A growing stack of cases shows Chinese actors misappropriating U.S. intellectual property and using it to compete in vital industries. In one headline case, the U.S. International Trade Commission ruled that Innoscience, a Chinese chipmaker, infringed a California company’s patent on gallium nitride power devices and issued exclusion and cease-and-desist orders through August 2030. Later, the Patent Trial and Appeal Board invalidated key claims in that same patent, reopening a path for the Chinese firm to challenge the import ban. Rep. Nathaniel Moran argues this “direct assault on American innovation” only happened because administrative patent judges ignored guidance meant to prevent duplicative attacks on patents that already went through a full trial at the ITC.

How the theft works

Industrial espionage and covert transfer sit beside forced tech transfer and copy-and-improve strategies. The Department of Justice described how a General Electric engineer used steganography to hide turbine trade secrets inside a sunset photo, then moved the data to an accomplice in China. The FBI’s Alan Kohler Jr. said China is targeting “American ingenuity” to “topple our status” as global leader. FBI Director Christopher Wray warned that Chinese efforts aim to “ransack” Western intellectual property across aviation, AI, and pharma.

How China’s political system encourages IP theft

Analysts tie the problem to China’s Party-State system. Companies face a politicized legal environment in which party connections and protection matter more than neutral rules. Innovation is risky for smaller firms that cannot buy political cover, while imitation and acquisition are cheaper and safer. Party preferences for state-owned enterprises, pressure to host party cells inside private firms, and limited access to capital further tilt the incentives away from original research and toward appropriation. As one assessment puts it, theft is not only policy, it is an inherent feature of the system until the rule of law supersedes party power.

Chinese leaders celebrate technology leadership, and Xi Jinping said in 2014 that the first mover advantage goes to “whoever holds the nose of the ox of science and technology innovation.” At the same time, political control, hierarchy, and censorship undermine the open debate and team problem-solving that fuel breakthrough ideas. Many firms choose assembly, reverse engineering, or copying rather than long, expensive R&D gambles. Some domestic innovators also see their work appropriated by better connected rivals, reinforcing the loop.

How U.S. rules and venues are being exploited

America’s own system can be used against its innovators. After a 16-month ITC investigation that included depositions and expert testimony, Innoscience was barred from importing infringing chips. Yet the PTAB later invalidated central patent claims under lower evidentiary standards. Moran notes the first Trump administration had told the PTAB not to review patents already in parallel litigation to protect smaller innovators from being overwhelmed. The Biden administration reversed that in 2022, the PTAB accepted Innoscience’s 2023 petition, and in March 2025 invalidated claims even after the ITC had ruled. Moran urges the USPTO director to reverse the PTAB decision and calls for rulemaking and legislation, such as the PREVAIL Act, to halt duplicative challenges and align PTAB standards with federal courts.

Targets range from Fortune 100 giants to startups, university labs, and specialized suppliers. Sectors include semiconductors, aerospace and turbine technology, 5G and communications, AI and robotics, pharmaceuticals and bioengineering, nanotechnology, medical devices, energy equipment, and advanced materials. The breadth reflects China’s drive to reduce dependence on foreign technology and dominate high value segments of the supply chain.

What China does with stolen IP

Stolen know-how is fed to state-linked companies, universities, and national champions to accelerate development and cut years of cost and trial. Analysts describe the goal as leapfrogging up value chains without paying the full price of indigenous R&D. In practice, this can mean quickly fielding competitive components, scaling assembly lines, bidding aggressively for global projects, and building export positions that pressure Western margins.

The scale is significant. The BBC’s review of recent cases places Chinese espionage across the country and across fields. U.S. export controls on chips and tools show how national security stakes have risen. Even when hacking dips, observers call prior bilateral “no-theft” pledges a joke because enforcement is missing. Each successful theft erodes the return on U.S. R&D, compresses product cycles, and narrows the time American firms have to profit before clones flood the market.

Illicit acquisition shortens development timelines, lowers costs, and reduces technical risk. Combined with subsidies, tax rebates, and government guidance funds measured in the trillions of renminbi, copied or adapted IP lets firms undercut prices and move faster. High speed rail is a famous pattern. After learning from foreign consortia and reverse engineering, China scaled domestic networks, then bid abroad at lower cost. The same template appears in chips, telecom, drones, and power electronics.

Examples that show the pattern

• Innoscience vs. Efficient Power Conversion. ITC found infringement of a GaN patent and issued import bans to 2030. PTAB later invalidated key claims, arming the infringer to challenge the ban.
• General Electric turbine secrets. An engineer used steganography to exfiltrate design data on blades and seals, aiming to benefit Chinese recipients.
• Aviation and aerospace targeting. A Chinese intelligence officer was sentenced for plotting to steal trade secrets from U.S. aviation firms.
• Forced and pressured transfers. Joint ventures and licensing reviews have been used to pry technology as a condition of market access.

Wray says China wants to “ransack” Western IP. The FBI calls it an attack on “American ingenuity.” Analysts in industry describe pervasive espionage that reaches corporate labs and academia. Moran warns administrative judges are helping Chinese firms “pilfer U.S. intellectual property” by reopening settled cases. Chinese officials reply that these claims reflect a Cold War mentality and smear campaigns.

China has also increased filings and built IP courts and tribunals, and some domestic firms now defend their own IP more aggressively. But even analysts who note those steps argue that party control, fragmented enforcement, and political priorities leave a system where appropriation remains attractive and often safe, especially for well connected firms.

The immediate step in the Innoscience case is for the USPTO director to overturn the PTAB ruling and align with the ITC. Longer term, formal rulemaking should lock in anti-duplication guidance, and Congress should pass reforms like the PREVAIL Act to raise PTAB standards to match federal courts. Beyond venue fixes, experts urge stronger prosecutions under the Economic Espionage Act, sanctions for beneficiaries of stolen IP, and legal support for victim firms. Companies need tighter internal security, ongoing loss checks, and diversification away from high risk partners and regions. At the strategic level, boosting DARPA and university R&D, and building robust public-private institutes on the Fraunhofer model would restore the time and resources U.S. firms need to out-innovate copycats.

China’s system makes theft a rational business choice and a political project. The U.S. cannot eliminate that incentive inside China, but it can cut the payoff, harden the targets, fix its own venues, and widen the innovation gap. As one analyst summed up the race, the threat is real and time is not on America’s side