Roughly 13 million Chinese high schoolers recently took the Gaokao—the ultra-competitive, multi-day exam that functionally shapes the rest of their lives. It’s the primary factor in determining which universities students can attend, what subjects they can study, and which careers they might pursue.
More than almost anything else, the Gaokao represents the values that Chinese leaders want to instill in their youth. So it’s striking that test-takers face questions like: Why do strong intellectual property (IP) rights matter?
The addition of questions about the importance of IP rights to the Gaokao in recent years has made few headlines in the West, but it illustrates an important shift in Chinese policy thinking. Increasingly, China sees a strong IP system—and the usurpation of America’s leadership over IP norms—as key to building industrial strength and economic dominance.
Yet just as China’s youth are learning to articulate the value of IP, fewer US leaders seem able or willing to do the same. Many have taken for granted the world they grew up in—one in which America’s gold-standard IP system seemed a fact of life, rather than a policy choice—and abetted policies that have eroded the strength of US IP rights. That complacency is giving China an opportunity to seize global influence.
America’s Intellectual Property Leadership Built the Modern Innovation Economy
America must rebuild its IP foundation. Otherwise, it risks not just losing the global innovation race but ceding to China the power to set the global rules of innovation.
America’s embrace of strong IP rights defined the 20th century, with US policymakers continually strengthening that domestic patent system to incentivize research and development (R&D). The 1984 Hatch-Waxman Act, for example, created IP protections that spurred investment in innovative drugs and cheaper generics. The 1980 Bayh-Dole Actempowered universities to own patents on the discoveries stemming from federally funded research and license them to private companies for further development. And Supreme Court rulings like Diamond v. Chakrabarty (1980) revolutionized the biotechnology industry by making many groundbreaking technologies patent-eligible.
The United States also spearheaded the creation of a global IP architecture that enabled innovation to flourish across borders with agreements like the 1947 General Agreement on Tariffs and Trade and the World Trade Organization’s (WTO) 1995 Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, and IP protections for emerging technologies such as digital copyright for the Internet. US trade agencies were given new powers to review countries’ adherence to IP rules and hold violators to account.
Weakening US Patent Rights Is Undermining Innovation
But in recent years, US politicians have shied away from defending IP. Domestically, media outlets portray strong IP rights not as essential drivers of investment, but as causes of high drug prices, corporate rent-seeking, and impediments to creativity. Discussions about IP on the world stage often fixate narrowly on theft and counterfeiting, ignoring the many other ways governments and foreign bad actors undermine the effectiveness of IP rights.
The growing disconnect between how the United States treats IP at home and how it promotes it abroad has undermined US credibility in countries such as China and led policymakers to focus on hard-edged criminal measures. Criminal measures are only internationally required for willful, commercial-scale copyright and trademark infringements, and distract from civil reforms that can address patent infringement, abusive licensing practices, and trade secret protection.
Reductive narratives about IP have led many US leaders to endorse policies that undermine the strength of US IP protections. A 2006 Supreme Court decision, eBay v. MercExchange, made it much harder for patent holders to obtain injunctions against firms that infringe their technology, particularly disadvantaging small companies that face patent theft. A series of later decisions effectively limited access to patents in high-tech sectors such as artificial intelligence (AI) and medical diagnostics, leading to measurable underinvestment in those areas and undermining US competitiveness. Companies are increasingly looking to overseas litigation forums where courts offer more predictable outcomes, including injunctive relief, often in less time.
US leaders have been slow to recognize the importance of restoring patent protection for emerging technologies, including AI, diagnostics, and software. Ironically, many of America’s current IP deficiencies mirror the very problems it once pressed China to address. Meanwhile, China has amended its patent law several times since its 1984 enactment and has adjusted its office practices more frequently and quickly in the examination and approval of patents for new technologies. China is also actively considering creating new forms of IP protection for emerging new technologies like AI-generated data, much like the United States once led in biotechnology protections and digital copyright.
As America has retracted support for patents, it’s also undermined the norms that underpin global innovation. During the COVID pandemic, for instance, foreign governments embraced compulsory licensing and other measures to override patent protections on medical technologies. These measures undercut the incentives that make vaccines possible, disproportionately harming US pharmaceutical R&D. Instead of standing up for the importance of IP and our innovative industries, the United States backed a WTO patent waiver that effectively greenlit worldwide patent misappropriation.
Another stark departure from decades of US efforts to promote transparency in China’s IP regime came in 2023, during a WTO patent dispute between the European Union (EU) and China. China argued that it wasn’t obligated to disclose the underlying policies shaping its IP system. Rather than challenge that assertion and support the EU and other allies, the US Trade Representative (USTR) filed a brief supporting China’s position. Such reversals have emboldened countries such as China to curtail adherence to international norms.
China currently publishes a far larger share of influential biotech research than either the United States or Europe. It’s taken the global lead in launching clinical trials. And the Information Technology and Innovation Foundation has warnedthat America’s advantages in R&D investment are diminishing in advanced sectors such as aerospace, electronics, biotechnology, alternative energy, and automobiles. Other reports, including those from the Royal Society of Chemistry, reinforce these concerns across many technologies, including AI.
America’s abdication of its historic IP leadership is opening a global void. And ironically, no country has risen to the defense of IP rights more eagerly than ostensibly communist China.
China Is Making Intellectual Property a National Strategic Priority
The Gaokao is far from the only vehicle China is using to advance its IP leadership ambitions. China recently surpassed the United States and the European Union in filing international patents. President Xi Jinping frequently remarks on IP policy and has sent high-ranking officials, such as its premiers and vice-premiers, to meet with the leadership of the United Nations (UN) World Intellectual Property Organization (WIPO). China’s new five-year economic plan also pledges to “improve” and “strengthen” IP rights.
But make no mistake: China’s leaders haven’t suddenly become classical liberals devoted to the sanctity of private property rights.
The hopeful view long cultivated by US diplomats—that China’s WTO accession and adherence to international IP norms would advance market reforms and the transparent rule of law—has proven sorely misplaced. Too often, US optimism has led diplomats and policymakers to overlook the fact that China has embraced IP norms to advance its own interests.
China’s IP leadership ambitions are part of a strategic effort to advance its state power, national competitiveness, and diplomatic interests. The Chinese government’s IP policy is closely coordinated with its industrial, science, educational, government procurement, labor, and foreign affairs policies on a national level as well as on local sector levels. It is not based on an underlying principle of private property rights, but is rooted in the primacy of broader industrial, scientific, and socio-economic planning.
Government agencies also actively seek to manage every aspect of China’s IP system—setting per-capita goals for patents, influencing licensing revenue for industrial sectors, ownership of core technologies by Chinese enterprises, elevating China’s role in international standards bodies, and reducing China’s dependence on foreign technology. These goals—and their attendant subsidies, incentives, and rewards—constitute a China-first IP regime that also incentivizes the theft of protected, proprietary technologies from foreign countries, many of which are core to manufacturing processes and frontier technologies.
The United States Lost Sight of the Strategic Value of IP
In many respects, the first Trump administration’s IP theft and de-industrialization narratives were inextricably linked. But the administration attempted to address these issues in its Phase One Trade Agreement by creating legal reforms and remedies for theft, rather than targeting motivations for theft.
US policy previously promoted a strong IP system as a form of global economic infrastructure. That enabled the United States to become a leader in frontier technologies and serve as the world’s largest technology transferor. But now, China has honed its IP regime to enhance its state-planned domestic innovation ecosystem, assert control over IP in other countries, and advance its own industrial strength in frontier technologies such as advanced AI and robotic manufacturing.
China Is Exporting Its Intellectual Property Model Abroad
Among the policies that demonstrate Beijing’s transnational embrace of IP are its increasingly aggressive legal and regulatory actions abroad. Chinese courts have asserted extraterritorial jurisdiction in matters involving patents and international standard-setting, a tactic that the WTO has determined to clearly violate its principles. They routinely discourage cases involving Chinese companies from being litigated elsewhere while limiting transparency around key rulings. China has also unilaterally asserted licensing fees for patents on certain technological standards, giving Chinese companies discounts and undermining the current global consensus that licensing rates should be negotiated freely between parties.
China’s IP enforcement practices have also disadvantaged foreign firms operating in the country. China’s trade secret agency, the State Administration for Market Regulation, has historically treated foreign entities’ trade secret claims differently from domestic claims, while its Ministry of Commerce has similarly denied ownership of improvements to technology co-developed in China with a foreign party. Chinese law permits longer litigation timelines for foreign parties than would otherwise apply when a Chinese party sues a Chinese party. China’s pharmaceutical IP protections also advantage companies that first launch a product in China.
If China continues on this path unchallenged, it’ll disadvantage smaller economies and make technological strength more contingent on state power than scientific merit.
Only Washington can change that outcome.
How the United States Can Restore Global IP Leadership
The first step is to bolster IP rights at home. That means passing reforms to clarify patent eligibility and restore strong enforcement mechanisms. It also means treating IP rights as genuine private property rights, including prohibiting use without authorization and compensating for misappropriation. Without stability, patents and other IP protections cannot fulfill their purpose in incentivizing long-term innovation. While US policymakers should not strive to emulate China completely, they should aim to learn from China’s policies to create market-based IP incentives to allow America’s emerging industries to stay ahead.
The United States should make respect for IP as a private right a central component of its trade policy. Tools like the USTR’s Special 301 Report should be adjusted to better condemn the problems with China’s statist IP regime.
For example, USTR should scrutinize subsidy regimes tied to IP systems and use more qualitative, rather than quantitative, metrics to measure improvements in the IP environment. It should also look at the utilization of China’s IP regime as a key measurement of China’s government improvements, rather than relying upon de jure changes or anecdotal data. The United States should continue to embrace and support collaborative science where outcomes are equitably distributed and transparently available to both sides. And it should also insist on higher standards of transparency for bilateral IP commitments; continue urging greater independence for courts, attorneys, and administrative agencies adjudicating IP disputes; and develop objective criteria to evaluate whether state-run systems discriminate against foreign companies without the selection bias inherent in China’s state-run statistics.
A China-led international IP regime will not produce an innovation ecosystem that is entrepreneurial, risk-tolerant, and open to fair collaboration. It may, however, create an IP landscape that disadvantages China’s economic competitors. It might also create an environment in which IP rights are respected only when that serves China’s industrial goals, much like the Soviet Union’s patent office and those of other autocracies.
If the United States is to answer China’s rising IP leadership, it must demonstrate that when the right legal protections and incentives are in place, innovation is strongest in democracies and market economies.
About the Authors: David Kappos and Mark Cohen
David Kappos is co-chair of the intellectual property practice at Cravath. He is widely recognized as one of the world’s foremost leaders in the field of intellectual property, including intellectual property management and strategy, the development of global intellectual property norms, laws and practices as well as commercialization and enforcement of innovation‑based assets. Mr. Kappos advises Cravath’s clients on a wide range of their most complex intellectual property issues, including those pertaining to artificial intelligence, blockchain, cryptoassets and fintech, as well as cybersecurity and data privacy.
Mark Cohen is a non-resident fellow at the University of California, San Diego. He serves as a guest professor at Renmin University (Beijing) and on the Advisory Board of the Asia Society. He previously led the Asia IP Project at the Berkeley Center for Law and Technology at Berkeley Law School, where he was responsible for teaching international trade law and research and writing on IP issues. Previously, Cohen was Senior Counsel, China, in the Office of Policy and International Affairs at the US Patent and Trademark Office.