Patents, Theft of Intellectual Property (IP), Product Piracy and US-China Relations
By Larry Romanoff, December 17, 2019
CHINESE ENGLISH NEDERLANDS PORTUGUESE SPANISH
There is one factor that contributed heavily to the wealth of America today that US history books seem to neglect. The US government and corporations today produce volumes of propaganda accusing China of copying American products or ideas, of having no respect for American IP, but the Americans for 200 years or more have been the world’s masters of IP theft and product piracy.
During most of the nation’s early existence, American companies freely and without compensation copied everything that was made in Europe. Not only did they freely copy, but the US government erected impossibly high tariff barriers against foreign products, so that the originals from Europe would be too highly-priced to sell in America, while manufacturers of the local copies of course flourished. Moreover, as far back as the late 1800s, the US government often offered cash rewards of US$20,000 to US$50,000 – as much as the earnings of several lifetimes – to anyone who could steal and copy foreign technology, as happened with the cloth weaving machines that were the backbone of British industry for a century.
When the great American Thomas Jefferson was US Ambassador to France, he conspired to steal and smuggle out of Italy a strain of ‘miracle rice’ which was banned for exports and sales to foreigners. Jefferson was a brave man because, diplomatic immunity notwithstanding, the theft was punishable by death had he been caught. This theft process was true with almost every imaginable item. Many English authors despaired of ever selling their popular written works in the US, due to import regulations and high duties but, on travelling to America, were more than surprised to discover their books widely on sale in shops everywhere. When Charles Dickens discovered the extent of the piracy of his works in the US, he wrote a book condemning Americans as thieves, a book which was immediately pirated and offered for sale everywhere in the US.
For most of 200 years the US ignored the IP, the patents, the copyrights, of any person or company in any nation. The truth is that Americans, as Americans, have never invented much of anything, their only domestic creations being hardware that could kill more people faster and from a greater distance. But now being the engineer on the IP train, American firms have suddenly gotten religion and become sanctimoniously possessive, condemning others for precisely the same things they did so freely for so long.
Stephen Mihm wrote an excellent book in which he deals at length with 200 years of American patent and copyright violations and widespread IP theft. He perceptively recognises a “fast and loose brand of commerce” as simply a stage in a nation’s development, a stage which the US experienced in the same way that Japan did 30 years ago and that China is doing today. It is only the moralistic Christianity pervading American society that drives Americans to condemn China today for something they did so freely not very many years ago, and which they still do today. In truth, the US was by far the most rampant thief of all nations in the world’s history. (1) (2)
One American columnist wrote that if it were Europe or Asia that produced all those Hollywood movies, the US would very quickly find a way to reproduce them at home without paying royalties or recognising any IP rights. There is more than ample evidence that the US even today will freely copy anything it wants, while ignoring other nations’ claims to copyright or patent.
This is another of the prime reasons the US became a rich nation – because over two centuries it copied, stole, or took by force, much or even most of the world’s inventions, recipes, patents and processes, while refusing to permit imports on any reasonable or fair terms, thereby enabling America and its corporations to prosper at the expense of the world. There is little to be proud of, in America’s inventiveness or innovation. Few Americans today are aware of this part of their nation’s history because most of the perpetrators are now dead and because their history books have all been nicely sanitised – cleansed of all the facts of piracy, forcible theft and dirty tricks that are so much a part of the American legacy.
The US media have constantly accused the Chinese of using copied or unlicensed American software but, while some claims were no doubt valid, the picture of America being a hotbed of morality while the rest of the world consisted of thieves is patently false. Software copying originated in the US, not in China, and I can testify that unlicensed commercial software has always been in widespread use by corporations and governments in North America. Microsoft and many other firms have had this problem even with many branches of the US government and the military, and US corporations of all sizes installing many tens of thousands of copies of unlicensed software without paying the license fees. The US media ignore these stories, preferring to write about China.
As one example of many, in November of 2013, a US firm named Apptricity was planning to sue the US government for $300 million for unlicensed copying and installation of the firm’s software. Apptricity supplies the US military with logistics software used to track the locations of troops and critical missions shipments. The license fees are $1.35 million for installation on each server, and another $5,000 per computer using the software. But it seems the US government had installed this software on almost 100 servers and almost 10,000 individual computers without telling the company and without paying the necessary license fees, and had been doing this for more than ten years (3). The company’s total loss in fees alone was more than $300 million but the military bullied the company into accepting a settlement of only US$50 million. According to the company, “As on every other known subject, American pronouncements of moral superiority are all just hypocrisy”.
More than this, Americans have no shame in claiming credit for the inventions of others. There are hundreds of examples, a current one being the military stealth aircraft of which Americans are so apparently proud, and to which they repeatedly refer as evidence of their superior innovation ability. But stealth technology is just one more thing the Americans stole, in this case from Germany. At the end of the Second World War, US troops arrived in Berlin well in advance of the other Allied forces and wasted no time in looting the nation of all commercial and military secrets. By the time the Allies arrived in Berlin, the US military and government had packed up and shipped home more than 1,600 tons of documents on science and physics, nuclear energy, countless commercial patents and processes, and the German military’s research on stealth aircraft technology.
The US stealth aircraft today are a virtual copy of what the Germans designed and invented 70 years ago, from the shape and configuration of the fuselage, to the coatings, engine placements, everything. The engines of course are modern and different, but all of the science and technology, and most of the know-how was simply stolen from Germany. Similarly, the F-86 Sabre jet was built using design principles stolen from German aerodynamic research. It was German IP, not American inventiveness, that permitted Americans to boast about this famous aircraft holding world speed records for years. Also, much of current US aircraft technology was taken from the Canadian Avro Arrow, which was the first supersonic aircraft of its kind. Many Americans today claim some of this technology was American, but the truth is that the Canadians at the time had no wind tunnels and had contracted to do their aerodynamic testing in the US, following which the Americans copied – and stole – all of it.
America’s entire space program resulted from information stolen from Germany and from the post-war importation of thousands of Germans – many of whom were known war criminals. Werner von Braun and countless people like him who had invented all of Germany’s missile technology were brought to the US with all their knowledge of rocketry and missiles, to help put America into space. It is absolutely true that the US could never have managed any of those feats without the technology and know-how stolen from Germany. American inventiveness is mostly a jingoistic myth created by the American propaganda machine.
The US did the same to Germany after the First World War. As part of the conditions of surrender set in the Treaty of Versailles, Germany was forced to surrender all its patents to the US, in every commercial and military field, from fabrics to printing inks, from rockets and missiles to tanks and vehicles. Much of everything that Germany knew, designed, created up to that time, was surrendered to the US military and US commercial corporations. Countless German patents, including things as common as Bayer Aspirin, were seized by the Americans. This is copying and stealing – by military force – on very grand scale never before seen by any country. The US did the same after the collapse of the former Soviet Union, approaching former Soviet satellite nations as comrades in arms with the purpose of looting everything available, especially anything with military value.
Kodak and Polaroid might be American firms, but their IP was virtually all German. Without those IP thefts they might well have disappeared generations ago. I believe Intel also benefitted enormously from German semi-conductor research. American aircraft manufacturers like Boeing likewise owe much of their existence to stolen German IP. Interestingly, US automakers were so busy selling fashion accessories it apparently didn’t occur to them to steal foreign IP until it was too late.
An example from another category is the antiviral drug Tamiflu, which controls the spread of influenza, and which was patented by Hoffman LaRoche. The active ingredient in Tamiflu is extracted from star aniseed, which grew only in China and had been used there for several thousand years as a TCM prescription. There were many unhappy people with that pharma patent, since it was seen as effectively entering China, copying a Chinese medicine and claiming the worldwide rights to it. The same was true with ephedrine, a plant drug now widely used for treating colds, which was common in China for many centuries and introduced to the West only rather recently, but now patented by Western pharma companies.
Coca-Cola, originally called Kola Coca, was invented more than 140 years ago in a small town in Spain, the creators of the formula for the world’s best-selling soft drink having been cheated of its ownership and billions of dollars. The process was a well-kept secret at the time and quickly became a world-famous product, winning dozens of international gold medals and other awards. Unfortunately, Bautista Aparici, one of the company’s founders, attended a trade fair in Philadelphia and gave a sample and a brief description of the process to an American he happened to meet, and a short time later US pharmacist John Pemberton changed the name to Coca-Cola and patented the product and process, the US government refusing to recognise the original Spanish patent.
Nike is another famous American brand with an airbrushed past, based on a similar manner of IP theft as was Coca-Cola, and benefiting equally from the American government and judicial system. Phil Knight was a runner at the University of Oregon, with Bill Bowerman as his coach, both on the lookout for better quality running shoes. Knight was on a tour of Japan when he discovered the Onitsuka Tiger running shoe, a product far superior to anything available in the US at the time. Knight and Bowerman borrowed some money and placed an $8,000 order which quickly sold out. The two men then began making Onitsuka’s shoes in the US, selling the designs as their own. An Onitsuka executive, on a surprise visit to the US and to Nike’s premises, was himself surprised to discover his firm’s designs in the warehouse with an American brand on them. Naturally a major court case ensued, with the US courts, always committed to fair play and religiously following a rule of law, ruled that Knight and Bowerman did no wrong and that the two companies could “share” the patents, the IP and the brand.
American companies didn’t always steal from Europe or Asia; sometimes they stole from each other. Microsoft today might be only a bit player if it hadn’t directly stolen the ‘windows’ and the mouse concepts from Apple, and hadn’t had sufficient financial backing to pay for litigation until Apple was finally ground down and lost.
In spite of all the hypocritical noise made today about China, the US is still one of the worst violators of IP in the world, making its own rules to benefit American corporations and stubbornly ignoring the IP legislation and practices of other nations. The Americans more or less invented brand advertising and jealously guard their brands, but there are entire categories of famous names, products and proprietary processes originating in other countries that the Americans refuse to recognise even though they are fully protected in the other 96% of the world.
These are not oversights; the US government deliberately establishes its own rules as to which kinds of IP it will respect and which it will ignore, with the rules always designed to benefit only American firms. Any IP that doesn’t fit US political and commercial ideology will simply be ignored. These names and processes have been protected by laws and treaties in all developed nations and most undeveloped ones for more than 100 years – except by the Americans who adamantly refuse to sign despite repeated requests dating back more than a century.
These products include French champagne and cognac, Burgundy, Rhone and Chablis wine, Italy’s Chianti, Portugal’s Port and Madeira, Spain’s sherry and Hungary’s Tokay. They include Japan’s Kobe beef and Italy’s Parmesan cheese, and of course virgin olive oil. There are more than 600 of these specialised registered copyrights for which the US permits its corporations to violate all international copyright laws and profit illegally from the use of famous names. Champagne, by both French and international law, is a name that can be applied only to a wine produced by a particular method in the Champagne region of France. But not according to the US, whose winemakers gleefully sell US ‘champagne’, in clear violation of their claimed standards and of international laws. On the other hand, anybody printing “Florida Orange Juice” on a product that isn’t from Florida, will meet the full force of US law. European patents on wine or cheese are not valid in the US.
One of the world’s most famous cheeses is Parmigiano (Parmesan), from the Parma region of Italy. The cheese, the cows, the ingredients, the methods and processes, even the animals’ feed, are patented, trademarked, registered and protected by both Italian and international law – except in the US. American firms produce a pathetically substandard version of this cheese and market it as ‘original’ when it is no such thing, their violations protected by their own government.
Bloomberg did a recent study of grated cheeses, and many brands, including Kraft, tested for high cellulose content – cheese made of wood. Michael Mullen, a Kraft spokesman, said, “We remain committed to the quality of our products”. One company whose cheese tested high for cellulose content said, “We strongly believe that there is no cellulose present in our cheese.” Another company with high wood pulp content said, “We think the test could have been a false positive.”
There was a company named Castle Cheese in Pennsylvania that marketed fake cheeses for 30 years before the FDA caught up with them and discovered their “Italian Parmesan” was actually imitation cheese containing cellulose from American trees and leftover rinds and trimmings from other fake American cheeses. But the American Cheese Association claimed, “The wholesomeness of our dairy products is a treasured part of our story”, and one media report wrote, unbelievably, “[American] Parmesan suppliers have been mislabeling products by filling them with “too much cellulose”, made from wood pulp, instead of using cheaper cheddar.” If we’re talking about Parmesan cheese, I would have thought anything above zero would be too much cheddar, to say nothing of cellulose, but then this is America, and things are different here. So, genuine Italian Parmesan cheese, made in Wisconsin with wood pulp from Idaho trees. No IP problems here. And no food adulteration like we have in China.
Olive oil is one of the culinary delights of the world, something that has been produced for centuries in Southern Europe and the Middle East, with processes that have long been proven to produce the best product. The most valuable oil, which we call “Virgin Olive Oil” or “Extra-Virgin Olive Oil” is produced by a gentle cold physical pressing of the olives done in a particular manner. The oil that flows from this ‘first press’ is rather thicker, is a dark green color, and is the most fragrant and tasty, and the most healthful. Virgin Olive Oil carries a substantial financial premium.
But the US has its own rules here too. American species of olives cannot meet international standards, being grown in a climate not especially suited to this fruit, and produce only a poor yellow oil – which is almost invariably adulterated with inferior and leftover vegetable or seed oils. American marketers thus claim that “color is irrelevant” in olive oil. Recognising that many people refuse to buy into the ‘irrelevant color’ propaganda, American producers bottle their olive oil in dark green glass bottles, which of course makes it impossible to see exactly what one is buying. The American story is that the dark glass – always green, just like the color of Virgin oil – is to protect the oil from the ravages of exposure to sunlight. It must surely occur to thinking people somewhere that cooking and salad oils are normally stored in a dark kitchen cupboard and seldom left sitting out in the parking lot fully exposed to blinding sunshine, and therefore not actually requiring protection from sunlight. But then this is America, and maybe things are different here.
Few of us may remember that pistachios used to be dyed a pretty red, with a powdered food coloring that happily transferred itself to hands and clothing, but we still sometimes see them at Christmas, festively dyed in red, green and white. The American marketing machine tells us that Iran dyed its pistachios because the hulls contained unappetising splotchy stains from primitive and backward Iranian harvesting methods, these Moslem terrorists covering their sins by dying them. There was never any evidence presented for this accusation, but then California produces large volumes of both pistachio and pecan nuts which have naturally splotchy hulls (and no taste) and which the Americans have peroxided, hypochlorited, chlorinated, and dyed for generations, and still do today, to disguise their unattractive appearance. So when patriotic, hard-working, god-fearing Americans dye pistachios, they are simply employing modern agricultural best practices while making the world safe for democracy, but when Iran dyes pistachios this is precisely the kind of deceitful conduct we would expect from those primitive non-Christian ragheads. Americans are such a pain in the ass.
Mr. Romanoff’s writing has been translated into 32 languages and his articles posted on more than 150 foreign-language news and politics websites in more than 30 countries, as well as more than 100 English language platforms. Larry Romanoff is a retired management consultant and businessman. He has held senior executive positions in international consulting firms, and owned an international import-export business. He has been a visiting professor at Shanghai’s Fudan University, presenting case studies in international affairs to senior EMBA classes. Mr. Romanoff lives in Shanghai and is currently writing a series of ten books generally related to China and the West. He is one of the contributing authors to Cynthia McKinney’s new anthology ‘When China Sneezes’. (Chapt. 2 — Dealing with Demons). His full archive can be seen at https://www.moonofshanghai.com/ and https://www.bluemoonofshanghai.com/
He can be contacted at: email@example.com
Copyright © Larry Romanoff, Moon of Shanghai, Blue Moon of Shanghai, 2021