Tag Archives: venture capital

USTR warns of increasing attacks by China on US intellectual property, including cyber-attacks

A report released in late November the Office of the United States Trade Representative (USTR) states that China appears to be stepping up its attacks on U.S. intellectual property.

“China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months.”

Raymond Zhong in The New York Times reported that “something is unfolding right now that carries higher stakes than any other tech story on the planet.”

Zhong was referring to China having detained the third Canadian citizen in apparent retaliation for the arrest of Meng Wangzhou, a top executive at Huawei, the world’s leading maker of telecom networking equipment. Since, CFO Wangzho’s arrest, Canadian officials have reported that a total of 13 people have been arrested in China. Eight have been released.

It has been long speculated that Huawei’s products can be used for spying by the Chinese government.

The USTR report, released on November 20th, is called UPDATE CONCERNING CHINA’S ACTS, POLICIES AND PRACTICES RELATED TO TECHNOLOGY TRANSFER, INTELLECTUAL PROPERTY, AND INNOVATION.

“In the USTR report the U.S. accused China of continuing a state-backed campaign of cyber-attacks on American companies that were both intensifying and growing in sophistication,” Bloomberg News reported.

Chinese Claims

In response to questions about the report, a spokesman for China’s foreign ministry on Wednesday said U.S. officials should read a white paper published by the government in September that claims China ‘firmly protects’ intellectual property rights.

On August 18, 2017, the Office of the U.S. Trade Representative (USTR) initiated a Section 301 investigation of China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation. 3

On the date of initiation, USTR requested consultations with the Government of China concerning the issues under investigation.4 Instead of accepting the request, China’s Ministry of Commerce expressed “strong dissatisfaction” with the United States and decried the investigation as “irresponsible” and “not objective.”5

The primary four points of the report (IPCU’s boldface):

1. China uses foreign ownership restrictions, such as joint venture (JV) requirements and foreign equity limitations, and various administrative review and licensing processes, to require or pressure technology transfer from U.S. companies.

2. China’s regime of technology regulations forces U.S. companies seeking to license technologies to Chinese entities to do so on non-market based terms that favor Chinese recipients.

3. China directs and unfairly facilitates the systematic investment in, and acquisition of, U.S. companies and assets by Chinese companies to obtain cutting-edge technologies and intellectual property and generate the transfer of technology to Chinese companies.

4. China conducts and supports unauthorized intrusions into, and theft from, the computer networks of U.S. companies to access their sensitive commercial information and trade secrets.7

“Further Unreasonable Actions”

The USTR report concluded: “China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months.

“USTR intends to continue its efforts to monitor any new developments and actions in this area.”

The full report can be found here.

Since 2014 Chinese venture capital investment in the U.S. totals $31 billion. The report cites analyst that estimate “Chinese investors participated in 10-16% of all venture deals in the United States between 2015 and 2017.”

Image source: USTR Update

 

U.S. cities are attracting a lower percentage of startup capital

Several surveys of global innovation have noted that the U.S. innovation edge is slipping, but until now they have not pinpointed where the U.S. share of global tech investment is going and possible reasons why.

A recent report detailing which cities today are attracting the most venture capital, Rise of the Global Startup City, states that the U.S., while still a lead player, is no longer the epicenter of all things new and  technological. Other cities are attracting a growing share of the venture pie, especially those in China.

“America’s long-held singular dominance of startup and venture capital activity is being challenged by the rapid ascent of cities in Asia, Europe, and elsewhere,” reports the study. “While the United States remains the clear global leader, the rest of the world is gaining ground at an accelerating rate.”

The reasons for the shift are complex: better access to data and computing power; local talent that cannot easily emigrate to the U.S. – or no longer wishes to  – and soaring real estate prices and salaries in established technology centers like Silicon Valley, New York and Boston.

Inhospitable Environment

Another reason not mentioned in the “Global Startup,” which was commissioned by the Center for American Entrepreneurship, is the inhospitable environment for U.S. IP rights, especially patents. The U.S. has fallen into an abyss where most IT patent rights are uncertain and virtually impossible to license, creating disincentives for both investors and tech companies.

At the same time, China has flaunted an increasingly plaintiff-friendly patent system that is more welcoming to innovators and foreign participation than a decade or two ago. Also, a decade or so ago, cities like London, Berlin and Delhi were barely a blip on the VC radar. Now they are serious players who want to grow.

For the full report, “The Rise of the Global Startup City, go here.

Source: Richard Florida/Ian Hathaway

LES members have until Monday to vote on business plan competition

FThe LES Foundation International Business Plan Competition Members’ Choice award will conclude on Monday, April 25. LES members who have not voted still can.

Competitor videos can be viewed and rated here by using the star system (5 stars being best).

Votes are logged as soon as you click on the stars – five stars being the highest. You may return to the page and change your vote, if you wish. It is not necessary to give a rating to all of the teams.

The online voting has been extended to Monday, April 25th at Midnight PDT. The winner will be announced during the LES 2016 PanAm Meeting.

FULL DISCLOSURE: Your intrepid IP CloseUp reporter, Bruce Berman, had the privilege of mentoring two of the finalists, Guardian Sensors from Austin, TX and Fruity-Cycle Project from Uganda.

Both businesses are led by bright young entrepreneurs with good, IP-influenced business plans. Please take a moment and vote!

LES-15-Grad-Stdnt-Bus-Plan-Comp-banner-550x173-FINAL

 

Image source: lesusacanada.org

 


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