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January 25, 2021

Inhofe Introduces Legislation to Hold Chinese Companies Accountable for Paying Licensing Fees

U.S. Sen. Jim Inhofe (R-Okla.) introduced the Protecting American Innovation and Development (PAID) Act of 2021 today: 

“The Chinese Communist Party has a long history of challenging the United States in all areas – military, economy – but also in stealing what they cannot build themselves. Allowing Chinese companies to continue to take American-patented wireless technology without paying the royalties is wrong. Worse, without holding China accountable for the theft, it risks the future of American technology companies. No longer. This legislation will send a clear message to China: there will be consequences for theft of U.S. intellectual property.”  

Background:

Many Chinese companies are selling wireless products (phones, laptops, TVs, etc) in the U.S. market using American-patented wireless technology, but they are refusing to pay licensing or royalty fees to the developers. The result - without licensing fees, free-market companies will fall behind to China – giving China control of 5G technology sold worldwide and the standards for production of countless wireless devices. The U.S. government needs a bigger stick to hold bad actor companies accountable because dispute resolution through the federal district court or through the International Trade Commission can take decades—ultimately allowing bad actor companies to continue to steal the licensing / royalty fees rightfully owed. 

That stick? Creating a watch list for companies breaking the rules and giving bad-actor companies 12 months to engage in negotiations or arbitration with free-market developers to set the appropriate licensing / royalty rate. If they refuse? Using the entities list to block those companies from selling wireless devices in the United States. These actions are significantly tailored so they will only impact Chinese companies in violation – not U.S. businesses.  

Section By Section

  • The bill gives authorities to the US Department of Commerce to hold bad actor companies responsible
  • The bill directs the US Department of Commerce to create a watch list of bad-actor Chinese companies who are selling wireless products (phone, laptops, TVs) in the US market, but are refusing to pay licensing / royalty fees to free-market developers
  • Once on the watch list, bad-actor companies have 12 months to engage in negotiations or arbitration with free-market developers to set the appropriate licensing / royalty rate
  • If bad-actor companies continue to refuse to work out the dispute, they are no longer able to access the US market to sell their wireless devices (phones, laptops, TVs)
  • If bad actor companies engage in the process to actually pay licensing/royalty fees (and therefore are no longer bad actors), they are no longer on the entities list
 

Link here to full bill.


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