The Global Debate on the Enforcement of Intellectual Property Rights and Developing Countries

Study
Date period
1 February 2009

SummaryIssue paper 22, The Global Debate on the Enforcement of Intellectual  Property Rights and Developing Countries brings together two studies: The first by Carsten Fink entitled Enforcing Intellectual Property Rights: An Economic Perspective and  the second by Carlos Correa entitled The Push for Stronger IPRs Enforcement Rules: Implications for Developing Countries.

The enforcement of intellectual property rights (IPRs) has gained  prominence in recent years on the global trade and intellectual  property agenda. A number of initiatives and developments in this area  at the global, regional and bilateral level carry wide reaching  implications for the regulation of the knowledge economy.

In the first study, Carsten Fink provides a much needed economic perspective on the enforcement of IPRs. Some of the key conclusions and recommendations of the study are the following :

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SummaryIssue paper 22, The Global Debate on the Enforcement of Intellectual  Property Rights and Developing Countries brings together two studies: The first by Carsten Fink entitled Enforcing Intellectual Property Rights: An Economic Perspective and  the second by Carlos Correa entitled The Push for Stronger IPRs Enforcement Rules: Implications for Developing Countries.

The enforcement of intellectual property rights (IPRs) has gained  prominence in recent years on the global trade and intellectual  property agenda. A number of initiatives and developments in this area  at the global, regional and bilateral level carry wide reaching  implications for the regulation of the knowledge economy.

In the first study, Carsten Fink provides a much needed economic perspective on the enforcement of IPRs. Some of the key conclusions and recommendations of the study are the following :

·         There is little empirical evidence that would shed light on the economic impact of piracy and counterfeiting.
·         The appropriate allocation of resources for IPRs enforcement is a major challenge for developing countries, where many public goods are underprovided and enforcement challenges exist in many areas of law.
·         Appropriate funding of competent government agencies in developing countries is necessary for IPRs enforcement;
·         Since developed country firms derive a direct benefit from  stronger IPRs enforcement, it may indeed be in the interest of their governments to subsidize IPRs enforcement activities in developing countries. It could also be envisaged that enforcement costs be borne  directly by private rights holders.
·         If weak IPRs enforcement in developing countries reflects fundamental institutional deficiencies, it is not clear how far obligations in trade agreements or technical assistance activities can at all remedy such deficiencies.
·         Outside incentives—whether positive or negative—may well make a difference in containing counterfeiting and piracy activities and their international proliferation. However, in many cases, sustained reductions in IPRs violations may invariably have to wait for broader institutional development

In the second study, Carlos Correa addresses the push for stronger IPRs enforcement rules and its implications for developing countries. Some of the key conclusions and recommendations of the study are the following:

·         A number of initiatives have been recently launched with the aim of strengthening IPRs enforcement rules beyond the requirements of the TRIPS Agreement.
·         Although the TRIPS Agreement requires criminal sanctions only in cases of willful trademark counterfeiting or copyright piracy on a commercial scale, the current enforcement drive aims at  criminalizing other infringing acts, inclduding patent infringement.
·         Developed countries’ governments and industry are actively seeking to induce changes in the regulation of border measures in developing countries, beyond what is required under the TRIPS Agreement. They aim, inter alia, at broadening their scope  and at reducing the requirements imposed on right holders to obtain such measures.
·         A major issue in the enforcement drive is the relation between IP and health. The application of an IP approach to what is essentially a public health issue may lead to the adoption of an inadequate set of measures. In the case of counterfeit medicines, the appropriate design and implementation of drug regulations is the most critical element in combating counterfeiting in medicines.

Foreword

Enforcement has once more emerged as a pressing issue on the global trade and intellectual property (IP) agenda. Although the achievement of a more effective enforcement of intellectual property rights (IPRs) was already one of the main driving forces behind the conclusion of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), it increasingly appears that TRIPS - while being an important milestone - did not, for some, represent a conclusive and satisfactory response to what is perceived as a significant rise in levels of counterfeiting and piracy. In this context, recent years have witnessed an unprecedented proliferation of initiatives relating to IPRs enforcement. These range from enforcement provisions in regional and bilateral free trade agreements (FTAs), to deliberations in plurilateral fora such as the G8, to multilateral fora such as the TRIPS Council of the World Trade Organization (WTO), the World Intellectual Property Organization (WIPO), the World Customs Organization (WCO), the World Health Organization (WHO), to litigation under the WTO dispute settlement system, and finally, to ongoing negotiations of new international agreements such as the Anti-Counterfeiting Trade Agreement (ACTA).

The global IP landscape, in which the push for stronger enforcement standards is taking place, differs significantly from the one in which the TRIPS Agreement was concluded in 1994. Today, our understanding of IP norms and their impact on development policy has significantly improved. The limits of a «one-size-fits-all» approach to international IP norm setting are increasingly recognized. Open collaboration and alternative innovation models are acquiring greater importance in generating wealth.

In addition, developing countries and civil society have become more active in international processes and discussions dealing with IP matters. The WIPO Development Agenda (DA) has crystallized many of these changes. In this regard, the 45 WIPO DA recommendations adopted in September 2007 represent a landmark development in efforts to achieve a more balanced and development oriented IP system. The last of these recommendations deals precisely with IPRs enforcement as it underlines the need to \\\\\\\"approach intellectual property enforcement in the context of broader societal interests and especially development oriented concerns\\\\\\\" in accordance with Article 7 of the TRIPS Agreement.

Significantly, there is an increasing realization that tinkering with rules on IPRs enforcement can have profound effects on the regulation of knowledge goods and fl ows in our knowledge-based economies. Issues of competitiveness, innovation, access to knowledge, technological development, and thus ultimately, sustainable development, are at stake.

Against this background, it is relatively easy to understand why the current global debate on IPRs enforcement is marred with controversy and the subject of polarized perspectives. This polarization is amplified by the limited number of in-depth analytical studies and evidence-based empirical analysis that could contribute to foster a more informed and constructive discussion.

To contribute toward addressing this gap, ICTSD’s Programme on Intellectual Property Rights and Sustainable Development commissioned two studies that have been brought together in this issue paper on The Global Debate on the Enforcement of Intellectual Property Rights and Developing Countries. As both studies put it upfront, the debate is not – and should not be - about whether IPRs should be enforced or not. Enforcement is an integral part of any effective IP regime. However, IPRs are private rights and upholding them is, first and foremost, the responsibility of private rights holders. Given that governments play an important role in ensuring the enforcement of these private rights, the debate is rather about how to achieve an appropriate balance between private rights and public interest in setting and implementing IPRs enforcement standards and in allocating resources for IPRs enforcement in the face of other competing, and more immediate, public policy priorities, particularly in developing countries.

In this regard, the first study by Carsten Fink, (Group d’Economie Mondiale, Sciences Po Paris), seeks to provide a much needed economic perspective on IPRs enforcement. The study evaluates the welfare effects of different forms of IPRs infringements and reviews available empirical evidence on the economic impact of piracy and counterfeiting. Its findings suggest that governments should particularly focus their enforcement efforts on cases of deceptive trademark infringements, especially those that create health and safety risks.

The study seeks also to identify a number of key considerations in the formulation of a strategy towards IPRs enforcement, particularly in developing countries, where many public goods are underprovided, enforcement challenges exist in many areas of law and governments typically face other priorities for public spending.

In this regard, the author estimates that while appropriate funding of competent government agencies in developing countries is necessary, it is not sufficient prerequisite for effective IPRs enforcement. Only as countries reach a certain threshold level of income and domestic IPRs ownership becomes more widespread, will the domestic incentive for stepping-up the fight against counterfeiting and piracy grow.

He underlines, that while implementing ‘TRIPS-plus’ enforcement obligations often contained in FTAs will likely require additional resources, there is little evidence available that could guide policymakers on the precise resource implications of implementing such obligations. The study highlights this gap and points to the importance future of better quantifying the budgetary costs of different types of enforcement activities in the future.

The author also raises the question of whether stepped-up IPRs enforcement in less developed countries should not be financed by developed country governments. He argues that since developed country firms derive a direct benefit from stronger IPRs enforcement, it may indeed be

In the interest of their governments to subsidize IP enforcement activities in developing countries. Another approach, he suggests would be to have enforcement costs borne directly by private rights holders as they are the most direct beneficiary of better enforcement and they can therefore be expected to make a substantial contribution to the financing of underlying costs

Finally, the study indicates that if weak IPRs enforcement in developing countries reflects fundamental institutional deficiencies, it is not clear how far obligations in trade agreements or technical assistance activities can at all remedy such deficiencies. He argues that in many cases sustained reductions in IPRs violations may invariably have to wait for broader institutional development.

In the second study in this issue paper, Professor Carlos M. Correa  (University of Buenos Aires) examines the recent drive for TRIPS-plus enforcement standards, which go beyond the requirements of the TRIPS Agreement and risk undermining the balanced contained therein. The study cautions against an expansive use of the terms ‘counterfeiting’ and ‘piracy’ as these terms are confined by the TRIPS Agreement to very specific infringing acts (i.e “counterfeit trademark good” and “pirated copyright goods”). The author further indicates, for instance, that while article 61 of the TRIPS Agreement requires criminal sanctions only in cases of willful trademark counterfeiting or copyright piracy on a commercial scale, the TRIPS-plus agenda aims at criminalizing other infringing acts, including patent infringement. However, in the United States and other developed countries, patent infringement is only dealt with under civil remedies.

Similarly, the study points to efforts the Agreement to strengthen provisional measures, as well as border measures, beyond what is required by the TRIPS Agreements and even by the national jurisprudences of many developed countries. Another recurrent issue is the demand that developing countries establish special units/task forces in national administrations or special judicial courts to deal with IPRs infringements.

Finally, the study addresses a major issue in the enforcement debate, notably the fight against counterfeit medicines. The author contends that arguments and proposals made in relation to this subject often confuse IP and public health considerations. Indeed, he argues, the application of an IP approach to what is essentially a public health issue may lead to the adoption of an inadequate set of measures. The study emphasizes the appropriate design and implementation of drug regulations as the most critical element in combating counterfeiting in medicines.

Together, we hope that these two studies bring greater clarity and intelligibility to the discussions on IPRs enforcement by improving the understanding of the issues at hand and their implications.

Beyond these studies, it is important to recognize that IPRs enforcement cannot be approached as a stand alone issue. The global debate about IPRs enforcement should be part of wider discussions about the balance on which the current IP architecture stands and the challenges it faces in ensuring that the benefits of IP regimes outweigh their costs, particularly for developing countries, which have undertaken significant efforts in past years to modernize and overhaul their IP systems.

Addressing these wider questions has been a central objective of ICTSD’s Programme on Intellectual Property Rights and Sustainable Development since its launch in July 2000. It has sought to achieve a better understanding of IP in the context of sustainable development  with a view to ensure proper balance between the different interests at stake in designing appropriate IP regimes compliant with international commitments. Another central objective has been to facilitate the emergence of a critical mass of well-informed stakeholders in developing countries – including decision makers and negotiators, but also actors in the private sector and civil society – able to define their own sustainable human development objectives in the field of IP and effectively advance them at the national and international levels.

The premise of ICTSD’s work is based on the understanding that IPRs have never been more economically and politically important – or controversial – than they are today. Patents, copyrights, trademarks, and geographical indications are frequently mentioned in discussions on such diverse topics as public health, climate change, food security, education, trade, industrial policy, traditional knowledge, biodiversity, biotechnology, the Internet, and creative industries. In a knowledge-based economy, a better understanding of IP is indispensable to informed policy making in all areas of development.

Empirical evidence on the role of intellectual property protection in promoting innovation and growth remains inconclusive. Diverging views also persist on the impacts of intellectual property rights on development prospects. It continues to be urgent, therefore, to ask how developing countries can use IP tools to advance their development strategy. How is IP directly relevant to sustainable development and to the achievement of agreed international development goals? How we can facilitate technological flows among all countries? Do they have the capacity, especially the least developed among them, to formulate their negotiating positions and become well informed negotiating partners? How can we foster an enabling international environment that would be conducive to greater respect for IPRs in a sustainable and balanced manner? These are essential questions that policymakers need to address in order to design IP laws and policies that best meet the needs of their societies and that enable effective negotiations in future agreements. These are also questions that should be taken into consideration in the current discussions on IPRs enforcement.

In this context, we hope that you will find this issue paper a useful contribution to discussions on IP and sustainable development and a valuable response to the need for a better understanding of the global IPRs enforcement debate and its implications for developing countries.


Ricardo Meléndez-Ortiz
Chief Executive, ICTSD