During a House Judiciary Committee hearing in July, Rep. Ben Cline (R-VA) asked Emily de La Bruyere, cofounder of Horizon Advisory and senior fellow at the Foundation for Defense of Democracies, about Chinese companies ownership of U.S. patents.
00:00No greater actor than China engaged in this activity.
00:04Additionally, adversarial governments or corporations linked to them may use this strategy to shape legal outcomes in federal courts, advancing their geopolitical agendas.
00:12This practice raises national security concerns, particularly when it involves targeting sensitive military and commercial technologies or leveraging U.S. disclosure laws for strategic gain.
00:21I introduced the Protecting Our Courts from Foreign Manipulation Act, which would require disclosure from any foreign person or entity participating in civil litigation as a third party.
00:30funder, litigation funder in U.S. federal courts and ban sovereign wealth funds and foreign governments from participating in litigation finances as third party litigation funder, either directly or indirectly.
00:40Ms. DeLarbreuer, your work is exposed to how the CCP uses non-military, non-traditional tactics to gain advantage.
00:47Do you see strategic use of U.S. litigation as part of the CCP's toolkit and would a bill like the one I explained help address that risk?
00:55The use of litigation is absolutely a part of the CCP's toolkit.
01:02Beijing uses litigation to censor and intimidate its opponents, and their cases of this abound, and they not only harm the direct opponents,
01:12but they also create a general silencing across the U.S. where it's simply too dangerous to speak about even known risks about Chinese entities because of litigation concerns.
01:26Beijing also uses targeted litigation to acquire intellectual property, including through the discovery process.
01:32And importantly, these efforts are in many cases funded by the Chinese government, both directly and indirectly, including through, for example, targeted subsidy programs that support Chinese companies dragging out these cases in U.S. courts.
01:46Now, some would argue that adding transparency requirements to civil litigation, like identifying foreign state interests behind a party, might chill access to the courts or create an administrative burden.
01:58From a national security and economic standpoint, is there a real cost to doing nothing instead of – and how would you respond to critics who say greater transparency in litigation is unnecessary or even harmful?
02:11I believe there's absolutely an economic and a security cost to doing nothing.
02:16I also think that the U.S. has proven out a system evident in, for example, the FARA regime of having transparency requirements for foreign adversaries and foreign entities that allow the U.S. to protect its security in that direction without undermining the integrity of the U.S. legal system.
02:35And that's by having a targeted campaign that seeks just generally information on the activities of foreign agents and is, again, targeted at foreign adversaries.
02:46Professor Ku, I introduced the bill to address how foreign adversaries, especially the Chinese Communist Party, may be using U.S. courts as a strategic tool.
02:54In your view, how real is the threat of foreign abuse of U.S. courts and how might Congress strike the right balance between maintaining judicial openness and protecting national security?
03:02Yeah, thank you.
03:04I think the answer is kind of boring but obvious, is disclosure.
03:09I think disclosure may create some administrative obstacles, but it doesn't prevent people from bringing cases.
03:15We want to allow foreign companies to feel like the U.S. judicial system is open to them.
03:20But there's really no reason why a foreign government really needs its rights protected in the same way.
03:26And so disclosing or maybe restricting foreign government involvement in these litigations, which they're not actually directly involved in or through third-party litigation or at least forcing disclosure, I think, would go a long way.
03:38I don't think would burden people from bringing cases.
03:41And one last thing I'll just note that it's very unclear that this could happen the other way, that U.S. companies could get involved in third-party litigation within China.
03:48So it puts U.S. companies at a disadvantage.
03:54According to West Fleet Advisors' most recent report, third-party financing is behind over 30 percent of U.S. patent litigation.
04:01According to Bloomberg, more than one-half of U.S. patents are issued to foreign entities, and our country has no record of when or to whom they are transferred.
04:10Isn't this a national security and economic security risk?
04:12For me, anyways, I think it is.
04:16And I think that we, as we point out, we require people to register as foreign agents in other contexts if you have a blog or something, and you're promoting the views of the Chinese Communist Party.
04:27But actually, if you're funding a lawsuit, it's not required to be disclosed.
04:31It's an odd, strange.
04:32We can distinguish between bad actors, or at least potentially bad actors, and just the average person who's involved in a lawsuit.
04:39I think there's – our system has proven we can do that, and we can do that here as well.
04:44Would we reduce – well, I have five seconds left, so with that, I'll just yield back.
04:49Thank you, Mr. Chairman.
04:50There's a first.
04:52We're getting our time back.
04:53I thank the gentleman from Virginia, and I go to the gentlelady from North Carolina for her five minutes, Ms. Ross.
04:59Thank you, Mr. Chairman and the ranking member for holding this hearing, and thank you to all –
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