Intellectual property problems

India has recently leased a nuclear attack sub from the Russians. The last thing I rented was a roto-tiller, so I am starting to think I should be shopping in cooler places. More interesting is that the Chinese have apparently also been hot to rent these boats but have not been allowed to as the Russians are worried about China’s lack of respect for intellectual property.

I find this kind of significant, since I was in Taiwan in the early 90’s when they started to crack down on IP piracy in a pretty serious way. Supposedly the reason for this was that Taiwanese companies were finding it harder and harder to get really cool technology from foreigners as it was assumed the Taiwanese would just steal everything. Taiwan was much more controlled by the state than China is today, and its economy much more dominated by a handful of firms, so I assume that things will not play out in China just like they did in Taiwan.1 Still, if you are looking for example #1 of how lack of modern IP and rule of law is hurting China, this might be it.

Via LGM, who seem to like boats

  1. Not that I would really want that anyway, as I find much of the IP system wrong-headed 


  1. Wrong. The Indians will not be leasing submarines from Russia. The Akula lease rumour has been bounced around for the better part of a decade. The earliest internet source is actually a People’s Daily article from February of 2002 quoting Janes that India planned to receive the submarine in 2004. However, for each year the rumours failed to pan out, what they failed to lose in credibility they managed to gain in grandiosity. It has become not one submarine but two, and not just an Akula class but an Akula 2.

    It has become an article of faith among Indian cyber-nationalists and the jingoistic press that the submarines are arriving despite repeated denials for years from direct sources. Instead preferring to rely on anonymous sources and echo-chamber “analysts” who just repeat what they heard from themselves. In 2006, the Russian deputy secretary of defense and head and arms exports denied any such lease. In 2007, the Chief of the Indian navy similarly denied any such lease. In 2008, the Chief of the Russian navy denied any such lease.

    Fact of the matter is, is that any such incomplete hulls are likely not in very good condition considering the state of the Russian arms industry when construction was halted. The incomplete hulls date to either the late 80’s to early 90’s. This means at best they may be 15 years old. It is not entirely certain even how many incomplete hulls remain nor their condition nor how far along they were. However what is known is that Russia has only launched one recently that was christened the Nerpa which is of uncertain vintage. However, one clue that hints at the condition of any remaining hulls, if any, is that the recent launch of the SSBN Yuri Dolguriky was only made possible by the cannibalization of incomplete hulls. The bow of the new submarine actually came from an incomplete Akula class submarine.

    All things considered, the Akula lease story doesn’t have much of a leg to stand on, especially since the oft quoted cost of leasing two submarines is only 600 million USD. To pay for the completion and outfitting of only one submarine would be two to three times that amount and considering the political winds of Putin’s Russia and the condition of it’s existing nuclear fleet, any newly launched submarines are almost certainly destined for the Russian navy and not for foreign sale.

    On a final note, I don’t believe China has ever been interested in leasing Akulas nor is their evidence of such beyond hollow speculation. Chinese arms procurement policy is based on buying new and they have never expressed solid interest in buying second-hand Russian equipment knowing full well the condition it is likely to arrive in. The present impasse in Russian arms sales to China is not as some assume due Russian wariness of potential transfering of technology to China but rather a Chinese stall due to contractual disagreements regarding the resolution of an order of Ilyushin transport aircraft which has seen massive price escalation and delays.

  2. The submarine that Jing suggests India isn’t leasing is now undergoing trials in the Barents Sea, and Russia would like to move it south before the ice comes. It is unclear if that will happen.

    I will let my blog represent whether I am a credible source on naval affairs.

    Towards the China and Russia IP issues, it should be noted China has stopped importing major arms from Russia, with China building major defense platforms domestic instead. Russia spends a lot of time accusing China of being a thief, but most of it is speculation. The purpose of the accusation is really designed to keep China out of the defense export market on systems that China has imported and Russia exports, after all, China builds military systems cheaper than Russia does right now, and Russia is protecting its economic influence in the defense industry of the third world.

    Whether there is any genuine IP theft by China is speculation, but it is noteworthy Russia recently prevented via legal action a Chinese aircraft engine manufacturing company from fitting some fighters exported to Pakistan with the engine originally agreed upon between China and Pakistan. The engine was protected under terms of a lease to build contract as Russian IP. Ultimately I believe Pakistan still got the engine, China still built the engines, but Russia got paid for it.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.