FBI Director Wray Testifies That FBI Is Investigating Persistent Intellectual Property Theft By Chinese Entities

King & Spalding

In his testimony before the Senate Judiciary Committee on July 23, 2019, Christopher Wray, Director of the Bureau of Investigation (“FBI”), addressed the threat posed by China to U.S. intellectual property rights. During the hearing, Wray stated that “there is no country that poses a more severe counterintelligence threat to this country right now than China.” He explained that a variety of actors within the Chinese government and the Chinese Communist Party, as well as “private sector entities” and “nontraditional collectors,” are working “to steal their way up the economic ladder at our expense.” He further testified that the FBI is now conducting more than 1,000 investigations of “attempted theft of U.S. intellectual property,” with “almost all {of the investigations} leading back to China.”

Wray commended Congress for its “consensus about the importance of confronting this threat in a more thoughtful and effective way{.}” He explained that the threat is complicated by the fact that there is “is not really a difference” between “the Chinese government and the Chinese Communist Party” on the one hand, and “the Chinese government private sector” on the other. Wray added, “Under Chinese law, most companies in China are either literally state owned enterprises…or legally are practically beholden to the Chinese Communist Party.” Moreover, he explained, “Different aspects of Chinese law will require those companies to basically provide whatever information the Chinese government or the Chinese Communist Party wants, essentially on demand.” Wray noted that most of the public is unaware that “virtually any company from China of any size is required to have inside it a Chinese Communist Party cell or committee to ensure that the company adheres to the Chinese Communist Party policies.”

Wray emphasized that the threat “affects basically any industry in this country.” He cautioned that any firm, “whether it’s in Silicon Valley or a Fortune 100 company, needs to be clear-eyed and thoughtful about who they get into business with because the road is long with victims of this {problem} and a lot of those companies wish they could” turn back time and avoid the consequences of becoming a victim of China’s attempt “to achieve dominance” in key technologies. In particular, Wray explained that the threat “covers the waterfront in terms of sectors from startups, high-tech companies all the way to aerospace to aviation to agriculture” and healthcare.

Wray ended his remarks by stating that “it doesn’t mean we shouldn’t do business with the Chinese … but it does mean that there are certain kinds of behavior that violate criminal laws and we’re not going to tolerate it."

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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