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That was a suggestion of how to make a commercial device piracy resistant. Rather than try to forcibly stop the pirate (which is relatively easy to eventually break), it just makes it easy for the pirate to ship a flawed copy, which costs them a lot later on.
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Some unscrupulous importer on the state side and manufacture in Chinaland collaborated with sketchy businesses stateside in knock off component market and it is beyond just the bottom line of the pirates.
http://www.ibtimes.com/why-pentagon-...uipment-701214
Such method as intentional malware planting is an evil terroristic approach as the flawed copy can impact beyond the bottom lines of the pirate. I wouldn't be surprised if China coded software would pull off such a feat though, they pulled off data stealing malware scandal in hardware sold for logistics and shipping use.
http://www.technewsworld.com/story/80742.html?rss=1
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In practice, it's rare to find open source hardware that doesn't have at least some open source software to go with it.
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That's the argument line, but I think you identify more with for-profit software developer and you have some sort of association with for-profit embedded firmware developers. You vehemently oppose closed source hardware, but not so on closed-source copyrighted firmware software.
Software copyrighting and proliferation of software bottle necked proprietary systems is the issues with embedded systems.