Over the Horizon: Military Exports and Intellectual Property

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    Ray The Chairman Defence Professionals Moderator

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    Over the Horizon: Military Exports and Intellectual Property

    Robert Farley | Bio | 26 Jan 2011

    In the background of Chinese President Hu Jintao's recent visit to the United States was the specter of increased military tensions between China and the U.S. Chinese military capabilities appear to be growing rapidly, with systems like the J-20 stealth fighter and the DF-21 anti-ship ballistic missile threatening key U.S. assets. However, the summit between Hu and President Barack Obama focused more on economic than military issues. And one of the foremost trade problems discussed during the visit was the issue of intellectual property (IP).

    The United States has consistently criticized China for laxness in IP regulation, complaining that Chinese firms and government agencies use unlicensed software, and that U.S. entertainment products are often pirated. Last month, a New York Times editorial similarly decried lax IP enforcement in China.

    Disputes about intellectual property don't normally excite the imagination to the same extent as the potential for military conflict, but in fact there is a connection: In addition to being a poor IP citizen with regard to software and movies, China regularly steals military technology from both partners and adversaries.

    The IP dynamics of military equipment are complicated, and two alternative systems of managing IP issues in military procurement have emerged. The first, adopted by the United States and its allies, relies on robust IP protection for producers at every step of the ladder. This system has grown increasingly complex as the development and production tree for modern weapon systems has spread. Weapons jointly developed by several countries -- the F-35, for example -- require negotiations to reconcile different IP regulatory regimes. Every country that manufactures part of the U.S.-developed F-22, by contrast, participates in the same international IP regime. The system requires considerable legal and political intervention to work, but it nevertheless tends to protect the IP rights of major American and European defense firms. It also stands as part of the overall international IP regime, which has emerged in response to the ongoing transformation of the advanced industrial economies of Europe and the United States. As U.S. and EU exports shift from industrial products to services, software, and similar goods, IP protection has grown more important.

    The other system, more traditional in some ways, disregards the value of protecting intellectual property in military acquisition. In this system, which can be thought of as the "anything goes" system of IP management, states beg, borrow, and steal whatever technology they can, often attempting to copy or reverse-engineer systems developed in other countries.

    Copying military technology has a long and illustrious history. States have always paid close attention to the military technology of potential rivals, even if efforts to reverse-engineer weapons haven't always gone well. The latest example of copying a key capability may have come with China's J-20. Many have compared the J-20 to a cancelled Soviet-era MiG, while others have argued that the Chinese copied key stealth capabilities from an F-117 downed over Yugoslavia. (While the J-20 doesn't resemble the F-117 in shape, the composition of the latter's skin may have given the Chinese clues as to how to manufacture the J-20.)

    Of course, neither Russia nor the United States sold this particular technology to China, or licensed its use. In many ways, Iran and North Korea operate by the same rules, buying and exporting missile technology without respect for legal protections on the patents or trade secrets that go into them. This older, more traditional system of "anything goes" IP management also allows countries like the DPRK, Syria, Iran, and Myanmar to gain access to weapons without the acquiescence of Washington or Brussels, which none would receive.

    Both systems have benefits and drawbacks for everyone involved. While the legal international IP regime restricts the use of certain technologies, participation has its perks. U.S. firms feel more secure in extending production chains to countries with robust IP protection, and the U.S. government worries less about the dangers of technology transfer. To be sure, in some cases, the question of copying or reverse-engineering a particular weapon system is moot. Many recipients of advanced weapons lack the sophisticated industrial capabilities needed to produce the weapons, even on a small scale. Moreover, most countries that receive weapons from the United States wish to maintain good relations with Washington, so there is incentive for even habitual IP offenders to respect the strict IP requirements imposed by Washington.

    The alternative system allows China to pursue technological advances without worrying about or paying for foreign IP rights, but it has its own costs. Most countries react poorly to thefts of their technology. Indeed, Russia has become very reluctant over the last decade to export advanced military systems to China, less because of concern over Chinese capabilities than because of the threat that China will reverse-engineer the technology and use it either to fulfill domestic needs or to sell on the export market. China is suspected of copying Russian aircraft and engine designs without royalty or license, as well as some Russian submarine designs, for this purpose.

    The Chinese have also run into quality-control problems. Without the technical expertise of Russian engineers, Chinese copies of Russian designs have suffered from dreadful reliability problems. For example, the engines of China's SU-27 fighter-bomber knock-off routinely fail after 30 hours of flight time, compared with 400 hours for the Russian-produced version. The J-10 fighter has also suffered dire reliability issues, with an unspecified number of crashes. These reliability problems obviously reduce the viability of Chinese arms exports.

    However, China's position in the military export market and in the larger international economy is changing. As China comes to rely on an export market for military hardware, the salience of IP concerns will grow. By and large, exporters of high-technology equipment benefit from the strict enforcement of IP rules. As Chinese military production increases in sophistication, and as the Chinese military supply chain spreads across different countries, China's position on IP management for military equipment may shift. Like the United States, China may always have political reasons to export weapon systems to bad IP citizens. However, in the future, China may pay increasing attention to precisely how its technology is used, and may attach strings intended to prevent the loss of Chinese trade advantages. In this sense, the politics of intellectual property are just like any other kind of power play: States seek to structure the rules of the game to their own advantage. As the economic and military profiles -- if not necessarily the interests -- of the United States and China converge, there will be more-substantial grounds for cooperation on the rules that govern the international IP regime.

    Dr. Robert Farley is an assistant professor at the Patterson School of Diplomacy and International Commerce at the University of Kentucky. His interests include national security, military doctrine, and maritime affairs. He blogs at Lawyers, Guns and Money and Information Dissemination. His weekly WPR column, Over the Horizon, appears every Wednesday.


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