By The Diplomat | Created at 2026-06-11 07:27:11 | Updated at 2026-06-13 22:44:50
3 days ago
Innovation, industrial policy, predatory trade practices, and export controls usually frame the discussion of global technology competition. The contest over semiconductors and artificial intelligence attracts the most attention. But these are not the only issues. The role of “intangibles,” including standards, patents, and the ability to create new intellectual property, is equally important.
Intellectual property (IP) is the engine of an innovation economy. IP makes up most of the value of major companies. The World Intellectual Property Organization, the multilateral body that coordinates global IP protection, puts this at two-thirds of global income. IP-intensive industries account for nearly 40 percent of U.S. GDP and are America’s most valuable asset.
IP laws (like patents and copyright) allow creators to protect their innovations and incentivize future innovation. Unsurprisingly, this makes IP an attractive target for “appropriation” by unscrupulous actors, including those in the private sector and more worryingly, China. This is why the rules that protect IP are so important.
China’s share of global patent filings has grown rapidly in recent years, part of a deliberate strategy to make IP and patents a new tool of economic competition. Chinese firms, most notably Huawei, have become aggressive accumulators of patents, using the Western legal system to assert patent infringements, demand licensing fees, block competition and, at least for Huawei, use this to gain market dominance. Huawei has amassed patent filings in the U.S. (last year it had more than Apple) in a bid to control new technologies like 6G, using IP laws to gain competitive advantage. It is not just the U.S. China controls over 11,000 German patents. German analysts say China strategically directs patent acquisitions while keeping its own markets relatively closed.
This is part of what China’s leader Xi Jinping calls a new approach to economic policy, which the Chinese call “new quality productive forces.” It focuses on intangibles like innovation and research more than manufacturing. China’s leaders want to escape foreign tech dependency and make China the chief source of global innovation. The Chinese government is taking a hard look on how it protects IP, but it also wants to exploit existing rules for China’s advantage.
Beijing has become a sophisticated actor in international standard-setting bodies such as the market-setting International Organization for Standardization and 6G telecom-related 3GPP. By building massive patent portfolios, Chinese firms seek to supercharge “new quality productive forces.” The intent is to escape foreign technological dependency and become a global innovation leader, using IP rules to block competition.
Chinese companies actively use intangible assets like patents to shape industry standards (and Standard-Essential Patents are indispensable for global industry) in ways that favor Chinese technology. Companies like Huawei use courts and patent enforcement as a means to achieve competitive benefit. China will exploit the legal system created to protect IP and will use America’s own laws and courts to gain commercial and technological advantage
A precedential case now in federal court (Realtek v. MediaTek, both Taiwanese companies) has major implications for U.S.-China competition. Antitrust lawyers and the semiconductor industry are watching the case closely. The trial’s outcome will shape how countries treat “patent assertion entities” (commonly known as patent trolls) in the global technology environment and international tech competition.
Realtek claims that MediaTek, the world’s leading TV chip producer, conspired with patent assertion entities to stifle competition. The case remains open, but its implications extend beyond the trial and reach into the core of U.S.-China technological rivalry. The outcome could set a precedent that would damage the U.S. in innovation and standards-setting. Defending the legal system used to protect IP is a national security priority.
Chinese media has closely tracked Realtek v. MediaTek because both companies are major semiconductor suppliers to Chinese companies. Chinese analysts focus on the implications for supply chain security, standard-setting and market dominance. They view “litigation bounty” agreements with patent assertion entities as a new form of corporate competition designed to reshape supply chains in one company’s favor and use Standard-Essential Patents to increase China’s global tech dominance. Huawei already aggressively demands licensing fees and files patent infringement lawsuits against major Western companies, including Verizon, Apple, Samsung, and European firms. Patent assertion entities could be a logical next step.
Patent trolls are nothing new. The tech industry has grappled with them before. Chinese companies now even face the same threat. China was always sensitive to the use of patents by foreign companies, believing that they use patents to hold China back, but this is changing as China now has its own IP to protect. China’s regulators pay close attention to American IP regulation and law and will see the Realtek case as precedential.
A clearer focus on how the U.S. should manage the extraterritorial implications and security effects of China’s new approach to global IP protection would be invaluable. It would be a start in addressing the larger problem of Chinese participation in a global trade system whose rules it does not respect. The U.S. needs to protect the integrity of the global patent and standards process if it does not wish to fall behind in any tech contest. To remain competitive against China or any other global rival, and whatever the outcome of this case, the U.S. must ensure that whatever the outcome of the case, its patent system protects innovation rather than lawsuits.
