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side reveal technology as a contract condition if it cannot be reverse
engineered, experts say.
“It’s difficult, if not impossible to know how many or how often the
Chinese violate (intellectual property rights) when it comes to tech-
nology transfers in the defence and aerospace section, but it’s pretty
common,” said Richard Bitzinger, military transformation programme
director with the S. Rajaratnam School of International Studies in
Singapore. “In fact, reverse-engineering which is a violation, occurs
pretty frequently in the Chinese defence and aerospace sector, and
has for decades,” Bitzinger said.
The Russian-designed MiG-21 and the Su-27 combat aircraft were
reproduced in China without licencing, Bitzinger said. The Chinese
Changhe Z-11 helicopter used reverse engineering from France, he
added, and the nose section of China’s ARJ-21 regional jet may have
copied that of the McDonnell Douglas MD-82 airliner. French and
Italian technology has also been copied in China, he said.
Foreign companies working in aviation,
among other sectors, should consider con-
tracts stipulating that any patent arbitration
take place outside China but in counties
where China would legally recognise the
outcome, intellectual property rights lawyer
Dan Harris said. He suggests Hong Kong,
and Singapore, for example. Harris further
warns foreign firms to apply for trademarks
before a Chinese peer can get them first.
“ What I would emphasise is that a number
of Chinese companies want to get into this
industry even though they are not licenced
to be in it, and you have to watch out for
that,” he said.
In some cases, Harris said, a Chinese part-
ner “beats” the foreign side in applying for a
trademark. “ You as the foreign company go to China and show in-
terest in doing business there and before you’ve even left, someone
with whom you talked has gone off and registered your company
name,” he said. “ This happens all the time.”
Over at least the past year, aircraft manufacturers have announced
use of 3D printed parts, which are particularly open to copying
because they ’re easy to reproduce.
Availability of “low-cost, high-performance” 3D printers has put
the technology in reach of common consumers, “fuelling huge ex-
pectations about what it can achieve,” Elsa Malaty, an associate in
the law firm Hughes Hubbard & Reed LLP in Paris, wrote in February
for the World Intellectual Property Organisation magazine online.
GE Aviation heralded a “paradigm shift” last year when announc-
ing the use of 3D printed parts in an aircraft engine. This year man-
ufacturer Eviation picked a supplier of 3D printed parts so it could
test new designs as often as needed before settling on final ones,
industry news website 3DPrint.com reports.
Norwegian aerospace parts maker Norsk Titanium said in April it
would make components for Boeing’s 787 Dreamliner aircraft using
a “proprietary ” 3D printing process it calls Rapid Plasma Deposition.
Trademark laws often cover the shapes of objects created by
3D printing, while patent laws apply to the software behind those
objects, Beijing-based MMLC Group law firm says in an article for
the legal resources website HG.org. In China, printed objects can be
trademarked for “several years,” the firm said, and the country lacks
fair-use and private-use caveats found in the laws of other countries.
“Indeed, with China already having a reputation for making and
selling counterfeit 3D products, these concerns by the owners of
well-known designs are extreme in China,” the article says.
Norsk Titanium declined comment for this report about any intel-
lectual property rights issues it might face in China. Boeing is set
to open a 737 aircraft assembly plant with the Commercial Aircraft
Corporation of China.
Boeing has never ceded private technology to a Chinese partner
as a condition of doing business in China, a
company spokesperson said. “ We have a ro-
bust export compliance program in place and
strictly adhere to US export laws and regula-
tions for everything,” the spokesperson said.
Honeywell and GE Aviation, both of which
contributed components to the mid-sized
made-in-China C919 commercial aircraft,
declined to comment.
Production of the Airbus 320 in China rep-
resents a “successful case” of a joint venture
with a technology transfer, Bitzinger said.
Airbus works with a consortium of Chinese
partners at a 500-employee plant in the city
of Tianjin to assemble the aircraft. The Euro-
pean aircraft maker has a technology “pro-
gramme” that lets it increase production and
expand in China, according to Airbus.
Western firms, sometimes barred by laws in Europe or the United
States, often don’t share technology if requested by a Chinese part-
ner, Aboulafia says. They may come into a partnership with older
technology to protect newer versions, hurting the Chinese aircraft
firms, he said.
“If only a third of the partner companies show up with last-gen-
eration technology, that makes the final product a second-rate
product,” he said.
Some companies try to protect technology through end-user
certificates and by “strictly” stating where it can be used, Bitzinger
said. They might follow up with site visits in China to make sure no
technology is “abused,” he added.
Chinese firms hope to learn from the foreign partners because
they need their technology to catch up in propulsion and microelec-
tronics, he said. Without that knowhow, he said, Chinese developers
must import jet engines and avionics, although the country has
made great strides in building its own engines in recent years.
You as the foreign
company go to China and
show interest in doing
business there and before
you’ve even left, someone
with whom you talked has
gone off and registered
your company name.
DAN HARRIS, LAWYER
10/08/2017 4:54:09 PM
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