Technology Transfer Fuels Counterfeiting

Does reverse engineering a competitor's product bother you ethically? The pervasive practice of opening the other guy's enclosure to see what's inside is not considered outright espionage, but it is rarely done openly.

If it is unacceptable to peek into another company's R&D labs, then why do many businesses have their competitors' products on the dissecting table behind closed doors? There could be a myriad of technical reasons a company would want to fish from this covert but readily available knowledge pool. Whose OEM chips did they use? How did they do their cooling? How did they handle their noise problem? What power supply values did they use? Did they do this on a two-sided board or multilayer? What is hidden under that encapsulated or shielded section? I know because I was asked to perform this kind of analysis a number of times.

On numerous occasions, I was asked to open a competitor's box and roll up the top-level cost based upon years of experience in sourcing and purchasing electronic components. I may have been asked to do this in a matter of minutes prior to going into a negotiating session in order to know what we should be charged for a similar product. Sometimes my cost evaluations were used in planning meetings where the company would be setting cost budgets at the earliest stages of product development. Invariably, while I was rolling up the cost mentally, I just could not help notice particulars in the design that, for all intents and purposes, the competitor would not necessarily be willing to divulge in a casual or technical conversation about its product.

I did not make a career of this practice, but I did it often enough to be the person assigned the job whenever the need arose. For my own part, as a component engineer, I was always interested in seeing how other people were using, mounting, or configuring a component I was already familiar with. Sometimes curiosity alone was enough to have me cross over this ethical gray line. I justified it by calling it a necessary engineering practice to help my company stay competitive.

Did you hear about Japan and China and the bullet train dispute? It seems Japan is claiming that China is using Japan's designs to manufacture its own bullet trains and thereby underselling the Asian rival and reducing its share in the worldwide market. How did China get all the technical goodies to build a similar train? Well, I will tell you.

Japan had to provide a "Transfer of Technology" package to China before China would build Japan's bullet trains and grant them market access. A Transfer of Technology article is the whole kit-and-caboodle on how to build the product. It includes the bill of materials, acceptable suppliers, assembly drawings and procedures, testing instructions, and virtually the entire product in documents. Have you seen the new Chinese Pterodactyl drone? It sure looks a lot like the US Predator.

This is not new news for anyone, but the fact that US technology has been being handed over for years to our biggest economic competitor makes my little excursions into the competitor's boxes seem almost like innocent fun. Every time a US company outsourced a product or a printed circuit board for assembly in China, you had to know that there were forensic and component engineers assigned to look at the technologies for the sake of China's "greater good."

I know that there are export restrictions on some semiconductor components like microprocessors, microcontrollers, and other devices key to our Homeland Security concerns, but with China's reach almost in every country in the world, how difficult would it be to find, import, and clone a restricted part that could be sourced by China from a country where the part was authorized for use?

There are no secrets. Homeland Security cannot stem the tide or stop the flood. Counterfeiting is becoming the largest economic and security concern because the technology, software tools, and fabrication equipment to clone components and entire products are on the open market. How much of the counterfeiting can be stopped if we curtail the transfer of technology practice? Like I said, the dam is already broken, and trying to stop this flood is like trying to rebuild the dam while the reservoir is overflowing and the river is at flood stage.