Republican Senator Marco Rubio is seeking to revoke the intellectual property (IP) rights of companies on government watch lists, just days after Chinese telecom giant Huawei asked for more than $1 billion from American telecoms operator Verizon over licensing fees.

The Senator submitted an amendment to the National Defense Authorization Act, a series of laws that guides American military expenditures. The amendment does not name Huawei or any other company, but proposes that foreign firms on certain priority lists be barred from pursuing legal action, filing complaints to the US Trade Commission, or receiving reparations for their US patents.

Two different federal watch lists are named in the proposal. One includes companies from countries that the US Trade Department sees as failing to provide adequate IP protection for American companies, such as China. The second includes the telecom and internet providers which “pose an unacceptable risk” to US national security under the executive order signed in May by American President Donald Trump, which banned Huawei from trading with US companies.

In short, if a company poses a national security risk or is from a country that doesn’t respect property rights, according to the US government, it will not be granted patent rights in the US.

Industry insiders in China were shocked by the news. “Nobody expected that your patent rights can be taken away,” said Yu Uny Cao, vice president at the Zhejiang Intellectual Property Exchange. “America is a good practitioner of the patent system. This damages its reputation,” he continued.

Senator Rubio tweeted yesterday that Huawei is using patent law to retaliate against the US government and that “We should not allow #China government backed companies to improperly use our legal system against us.”

Many responses from Twitter users spoke of a “double standard.”

Last week, the Wall Street Journal reported that Huawei was seeking more than $1 billion in damages from Verizon for infringing on 238 of its patents, citing anonymous sources familiar with the matter.

According to patent services provider IFI Claims, Huawei is one of the top patent-holders in the US, higher than many major American companies including General Electric, Boeing, and AT&T. It is ranked 16th with more than 3,000 patents.

Chinese tech professionals are wondering if the proposal is fair. “People take it personally, Huawei has been having bad news every day, and this engenders some kind of sympathy,” said Cao. “There is a group that says Americans are unfair, Americans are overstepping,” he said.

State-owned newspaper People’s Daily published a news report saying that “The senator from Florida intends to let the US—not steal—but blatantly grab the intellectual property and patents of Chinese companies.”

Rubio responded on Twitter, “When the official newspaper of the Central Committee of the Communist Party of China attacks you, you know you are doing something right.”

The defense bill was used in 2018 to ban federal agencies from using ZTE equipment and in 2019 to prohibit them from using Huawei equipment. The Shenzhen-based telecom giant has sued the US government over the 2019 bill, saying that is “unlawful” and hinders “fair competition.”

“I am almost certain that Huawei will sue the US government if the amendment passes,” Cao said, adding, “The question is how, and will it be frozen in the meantime?” Huawei could have no legal intellectual property protection during an ongoing legal battle, and the proceedings are likely to be lengthy.

The bill is set to be debated this week. Last year’s act passed on June 18, 2018, almost two months after the amendments were reported to the Senate, and was signed into effect by President Trump on August 13 of the same year.

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.

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