited progress toward rule by
    law or that have back slid from robust democratic rule of law.
    It's one of the things that can be quite insidious. Ernst
    Frankel, a German scholar from many years ago, describe the
    idea of a dual system, a dual State where some cases are
    channeled through the ordinary legal process with fair process.
    Other cases, politically sensitive ones, face a very different
    regime wherein the preferences of those in power determine the
    outcome.
        Mr. Raskin. Can you explain the doctrine of true conflict
    where American courts will sometimes not impose U.S. law
    against a foreign entity if that entity's country has a law
    that's in true conflict with our laws?
        Mr. deLisle. A true conflict situation is where a party is
    subject to the laws of two countries. That often happens with
    entities or individuals who work in China and here, some border
    straddling activity. A true conflict is where you cannot comply
    with one State's laws without violating another.
        To take one example from U.S. litigation, the Vitamin C
    Antitrust Litigation where the claim was that Chinese law
    required price collusion and U.S. antitrust laws, of course,
    prohibited it. We're seeing more of this. One of the areas
    where it may become quite serious is in China's antiforeign
    sanctions law where they will prohibit companies subject to
    Chinese jurisdiction from complying with U.S. sanctions whereas
    those companies are obliged to comply with U.S. sanctions.
        The courts are going to have to face this and they have to
    decide what to do. The ordinary international legal principles
    rooted ultimately in comity are to decide which State has the
    stronger interest and to apply its law or to refuse to apply
    foreign law that is repugnant to the public policy of the host
    jurisdiction, the foreign jurisdiction.
        Mr. Raskin. Thank you. I yield back, Mr. Chair.
        Mr. Issa. I thank the gentleman. We now go to the gentleman
    from Virginia, Mr. Cline, for five minutes.
        Mr. Cline. I thank the Chair. I want to thank our witnesses
    for being here. As was stated, foreign entities invest
    substantial sums in litigation financing, potentially
    influencing court decisions to align with their interests.
        There's no greater actor than China engaged in this
    activity. Additionally, adversarial governments or corporations
    linked to them, they use this strategy to shape legal outcomes
    in Federal courts, advancing their geopolitical agendas. This
    practice raises national security concerns, particularly when
    it involves sensitive military and commercial technology or
    leveraging U.S. disclosure laws for strategic gain.
        I introduced the Protecting our Courts from Foreign
    Manipulation Act which would require disclosure from any
    foreign person or entity participating in civil litigation as a
    third-party funder--litigation funder in U.S. Federal courts
    and ban sovereign wealth funds in foreign governments from
    participating. Litigation finances the third-party litigation
    funder either directly or indirectly.
        Ms. de La Bruyere, your work has exposed how the CCP uses
    nonmilitary and nontraditional tactics to gain advantage. Do
    you see a strategic use of U.S. litigation as part of the CCP's
    toolkit? Would a bill like the one I explained help address
    that risk?
        Ms. de La Bruyere. Use of litigation is absolutely a part
    of the CCP's toolkit. Beijing uses litigation to censor and
    intimidate its opponents and cases of this abound. They not
    only harm the direct opponents, but they also create a general
    silencing across the U.S. where it's simply too dangerous to
    speak about even known risks about Chinese entities because of
    litigation concerns.
        Beijing also uses targeted litigation to acquire
    intellectual property, including through the discovery process.
    Importantly, these efforts are in many cases funded by the
    Chinese Government, both directly and indirectly, including
    through, for example, targeted subsidy programs that support
    Chinese companies dragging out these cases in U.S. courts.
        Mr. Cline. Now, some would argue that adding transparency
    requirements to seal litigation, like identifying foreign State
    interest behind a party, might chill access to the courts or
    create an administrative burden. From a national security and
    economic standpoint, is there a real cost to doing nothing? How
    would you respond to critics who say greater transparency in
    litigation is unnecessary or even harmful?
        Ms. de La Bruyere. I believe there's absolutely an economic
    and security cost to doing nothing. I also think that the U.S.
    has proven out a system evident, for example, the FARA regime
    of having transparency requirements for foreign adversaries and
    foreign entities that allow the U.S. to protect its security in
    that direction without undermining the integrity of the U.S.
    legal system. That's by having a targeted campaign that seeks
    just generally information on the activities of foreign agents
    and is, again, targeted at foreign adversaries.
        Mr. Cline. Professor Ku, I introduced the bill to address
    how foreign adversaries, especially the Chinese Community
    Party, may be using U.S. courts as a strategic tool. In your
    view, how real is the threat of foreign abuse of U.S. courts
    and how might Congress strike the right balance between
    maintaining judicial openness and protecting national security?
        Mr. Ku. Yes, the answer is kind of boring but obvious is
    disclosure. Disclosure may create some administrative
    obstacles. It doesn't prevent people from bringing cases.
        We want to allow foreign companies to feel like the U.S.
    judicial system is open to them. There's really no reason why a
    foreign government really needs its rights protected in the
    same way. So, disclosing or maybe restricting foreign
    government involvement in these litigations which they're not
    actually directly involved in or through third-party litigation
    or at least forcing disclosure would go a long way.
        I don't think it would burden people from bringing cases.
    One last thing, I'll just note that it was very unclear that
    this could happen the other way, U.S. companies could get
    involved in third-party litigation within China. It could put
    U.S. companies at a disadvantage.
        Mr. Cline. According to Westfleet Advisors' most recent
    report, third-party financing is behind over 30 percent of U.S.
    patent litigation. According to Bloomberg, more than one-half
    of the U.S. patents are issued to foreign entities and our
    country has no record of when or to whom they are transferred.
    Isn't this a national security and economic security risk?
        Mr. Ku. For me, anyways, I think it is. As we point out, we
    require people to register as foreign agents in other contexts,
    if you have a blog or something and you're promoting the views
    of the Chinese Communist Part. Actually, if you're filing a
    lawsuit, it's not required to be disclosed. It's odd, strange.
    We can distinguish between bad actors or at least potentially
    bad actors and just the average person who's involved in a
    lawsuit. Our system has proven we can do that, and we can do
    that here as well.
        Mr. Cline. Would we reduce--well, I have five seconds left.
    With that, I'll just yield back. Thank you, Mr. Chair.
        Mr. Issa. There's a first. We're getting our time back. I
    thank the gentleman from Virginia, and I go to the gentlelady
    from North Carolina for her five minutes. Ms. Ross.
        Ms. Ross. Thank you, Mr. Chair and the Ranking Member for
    holding this hearing. Thank you to all our witnesses for
    testifying today. I am going to focus most of my questions for
    Mr. Muller because we are bipartisan cheerleaders from North
    Carolina and our businesses.
        I also want to thank Mr. Muller for your testimony, your
    ideas about what Congress can do better but also for your
    service to this country. In particular, at the beginning of
    your service working for USAID, we know how important foreign
    relations are.
        You told us that Charlotte Pipe has filed multiple claims
    against Chinese litigants at the International Trade Commission
    and that Chinese companies clearly have been dumping products
    at competitive low prices. I participated with our North
    Carolina Secretary of State at a North Carolina Chamber event.
    It can actually just devaState a small company that doesn't
    have the resources that you do. How much time and money has
    your company invested in filing these multiple antidumping
    suits at the ITC?
        Mr. Muller. Well, I mentioned previously in my testimony,
    it's almost $7 million of our own money. Another way to answer
    your question, I was hired by Charlotte Pipe and Foundry 23
    years ago to run the marketing department, to be the Vice
    President of Marketing, which I did for a number of years. In
    2006, I took on a government affairs role and kind of wore two
    hats at Charlotte Pipe.
        In the last five years, I've been working exclusively on
    government affairs. My time and salary have been dedicated to
    try to work through these issues, both at the State level and
    at the Federal level. It continues to occupy--I joke that I
    shed half my job and I'm twice as busy.
        Ms. Ross. Small businesses simply couldn't afford to have
    that kind of advocacy?
        Mr. Muller. No. In fact, I also have represented the
    American Foundry Society. They have 1,000 corporate member
    foundries throughout the United States, steel, aluminum, and
    cast iron. Eighty percent of those foundries are small
    businesses, 100 people or less.
        They don't have the resources to fight like we do. Many of
    them are going out of business. Twenty years ago, there were
    2,000 foundries in America, and we're down to about 1,700.
    These are vital for national security. You can't make tanks or
    plans or ships without foundries, steel, cast iron, and
    aluminum foundries.
        Ms. Ross. Well, thank you for representing your company and
    also those small businesses by extension. In 2017, Charlotte
    Pipe discovered that a Chines manufacturer had stolen your
    name, trademark, and logo and was using it to sell unaffiliated
    products in East Asia. Since then, you filed trademark
    infringement claims in both China and Singapore. Can you tell
    us the status of those claims?
        Mr. Muller. Yes, thank you for that question. I did testify
    on the Senate side before Senator Tillis and his Intellectual
    Property Subcommittee on this topic. We only discovered by
    accident that China had stolen our brand identity and was going
    to market in Southeast Asia as Charlotte Pipe and Foundry.
        There's a building in Shanghai with our logo on the side. A
    gentleman was passing out Charlotte Pipe business cards at a
    trade show in Singapore. That's how we discovered the theft.
        We filed to get our IP back in Singapore. We lost but then
    won on appeal. We also had to hire a Chinese law firm at great
    expense to fight for our IP to get it back in China. That is
    stalled in the courts of Beijing.
        No decision has been made. The case has basically gone
    cold. We can't get any information from the Chinese Government,
    from our Chinese law firm as to the status of that case. We
    know they're still going to market. On Chinese websites, you
    can still see that they're going to market as Charlotte Pipe.
        Ms. Ross. Just not to be too repetitive. When I went to
    this North Carolina Chamber event, they brought in two small
    businesses that have experienced similar kinds of appropriation
    of their intellectual property. Those small businesses simply
    do not have anybody who can stand up for them.
        They either have to move on, or they have to find some
    other way. I want to thank you for suggesting some very
    concrete bipartisan steps we can take to help right these
    wrongs. Thank you for your testimony.
        Mr. Muller. Thank you.
        Ms. Ross. I yield back.
        Mr. Issa. I thank the gentlelady. We now go to the
    gentleman from California, Mr. Kiley, for his questions.
        Mr. Kiley. Thank you, Mr. Chair. Thank you to our witnesses
    for this important discussion which I think really covers two
    main areas, one being the CCP's evasion of policy and law and
    international rules to press its own advantage. The second
    being its manipulation of our legal system in conjunction with
    its political control over its own [inaudible] has benefited
    itself at the expense of the United States.
        I wanted to ask, first, Ms. de La Bruyere--did I get it
    right? Close? All right. If you could comment on how this
    discussion relates to what's probably the most important issue
    when it comes to our competition with China. That is the CCP's
    efforts to evade export controls when it comes to leading edge
    semiconductors/how they're trying to steal technology to
    advance their own foundry.
        Ms. de La Bruyere. Absolutely. Generally, this falls within
    this first category you listed of China abusing the U.S. legal
    system in order to evade and to neuter our defenses. There are
    offensive things, though, China also does to this and
    including, for instance, using litigation to obtain tech
    through discovery.
        The other important thing is that as the U.S. has become
    increasingly serious about imposing restrictions on China from
    tech to trade, Beijing has also become increasingly serious and
    adept at first at the point of framing, making sure that there
    are loopholes or weaknesses within those restrictions. Then at
    the point of enforcement, evading them. Across export controls
    and other means to restrict tech access, Beijing consistently
    lobbies and influences to make sure that it will continue to
    maintain tech access. Then, of course, there's the network of
    shell companies, of localization efforts, of backdoor activity
    that China engages to directly evade U.S. restrictions that
    have already been levied.
        Mr. Kiley. Thank you. Professor Ku, there's this issue we
    also discussed where U.S. court system recognizes judgments in
    Chinese courts, but the opposite is not always true, even
    though judgments in our courts follow from a legal system
    that's developed over centuries to assure fairness through
    things like due process and discovery, access to counsel,
    whereas that's far from the case in the Chinese legal system.
    Why is it that we continue to allow that lack of reciprocity?
    How might we go about changing?
        Mr. Ku. Well, this is a big issue. The United States courts
    have always been more deferential to foreign courts than
    foreign courts have been to the United States' court judgments.
    This is not just Chinese courts.
        The United States courts tend to enforce foreign judgments.
    We just generally--U.S. courts generally do this. The other
    complication is that it's often left to State law.
        Different States might enforce some slightly different
    standards. It often is in State courts, not Federal courts. The
    State court judges might not be as attuned or worried about or
    concerned about the issues that we're discussing here, which
    might've happened in the case I mentioned on Long Island.
        That's part of the problem. There have been efforts, and
    the American Law Institute years ago did propose that Congress
    adopt Federal Legislation to require reciprocity for U.S.
    courts before we enforce foreign court judgments. That would
    apply to China as well.
        China itself does have a reciprocity requirement before
    they will enforce the U.S. court judgment. There have been
    proposals, but it's been complicated. It creates a lot of
    effort. That would be the way that Congress could get involved
    here to create a fair system for--especially now that we see
    Chinese companies taking advantage of the way U.S. courts give
    deference to Chinese courts.
        Mr. Kiley. How do you think China would respond if we
    passed along those lines?
        Mr. Ku. I don't know if this is the top of their agenda.
    They'd actually wouldn't worry too much about it because we
    would adopt essentially their rule, reciprocity, right? I don't
    think they would have any basis to object to that.
        Mr. Kiley. Thanks very much. I yield back.
        Mr. Issa. Would the gentleman yield?
        Mr. Kiley. Happy to.
        Mr. Issa. What you're saying is they might not be too
    concerned if we actually had our reciprocity match their
    reciprocity? They would be outraged as they often are?
        Mr. Ku. Well, they could be outraged. They wouldn't have
    any reasonable basis to be outraged. The rule would be not just
    the United States, but most countries in the world have a
    reciprocity requirement.
        Mr. Issa. We use Rule 26 for disclosure by the defendants
    of their third-party funding, if you will, of their defense
    and/or payment. In China, do they have a similar rule? Does it
    require the plaintiff to also disclose?
        Mr. Ku. I'm not familiar with that specific rule in China.
    I do know that there have been disputes. It's uncertain--court
    judgments have--some Chinese courts have disallowed third-party
    litigation funding for agreements that have been disclosed. I'm
    not sure disclosure is required under Chinese court system. I
    do know that Chinese courts--some Chinese courts have refused
    to allow people to proceed if they had a third-party litigation
    agreement.
        Mr. Issa. OK. They're just outright prohibited?
        Mr. Ku. Well, there's no general rule. I know courts have--
    in China have ruled that it is inappropriate or not allowed or
    prohibited in this case.
        Mr. Issa. Thank you. Seeing no one else on your side for
    now, we now go to the gentleman from South Carolina. Hopefully,
    you'll deal with your North Carolina friend as well as everyone
    has. It's been pretty good so far.
        Mr. Fry. Mr. Chair, I couldn't agree more. He's outside the
    district, but we're in the footprint of Charlotte. Most of the
    United States is actually in the footprint of the Charlotte.
        Mr. Issa. The gentleman is recognized then.
        Mr. Fry. Thank you, Mr. Chair. Professor, you were talking
    earlier with Mr. Kiley about enforcement of judgments. I'm just
    curious. What would be the prudent way in which Congress or the
    courts could review these judgments in foreign countries to
    ensure that substantive and procedural due process were
    honored?
        Mr. Ku. As Ms. de La Bruyere mentioned, there are already
    standards. The courts are already empowered to review. The
    problem is that the standard is too deferential.
        The courts should be given a different standard where
    presumption is reversed. It could be with respect to certain
    countries that Congress identifies foreign adversaries.
    Congress has identified foreign adversaries. OK. These
    standards should not be given to courts in these countries.
    That might be one way to do it, right, which I think would be
    kind of a scalpel, right? It would focus without creating
    problems with other countries.
        Mr. Fry. If you took countries of concern, right?
        Mr. Ku. Countries of concern.
        Mr. Fry. These countries. Would it be a de novo, almost a
    de novo review of their procedural and substantive processes to
    make sure that the hearing was fair in the foreign country?
        Mr. Ku. Right. We do have a standard where they do have to
    meet a standard of fundamental fairness. What I'm worried about
    is a lot of courts just don't do that. Maybe the way to give
    litigants even more is a presumption that the parties seeking
    to enforce a foreign judgment has the burden to prove that the
    prior judgment was adopted fairly.
        One of the problems mentioned is that it's hard to get
    access to information on the original court judgment. In China,
    for instance, it'd be hard to travel there as Mr. Muller
    discovered. He can't travel there because he's worried about
    being arrested. Creating a presumption, putting the burden on
    the party seeking to enforce the foreign court judgment or the
    Chinese court judgment would solve a lot of these problems.
        Mr. Fry. In your experience, Professor, do you believe that
    when domestic courts are enforcing foreign judgments that is
    almost a rubberstamp exercise?
        Mr. Ku. I wouldn't go so far as to call it a rubberstamp.
    It isn't as--I'll just put it this way. It's not as rigorous as
    other countries. Other countries are much more skeptical of
    foreign court judgments than on average U.S. courts are,
    especially I'll include State courts. Part of it is there's no
    Federal standard.
        Mr. Fry. Thank you for that. To briefly shift a little bit,
    what do you suggest just overall that Congress, the Executive
    Branch, or even domestic companies can do to stop China from
    evading trade controls as an example?
        Mr. Ku. Yes, this is a real problem. The first problem is
    identifying--admitting the problem exists. In educating folks
    to realize that the party State as they call it is intertwined
    with Chinese businesses.
        Even if Chinese businesses don't really want to, they are
    essentially manipulated often or forced to participate in a
    Chinese strategic plan which can be nefarious. That is the
    first step in getting everyone to be aware of what you can do.
    Then, we have tools which we can do to harden our system. I
    like to use the term hard.
        We shouldn't change our system. We need to make it tougher
    for--make it harder to manipulate the bad foreign actors. I
    think disclosure, education, awareness will go a long way to
    solving some of our problems.
        The transshipment problem might be the solution. It might
    be empowering the people who know best. The parties are being
    injured by the bad actors to go to court. Bring their evidence
    to court because we just don't have necessarily enough
    enforcement resources in the United States.
        Mr. Fry. Right. In the instance of the piping company,
    they're much more equipped to recognize the problems in the
    industry as it pertains these shipments into the United States.
        Mr. Ku. Right. We've adopted this in other mechanisms as a
    way--False Claims Act and other ways to enforce. Giving private
    actors who already have the incentives might be a good way to
    do that to make it tougher for transshipment and other types of
    evasion.
        Mr. Fry. Ms. de La Bruyere, what should U.S. companies and
    law firms with a presence or operational nexus with China be
    doing to insulate themselves from risks associated with
    engaging in this space?
        Ms. de La Bruyere. First, that they should limit their
    engagement with China to the greatest extent possible. That's a
    role Washington can play too. If the U.S. Government imposes
    costs in the same way that China does to its entities, calls
    for a choice to be made between the U.S. and the Chinese
    markets, that will create an incentive both for U.S. companies
    to invest at home and to protect themselves from the risks of
    exposure to the Chinese market because China is adept at
    leveraging short-term incentives to which our market entities
    are very vulnerable in exchange for long-term strategic
    advantage that will destroy our market entities and our system.
    There's a role for Washington simply to restrict that exposure,
    or to put costs in it, and at the same time to create greater
    incentives for investment at home so that it's not just
    surrendering things for U.S. entities. It's also gaining a new
    opportunity.
        Mr. Fry. Mr. Chair, I see my time has expired, and I yield
    back.
        Mr. Issa. I thank the gentleman. I now recognize the
    Ranking Member for unanimous consent.
        Mr. Johnson. Yes, two articles, Mr. Chair, I'd like to
    offer for the record. First, Bloomberg Law that is entitled,
    ``Litigation Finance Doesn't Pose Security Risks.'' Second, is
    a Law360 article entitled, ``A Boogeyman National Security
    Threat and Litigation Funding.''
        Mr. Issa. Thank you. I will now--without objection, so
    ordered. I now will offer unanimous consent that a statement by
    the American Property and Casualty Insurance Association
    concerning the same litigation or legislation be placed in the
    record. Another one from the Alliance of American
    Manufacturing, a statement submitted for this hearing in
    support of the hearing. Without objection, all these will be
    placed in the record.
        I'll now recognize myself for some closing questions. This
    has been a very good hearing, and I appreciate all your input.
    There were a couple of things that came out during this that
    I'd like to touch on.
        First, it's a broad question. Rule 11 sanctions which
    sanction parties are basically for wrongful actions, that's
    currently made at the discretion of the judge. It has no
    requirement that it equals the damage.
        It can be $10,000 even if it cost you $50,000 just to file
    the motion. Do you believe Congress has a role and should
    consider legislation that would effectively strengthen and make
    it much more of a shall requirement when there had been the
    findings normally found in Rule 11 sanctions? Just briefly,
    does anyone disagree with that as an area that would help stop
    wrongful legislation when it is onerous and deliberately
    deceiving?
        Good. My next one is Rule 26 which was alluded to. Under
    Rule 26, defense has a requirement to make available including
    documentation under Rule 34 that you have to produce any
    insurance or other third-party defense funding that pays for
    the defense and/or could pay all or part of the settlement. If
    that is the case, my question to each of you--and I'll start
    from left to right with the professor there--has that
    requirement in some way diminished the ability of defendants to
    protect themselves or to be able to get that protection such as
    insurance for defense? Has the requirement to disclose it ever
    reduce the availability?
        Mr. deLisle. That's beyond my scope of expertise about
    what's happened to parties in U.S. courts that have had to
    disclose that.
        Mr. Issa. Well, wait a second. Wait a second. You came here
    as an expert. I want to hold you a little accountable. You
    basically--and from the dais, it's been said that if we have to
    disclose the plaintiff's funding, that it's going to somehow
    diminish their ability to have access to the court. Do you have
    any knowledge, and you should have knowledge, I would think, of
    whether there's been some sort of adverse effect because of
    Rule 26?
        Mr. deLisle. As I said, I'm not an expert on what happened
    with Rule 26 with U.S. insurance claims. My concern about the
    issue of foreign disclosure, particularly what to be the
    proposal to require disclosure of foreign government or party
    linked funding perhaps, targeting China perhaps more generally,
    is that's much messier than asking someone to disclose an
    insurance policy. It does--
        Mr. Issa. OK. Well, I got your opinion now solidly on one
    side, but not the other. Let me go--well, Mr. Muller, you've
    been involved in your litigation. If you brought in a partner
    to help in that litigation to share in the losses, the profits,
    the payments, would that discourage you if you had to disclose
    it?
        Mr. Muller. No. In fact, through our trade association, we
    partnered with our competitor, McWane, out of Birmingham, in
    our trade cases.
        Mr. Issa. It's an open disclosure. Professor Ku, you're--
    both of the next two witnesses. When it's been disclosed either
    that you're insured, has that somehow made it unavailable or
    hindered, even though it's often something the plaintiff is
    prepared to settle for?
        If they want damage, they look at how much you have and
    that affects it. Even with that, has it actually done any harm?
    Because one of the things we're hearing is that somehow if you
    disclose, you by definition will take away someone's ability to
    get that. Your opinions on that based on the history of those.
        Mr. Ku. Right. I'll be a little professory, and say I
    haven't studied it very carefully. I don't think that it would
    and I'm not aware of any sites that show that it does
    discourage plaintiffs or disincentivize these lawsuits.
        Mr. Issa. Of course, we're talking to the defendant that's
    currently the only one having to--
        Mr. Ku. Right, of course. Defendants as well, right, that
    they're unwilling to go to court.
        Ms. de La Bruyere. I don't know of any cases where that has
    disincentivize participation.
        Mr. Issa. OK. Now, I just want to try to understand if
    there were three parties and they're suing. Mr. Muller, I'm
    going to go back to you since you do seem the one that doesn't
    have to study. You've lived it.
        If when you go and you partner with somebody, you don't
    have a problem disclosing. Those are co-plaintiffs. Or even if
    they're hidden plaintiffs, you don't have a problem disclosing
    them.
        Mr. Muller. No, no. We have no hidden plaintiffs in our
    trade cases.
        Mr. Issa. In that case, they also are subject to being
    subpoenaed and deposed, right?
        Mr. Muller. Certainly, they would, yes.
        Mr. Issa. OK. What I'm trying to understand here in closing
    is this whole question of the goose or the gander. If it's fair
    for the defendant to have their finances known, to have their
    source of funding for possible payment if they lose or the
    defense and it doesn't have a chilling effect and it's been in
    place for years even though Rule 26 doesn't work both ways, the
    question is, why would be bad at all if there had to be an open
    recognition?
        Professor, I'm going to go back to you briefly. I asked you
    if you knew, and you said you hadn't studied. OK. I'm going to
    take you to one thing that you said earlier. I don't want to be
    personal, but you are at Penn, correct?
        Mr. deLisle. Yes.
        Mr. Issa. Your university took 105 million between 2018-
    2022 from the Chinese Government related business entities
    alone. You opined considerably on political, and the influence
    and the difference. You were unwilling to differentiate between
    Chinese Communist judges who serve at the pleasure of the
    Chinese Government and lifetime appointment Federal judges.
        Then you even talked about the universities in China. Isn't
    there and hasn't there been a concerted effort by the Chinese
    Communist government through their proxies to, in fact,
    influence universities in America through very generous gifts,
    the tip of the iceberg being 105 million to Penn?
        Mr. deLisle. I don't think I was unwilling to distinguish
    between Chinese judges and U.S. judges.
        Mr. Issa. You said they were more similar than not.
        Mr. deLisle. I'm not sure that I said that either. What I
    said is I don't think either side is at the polar end of the
    spectrum. There is many times fair justice, fair judges, and
    good lawyering in China.
        I have the concerns I expressed about trends in the United
    States. There still is a very significant gap. I don't want to
    be misunderstood as suggesting that there is not.
        Mr. Issa. Would that gap be considered pretty much night
    and day, not absolute but considerably different, so much so
    that the level of justice is inherently different?
        Mr. deLisle. At this point, yes. Although I'd say there are
    worrisome signs about the direction in both places. As to your
    question about funding, universities and others received
    funding from a great many sources.
        The degree to which those come with influence and strings
    attached varies hugely. The amount you refer to is obviously a
    drop in the bucket of an institution the size of Penn, much
    smaller than the cuts Penn has suffered from U.S. sources, for
    instance. I have never knowingly had any contact with Chinese
    money coming into Penn. I know there is a wariness of accepting
    it. In some cases for good reason.
        Mr. Issa. Thank you. I'd like to allow the Ranking Member
    to have some of these minutes I've taken. The gentleman is
    recognized.
        Mr. Johnson. Well, I think so long as we can adhere to our
    rule as much as possible that each of us gets five minutes of
    questions, I'm happy with whatever the content of any questions
    might be from the Chair. However, I would just take the
    opportunity to point, Professor deLisle, that you are the
    Stephen A. Cozen Professor of Law and Professor of Political
    Science and the Director of the Center for Study of
    Contemporary China, correct?
        Mr. deLisle. Yes, sir.
        Mr. Johnson. You are not the president of the university?
        Mr. deLisle. Fortunately, not.
        Mr. Johnson. You're not deciding campus-wide policies on
    admission, school finances, or speech, correct?
        Mr. deLisle. I am not. I try to shake some money loose from
    the central administration, but that's a rather different
    undertaking.
        Mr. Johnson. All right. With that, I will yield back. I
    thank the Chair for the time for rebuttal.
        Mr. Issa. Thank you. Clarification is always what we seek.
    I want to make sure this Committee always stands for that. I
    want to thank our witnesses.
        Today's hearing is expansive but not complete. For that
    reason, I would ask that you be willing to supplement answers
    to questions that are given to you in writing in the next few
    days? Thank you.
        With that, this concludes today's hearing. I want to again
    thank our witnesses. Without objection, this Committee stands
    adjourned.
        [Whereupon, at 11:57 a.m., the Subcommittee was adjourned.]

        All materials submitted for the record by Members of the
    Subcommittee on Courts, Intellectual Property, and the Internet
    can
    be found at: https://docs.house.gov/Committee/Calendar/ByEvent
    .aspx?EventID=118511.

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