Beyond Local Pattern Matching: Recent Advances in Machine Reading

Yes, under U.S. patent law, this would still probably be illegal (but see below for some nuance). Given how globalized our economy has become, a very similar issue already came up over ten years ago. It wasn't between U.S. and China, but between U.S. and Canada.

Ten years ago, Blackberry reigned supreme in cell phones, and they were a Canadian company. They were sued by companies in U.S. courts holding U.S. patents over networking technology. Blackberry argued that most of the tech covered by the U.S. patents actually took place in Canada (where there were no corresponding patents). The U.S. judges said that, even though most of the steps were performed outside the U.S., U.S. patent law still applied. This is the short version of the story, you can read a much better write-up here: https://www.finnegan.com/en/insights/the-extraterritorial-re...

So, going back to your example of U.S. patented AI algorithms being run in China: If everything stays in China, then it won't be covered by U.S. patent law. However, even if just the results from that patented process that was done entirely in China get imported back into the U.S., there's a good chance that U.S. patent law would kick-in and whoever did that importing could be sued.

That said, this is a relatively new area of patent law. Patent law has been around for hundreds of years, but globalization has only been around for a few decades. The truth is that U.S. judges don't come across these issues very often, so even though it's likely illegal, maybe it isn't, it's very fact and case-by-case specific. It's likely the exact parameters of what is and isn't allowed will be fought in courts for many more years to come.