The Role of Intellectual Property in Trade Wars: US-China IP Disputes and Global Impact

Author: Humaira Imran, Ishan Law Institute



To the point

The ongoing U.S.-China trade war has highlighted intellectual property (IP) as a central point of contention between the two global powers, significantly influencing international trade, technological development, and geopolitical relations. Disputes over IP, including accusations of IP theft, forced technology transfers, and patent infringement, have become a defining issue in trade negotiations. The U.S. has frequently accused China of undermining American technological innovations, particularly in sectors like telecommunications, artificial intelligence, and biotechnology, while China argues that stringent IP protections unfairly restrict the access of developing nations to critical technologies. At the core of this conflict lies the recognition that intellectual property is not just a tool for safeguarding innovation, but also a powerful political and economic instrument in global power dynamics. Both the U.S. and China leverage IP policies to further their national agendas: the U.S. aims to protect its leading tech industries and preserve its dominance in global innovation, while China seeks to strengthen its technological autonomy and broaden its influence in international markets. As the U.S. and China vie for technological supremacy, IP enforcement is increasingly tied to national security concerns, especially in sensitive industries like 5G telecommunications (e.g., the Huawei case), cybersecurity, and biotechnology. The IP disputes are thus not only reshaping bilateral trade relations but also influencing the future of global IP governance and international trade policies, with lasting consequences for innovation, competition, and global market access.
This complex relationship between IP and geopolitics reveals how IP laws are being used as strategic tools in broader trade wars, reshaping the global economy and raising fundamental questions about the balance of power, economic fairness, and the future of international cooperation.

Use of legal jargon

The U.S.-China intellectual property (IP) disputes involve a complex interplay of legal, economic, and geopolitical factors, with far-reaching implications for global trade and innovation. At the core of the conflict is the growing recognition that IP is not merely a tool for protecting innovation but also a strategic political and economic weapon. Both nations leverage IP laws to advance their national interests—the U.S. to safeguard its technological leadership and high-tech industries, and China to promote its technological sovereignty and expand its global market presence.


Key legal issues include the extraterritorial application of IP laws, where the U.S. extends its jurisdiction over foreign entities, particularly Chinese firms, using tools like sanctions and the International Emergency Economic Powers Act (IEEPA). The ongoing disputes also highlight the tension between IP exclusivity and global public interests, especially in the context of compulsory licensing and TRIPS waivers for pharmaceuticals. The debate is especially pronounced in sectors like pharmaceuticals, where IP protection is at odds with access to affordable medicine in developing countries.


The harmonization of global copyright laws, particularly the fair use doctrine in the U.S. and China’s stronger IP enforcement, has led to concerns about forum shopping and jurisdictional clashes. Similarly, anti-circumvention laws like the Digital Millennium Copyright Act (DMCA) in the U.S. and China’s inconsistent DRM enforcement create cross-border challenges for digital rights protection.


Another central issue is the role of IP in national security. The U.S. increasingly views IP as a matter of technological sovereignty, particularly in sectors like 5G and cybersecurity, while China aims to strengthen its domestic IP system to reduce reliance on foreign technologies. This has raised questions about the intersection of IP law and national security in areas such as telecommunications (e.g., Huawei) and cybersecurity.


Furthermore, the Investor-State Dispute Settlement (ISDS) provisions in trade agreements like the CPTPP raise the risk of IP-related claims against governments, particularly if reforms infringe on multinational interests. At the same time, patents in high-tech sectors are increasingly used as market access barriers, and both countries’ IP policies are becoming tools of technological protectionism.


The TRIPS Plus provisions in trade agreements are also a point of contention, with critics arguing that they disproportionately favor developed nations while limiting access to critical technologies in developing countries. Lastly, state-sponsored IP theft remains a major issue, with accusations against China for engaging in widespread cyber-enabled IP theft, challenging enforcement efforts and complicating international IP protection.

The proof

The U.S.-China intellectual property (IP) conflict is a multifaceted issue with significant legal, economic, and geopolitical implications. The U.S. has used extraterritorial measures, such as the International Emergency Economic Powers Act (IEEPA), to impose sanctions on Chinese firms like Huawei, citing IP theft and national security concerns. This extends to global public health, as seen in the TRIPS waivers during the COVID-19 pandemic, where countries like India and South Africa advocated for compulsory licenses to increase vaccine access. Meanwhile, the U.S. fair use doctrine and anti-circumvention laws create cross-border friction, especially with countries like China that enforce stricter copyright protections. IP is also increasingly viewed through the lens of national security, as evidenced by the U.S. crackdown on 5G technologies and state-sponsored IP theft allegations against China. Investor-State Dispute Settlement (ISDS) mechanisms in trade agreements have allowed companies to challenge national policies, while Standard-Essential Patents (SEPs) have become tools for market control and anti-competitive practices. Ultimately, these issues highlight the growing politicization of IP, as both nations use IP laws to promote national interests, influencing global trade, innovation, and access to critical technologies and medicines.


Abstract


The escalating trade war between the United States and China has brought intellectual property (IP) to the forefront of global economic and political tensions. At the heart of this conflict are disputes over alleged IP theft, forced technology transfers, and the protection of trade secrets, particularly in high-tech sectors like telecommunications, artificial intelligence, and pharmaceuticals. The U.S. has accused China of systematically violating IP rights, undermining American innovation, and providing unfair competitive advantages to Chinese firms. In response, China has pushed back, asserting that IP enforcement must consider the unique developmental needs of emerging economies. This paper examines the role of IP in the U.S.-China trade war, focusing on the legal, economic, and geopolitical implications for both countries and the global economy. It explores how IP disputes are not only reshaping bilateral trade but also influencing international trade policies, investment flows, and the global technology landscape. The analysis also highlights the broader consequences for multilateral organizations like the World Trade Organization (WTO) and the future of global IP governance.

Case Laws


1. Huawei v. U.S. (2019) – Entity List
Overview: The U.S. placed Huawei on its Entity List, barring U.S. companies from selling or exporting technology to the Chinese tech giant due to national security concerns, particularly related to IP theft and espionage.
Significance: This case highlights the growing intersection of IP law and national security, demonstrating how IP can be used as a geopolitical tool. It underscores the extraterritorial reach of U.S. IP laws and the challenges it poses for international companies, particularly those in China.

2. Apple Inc. v. Samsung Electronics Co. (2012)
Overview: This case involved a high-profile patent and design patent dispute between Apple and Samsung over smartphone designs and features. Apple accused Samsung of copying its designs for the iPhone and iPad.
Significance: The case was a landmark for patent litigation in the tech industry and played a significant role in shaping the future of smartphone design patents. It highlighted the global nature of IP disputes and the competitiveness between U.S. and Chinese companies in the mobile tech space.

3. Google LLC v. Oracle America, Inc. (2021)
Overview: This case involved whether Google’s use of Oracle’s Java code in the Android operating system violated Oracle’s copyright. Google argued its use constituted fair use, while Oracle claimed it was infringement.
Significance: The U.S. Supreme Court’s ruling in favor of Google reinforced the principles of fair use in the software industry and had global implications for software development and open-source projects. It also impacted the way copyright and fair use are treated in both the U.S. and international IP contexts.

4. Qualcomm Inc. v. Federal Trade Commission (FTC) (2020)
Overview: The FTC accused Qualcomm of engaging in anticompetitive practices with its Standard-Essential Patents (SEPs) in the mobile chip market, including charging excessively high royalties for its patents related to mobile technology.
Significance: This case highlighted the tension between IP rights and antitrust law. It is significant for the global telecommunications industry, as Qualcomm is a key player in the 5G market. The case also raised concerns about IP abuse and the role of SEPs in fostering or hindering innovation, an issue with wide-reaching implications for China’s telecom giants like Huawei.



Conclusion


The U.S.-China IP conflict has evolved into a multifaceted global issue, involving not only legal disputes but also economic and geopolitical power struggles. Cases such as Huawei v. U.S., Apple v. Samsung, Google v. Oracle, and Qualcomm v. FTC exemplify the way intellectual property laws are increasingly being weaponized in the trade war between the two countries, with both sides leveraging IP protections to advance national interests. These legal battles touch on crucial issues like national security, market access, patent abuse, and the balance between innovation and public interest.
The resolution of these cases has far-reaching implications for global trade, technology development, and access to goods. The conflict reveals that IP law is no longer a neutral tool for protecting innovation but a key instrument in the broader political and economic tensions between the U.S. and China. As IP disputes continue to unfold, particularly in sectors like telecommunications, pharmaceuticals, and software, the global IP framework will likely require reform to ensure fairness and balance, especially for emerging economies and developing nations seeking greater access to essential technologies and medicines.

FAQS


What is the U.S.-China IP conflict about?                                                                                 Answer: It involves allegations of intellectual property theft, with the U.S. accusing China of forced technology transfers and IP violations by companies like Huawei and ZTE.


2. How does the U.S. use IP laws in its trade war with China?                                                      Answer:The U.S. uses IP laws to impose sanctions and restrictions on Chinese companies, like placing Huawei on the Entity List to block access to American technology.


3. What are Standard-Essential Patents (SEPs) in this dispute?                                                           Answer: SEPs are patents essential to technologies like 5G. Disputes arise when companies charge excessive fees or refuse to license on FRAND terms, as seen with Qualcomm and Huawei.


4. What is the impact of the Huawei case?                                                                                 
Answer:The Huawei case demonstrates how IP and national security concerns can intertwine, leading to extraterritorial enforcement and complicating global IP regulations.


5. How do IP disputes affect developing countries?
Answer:IP disputes can limit access to affordable medicines and technology, affecting innovation and market growth in developing nations.

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