Written by: Keegan Caldwell, PhD
When China’s State Council issued Order No. 801 in March, some U.S. intellectual property lawyers may have missed the memo — but they won’t miss the lawsuits.[1]
The new order, “Provisions of the State Council on the Settlement of Foreign-Related Intellectual Property Disputes,” outlines significant changes, and overall, this represents China’s transformation from a defensive player in global IP battles to an assertive venue for patent enforcement, equipped with sophisticated tools for economic statecraft.
For decades, U.S. companies viewed China primarily as an IP risk zone, a market where trade secrets vanished and patents were routinely infringed. That narrative is now outdated.
As Chinese courts accelerate patent enforcement, and domestic tech giants like Huawei, Tencent and BYD assert their patent portfolios globally, American businesses face a new reality: China has become both a critical market opportunity and a formidable IP adversary, wielding intellectual property as a strategic weapon in cross-border economic competition.
China’s Modern IP Evolution
The State Council’s provisions reveal just how serious China has become about IP.
Articles 14-17 grant Chinese authorities sweeping powers to implement countermeasures against what they deem “discriminatory” foreign IP actions.
Under Article 15, if a foreign country “uses intellectual property disputes as a pretext to contain and suppress China,” the State Council can add organizations and individuals to a countermeasures list and impose restrictive measures — effectively creating a blocking statute against foreign IP enforcement actions.
This isn’t happening in isolation — it’s part of the broader U.S.-China trade tensions.
Article 14 lets Chinese authorities investigate when imported goods allegedly infringe IP rights or when foreign companies impose restrictive licensing terms.
Article 16 goes further, forbidding any organization from carrying out foreign “discriminatory restrictive measures.” This means multinationals could find themselves in a bind, caught between competing legal systems with incompatible demands.
Chinese tech giants are already giving the world a look at what this new reality looks like. For example, Huawei recently filed its latest round of semiconductor chip technology suits against MediaTek in Germany and in the U.K.[2] Tencent is building serious patent portfolios around gaming and social media.[3] BYD recently demonstrated electric vehicle charging tech that adds almost 250 miles of range in five minutes, plus self-driving features across its entire lineup.[4]
And it’s worth noting that these examples aren’t copycat innovations — they’re legitimate breakthroughs that Chinese companies will fight to protect globally.
Implications for U.S. Companies
American businesses need to recalibrate their China strategies to address both defensive needs and potential opportunities.
On the defensive side, understanding Chinese court procedures has become critical. The regulation’s Article 13 imposes strict requirements on providing evidence to overseas jurisdictions, requiring compliance with China’s laws on state secrets, data security and technology export management. U.S. companies involved in global litigation must carefully navigate these requirements when Chinese subsidiaries or partners hold relevant evidence.
Generic global IP strategies won’t cut it anymore. Article 11 requires companies operating in China to “strengthen their awareness of the rule of law” and build proper internal compliance systems. Translation: You need China-specific protocols, an understanding of the local rules, and maybe a complete rethink of how you deploy sensitive technology in the Chinese market.
But China’s evolving IP system creates opportunities too. Chinese IP courts have become much more sophisticated, with specialized tribunals and judges who understand complex patent disputes.[5] If you’ve got strong patents and a local infringer is eating your lunch, modern Chinese courts are better positioned to help — provided you avoid triggering discriminatory-measures provisions.
The key is understanding when Chinese enforcement aligns with Beijing’s industrial policy goals and when it might be viewed as hostile foreign interference.
IP as Economic Statecraft
The U.S. pioneered the use of IP as a tool of economic statecraft. Under the Trade Act of 1974, Section 301 investigations have long allowed Washington to impose tariffs based on IP concerns.[6] As a recent example, some may recall there has been an extension of Chinese-related exemptions from the Trump administration’s new tariffs.[7]
At the same time, some provisions in bilateral trade agreements extend American IP standards globally, requiring trading partners to adopt IP protections that exceed the minimum standards set by the World Trade Organization‘s Agreement on Trade-Related Aspects of Intellectual Property Rights.[8] This strategy has helped maintain U.S. technological leadership by creating legal frameworks that favor American innovation models.
China’s counterstrategy rests on four pillars, which are all clearly visible in the new regulations.
First, it positions IP as a diplomatic tool, using patent disputes to advance broader negotiation objectives.
Second, Articles 14-17 create mechanisms for economic retaliation when China perceives unfair treatment.
Third, the regulations explicitly support building “strategic patent portfolios” to advance national competitiveness, encouraging Chinese firms to patent aggressively abroad.
And fourth, Beijing asserts economic sovereignty by controlling how foreign tech companies operate within China and restricting evidence flows in cross-border disputes.
This IP-as-statecraft trend reflects deeper shifts in the global economy. As technological competition intensifies between the U.S. and China, patent rights become weapons in a broader struggle for economic dominance. As recently as April, the European Union lost its WTO challenge against China’s antisuit injunctions, presenting the world with a clear illustration of how IP disputes now implicate fundamental questions of judicial sovereignty and international trade rules.[9]
The New Normal
Patent rights have become weapons in the U.S.-China tech rivalry, and companies will have to adjust their aim accordingly. The old formula — like, say, designing in California, building in Shenzhen and selling everywhere — faces new realities as both governments weaponize IP rules for national advantages. Access to Chinese consumers now means accepting greater IP risks, while Chinese competitors bring increasingly strong patent portfolios to Western markets.
Smart companies are already adapting. Their teams understand both IP law and geopolitics, and they’re segmenting their technology to minimize cross-border vulnerabilities. Most importantly, they’re staying nimble as rules shift with political winds.
But in general, the days of treating patents as purely legal assets are over. In 2025 and beyond, ready or not, your IP strategy is your geopolitical strategy. Companies that grasp this new normal will thrive — and those that don’t may find themselves collateral damage in a conflict they never saw coming.
Read in Law360.
[1] Qiang, Li Prime Minister. “Provisions of the State Council on the Settlement of Foreign-Related Intellectual Property Disputes: National Order No. 801.” State Council of the People’s Republic of China, March 13, 2025. https://www.gov.cn/zhengce/content/202503/content_7014486.htm.
[2] Richter, Konstanze. “MediaTek and Huawei Take Multi-Jurisdictional Chip Battle to the UPC.” Juve Patent. April 15, 2025. https://www.juve-patent.com/cases/mediatek-and-huawei-take-multi-jurisdictional-chip-battle-to-the-upc/.
[3] “Patents Assigned to Tencent Technology (Shenzhen) Company Limited.” Justia Patents. May 8, 2025. https://patents.justia.com/assignee/tencent-technology-shenzhen-company-limited.
[4] Carter, Tom. “BYD Says It Can Charge an EV in 5 Minutes. That’s Yet Another Challenge for Tesla.” Business Insider. March 18, 2025. https://www.businessinsider.com/byd-unveils-fast-chargers-400km-range-5-minutes-tesla-challenge-2025-3.
[5] Rader, Randall R. “Inside the Creation of China’s Federal Circuit.” IAM Media May/June, (2019): 8-10. Accessed June 3, 2025. https://www.law.berkeley.edu/wp-content/uploads/2021/05/Inside.pdf.
[6] “Section 301 Investigations.” Office of the United States Trade Representative. Executive Office of the President, January 1, 2025. https://ustr.gov/issue-areas/enforcement/section-301-investigations.
[7] “Notice of Product Exclusion Extensions: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation.” Office of the United States Trade Representative. Executive Office of the President, May 31, 2025. https://ustr.gov/sites/default/files/files/Press/Releases/2025/Federal%20Register%20Notice%20Extending%20Exclusions%2005312025.pdf.
[8] Agrawal, Ashmika Ms., and Paramita Choudhury Dr. “TRIPS-Plus Regulations in Bilateral and Statewide Trade Agreements: Their Bearing on Intellectual Property Rights and International Trade.” Alliance Journal of Intellectual Property Law 1, no. 1 (2023). Accessed June 3, 2025. https://www.alliance.edu.in/research/AJIPL/ajipl-2023/assets/pdf/trips-plus-regulations-in-bilateral-and-statewide.pdf.
[9] Wininger, Aaron. “EU Loses WTO Challenge Against China’s Anti-Suit Injunctions; Files Appeal.” The National Law Review XV, no. 154 (2025). Accessed June 3, 2025. https://natlawreview.com/article/eu-loses-wto-challenge-against-chinas-anti-suit-injunctions-files-appeal.