Risky Business: Iranian-Chinese Ties Present Major Threat To Intellectual Property

(New York, N.Y.) — As direct and indirect negotiations continue between Europeans, the U.S., Russia, China, and Iran to ease economic sanctions against Tehran in return for its compliance with the terms of the Joint Comprehensive Plan of Action (JCPOA), business leaders should consider the far-reaching intellectual property (IP) implications of re-entering the Iranian market. Global companies must recognize that Tehran’s warming relations with China will help pave the way for the transfers of stolen IP from European firms. What stolen IP is not turned over by the Iranian regime to its allies in Beijing is likely to be taken. Iran’s loose to nonexistent legal protections on IP present a low barrier for unauthorized transfers.

“The Chinese Communist Party (CCP) is championing a return to the JCPOA out of its own self-interest,” said United Against Nuclear Iran (UANI) CEO Ambassador Mark D. Wallace. “Party leaders in Beijing know that reintegrating Iran into global trade and banking will accelerate the Iranian regime’s theft of IP even further, creating a rich vein of European technological knowhow. We are concerned that the connections between Iran and China are a blind spot for both negotiators in Vienna and business leaders interested in exploring a return to the Iranian market.”

Chinese and Iranian hackers have already been implicated by U.S. intelligence for the attempted theft of IP on COVID-19 vaccines from U.S.-based pharmaceutical company Gilead Sciences, Inc. Separately, UANI has confirmation from more than 100 European businesses that their names and trademarks have been stolen by Iranian firms, many of which are front companies for the Islamic Revolutionary Guard Corps (IRGC), aided by the country’s virtually nonexistent respect for copyrights, patents, trademarks and trade secrets.

European leaders and businesses are rightfully concerned over the threat emanating from China and have taken some measures to bolster their defenses. In April, Germany adopted strict rules targeting untrustworthy companies, including Chinese telecom giant Huawei. In May, Britain created a unit to advise universities considering overseas research partnerships on export controls, cybersecurity, and IP protection amid growing concern over Chinese cyber activities. Properly defending against Chinese incursions requires extended protections, however. Refraining from doing business with China’s allies should be a best practice, as any IP in Iranian hands can be reasonably assumed to end up in China.

In recent months, Tehran and Beijing have cooperated to evade sanctions on Iran’s oil sector and inked a 25-year deal worth $400 billion for the CCP to invest in Iranian banking, telecommunications, and information technology sectors, as well as infrastructure and health care. They are also cooperating more closely on military-to-military ties. Beijing has been unrestricted in provisioning military equipment to Iran since the international arms embargo against Iran was lifted in October 2020 due to the sunset provisions in UN Security Council Resolution 2231. The CCP allows companies to sell nuclear- and missile-related material to Iran.

“IP stolen by Iran won’t stay in Iran. European businesses concerned with Chinese IP theft should carefully consider engagement with China’s allies. After all, Iran is dependent upon China diplomatically, economically, and increasingly militarily. The threat to global businesses from Iran’s state-sponsored thievery is growing as the regime draws closer to Beijing,” said UANI Research Director Daniel Roth. “Iran’s grossly inadequate legal protections have always been a back door for Chinese agents, but soon enough, Beijing might be invited through an open front door instead.”

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