As anticipated in May, rising trade tensions between the U.S. and China have led to a series of escalating measures including tariffs and trade investigations. In July 2019 testimony to the Senate Judiciary Committee, FBI Director Christopher Wray noted that more than 1,000 active investigations on intellectual property theft "lead[] back to China." Against the backdrop of these issues, the Department of Justice announced the "China Initiative" on November 1, 2018. The DOJ explained that the Initiative was launched against the background of prior findings by the Administration regarding China's trade practices. One of the China Initiative's key goals is to "[i]dentify priority trade secret cases, ensure that investigations are adequately resourced; and work to bring them to fruition in a timely manner and according to the facts and applicable law."
Since the announcement, the DOJ has moved to publicize and unseal several older cases that allege trade secret theft by Chinese nationals and agents acting for Chinese companies. And in recent months, several high-profile indictments have been made public, including for the widely-publicized Huawei case. There, the DOJ alleges that Huawei stole trade secrets from T-Mobile used to test mobile phones.
So, what does this all mean? That Chinese companies and U.S. companies operating in China must remain vigilant about a variety of trade secret issues. These include figuring out what constitutes a trade secret within the company's business operations and establishing adequate controls to protect these IP assets. For example, if not done yet, companies should establish policies safeguarding use and access to trade secrets and create training to educate executives and employees on these issues. We will, of course, continue to monitor further developments on the China Initiative and keep you updated.
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