IP ALERT: Senate Finance Committee Leaders Seek ITC Investigation into the Effect of China's IPR Infringement

    23 April 2010

    On April 19, 2010, Senate Finance Committee Chairman Max Baucus (D–Mont.) and Ranking Member Chuck Grassley (R–Iowa) requested a comprehensive U.S. government investigation under section 332(g) of the Tariff Act of 1930 (19 U.S.C. § 1332(g)) into the effects of China’s intellectual property rights (IPR) infringement on American jobs and the American economy. This infringement is estimated to cost hundreds of thousands of American jobs every year.

    In a letter to U.S. International Trade Commission (ITC) Chairman Shara Aranoff, the Senators requested the ITC provide two reports over the next year quantifying the effect on American competitiveness of China’s IPR infringement. The Senators also asked the ITC to investigate how China’s policies favoring home-grown or “indigenous” innovation can have a negative effect on U.S. companies operating in the Chinese market, which can affect the ability of those companies to create jobs here at home. This formal request triggers the ITC’s undertaking and completion of the two reports.

    The first report, due by November 19, 2010, would be based on a review of the literature on the following:

    • Describes the principal types of reported IPR infringement in China;
    • Describes China’s indigenous innovation policies; and
    • Outlines analytical frameworks for determining the quantitative effects of the infringement and indigenous innovation policies on the U.S. economy as a whole and on sectors of the U.S. economy, including lost U.S. jobs.

    The second report, due by May 2, 2011, would be an analysis of data and other information from available sources, including a survey of U.S. firms, that:

    • Describes the size and scope of reported IPR infringement in China;
    • Provides a quantitative analysis of the effect of reported IPR infringement in China on the U.S. economy and U.S. jobs, including on a sectoral basis, as well as potential effects on sales, profits, royalties, and license fees of U.S. firms globally, to the extent primary data can be collected; and
    • Discusses actual, potential, and reported effects of China’s indigenous innovation policies on the U.S. economy and U.S. jobs, and quantifies these effects, to the extent feasible.

    Tariff Act § 332(g) authorizes the ITC “to put at the disposal of the President of the United States, the Committee on Ways and Means of the House of Representatives, and the Committee on Finance of the Senate, whenever requested, all information at its command, and shall make such investigations and reports as may be requested by the President or by either of said committees or by either branch of the Congress.” The ITC is restricted from disclosing confidential business information, however.