02.28.2019 0

U.S.-China tech balance of power at risk in FTC case

By Rick Manning

Protection of intellectual property is one of the primary stumbling blocks in the ongoing trade negotiations between the United States and China. It is not being hyperbolic to say that China’s long-standing and on-going demands that intellectual property rights be relinquished by businesses accessing their markets may be the most intractable issue in the negotiations.

In fact, the Chinese, who it must be remembered are Communists and don’t believe in the concept of private property, have put their own economy and military on steroids largely through the use of either stolen or coerced intellectual property developed by others.

And controlling the cyber pathways for the emerging Internet of Things — 5G technology — is one of Beijing’s top priorities with a published goal of dominating all aspects of this arena by 2025.

One of the on-going competitions is whether Chinese Internet giant, Huawei, will win the race to develop the 5G computer chip which runs 100 times faster than current 4G technology.  It cannot be overstated that with their demonstrated capacity and willingness to build backdoors into Internet hardware that threatens the future viability of systems depending upon it, the concept of Chinese 5G chip dominance is chilling to the very national security of our nation.

The real hope for the world is Qualcomm, a private San Diego, California company which is responsible for developing both the 3G and 4G chips that have changed the computing and hand-held mobile device world.

Qualcomm uses a typical licensing business model where they charge companies like Apple a fee to use their intellectual property. In Apple’s case, the fee approximates the cost of a replacement charging cord sold by an Apple store.

Now there is a federal court case in Apple’s backyard of Cupertino, California, where Qualcomm’s right to charge a licensing fee for their intellectual property is at risk.

Ironically, it is the United States government’s Federal Trade Commission that is suing Qualcomm, effectively on Apple’s behalf, to break its licensing agreements for intellectual property. More shockingly, the FTC has used the Chinese mega-firm Huawei, Qualcomm’s main competition in the race to develop the 5G chip, as one of its key witnesses opposing Qualcomm’s licenses.

Of course, if the FTC suit is successful, it will cripple Qualcomm’s ability to continue developing the 5G chip as it will cut off the licensing funding for previous inventions and discoveries that fuels today’s research. And Huawei, and its Chinese Communist Party masters would be the primary beneficiaries.

The trial portion of the case has completed and it is hoped that the FTC will find a pathway to a settlement which does not harm our nation’s only hope for winning the race to 5G.

This FTC lawsuit should serve as a wake-up call to policy makers from across the political spectrum, who need to understand that the race for the future of the connected world is at stake and Chinese control of every aspect of the Internet of Things is extremely dangerous.

Intellectual property protection matters, and all Qualcomm seems to be asking is that they be allowed to collect fees which were agreed upon by business partners which wanted to use — and re-sell for a profit — innovations that the San Diego company developed. This is the essence of intellectual property. It is also how U.S. businesses should run, relying upon their own ingenuity and productivity to profit rather than relying upon government handouts and law-fare.

The real damage to our nation goes well beyond the destruction of one company’s ability to function, or even the principle of protecting intellectual property as difficult as that might seem. The real damage to our nation would be the ceding of future technological advances to a Chinese government and their corporate state.

The Internet of Things is not just a cute nickname which has little meaning, it is the evolution of machine to machine communication which will be the basis for self-driving cars, integrated smart road systems, and the factories of the future. Machine to machine communications create images of a dystopian society where machine to machine communication runs amok Terminator-like, to the detriment of their human creators.

However, concerns about this amoral machine future aside, the more imminent danger is for the world’s technology to be controlled from manufacturing to the development of the brains of the system by China, a country which makes little secret of its desire for world hegemony.

Quite simply, the brains of our nation’s military equipment cannot be Chinese made. Our factories cannot be dependent upon Chinese good will to not just flip a computer switch and slow or end production due to a planted “computer glitch.”

And yet that is what is at stake in the race to develop the 5G chip between Qualcomm and Huawei.

Let’s hope that the FTC is wise enough to settle their case against Qualcomm before it tilts the balance of power in this race for the Internet future of the world unalterably in favor of the Chinese.

Rick Manning is the President of Americans for Limited Government.

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