Hearings to examine China's theft of U.S. innovation

Name: Hearings to examine China's theft of U.S. innovation
Start: 2026-04-22
Location: US Senate

US-China Technology CompetitionSenate Judiciary · 2026-04-22 · 119th Congress

Transcript

Highlights

▶ 0:22:20Chair Grassley: Good morning, welcome. This hearing will come to order. Senator grassley regrets not being able to attend. I will be entering his opening remarks into the record, along with statements from three other members. Today's hearing will explore how foreign adversaries, specifically the communist party of china, threaten U.S. economic and innovation documents through rampant intellectual property theft.

▶ 0:22:50Chair Grassley: The economic mess from china's ip theft is estimated to be between $400 billion and $600 billion a year, the equivalent of costing the average american taxpayers thousands of dollars every year. China's overall goal is to undermine U.S. leadership to assume the title of world's innovation leader. We cannot allow this to happen, ladies and gentlemen.

▶ 0:23:16Chair Grassley: While the theft is a major concern, we recognize the concern of china evolving from an imitator to innovator. Before I gavel down, I spoke with two of the witnesses to talk about the number of committee meetings we have had in the intellectual property subcommittee just documenting blatant theft, blatant counterfeiting under our nose, and I think it is time for the president, the administration, and congress to take action to

▶ 0:23:48Chair Grassley: Hold china accountable to what -- accountable. The U.S. must overcome historical and ideological views that china is unable to innovate. Innovation and creativity are clipped -- critical to the global competitiveness of our great country and our national security. Ip intensive industries generate nearly half of the U.S. gross domestic product and employ over 47 million workers. Therefore, we must do everything to ensure that strong, clear, reliable, predictable ip rights remain central to this country.

▶ 0:24:20Chair Grassley: Make no mistake, we are in a race with china, but unlike china, we are not in a race to the bottom. And I think, again, I am glad to see that chair grassley has convened a full committee on this subject. We have been talking about it for years, but we have only made incremental progress.

▶ 0:24:44Chair Grassley: And now I think it is time to educate the broader members, the base of members, on this issue so we can work together on a bipartisan basis to bring about real change. Now I turn to senator durbin, ranking member, for opening comments.

▶ 0:25:02Sen. Durbin: Thanks, senator tillis, and I also thank senator grassley for calling this important hearing. I spoke to him a couple days ago, he is feeling great, expects to be back next week, and I wish him well. I thank senator tillis for serving as chairman today. Thank you to the witnesses, as well. The U.S. has been the world's leading innovator, from the light bulb and telephone to the semiconductor. Americans have been at the forefront of many of the greatest breakthroughs, but U.S.

▶ 0:25:33Sen. Durbin: Leadership in this area is never guaranteed. Over the last 15 months, president has repeatedly taken actions that harm our innovation ecosystem. Let me be specific, he has attempted to cancel grants, fire scientists, and free up billions of dollars of the national institute of health and national science foundation funding.

▶ 0:25:57Sen. Durbin: He sought to freeze university research funding for top universities, funding that helps develop technologies of tomorrow and allows us to maintain our lead in innovation. That is not all. He is imposed on again/off again tariffs with little regard to whether they target our allies or adversaries.

▶ 0:26:19Sen. Durbin: As a result, our nation's reputation has been shaken, making it more difficult to build the coalitions and engage in the international organizations necessary to collectively counter china's growing global influence. China is taking advantage of american chaos, doing whatever it takes to overtake our position as global leader in innovation.

▶ 0:26:45Sen. Durbin: Several decades ago, china launched in all of country approach to use all available means to require foreign technology to support its efforts to become a global leader in technological innovation. In 2015, china announced it's made in china 20 25 initiative, calling for chinese technology and advancement of manufacturing to catch up to and replace foreign technology.

▶ 0:27:10Sen. Durbin: On a level playing field, like our chances of being the first to develop next-generation batteries, quantum computers, new cures for diseases. But too often we are not on a level playing field, and the current administration's efforts in many respects are tilting this toward china. Why in the world are we taking the most sophisticated computing chips that we have developed and sending them to china? Does not make sense to me.

▶ 0:27:40Sen. Durbin: China has engaged in economic espionage and ip theft to still work that may have taken many years to develop come at an estimated cost between 220 5 billion dollars and $600 billion every year. This affects both the economy and the jobs of hard-working americans. U.S.

▶ 0:28:01Sen. Durbin: Companies have less incentive to invest in r&d, and other jobs they think china will still copyrights, trademarks, or trade secrets. Take the case of an employee of google who used stolen ai trade secrets to start his own ai company in china.

▶ 0:28:24Sen. Durbin: He was convicted of thrift and trade secrets, but the chinese government obtains those secrets and can use them to their benefit. China's tactics are not limited to economic espionage. It also acquires ip through agreements that require companies that want to do business in china to partner with and transfer technology to chinese companies. Once the technology has been transferred, the chinese partner can transfer into the chinese government. This happens far too often.

▶ 0:28:52Sen. Durbin: A few years ago I learned of a story of inios, a company with an r&d facility in my state that developed a chemical that is a key building block in hundreds of applications across the medical, aerospace, and military sectors. Senebek, a chinese oil refiner stole those trade secrets and began manufacturing the chemicals.

▶ 0:29:17Sen. Durbin: The company sued in the chinese court system, and they have reach a settlement under which they agreed to jointly use the chemical. Soon after, those working on the joint venture left to create a competing company in china using that technology. This experience is not unique, and these stories also result in china taking american company ip to create their own domestic industry.

▶ 0:29:40Sen. Durbin: It should be said, and this is important, that while today's hearing focuses on ip threats from china, the government, and its companies, china is not the only country engaged in or hosting ip theft. Other countries like russia have done the same. We must ensure our efforts to address the problem are aimed at the real bad actors, and we do not simply target people of chinese dissident, which is too often the reaction in this situation.

▶ 0:30:10Sen. Durbin: I look forward to discussing help us to address these issues and how we can protect american innovators and technology they create.

▶ 0:30:18Chair Tillis: I will introduce today's witnesses. First is tom lyons, former senior officer with the cia, more than 20 years of experience in U.S. government and the private sector. He focused on counterterrorism and china related issues. In 2021, he helped found the 2430 group, nonprofit nonpartisan research institute that focuses on state-sponsored espionage against western businesses. Thank you for joining us, Mr. lyons.

▶ 0:30:49Chair Tillis: Next is helen toner, the interim executive director of georgetown's center for security and emerging technology. She previously worked at open philanthropic -- open philanthropy, where she advised policymakers on artificial intelligence, policy, and strategy. She also previously lived in beijing where she studied chinese ai ecosystems. Finally, Mr. cohen, welcome, good to see you again.

▶ 0:31:18Chair Tillis: He is currently senior technology fellow at the asia society of northern california and an edison fellow at the university of akron school of law. He also serves as a nonresident scholar at the university of california and the national bureau of asian research. He previously served in office -- in the office of international relations at the U.S. patent and trademark office. His career has included more than 30 years of expands on the issue of intellectual property rights in china.

▶ 0:31:47Chair Tillis: On behalf of the committee, I want to welcome all three of you here today. We look forward to hearing your testimony on this important topic. As tradition, I asked the witnesses to rise and raise their right hands. Do you swear or affirm that the testimony you are about to give before this committee will be the truth, the whole truth, nothing but the truth, so help you god? Thank you. Let the record reflect the when this is answered in the affirmative. Mr. lyons, we will begin with you.

▶ 0:32:20Mr. Lyons: Senator tillis, ranking member, committee members come I spent a career as cia focused on foreign adversary capabilities and tensions, not intellectual property theft. But you cannot work in the intelligence community without seeing evidence of china's economic espionage throughout the U.S. front companies operating freely, talent programs strip mining error companies, and poor infrastructure built on stolen american secrets. The magnitude of the p.r.c.'s effort was all was staggering.

▶ 0:32:49Mr. Lyons: The response, however, from both governments and private sector was not. This disconnect is why I left government. It is why I helped found the 2430 group and why I am here today. Our team has a mission that we could not have pursued from inside government. We partner with and help U.S. companies defend their innovations and theft. What we have seen has been alarming. American firms are not competing against chinese rivals in any normal sense.

▶ 0:33:18Mr. Lyons: They are competing against the largest intelligence apparatus in the world, one whose mission includes putting american companies out of business. This is not gm versus ford. This is a U.S. start up versus the resources of the pla. The issue is that our system was never designed for this.

▶ 0:33:35Mr. Lyons: Our commercial sector and legal system assumes good faith, self-interested, profit oriented companies, but none of those assumptions hold up when the other side compels theft, sponsors copycat products at subsidize costs, and has little focus on profit. American companies are defending themselves against the ministry of state security and approaching it like a compliance issue. The consequence of this mismatch will be the wholesale transfer of american industry to our adversary.

▶ 0:34:05Mr. Lyons: Look what they have already achieved. To highlight this disconnect, consider deng, who still google's latest generation designs, technology at the center of a one trillion dollar industry. What is most striking is not the theft itself, it is rather that he advertised the theft as his company's differentiator when he was at the p.r.c.

▶ 0:34:25Mr. Lyons: The theft was used like a credential, and it is important to note that while deng was cut, that technology was gone and we will only see the consequences of that over the next several years. What about american superconductor. A massachusetts company that saw the theft of a software from a p.r.c. State owned company in response to this multibillion-dollar theft, the p.r.c. Company paid $59 million fine, and it got to keep these still in software and continue to sell it.

▶ 0:34:58Mr. Lyons: Meanwhile, an american superconductor had to fund its own litigation across multiple jurisdictions for years, hemorrhaging revenue, fighting to survive, all the while competing against its own profits. How about apple's autonomous vehicle program, which was hit by three separate major p.r.c. Theft cases? Doj went after the individuals but not the companies that commissioned the theft or the system that incentivize the behavior. And today we know apple has no autonomous vehicle program, yet the p.r.c. Is the fastest growing on the planet.

▶ 0:35:29Mr. Lyons: The p.r.c. System, while an individual may steal like technology, they are doing it on behalf of a system that rewards the behavior. It is prestigious, lucrative, and in some cases global tory. In the U.S., we are not addressing the infrastructure that supports the theft, nor do we address the companies that benefit from the feds -- theft. We must do more to get in front of these crimes.

▶ 0:35:53Mr. Lyons: For example, we should increase the deterrence mechanisms by making the consequences of theft devastating for those involved, increase the penalties of the economic espionage act. As it stands they serve as a small text relative to the benefit received. We must ensure the beneficiaries face consequences, not just individuals. Have an enforcement model is plaintive companies can't share in the financial recovery and do not have to share and litigation costs.

▶ 0:36:22Mr. Lyons: Pair this with a whistleblower bounty program modeled off of dodd frank, providing financial or immigration benefits to those who step up to protect our companies. We also should mandate that every federal contractor undergo foreign influence backup checks. And we must give our company's federal authority to conduct these same checks on employees, currently in some states it is implemented.

▶ 0:36:47Mr. Lyons: Let's build a product of incentive structure by offering tax credits to corporations that invest in counterintelligence programs. Detection is everything. Companies cannot report what they do not discover. Likewise, we propose a federally backed insurance program for trade secret theft by state actors so that companies have a financial incentive to report rather than remain silent.

▶ 0:37:08Mr. Lyons: If a foreign military were conducting operations on american soil, we would not ask our companies to fund the defense, yet that is the current reality. The p.r.c. Is targeting our infrastructure, our companies, civil society on our soil. And we have outsourced this issue to I.t. Or hr departments. Frankly, the ceo's whose primary objective is earnings for next quarter.

▶ 0:37:36Mr. Lyons: Our issue as a national security failure, but this could change that. Thank you and I look forward to questions.

▶ 0:37:42Chair Tillis: Ms. toner, before you begin, I can assure you that I know how to pronounce philanthropy. [laughs]

▶ 0:37:53Ms. Toner: I appreciate it, senator tillis. Thank you for the opportunity to testify. I am helen toner and I lead the center for security and emerging technology at georgetown were for the past 70 years my work focused on ai and national security, U.S. china competition over ai, and ai safety and security issues more broadly. Accordingly, my testimony focuses on issues related to ai, both give and it is where my experience lies and given the vital strategic importance of ai today.

▶ 0:38:21Ms. Toner: Right now, the ai related ip threat that is receiving most airtime is known as distillation, a technique whereby the more advanced ai model is used to improve a less advanced ai model. Distillation is a real threat to U.S. ai competitiveness. Chinese ai companies are distilling from american models that large scale, and this is something we should work to understand and prevent. But distillation is far from the only threat to U.S. ip or U.S.

▶ 0:38:50Ms. Toner: Competitiveness in ai, and it would be a mistake to focus myopically on the attack on distillation at the expense of other threats. As I outlined in more detail in my written testimony, simple way to think about the types of ip that ai companies must protect includes four elements. Ai models themselves. Algorithmic secrets. Training data. And ai hardware. There have been multiple cases of these different categories of ip being stolen.

▶ 0:39:18Ms. Toner: In 20 23, hackers breached openai internal communication systems and extracted extensive internal documentation, including algorithmic secrets. Earlier this year, as mentioned, a chinese national formally employed at google was convicted of systematic getting trade secrets from google, including large mass of information related to the company's state-of-the-art ai hardware.

▶ 0:39:40Ms. Toner: As for training data, companies, including openai, anthropic, and google have reported large-scale distillation campaigns by chinese actors on their platforms, which essentially amount to extracting training data from U.S. models. There are also more direct routes to acquire training data, including what hackers did to provider U.S.

▶ 0:40:00Ms. Toner: Company named m ercor two weeks ago where they went into and still models by hacking. And you can simply buy discounted data and training environments a few months after companies are done with them. All of that to say there is no shortage of ways in which U.S. innovation in ai is vulnerable to foreign technology transfer efforts. What should we do about it?

▶ 0:40:29Ms. Toner: I have more detail in byron testimony, but briefly some highlights. One recommendation at the strategic level is to make sure that any effort to tackle our concerns about distillation is done in ways that support, rather than undermining, other elements of U.S. ip protection and ai competitiveness. That means do not divert resources away from threats like preventing adversaries from misusing ai more broadly or from stealing other types of ai ip.

▶ 0:40:56Ms. Toner: I do not pursue approaches that will undermine the open and international ai research ecosystem that has been the fundament of U.S. success in ai. More technically, for very specific recommendations, one is to expand funding for the ai security center within nsa and the center for ai standards and innovation within the department of commerce. Those are two programs that facilitate information sharing about security threats between government and industry.

▶ 0:41:22Ms. Toner: Two, in service of this information sharing, doj should expedite security clearance processing for relevant ai company employee is, often taking a long time and delaying valuable information sharing. Three, doj should provide clear guidance to ai companies on the extent to which those companies may coordinate on defending against ai distillation or other misuses of their models without being subject to antitrust infringement.

▶ 0:41:47Ms. Toner: It has been publicly reported that top ai companies like google, openai, anthropic are undertaking limited steps to share information with each other, but in private conversations I hear that they feel their hands are tied by legal ambiguity around antitrust concerns here, which doj could easily clarify.

▶ 0:42:11Ms. Toner: Fourth, and service of better information sharing in the ai space more generally, I commend chair grassley's ai whistleblower protection act, which can help ensure that when employees of these powerful companies see something wrong, they are able to speak up about it. Thank you, and I look forward to your questions.

▶ 0:42:26Chair Tillis: Thank you. Professor cohen.

▶ 0:42:30Mr. Cohen: Thank you, acting member tillis, senator durbin, and the judiciary committee. My name is mark cohen and I have worked on U.S. china intellectual property issues, core ip issues, over 30 years. I am affiliated with the society of northern california, university of akron, other institutions, but the opinions I express today are solely my own. I have three topics.

▶ 0:43:00Mr. Cohen: First, the ip theft narrative has in many respects misguided us. Certainly, there's ip theft out there and trade secret theft, of course technology transfer, but our policy response in general has emphasized public enforcement, criminal remedies, and headline cases, rather than system issues which ip is primarily based on civil enforcement. With china, we are talking about 500,000 civil cases per year, of which foreigners are a small component.

▶ 0:43:30Mr. Cohen: In many respects, we are focusing on criminal remedies for over two decades. We have helped enhance the role of the state. We need to look at ip as a private right, which is what it is. We do not track how foreign companies actually use chinese ip system, including its civil system and actual outcomes. We have under emphasized the importance of transparency, which has been declining in china and makes the phase one trade agreement largely unverifiable.

▶ 0:43:58Mr. Cohen: So we face a series of paradoxes, large claim losses, only selected publishing of cases, extensive policy activity, but limited verifiable participation in the outcomes, significant tragic anecdotal evidence of agreements impossible to fully verify.

▶ 0:44:19Mr. Cohen: We are making policy in the dark without a clear understanding of how chinese system is actually used, where it succeeds, and it does in some places, and where appropriate corporate or government resources need to be allocated. We have also not sufficiently focused on strengthening the institutions that have enabled private rights to be effectively enforced in china. And this, by the way, is not new. The ussr had one of the 10 largest patent offices in the world for decades.

▶ 0:44:46Mr. Cohen: So china being number one is actually not new in the ip context. We undermine in some respects the patent system in the united states, in our own country, by putting it at risk, weakening eligibility, limiting relief, under emphasizing civil enforcement. Second, there is good news and bad news on the chinese ip system. The good news is china believes in ip. The bad news is china believes in ip.

▶ 0:45:17Mr. Cohen: China has a scale, speed, lower costs, broad injunctive relief, and comprehensive industrial policies to invest in the ip system. But it is a state driven, and ip is used as a tool of industrial policy with subsidies, metrics, administrative guidance, and non-independent judiciary.

▶ 0:45:37Mr. Cohen: We are competing with a peer that is the largest filer of international patents, has the largest patent and trademark office, has the largest civil and criminal ip docket, and it uses these systems to advance national objectives. And we also shortly overtake the united states to become an international norm site and intellectual property, which I think would be tragic.

▶ 0:46:00Mr. Cohen: China is moving to shape policy in emerging areas like ai and data governance, including treating data in ways that resemble a foreign intellectual property. Chinese policymakers also react quickly to address ip challenges in new and emerging technologies. As we consider patent reform and the implementation of the phase I agreement, we should recognize that china is reinforcing key features of a system through a system that often relies on public.

▶ 0:46:29Mr. Cohen: We need to smartly collaborate with china, as well, to address common challenges and maintain one of our great strengths of our system, which is relative openness to outsiders to participate. Even our court system, the so-called rocket docket, the itc in the eastern district of virginia is low compared to china, which has become a pacing competitor in cross-border ip disputes.

▶ 0:46:56Mr. Cohen: We need to ensure that our private rights system continues to be a world leader and model for the world. Third, we should not be surprised by china's advances, and we are. China is not only copying but it is increasingly innovating. We recently heard a great deal about china's rising leadership in the biopharmaceutical sector. Many of these advances, if not boat -- most, could have been anticipated.

▶ 0:47:23Mr. Cohen: Decades ago, the congressional office of technology assessment warned of this. Chairman grassley, I regret is not here and wish him a speedy recovery, was on the board of the ota. I have a copy of the july 1987 report which anticipated major advances in china's use of development of dual use technology and general narrowing of the technology gap by 2017. It was prescient. Ota is gone, did not maintain that institutional capacity. We need to rebuild it.

▶ 0:47:54Mr. Cohen: I believe uspto could be very helpful in that regard. Most important, we need to recognize that we need to maintain effective competition and continuing leadership in ip, and that burden is on us. Thank you, members of the committee.

▶ 0:48:12Chair Tillis: Thank you, Mr. cohen. And appreciate you being back before this committee. We have appreciated the contributions you have made in the intellectual property subcommittee. I started by talking about something we have discussed at the subcommittee level, and that is the patent eligibility restoration act. We are hopeful that we are going to have a full committee hearing on it before this congress ends.

▶ 0:48:35Chair Tillis: But could you talk about that bill with respect to china, how you think that that may be helpful or not, in your opinion?

▶ 0:48:45Mr. Cohen: Let me state, first of all, that we have had a lot of judicial doctrines that were not legislated but limited the scope of patent eligible subject matter and emerging technologies. The comparison to those cases has been china has amended its patent examination guidelines about 18 times since 1995. It cemented its patent law about five times since about 2001.

▶ 0:49:15Mr. Cohen: So what you have in the institutional structure in china is a patent office, and more importantly, and industrial policy network that leans in heavily where the emerging technologies are, develops that information from a five year plan, so made in china 2025, with all due respect, is only one and the least granular. You have them by locality, at the national level, and often voluntary ones by industry groups.

▶ 0:49:43Mr. Cohen: Those become the guidelines going forward from the patent office. What we have done is had a very static system that is slow to legislate, slow to react, while china has granted patents to theirs. What are the consequences? If you are an inventor here in many areas, including ai, your patent will be granted in china, perhaps the eu, but will not be granted in the U.S. there are many instances of that, and that drives the innovation overseas.

▶ 0:50:13Chair Tillis: Some of the push step -- pushback we have gotten here, we are not trying to accelerate someone who ultimately gets a patent, we're just trying to open the buy box and what may be patentable. Do you agree with that?

▶ 0:50:27Mr. Cohen: Completely.

▶ 0:50:27Chair Tillis: Do you see any downside to that?

▶ 0:50:31Mr. Cohen: Some people believe patents should not be protected at all. We have to be very careful about that, because there are some areas in technology that are less patent dependent. Some areas you can get patents and share them. The patent system does not require that you get paid, although most people expect that. But there is open source and other mechanisms. In biopharmaceuticals, it is absolutely critical to get a patent as well as in areas of high tech.

▶ 0:50:58Mr. Cohen: The more we weaken the system, the less capable we are as a partner and in standards. In many other areas, we talked about high-profile national security areas, but there are many other areas.

▶ 0:51:15Chair Tillis: Thank you. Mr. lyons or Ms. toner, are you familiar with the beard act that we put together, the bad electronic art recording distributors act? It is basically -- I did not want to throw a question that you if you had not had a chance to look at it, but what we are trying to do is align U.S. law with what I think are in emerging standards in europe.

▶ 0:51:37Chair Tillis: I am not one to go to european policies, as I think they got it wrong with a number of things, but what are your thoughts on joining other countries around the world that are identifying and protecting consumers from these piracy websites, if you have any opinion on that? And Mr. cohen, I know you probably do. I will come to you last.

▶ 0:52:00Mr. Lyons: Senator, thank you. I am not familiar with that specific act. I think this is an international effort --

▶ 0:52:07Chair Tillis: If you can get your microphone a little closer.

▶ 0:52:10Mr. Lyons: I do think this is an international effort. In order for us to move the needle on this issue, we must cooperate with allies. During the cold word, we had co-com, which had a lot of leads. The match act was proposed, as well, and ally prevention syrian -- scenario. I think the international front is important here.

▶ 0:52:36Ms. Toner: I would agree with that, certainly considering the multilateral aspects of anything we are trying to do here.

▶ 0:52:43Chair Tillis: One thing you mentioned about distillation, I think probably the first reported one of that was deepseek and going after chatgpt, which chatgpt just mentioned was a violation of its terms of use. What more do we have to do to counter distillation now? The concern I have with that, like after the distillation of the chatgpt llm is that becomes an enabler for rampant ip theft.

▶ 0:53:14Chair Tillis: What should the industry do to counter that versus, say, don't do that? I get technologically the challenges they have, but what are the trends for the industry to protect itself from chinese initiatives like the deepseek distillation?

▶ 0:53:29Ms. Toner: I think the way I would suggest understanding this is as one type of ai misuse, so different ways that adversaries, bad actors try to use ai models. Like to plan cyber attacks or carry out cyber attacks or excess illegal information.

▶ 0:53:46Ms. Toner: I think the best lover and simplest lover available right now is simply clarifying antitrust guidance -- I think the best and simplest lever available right now to simplifying clarifying antitrust guidance. There is antitrust enforcement, if they talk too much about what they are trying, so there could be meaningful improvements if they are given a little more clarity on that.

▶ 0:54:12Chair Tillis: Thank you. Senator durbin.

▶ 0:54:13Sen. Durbin: Thanks, Mr. chairman. Karl marx, who I do not often quote, set 100 years ago, you can count on a capitalist to sell you the rope you plan on hanging with. I would like to ask you about this nvidia chip sale to china, and in the context of american innovation and competition for innovation how this makes sense that we would take sophisticated computer chips and decide that china can buy them, which was

▶ 0:54:45Sen. Durbin: The president's announcement, so long as we get 25% on the deal. Are we selling our souls here by giving away this kind of hard-fought innovation?

▶ 0:54:57Ms. Toner: I will say, I think controlling access to chips and to computing power is really the best lever we haven't ai competition with china. A lot of factors go into ai competitiveness, and a lot are hard to control. The fact we are able to restrict the amount of computing power that resides in china and that china's companies have access to is really important. Yes, I think it is a mistake.

▶ 0:55:23Ms. Toner: It is also really important, sometimes in these discussions the numbers get lost, and the numbers of chips we are selling in the level of how advanced those chips are matters a lot. I am encouraged that, despite a lot of the back and forth on this policy issue, the licenses that have been approved, as I understand it, have been relatively small numbers of chips.

▶ 0:55:43Ms. Toner: I think if we principal approve cells but in practice the numbers are low, then we can sell them may be a thinner, less useful rope, to pick up on your analogy.

▶ 0:55:59Sen. Durbin: Anyone else prepared to comment on this?

▶ 0:56:06Mr. Cohen: Personal comment, than observation. I first heard about nvidia in 2011 and a magazine called electronics intellectual property, where I first heard the term gpu. It was pretty clear where china was headed back then.

▶ 0:56:21Mr. Cohen: Our inability, or lack of use of future oriented technology assessments, which were pioneered by ota, widely used in europe, patents on ota approaches, is really critical here in assessing what happens when you deny the profit stream for advanced technologies and whether the U.S. can remain the leader in that area or whether we will be hampered from it.

▶ 0:56:48Mr. Cohen: It sounds highly problematic to me to sell these chips to china, but it may be more problematic not to sell the chips to china. I think we really need to understand that now.

▶ 0:57:00Sen. Durbin: Thank you. I also would like to address this ai situation, the current state of research, and profess at the beginning I am a liberal arts lawyer, so you lose me in a hurry when you get deep into technology.

▶ 0:57:14Sen. Durbin: But as I understand it, we are basically inviting the private sector in america to get into the race for ai achievements, and many of them are, I think four major companies and competition in our national space for that possibility. I look back in history, whether it is the a bomb or the man on the moon, he used to be a partnership between the private sector.

▶ 0:57:43Sen. Durbin: Can you describe the current situation in terms of the government's role in our control over the research and what comes from it, Ms. toner?

▶ 0:57:51Ms. Toner: Yes, I think it is truly unprecedented the mismatch between house strategic the technology is and how little involvement government has in developing it. I think it is most likely not a good thing.

▶ 0:58:12Ms. Toner: I was asked to testify a year ago about what it is we and policy conversations in washington don't understand about insider conversations about ai, and when I testified in september 2024, is we do not understand how deadly serious they are about building machines that will outperform humans at everything commend how deadly serious they are that they do not know if they can control what is created.

▶ 0:58:37Ms. Toner: It sounds like science fiction, but it is truly what some of the wealthiest and most -- most powerful are pouring hundreds of millions of dollars in doing.

▶ 0:58:47Sen. Durbin: Mr. chairman, can ask one more question. Mr. lyons, I want to ask you a question that comes before me on a regular basis. Universities, major universities in my state, or lamenting the fact that foreign students are choosing not to attend college in our country. Around it has to do with the anti-immigrant conversation and the experience of many of these immigrants and foreign students have had when they came to the united states.

▶ 0:59:16Sen. Durbin: So I would like to ask you, with your background, from a security viewpoint, do you believe we can invite students to come study in the united states in some of these critical areas without compromising our national security?

▶ 0:59:32Mr. Lyons: Thank you, senator. It is a complex issue. The design problem that we are facing is how we distinguish between those who are resource and those who are risk to our country. I would say that as a country of immigrants, we need to always support immigration towards resources. Right now there is very little checks that go into place when students and/or even h-1b v holders are arriving to the united states.

▶ 1:00:02Mr. Lyons: I think there is a spectrum of opportunity that we have that goes from increasing the amount of research that is done on individuals coming into the country to an outright ban. I think the outright ban is something a bit off the table for now, and it should be, even during the soviet era, we had -- we were pro-immigration, and I think we should remain that way.

▶ 1:00:29Chair Tillis: Senator cornyn.

▶ 1:00:31Sen. Cornyn: Mr. toner, you are no doubt aware the system of cybersecurity and infrastructure security agency is active -- component of the department of homeland security, and because of an impasse over funding for the department of homeland security, they have now laid off or furloughed about 60% of their staff.

▶ 1:00:55Sen. Cornyn: Isn't sessa the primary government agency that is supposed to focus on this cyber security threats we face from china -- is it cdisa in charge of that? Toner pump it is, and we have a leading american ai company that has developed a system that can find vulnerabilities in every major operating system and explain those vulnerabilities.

▶ 1:01:20Sen. Cornyn: In that company, anthropic, is working to partner with cyber defenders, including in both corporations and governments. And cisa would be a natural partner for them to defend and match with the ai system is able to identify. I think it is a real problem that the U.S. government right now is not positioned to partner with them in that way.

▶ 1:01:45Sen. Cornyn: I agree with you, and I think it demonstrates a monumental stupidity of the failure to fund the department of homeland -- homeland security, including all its components, but including cisa. Mr. lyons, the national security agency, nsa, is our premier cybersecurity agency of the federal government, is it not?

▶ 1:02:08Mr. Lyons: It is.

▶ 1:02:12Sen. Cornyn: And the head of the nsa typically is dual hatted, cyber calm is the military component there that is -- cybercom is the military component responsible for cyber security efforts, correct? So it strikes me that we have primarily been playing defense when it comes to cyber theft, which is one of the specialties that china has.

▶ 1:02:42Sen. Cornyn: They just keep stealing our stuff, and because we are not going on offense enough to raise the costs of those sorts of attacks and theft, they just keep coming. Is that a fair statement, do you agree?

▶ 1:02:56Mr. Lyons: I think I would differentiate between a lot of the cyber theft -- there is truth and what you say when it comes to the malware placed in core infrastructure. However, there is not necessary -- there is great effort placed on truth stealing trade secrets at the pla, and I do not think that is the domain of the usa -- nsa.

▶ 1:03:22Sen. Cornyn: Professor cohen, we obviously contrasted with the people's republic of china. We are an open society. And they prey on the fact that we are an open society and they are not. One of the areas where we are an open society is in our courts, in our litigation, where people who have a grievance are entitled to go to court and seek redress for those grievances.

▶ 1:03:52Sen. Cornyn: But one of the things that has sort of come up in fairly recent years, certainly since I quit practicing law, has been this third-party financing of litigation, which is relatively opaque.

▶ 1:04:07Sen. Cornyn: And what I am concerned about is the potential, and maybe the reality, of adversary nations contributing to the finance and litigation in order to steal our intellectual property, either through this -- the discovery process or otherwise. Is that a concern?

▶ 1:04:25Mr. Cohen: I think there has been little to document nonpracticing entities being funded by the chinese government or surrogates. I do agree though that we could do a better job across the board in encouraging courts, regulatory agencies, the pto, the sec, to disclose real parties interests.

▶ 1:04:53Sen. Cornyn: So a little transparency would go a long way.

▶ 1:04:57Mr. Cohen: There is a professor at stanford who has written extensively on the labyrinthian links between the party, state owned enterprises, partial ownership, etc. Agencies need to look at who will control the technology when a foreign policy is going to acquire a U.S. company, so that would be critical. For the U.S. pto, it is who will own the patents and who will be in charge of the patents, like another technological product.

▶ 1:05:27Mr. Cohen: We saw this recently in a patent office proceeding which would extensively at those interests.

▶ 1:05:33Sen. Cornyn: Five minutes goes fast.

▶ 1:05:36Chair Tillis: Senator whitehouse.

▶ 1:05:39Sen. Whitehouse: Thanks very much, chairman tillis. I have got a little history here , much of it working with senator graham back in 2013. We released draft legislation to strengthen criminal prosecution of trade secret theft and economic espionage, particularly by means of state-sponsored cyber hacking. We obviously had china in mind when we did that.

▶ 1:06:09Sen. Whitehouse: The next year we had a hearing in my subcommittee on crime and terror on that pattern of theft, of intellectual property. Ultimately, congress passed the defend trade secrets act, which created a civil cause of action for trade secret theft.

▶ 1:06:29Sen. Whitehouse: It included senator graham's in my provision making trade secret theft and economic espionage ricoh predicates for racketeering investigations. And here we are still concerned about what years ago I described as the greatest theft in world history.

▶ 1:06:51Sen. Whitehouse: By that, I was referring to chinese cyber intellectual property theft from the united states, our first cyber command chief keith alexander borrowed that phrase and used it widely. So what do we best need to do to empower companies that have been hacked to seek redress?

▶ 1:07:24Sen. Whitehouse: At one of the ideas we kicked around was to consider a government license to start in companies that would allow them guardrails to hack back at a cyber intruder. You obviously do not want a complete free-for-all, but neither do you necessarily want the U.S.

▶ 1:07:53Sen. Whitehouse: Government to become a chokepoint so that very little can be done. When a company sees itself under that kind of attack. If you could just give me your best idea or two, I would appreciate it. I will start with you, Mr. lyons. Thank you, senator. I think the biggest discrepancy in the private sector today is the fact there is no incentive to pursue these cases often times. And while cyber is a portion of it, it is also a human game very much.

▶ 1:08:21Sen. Whitehouse: What we would propose is a key model for enforcement centered around the economic espionage act where companies have incentive to bring cases to doj, let doj carry the burden of the cost of litigation, and the company can recoup expenses. And keep that quiet for 18 months to allow for doj, nsa, and everybody to investigate this issue.

▶ 1:08:44Sen. Whitehouse: I would say that that is important, as well as whistleblower bounty programs that incentivize individuals from stepping up who know about these issues. And I think tax credits for companies to establish counterespionage programs is incredibly important. This is looked at today as a cost center versus what it is, a revenue protection.

▶ 1:09:08Ms. Toner: I will defer to michael witnesses on this.

▶ 1:09:11Mr. Cohen: So, great question. Back in 2002, I raised the problem of trade secrets with ustr, not on their radar screen at the time. This has been a severely neglected issue for too long.

▶ 1:09:29Sen. Whitehouse: Agreed.

▶ 1:09:30Mr. Cohen: One thing I have urged consideration is whether under california law and other states we could prohibit noncompete agreements, whether congress should consider legislation to allow companies to have noncompete agreements, at least at an international context. California does not want noncompete agreements in california, but within the 50 states, that is their decision.

▶ 1:09:57Mr. Cohen: But in international context, you are creating foreign competitors. One of the reasons this is so important is this is a major highway third theft of trade secrets. Disgruntled employees or contractors go off, and if they are from another state, they come to work in california and now they are governed by california law. And they go to a third jurisdiction such as china, now they can disclose trade secrets they have learned. It would be very hard to catch.

▶ 1:10:24Mr. Cohen: Other changes could be made if the U.S. would put on the trade agenda, for example, china perhaps an anonymous patent. Why would you want an honest patent? You would want a commercial patent. If you have stolen something, then maybe you don't want your name attached to the patent appeared in the injured party, and this has happened to U.S. companies and has appeared in U.S.

▶ 1:10:46Mr. Cohen: Criminal cases, the injured party now has a quadruple whammy, if you want to call it that, their information has been disclosed, they have lost the trade secrets, they have a problem locating how it has been disclosed. Who is the inventor that came up with this patent that is so close to mine? That is another area that is problematic. I think some kind of rapid litigation system in the U.S.

▶ 1:11:06Mr. Cohen: -- I have two more, such as section 337 on steroids might be helpful here. That is because once the information is disclosed, you cannot get it back. Trade secret cases are difficult.

▶ 1:11:26Chair Tillis: This is an important subject, would you mind cementing an expanded response for the record -- submitting an expanded response for the record?

▶ 1:11:36Mr. Cohen: Absolutely, you know me well enough to know I could go on.

▶ 1:11:40Chair Tillis: Senator blackburn.

▶ 1:11:42Sen. Blackburn: Thank you. I am thankful for you all being here. Mr. cohen, I want to stay with you. This morning, I spoke to a group in town for grammies on the hill, ip theft is something that is the top of their to do list, and it should be. And they are very concerned about what is happening with ai.

▶ 1:12:06Sen. Blackburn: They are very concerned about what china is doing to scoop and scrape their intellectual property and train llm's on it, then, poof, it is gone. Senator welch was also there, and he sent a letter to bytedance after they did 2.0, and this is dangerous.

▶ 1:12:32Sen. Blackburn: Of course, we know that day one of sea dance being out there, they used it to create a brawl with tom cruise and brad pitt that had never happened. They rewrote the ending of a netflix tv show, "a stranger things." they stage a fight with superman that had never occurred. But they are ripping off the nil and the ip from entertainers.

▶ 1:13:03Sen. Blackburn: Like I said, this is why senator welch and I sent a letter urging them to shut down this technology. And I would love to hear you comment on the blatant nature of this ip theft and how that fits into that broader narrative of what the ccp is doing to rip off consumers, to rip off trade secrets, to rip off military

▶ 1:13:35Sen. Blackburn: Information to indoctrinate a population.

▶ 1:13:40Mr. Cohen: Thank you for a very thoughtful question. Obviously, we have had a long engagement with china over protecting U.S. content, from the days of cd's and dvd's to the internet and now ai. In many cases, it was tolerated, if not encouraged, and it helped develop certain sectors of the chinese economy. But legally, at least under chinese law, actually the structure is not that bad.

▶ 1:14:10Mr. Cohen: And a lot of chinese companies do this opportunistically, and they are actually violating chinese law which requires a legal source for content that is used to train ai products. So this is something where I actually think we can leverage the chinese regular tory system to do a better job. And we have seen this elsewhere.

▶ 1:14:34Mr. Cohen: What china does is they use a propaganda bureau, copyright bureau, which is under the ministry of propaganda, which is stronger than the copyright bureau, and we have done that in the past. We did c1 with a moderate amount of success. I think this is an area where engagement might help. And we should can continue to do this.

▶ 1:15:00Sen. Blackburn: Senator coons and I have filed the countering chinese espionage reporting act and that would require the department of justice to do an annual report on chinese espionage threats, including the theft of U.S. ip.

▶ 1:15:20Sen. Blackburn: How concerned should we be about the broader issue of stolen american data, research, ip, and the chinese using this to accelerate their development?

▶ 1:15:34Mr. Cohen: We should be concerned about any competitor to the united states, legitimate or illegitimate. Obviously, illegitimate is more concerning. I think with trade secrets in particular, there is a disincentive to disclose which probably makes companies less willing to advise the doj or ustr. If you disclose it, you are showing some weakness in management.

▶ 1:16:02Mr. Cohen: Similarly, they are reluctant to bring civil or criminal cases, because you risk a double disclosure. Originally to the person who stole it, and secondly to a court or administrative agency. That's part of the reason we don't see those numbers in china. Getting doj involved may help in terms of what they have investigated. I suspect whatever they report on would not fully reflect the nature of the problem, and how people are handling it. There have been some U.S. companies that have had success in china.

▶ 1:16:33Mr. Cohen: That is also important to look at. Eli lilly had a major case, which they won at an early stage back in 2013. They may be the outlier. I don't know. Lacking transparency, I can't really tell you.

▶ 1:16:45Sen. Blackburn: I'm going to submit one to you for a q a far. It deals with the auto industry and ip theft. They are both in the auto manufacturing and aftermarket auto parts industry. This is a liability. We have a lot of auto manufacturers. And just-in-time suppliers in tennessee. And the theft there has really become quite an issue. Thank you for being with us.

▶ 1:17:15Chair Tillis: Senator schiff.

▶ 1:17:18Sen. Schiff: Thank you, Mr. chairman. Thank you for coming to testify today. I want to ask further about distillation. I apologize if I'm repeating some well trod ground. What I have been trying to ascertain is, as china attempts to lead the head at a cost way by distilling what our models are doing, is there a government role in this or is this incumbent on the ai companies to

▶ 1:17:49Sen. Schiff: Do a better job defending themselves? It looks like from the experience that anthropic had, that there was the manipulation of lots of accounts to ask lots of questions. Something I think a sophisticated system ought to be able to detect. Is this a failure of the ai companies to make it more difficult to distill their work?

▶ 1:18:14Sen. Schiff: Or is there anything the government can do to somehow try to curb, diminish, or prevent this?

▶ 1:18:25Ms. Toner: My recommendation is to think of distillation as one type of the broader category of ai misuse, different actors trying to do things with usaid models they are not allowed to do. Distilling is one example. Anthropic and other companies are similarly looking to detect if cyber criminals try to use their models for cybercrime, scammers, people trying to plan attacks. There have been cases of this as well.

▶ 1:18:49Ms. Toner: From the company's perspective, they are trying to balance how they detect misuse attempts, while not excessively clamping down on legitimate activity. That drives away users and profits. In terms of the government role, I think this is primarily a technical question that they are working through. They are developing techniques, trying to figure out the best way to do it.

▶ 1:19:13Ms. Toner: The simplest recommendation I have for a government role is clarifying antitrust guidance here. The companies could coordinate with each other, share information of what they are detecting and how they are preventing distillation. They are holding back on that because they are concerned about antitrust. Some of the initiatives that I name in my written testimony are the ai security center within an essay, in the center for ai standards and innovation within nist.

▶ 1:19:42Ms. Toner: These are centers of excellence that are sharing information between governments including finding ways to transfer classified information, for example, with employees who have clearances. Basically trying to make sure to the extent the government has access to threat intelligence or is able to alert companies to things that they should be aware of, that they are able to do that. Those programs are good but they don't necessarily have the resources they need.

▶ 1:20:09Ms. Toner: I also recommend looking at the full suite of law enforcement and intelligence collection tools available to the fbi and I see more broadly. They could include -- we have talked about defend forward type approaches to find out how coordinated china is, is an individual companies or actors planning and carrying out these campaigns? Is their coordination we could detect using intelligence?

▶ 1:20:34Sen. Schiff: Is there a legitimate role for, let's say you've got midsized ai companies that are trying to learn from the frontier models. Is there any legitimate use of distillation domestically, or is that just a different kind of intellectual property theft?

▶ 1:20:53Ms. Toner: It is absolutely legitimate and that something that makes it more difficult for the companies to detect. Illegitimate adversarial distillation from perfectly legitimate kinds, it is very typical for academic researchers, researchers at nonprofits, to use distillation techniques to improve their own models, to train models for research purposes, for creating smaller models that don't compete. Typically the way the providers handle it is they say it is a terms of service violation if the intention is to create a competitor model.

▶ 1:21:24Ms. Toner: To create a general purpose model which is what. The chinese companies are doing that makes it more challenging for them to determine if they are seeing a specific pattern of behavior. Is that a perfectly legitimate actor or is it an adversary trying to compete?

▶ 1:21:40Sen. Schiff: Changing topics, I want to ask about china's abuse of the patent system. There are any number of techniques china uses to overwhelm our practice system, in various forms, as well as uses own patent system to try to gain a competitive advantage. What would you point to as some of the biggest abuses of the patent system? And what do you recommend we do about it?

▶ 1:22:11Sen. Schiff: Open for anyone.

▶ 1:22:19Mr. Cohen: Thank you, senator schiff. I have published an article on our trademark system by china. I'm happy to give it to your staff. It's very similar. Part of the reason the abuse manifest is in the U.S. is through subsidies. If you are going to get --

▶ 1:22:32Sen. Schiff: Can you pull the microphone closer?

▶ 1:22:34Mr. Cohen: One of the reasons you have this problem with abuses successive use of subsidies, from the chinese side. If you have a subsidy for filing a patent overseas, and U.S. costs are relatively low, you are going to pull in a lot of patent applications from china. The U.S. doesn't really pursue you until there is a renewal fee. Then the patents drop. Companies are satisfying local metrics to file patents, or national metrics.

▶ 1:23:06Mr. Cohen: That is one of the basic reasons that it manifests itself. . China has been trying to change that. But you continue to have misuse of the system in targeted technologies. A separate area that will be more akin to this concern about ip theft. Generally, I would say five or six years ago, you should not worry about misuse of its patent system, excepting if you are in core strategic technologies.

▶ 1:23:34Mr. Cohen: I looked at this in semiconductors and pharmaceuticals where there was a manifest difference between domestic treatment and patent applications versus foreign applications in china. I'm not so sure if that holds today, in part because what is considered strategic as become a much broader area. We're talking about economic strategic importance, not necessarily military or core objectives of the state. This is an area where the hand may be on the scales in china. At the U.S., we need to deal with low quality patents.

▶ 1:24:06Mr. Cohen: I think that is a bigger concern than misuse of the patents. Frankly, I want chinese companies to come to the U.S. and disclose their technology. We may have differences with china of the enforcement of those patents if the U.S. is competitive in those areas. I want to see robust disclosure of chinese technology. In the past, the U.S. has benefited from this in certain areas of concern to national security. >> thank you, Mr. chairman. I appreciate you holding this hearing.

▶ 1:24:36Mr. Cohen: Senator cornyn brought up an unfunded department of homeland security and the effects on cisa. I think americans need to understand the impact of what has happened when it comes to the issue we are talking about today. When you look at ip theft specifically from china, fbi has said it cost the U.S. economy between $225 billion to $600 billion a year. That is significant.

▶ 1:25:07Mr. Cohen: I think what I think what a lot of people don't realize, and really frustrated me and continues to about the way my democratic colleagues approached funding, they continue to put forward bills that left out I.c.e. And cbp. A lot of people don't know the national intellectual property rights court a nation center, under I.c.e., does significant work to keep americans safe, to make sure that these things are caught and people are held accountable.

▶ 1:25:38Mr. Cohen: If you think about fy 24 alone, I think they had 524 criminal arrests, they had 160 convictions, had over 2700 seizure incidents, it was well over $1 billion of infringing or illegal goods that they captured. Additionally to that, consistently, we saw them bring forward legislation that did not fund I.c.e. Or cbp.

▶ 1:26:05Mr. Cohen: Hsi and cbp during that same amount of time reported seizing over 27 million dollars of illicit goods in the same period. We had a lot of good money in the homeland security appropriations bill that unfortunately, they walked away from. It included $15 million for investigating the ip rights violations, and helping with the center.

▶ 1:26:31Mr. Cohen: In addition to funding, which we know you need, what authority do you think congress could grant that would make the biggest impact out there?

▶ 1:26:44Mr. Cohen: Great question. I worked extensively with cbp when I was in the government. Most of those seizures are trade walk -- trademark and copyright infringements. You would have to find another way typically out of U.S. district courts. U.S. district courts, I'm not sure if they have the authority to order customs to seize goods.

▶ 1:27:15Mr. Cohen: I.c.e. Orders in ram against the goods themselves. You see these kinds of orders securing out of -- appearing out of trade fairs. I think having that authority in the district court deal with infringements, I think remedy in a dispute, particular one involving technology, would be extremely helpful. Also expanding I.c.e.

▶ 1:27:39Mr. Cohen: So that they market their services beyond the luxury goods, beyond the nikes of the world, which dominate a lot of their work. Clothing, fashion, pharmaceuticals as well. For smaller companies and consumers, that would be extremely important. >> want to talk about pharmaceuticals. You just mentioned it.

▶ 1:28:02Mr. Cohen: It has come to my attention, just the extent of china's efforts to steal intellectual property within our biotech and pharmaceutical industry, patents great thing, using ai to back things out and steal what we know has obviously rightly belongs to someone else, but also has not been completely and totally vetted.

▶ 1:28:30Mr. Cohen: China has continued to make strides in the pharmaceutical area, and competing with the U.S. in an unprecedented way. This is one of the reasons why I feel it is so important to invest in research and development here on our shores. Can you tell me a little bit about, is there any steps we need to be taking here in the U.S. to ensure america remains the world's leader in the biopharmaceutical industry and innovation?

▶ 1:29:02Mr. Cohen: We have a program at the society on this topic. I could. Send you an invite.

▶ 1:29:07Sen. Britt: Please do.

▶ 1:29:08Mr. Cohen: You are looking at five to 10 years of clinical -- clinical trials. It's not the place that that money goes to. I think the U.S. government plays a key role in funding the early-stage innovation. Which permits commercialization of U.S. government-funded inventions by the inventor is extremely important.

▶ 1:29:34Mr. Cohen: Limiting marching rights where the government can take those rights and frequently, they don't go anywhere after they have been taken away that way. We have diminished the role of some of our market operators through diminishing the role of the government in funding the r&d. Now china is a rising competitor, the second largest license for a pharmaceutical molecules in the world. They have a very robust clinical trial environment. They have tremendous talent in the area.

▶ 1:30:06Mr. Cohen: We are dealing with a major legitimate competitor, and one that has certainly illegitimate aspects as well. I think if you peel that away, you see a very strong legitimate competitor. We have to find the ways to get the juice back in our system.

▶ 1:30:20Sen. Britt: I look forward to hearing what you say next week and certainly come a to working on this. One more quick thing. China is one of the primary and worst offenders when it comes to illegal e-cigarettes. I know that sherman here feels the same way. Can you speak to any of the dangers you are seeing out there as a result of this particular ip theft from china?

▶ 1:30:44Mr. Lyons: Thank you, senator. Related to the e-cigarette industry in particular, I'm not familiar. I do know they have copied U.S. technology and european technology and flooded the world markets with this. I would point out also for all of us to take a step back and look at the industries that the prc is targeting. It's energy, non-carbon-based energy, communications, its logistics, it is automotive.

▶ 1:31:15Mr. Lyons: Semiconductors. This is how you mobilize a war. We are not dealing with just the competitive adversary here. We are dealing with someone who is insuring they can win the fight without firing a shot.

▶ 1:31:27Chair Tillis: Senator padilla.

▶ 1:31:29Sen. Padilla: Thank you, Mr. chair. As many of you know, I have been fortunate to serve on the national security commission on emerging biotechnology along with our colleague, senator young. Through the work of that commission and beyond, we know that theft of U.S. innovation is a well-established threat in the biotechnology space.

▶ 1:31:55Sen. Padilla: There has been many recorded instances of corked espionage and predatory business practices that end up transferring U.S. intellectual property to chinese competitors. In the communist party of china government as well. The 2025 bio secure act was motivated by bad actors accused of transferring pharmaceutical ip to the chinese government without authorization.

▶ 1:32:22Sen. Padilla: I want to ask a question that builds on the question that senator britt asked a few minutes ago. Biopharmaceutical companies often don't want to report that they have been the target of attempted ip theft because they don't want to jeopardize their chinese market assets. How can the government better support these companies in identifying and investigating incidents of corporate espionage?

▶ 1:32:47Mr. Lyons: Thank you, senator. I think you hit the nail on the head. Companies oftentimes lack incentive to bring cases for a number of different reasons. First of all, it's expensive. And it's complex litigation. They will face retaliation from the piercing markets.

▶ 1:33:05Mr. Lyons: We have proposed a concept around key tam that would allow -- it is more robust in her written statement, that would allow companies to cooperate with doj behind-the-scenes for 18 months or so to allow for investigations to occur. Then doj can take the litigation and bring the case. And then it is awarded with the penalties. Or is allowed to share in the penalties.

▶ 1:33:34Mr. Lyons: That is one very material stuff that can be taken. I think we need to incentivize individuals to step up as well. Detection is one of the biggest issues here. We have talked about the numbers of ip theft from the ip commission. That is 2017 numbers. $600 billion. I think that is woefully underreported. Germany did a study a couple years ago focused on data theft at large. It included economic espionage.

▶ 1:34:03Mr. Lyons: Their numbers were $300 billion for an economy that was 1/6 of our size. We are about 1.5 trillion dollars of economic espionage.

▶ 1:34:13Sen. Padilla: Thank you. A question for Ms. toner. The challenge is tough enough for larger companies, more established companies, technically, legally, and otherwise. I would imagine it is a more acute challenge for smaller businesses and startups. Startups often face challenges implementing robust cybersecurity measures from the outset. They may not be fully informed about the risks of corporate espionage or data theft.

▶ 1:34:42Sen. Padilla: They may face technical hurdles in safeguarding their intellectual property. Have partnerships with the government help these firms guard against those risks?

▶ 1:34:54Ms. Toner: Ms. toner: it is a really important issue. I think the best vehicle we currently have in the U.S. government has already been named, cisa, within dhs. They have a history of collaborating with the private sector and ensuring that private sector actors have the private security resources and understanding they need. That is the best vehicle at this time.

▶ 1:35:14Sen. Padilla: This is the same system about the current administration has reduced funding for and has lost staffing. That is a great reminder we need to protect and strengthen that agency for all its functions, including in the states. Last question for Mr. cohen. Biotechnology firms have supply chains that rely heavily on china, meaning they have to send data overseas to firms that may end up sharing their data with a foreign adversary government. Or possibly competitors. How can the U.S.

▶ 1:35:44Sen. Padilla: Government help protect sensitive data under the circumstances?

▶ 1:35:51Mr. Cohen: The one thing I can say with absolute certainty is that the U.S., based on my experience, the U.S. industry has a very poor command of where china is headed. A lot of the things that are concerning to us are predictable, if you look at the five-year plans. They are very granular. The U.S.

▶ 1:36:20Mr. Cohen: Or the private sector or both should be digesting those plans. Jeff welch identified this back in 2012. He told his ge executives, look at those five-year plans. I have consulted with companies, one of the first questions I ask, did you look at whether this particular product is on a five-year plan? They said, yes we did, and it is. We should not be surprised about many of these areas.

▶ 1:36:49Mr. Cohen: If it is a particular therapeutic and illness, that is concerning. I think you need to take enhanced steps in that instance.

▶ 1:36:56Sen. Padilla: Thank you very much. Thank you, Mr. chair.

▶ 1:37:27Chair Tillis: While we are waiting, want to make sure, we are entering -- I mentioned three statements for the record in the opening statements. We are also going to be adding for the record a statement from the chief executive officer and cofounder of group 14 strategies. Without objection. Senator hawley.

▶ 1:37:48Sen. Hawley: Can I come back to something that I think you said in response to senator durbin, you said to him, regarding american ai companies, you said it is hard to believe but nevertheless true that american ai companies are working as hard and as fast as they can to try to develop technology that will displace many millions of workers, and potentially pose existential risks.

▶ 1:38:18Sen. Hawley: Maybe you want to correct the record as you said it before. I thought that was interesting and important. Could you reiterate that for us?

▶ 1:38:24Ms. Toner: Yes, I think ai is a very fast-moving field. I think it is important that as we think about what ai's implications are for our society and civilization, we don't merely look at the ai systems we have today. Chatbot's are starting to be agents that can help a little bit with professional tasks. But instead we take seriously the goals of the company's building these systems.

▶ 1:38:49Ms. Toner: Over the past 10 or 20 years, it has gone from a very abstract idea that we might build ai that can outperform humans at any intellectual task to a pretty concrete idea that some of the most well-capitalized companies in the history of the planet are driving towards as fast as they can. They may fail. It may turn out to be harder than they think to build systems that are that capable.

▶ 1:39:15Ms. Toner: I'm skeptical of some of the extremely short timeline they named, saying we might have the super intelligent ai systems within one to three years. I think if -- I don't see how -- it seems so clear that there is a real possibility that they build the systems within three years, 10 years, if they build it within 10 years, that is when my daughter is entering high school. That's not very long.

▶ 1:39:40Ms. Toner: That is an extremely radical thing to be trying to do, to build computer systems that can outperform humans that may escape the control of humans. In the companies are telling us they are doing it, and I think we don't take them seriously and we should.

▶ 1:39:57Sen. Hawley: These same companies often say, often in front of this committee, that it is vital they succeed at whatever it is they are doing on that particular day. In order so that we can beat china. Our great national champions and we have to beat china.

▶ 1:40:13Sen. Hawley: My concern is based on what you have just testified to and what I have heard others testify to, it sounds like the goals they have in mind, the ceos have in mind, are every bit as nefarious, in fact, if these same goals were held by a foreign adversary, we would say this is an incredible threat to our national security. We would never allow a foreign corporation to try to pursue such plans at the expense of american workers, families, and yet these companies are doing it. What -- let me ask it this way.

▶ 1:40:46Sen. Hawley: Will it do us any good if these american ai companies are able to pursue their designs without any hindrance? Will it do any good that we beat china if in fact they succeed in displacing millions of american workers, gobbling up americans data, destroying our ip system, etc.?

▶ 1:41:01Ms. Toner: I think the way I have put -- I have heard this put best, the way we build ai right now and the level of control we have over it which is not great, the winner of any ai race between the U.S. and china is the ai. We need to be working to make sure that is not the case. I think it's very important that U.S. ai sector remains ahead of the chinese ai sector. That is at the expense of -- if that is at the expense of ai overrunning the entire planet, that has not benefited us.

▶ 1:41:32Sen. Hawley: That sounds entirely sensible. I don't have an interest in winning an ai race in which the goal, the victory, the prize for success is to become like china. Is to become a surveillance state. Is to become a place where there is no private property any longer, where nothing is personal, nothing can be protected, nothing can be owned by any individual. Why would we want that in the united states of america?

▶ 1:42:05Sen. Hawley: It seems very dangerous to me. You also testified that the best way to constrain china's ability to match us in ai develop and is to constrain the hardware in which they have access. That seems to be an important point. Can you elaborate?

▶ 1:42:26Ms. Toner: There are different levers of what goes into having a competitive ai ecosystem. Many of them, talents, data, algorithm ideas are difficult to control where it is produced by american companies. Designed by american companies. China is growing their capacities here but they are not growing them fast enough to meet their own domestic demand or the U.S. companies.

▶ 1:42:52Ms. Toner: We could control chips to china and not forgo any profits because the demand for the chips is so great. I will call your attention to semiconductor manufacturing equipment. What goes into the so it is, it is more strategically clear access to advanced tools.

▶ 1:43:14Ms. Toner: Enforcement has been week, and ensuring the most advanced tools, the most advanced design software, other aspects of the semiconductor supply chain are not being exported to china to let them build their own indigenous supply chain is one of the simplest and most important levers we have available.

▶ 1:43:31Sen. Hawley: I think it is out salute leave vital that we bend this technology, this ai technology, which is upon us whether we like it or not, that we bend it to the good of the american worker and the american family. I'm firmly at the view that this will not happen magically. That if we stand back and see what will happen, it will not be good for american workers or families. We have to make a choice as a society to make it so. This is the time to make that choice right now.

▶ 1:43:59Chair Tillis: Senator cruz.

▶ 1:43:59Sen. Cruz: Thank you, Mr. chairman. Last month, and chinese telecommunications agency was fined $50 million in federal court for stealing american technology. In january of this year, a google engineer was convicted of stealing artificial intelligence secrets for the chinese government. This is not a pattern of isolated incidents.

▶ 1:44:26Sen. Cruz: This is a coordinated campaign directed by the chinese communist party to steal its way to global dominance. Both the U.S. government and private sector analysts estimate the american economy loses between $400 billion and $600 billion each and every year due to china intellectual property theft. Is that correct? Can you turn the mic on?

▶ 1:44:58Mr. Cohen: Mr. cohen: that is the estimate by the U.S. government.

▶ 1:45:03Sen. Cruz: Is it correct that chinese communist government is widely regarded as the world's most aggressive thief of intellectual properties, stealing and copying everything from sneaker designs to plans for military aircraft?

▶ 1:45:13Mr. Cohen: I would not agree that it is necessarily the communist party. There are incentives that the party would -- that people avail themselves of.

▶ 1:45:24Sen. Cruz: The chinese government?

▶ 1:45:28Mr. Cohen: Could be the chinese government or the local government.

▶ 1:45:34Sen. Cruz: And the chinese government is controlled by the chinese communist party.

▶ 1:45:35Mr. Cohen: That's correct.

▶ 1:45:38Sen. Cruz: Hasn't the fbi described china's intellectual property theft as the largest transfer of wealth in human history?

▶ 1:45:45Mr. Cohen: . . Yes, it has.

▶ 1:45:48Sen. Cruz: Given the scope of the attack on our economy, does it surprise you that the fbi opens a new china related counterintelligence investigation roughly every 12 hours?

▶ 1:45:59Mr. Cohen: Is that the current data? I know that was during the china initiative. I don't know if that is current data. But it was running once every 12 hours.

▶ 1:46:08Sen. Cruz: Does it surprise you that roughly 80% of the prosecutions brought by the department of justice for economic espionage involves conduct that benefits china? Mr. lyons, theft is not just about lost profits. It changes the battlefield. Let's walk through what stolen innovation looks like in practice.

▶ 1:46:34Sen. Cruz: To my right, you will see some of the most advanced military platforms ever produced by the united states. On the left, they are chinese counterparts. First, the f-35. The cornerstone of america's air dominance. To the side, is china's j 35.

▶ 1:47:00Sen. Cruz: It may be possible that two independently developed fighters might naturally converge on similar shapes. But criminal convictions speak louder than theories. A chinese national pleaded guilty in a united states federal court to stealing f-35 technical data, and selling it to beijing. Not a coincidence, for conviction.

▶ 1:47:24Sen. Cruz: When china has a federal conviction for stealing blueprints and fields in aircraft that looks remarkably similar, do you think that resemblance is a coincidence?

▶ 1:47:34Mr. Lyons: No, sir. I'm very familiar with that case. It was not only the j 35 but it was the y 20, it was the drone technology that mimics our and q nine and predator drone's. It's all gone.

▶ 1:47:51Sen. Cruz: China didn't need to solve the physics problems from scratch. They just needed to steal the answer. When america spends decades innovating the china copies us in years and steals from it, that is not competition. It is being a parasite. Next, as you mentioned, we have the mq-9 reaper.

▶ 1:48:21Sen. Cruz: It can watch enemy movements in real time. It carries precision missiles that allow the united states to strike terrorists, enemy vehicles, and strategic targets without putting american pilots at risk. How long did it take the united states to develop the and q nine reaper?

▶ 1:48:40Mr. Lyons: Two decades.

▶ 1:48:41Sen. Cruz: And china's gj-2, does not represent chinese engineering ingenuity or simply american engineering stolen and repackaged?

▶ 1:48:53Mr. Lyons: It is repackaged american technology. And if I could, I think this is occurring across our energy field, tele-communications field, solar energy, wind energy, transport, logistics. What we are seeing is a desire to dominate the industries that win wars.

▶ 1:49:16Sen. Cruz: I met with the ceo of a major commercial space company in texas who described every year more and more of his budget is going to just defending against chinese cyber hacking. Because they are expending millions and millions of dollars trying to hack into a system every day to steal every single technology they are developing peer that is one private company being replicated across the private sector.

▶ 1:49:43Sen. Cruz: In fact, the very last case I argued before the U.S. supreme court was a case called global tech versus seb. It dealt with chinese ip theft. My client in that case in private practice was a french housewares manufacturer who had a U.S. patent on a deep fryer. And a chinese company purchased the deep fryer in hong kong, disassembled it, reverse engineered it, and marketed in the U.S.

▶ 1:50:11Sen. Cruz: Market and sold deep fryers that flagrantly infringed on that patent and they made millions of dollars as a result. We won that case and my client received a judgment of compensation. But this is a pattern that is far-reaching and the consequences for our economy are massive. The consequences for our national security are great. Thank you.

▶ 1:50:35Chair Tillis: Excellent point, senator cruz.

▶ 1:50:36Sen. Moody: Thank you for taking over the gavel this morning. Thank you for your stamina this morning and sticking out this hearing. I know it has been a long time. This is an incrediblely important topic. I don't think it is surprising to see the boards put up by senator cruz are the real world examples he has shown in terms of what we are dealing with.

▶ 1:51:09Sen. Moody: We have an administration now that is truly focusing on reenergizing innovation, manufacturing, the industrial base within our nation. We should see that pay dividends. What we can do is ignore the threats to that very innovation while we are trying to re-energize and bolster that.

▶ 1:51:33Sen. Moody: We have had a couple of hearings on this topic, and I think it is so important and thank you for your comments and testimony this morning. What really keeps me up at night is we often, as a government at least, seem oblivious to the fact that many of the people coming in and stealing the very information, whether that is military information design, or whether that is commercial or research at our universities, we are inviting, welcoming, come on

▶ 1:52:04Sen. Moody: In with the red carpet rolled out. And in doing so, we are doing this with nations that have laws on the books that require their citizens to spy on us, and gather intelligence and report back. This is very concerning to me.

▶ 1:52:22Sen. Moody: When I mentioned this to other lawmakers, many of them have no idea that we will give visas, whatever the type, to nationals of countries that put on their books, under penalty, that their citizens have to come and gather information and cooperate with them. That shocks people when I tell them that.

▶ 1:52:46Sen. Moody: The fact that we have done nothing in congress to prevent that, at the same time, we are trying to strengthen and put more resources into and bring jobs back into our own country. I think it is negligent. So, I guess I will start with you, Mr. lyons. And certainly, we are not just talking about hypotheticals.

▶ 1:53:14Sen. Moody: You have seen just this morning examples of students who have come out publicly, chinese nationals have said they have been pressured by china to cooperate, to provide information. We increasingly find chinese students that have come over on visas taking pictures of military bases. We know there has been theft from our universities.

▶ 1:53:39Sen. Moody: In florida, we have prevented many of those coming into our research institutions, and have plot -- have passed laws to do something. I hail from the great state of florida who is actually recognizing when there are issues in taking proactive steps. I'm trying to rally some of my colleagues to do the same. It seems a little more difficult here, but nonetheless, important. I think this is one of those topics.

▶ 1:54:07Sen. Moody: If you look at china, for example, their national intelligence law requires their citizens and organizations to cooperate and assist chinese intelligence agencies and they don't stop at their borders. They allow the cpp to put immense pressure on personnel that operates in the U.S. Mr. lyons, I know you have addressed this previously and you had concerns with an outright ban on such visas.

▶ 1:54:36Sen. Moody: What would be your recommendation? And maybe don't limit it to china. Of course, we are seeing example after example within the united states of this happening, where people are here and stealing information. We are seeing the backend where people are making millions of dollars. We are also putting our country at risk in the military realm. What would be your approach, your recommended approach?

▶ 1:55:03Sen. Moody: What would you suggest congress do first and foremost, if we were to do one thing, recognizing there are other foreign adversaries out there with laws on the books requiring their nationals to cooperate with their intelligence gathering in these nationstates where you blur the line between government and private citizens and companies.

▶ 1:55:22Mr. Lyons: Thank you, senator moody. I think what you are touching on is one of the biggest issues, which is that the only thing criminal out of the activity that occurs is the theft. The infrastructure that supports the theft, there it is student visas or talent programs or venture capitals, it is all legal. The fbi does not focus on anything but that theft. That comes after.

▶ 1:55:48Mr. Lyons: One of the first things I would do is I would work on passing the foreign economic espionage is ignition act, make that infrastructure illegal. Specifically, if one was to receive material support from a talent program that has been designated, that is the illegal act. No longer do we have to wait until the theft occurs, but we can get in front of that. There is a lack of transparency on this issue today.

▶ 1:56:14Mr. Lyons: We are suggesting a malign foreign interest disclosure act, in which individuals venture capitals, students, whomever may be the case, if they are under obligations or receiving material support, they have disclosed that to commerce who may maintain a list of that, so americans know when they are receiving funds from a venture capital firm who is obligated to the jiangsu government, for example.

▶ 1:56:38Sen. Moody: Sen. moody: I see that my time has expired thank you.

▶ 1:56:41Chair Tillis: I want to thank the witnesses for being here today. This will conclude our hearing. Over the course of the discussion, I've heard a couple of the witnesses make reference to maybe other materials that you are welcome to submit to the record. Mr. cohen, we always appreciate your additional information, as I've said before in the ip subcommittee. Any written questions can be submitted to the record up to one week from today.

▶ 1:57:09Chair Tillis: Again, I would appreciate your responses to those questions in a timely manner. We will hopefully get them within two weeks of receiving the questions. Thank you all for your insights today. This was enjoyable to hear a full committee hearing on intellectual property, something we have spent a lot of time on in the intellectual property subcommittee. Your input is very valid. Hopefully we will take action.

▶ 1:57:35Chair Tillis: I do also want to submit for the record closing statements offered by one member, others may as well. This hearing is adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit

Title

China's intellectual property theft and threats to U.S. innovation

Purpose

The Senate Judiciary Committee held this full-committee hearing to examine how China's theft of American intellectual property — estimated at $400–600 billion annually — threatens U.S. economic and innovation leadership, and to explore legislative and policy responses. Acting Chair Thom Tillis presided in place of Chairman Grassley, who was absent for health reasons, and the panel heard from a former CIA officer, an AI policy researcher, and an IP law scholar on trade secret theft, AI model distillation, patent system abuses, and export controls on advanced chips. Begins at▶ 0:22:20

Who spoke

• Chair Thom Tillis (R-NC)▶ 0:22:20: Opened by noting Grassley's absence, stated China's IP theft costs $400–600 billion a year▶ 0:22:50, and later questioned witnesses on the Patent Eligibility Restoration Act▶ 0:48:35 and the "BEARD Act" targeting piracy websites▶ 0:51:15.

• Sen. Dick Durbin (D-IL), Ranking Member▶ 0:25:02: Criticized the administration's cuts to NIH/NSF funding and university research freezes▶ 0:25:33, cited the case of a former Google engineer who stole AI trade secrets to launch a Chinese AI company▶ 0:28:01, and described a Illinois company (Inios) whose chemical trade secrets were stolen by a Chinese firm, Senebek▶ 0:28:52; later pressed witnesses on the administration's approval of advanced Nvidia chip sales to China▶ 0:54:13.

• Tom Lyons, co-founder, 2430 Group (former CIA officer)▶ 0:32:20: Said American firms are effectively competing against the world's largest intelligence apparatus rather than normal rivals▶ 0:32:49, cited the American Superconductor case where a Chinese state firm paid only a $59 million fine and kept the stolen software▶ 0:34:58, and proposed a qui tam-style enforcement model, whistleblower bounties, and tax credits for corporate counterintelligence programs▶ 0:35:53▶ 0:36:22▶ 0:36:47.

• Helen Toner, interim executive director, Georgetown CSET▶ 0:37:53: Explained AI "distillation" as a real but not sole threat to U.S. AI IP, alongside theft of models, algorithms, training data, and hardware▶ 0:38:21; recommended clarifying antitrust guidance so AI firms can coordinate on security▶ 0:41:22, and called Nvidia chip sales to China a mistake given chips' role as the best lever in AI competition▶ 0:54:57.

• Mark Cohen, Senior Technology Fellow, Asia Society of Northern California▶ 0:42:30: Argued the "IP theft narrative" has misguided policy by overemphasizing criminal enforcement over civil rights and transparency, noting China handles roughly 500,000 civil IP cases a year▶ 0:43:00; said China's patent examination guidelines have been amended about 18 times since 1995▶ 0:48:45; and recommended reviving the Congressional Office of Technology Assessment▶ 0:47:23.

• Sen. John Cornyn (R-TX)▶ 1:00:31: Noted CISA has furloughed roughly 60% of its staff amid a DHS funding impasse▶ 1:00:55 and pressed on third-party litigation financing as a potential vector for adversary-funded IP theft▶ 1:03:52.

• Sen. Sheldon Whitehouse (D-RI)▶ 1:05:39: Recalled his 2013–2016 work with Sen. Graham on the Defend Trade Secrets Act▶ 1:06:09 and asked witnesses how to empower hacked companies to seek redress, including a possible "hack back" license▶ 1:07:24.

• Sen. Marsha Blackburn (R-TN)▶ 1:11:42: Described a letter with Sen. Welch urging ByteDance to shut down "Sora 2" over AI-generated deepfakes of celebrities and IP▶ 1:12:06, and cited her Countering Chinese Espionage Reporting Act with Sen. Coons▶ 1:15:00.

• Sen. Katie Britt (R-AL)▶ 1:24:36: Cited FBI figures of $225–600 billion in annual IP-theft costs▶ 1:24:36 and criticized Democratic funding bills that excluded ICE/CBP, noting ICE's National IP Rights Coordination Center made 524 criminal arrests and seized over $1 billion in goods in FY24▶ 1:25:38.

• Sen. Alex Padilla (D-CA)▶ 1:31:29: Referenced his work on the National Security Commission on Emerging Biotechnology and the BIOSECURE Act▶ 1:31:55, asking how government can help companies report corporate espionage without endangering Chinese market access▶ 1:32:22.

• Sen. Josh Hawley (R-MO)▶ 1:37:48: Pressed Toner on AI companies' pursuit of systems that could displace millions of workers or pose existential risks▶ 1:38:18, and argued winning an AI race against China is worthless if it means becoming a surveillance state▶ 1:42:05.

• Sen. Ted Cruz (R-TX)▶ 1:43:59: Presented side-by-side comparisons of the F-35/J-35 and MQ-9 Reaper/GJ-2 drones, citing a Chinese national's guilty plea for stealing F-35 technical data▶ 1:47:00, and recounted his Supreme Court case Global-Tech v. SEB involving Chinese reverse-engineering of a patented deep fryer▶ 1:49:43.

• Sen. Ashley Moody (R-FL)▶ 1:50:36: Raised concerns about visa holders from countries with laws compelling citizens to spy for their governments▶ 1:52:22, and asked Lyons for Congress's top recommended action.

Key moments

• Chair Tillis stated China's IP theft costs the U.S. an estimated $400–600 billion annually▶ 0:22:50.

• Lyons detailed the Apple autonomous vehicle case: after three separate PRC theft incidents, Apple abandoned its self-driving program while China's is now the fastest-growing in the world▶ 0:35:29.

• Toner disclosed that in 2023 hackers breached OpenAI's internal systems and extracted algorithmic secrets, and that a Chinese national formerly at Google was convicted of stealing state-of-the-art AI hardware trade secrets▶ 0:39:18.

• Cornyn and Toner sparred implicitly with the administration: Cornyn called the DHS funding lapse and resulting CISA furloughs "monumental stupidity" given China's cyber threat▶ 1:01:45.

• Durbin and Toner directly criticized the administration's approval of advanced Nvidia chip sales to China in exchange for a 25% cut, with Toner calling it "a mistake"▶ 0:54:45▶ 0:54:57.

• Cohen testified the U.S. system underemphasizes civil IP enforcement compared to China's roughly 500,000 annual civil IP cases, calling current policy "making policy in the dark"▶ 0:43:30▶ 0:44:19.

• Sen. Cruz's exhibit comparison: a Chinese national pleaded guilty to selling stolen F-35 technical data to Beijing, and Lyons confirmed the J-35, Y-20, and Chinese drone programs are "repackaged American technology"▶ 1:47:24▶ 1:48:53.

• Sen. Hawley and Toner discussed AI existential risk, with Toner warning that under current control levels "the winner of any AI race between the U.S. and China is the AI"▶ 1:41:01.

• Lyons proposed the Foreign Economic Espionage Sanctions Act to criminalize the infrastructure (talent programs, VC funding) supporting theft, not just the theft itself▶ 1:55:48.

• Britt cited FY24 ICE IP enforcement data: 524 criminal arrests, 160 convictions, over 2,700 seizure incidents, and more than $1 billion in seized infringing goods▶ 1:25:38.

Metadata

Committee	Senate Judiciary
Chamber / Congress	Senate · 119th Congress
Date	2026-04-22
Type	Open Hearing
Witnesses	(none listed in event metadata)
Video	senate-isvp
Transcript	271 caption blocks · 13,561 words · 1:57:58 runtime
Event	Congress.gov 338323