Intellectual Property Rights

We sometimes forget that much of the East Asia success in industry was due to wholesale copying of Western goods. It was not so long ago that “made in Japan” was a derisory term for cheap and poorly made knock-offs of Western products. China, Taiwan and Korea have followed the same development path. Will over-zealous protection of patents and copyright bar this path to development for some of the upcoming least developed countries?

The Patent Cooperation Treaty was first signed in Washington in June 1970. It has been amended several times since. The latest version has been in force since April 2002. It provides protection and legal remedies for registered inventions. By filing one international patent application an inventor can seek simultaneous protection in over 100 countries, including a number of developing countries. The World Intellectual Property Organization (WIPO) is helping developing countries to develop improved patent protection laws and to ratify the Patent Cooperation Treaty, the Madrid system for the international registration of marks, and the Haque system for the international registration of industrial designs. Similar protection is afforded copyrights through the Berne Convention for the Protection of Literacy and Artistic Works. Plant varieties can be protected by patents or by a special system (such as breeder’s rights under the International Convention for Protection of New Varieties of Plants).

The Trade in Intellectual Property Rights (TRIPS) Agreement (Annex 1C of the Marrakesh Agreement Establishing the World Trade Organization) was negotiated as part of the 1986-1994 Uruguay round on international trade negotiations. For developed countries the TRIPS provisions came into force in January 1996. Developing country members of the World Trade Organization (WTO) were given a transition period until January 2000 and least developing countries were given an even longer extension until January 2006 (pharmaceutical patents have been extended to 2016). The TRIPS Agreement makes intellectual property rights (essentially copyright and patents) an integral part of the multilateral trading system.

The International Chamber of Commerce estimates that 7% of global trade is counterfeit and the counterfeit market is worth $350 billion per year. The Business Software Alliance estimates that software piracy alone is worth $29 billion per year. Counterfeit automobile parts cost the industry $12 billion per year in lost sales and 200,000 jobs in the USA. Fake diet pills, infant milk formula, wines and spirits, and automobile parts (such as brake pads made of sawdust) have also caused loss of life, thus nailing the excuse of a victimless crime. Further examples can be found on the website of International AntiCounterfeiting Association ( The International Federation for the Phonographic Industry estimated that 1 billion fake music compact disks were sold in 2003 (one out of every three music compact disks sold) valued at $4.5 billion, or 15% of the global recorded music market. Of the top ten offending countries, more than half are in the Asia-Pacific region.

Even where developing countries have signed on to these international agreements, in the past, enforcement has been lax in the Asia-Pacific region. You may even be wearing a fake watch or carrying a fake brand name handbag. At home, you may have a collection of fake compact disks, computer software, or pirated movies. Your medicine chest may even have fake pharmaceuticals. Faking it is gradually becoming more difficult in the Asia-Pacific region, partly due to increased government action but also due to developed country firms taking direct action. Lightning raids on manufacturers or outlets selling fake products is now a major activity of security firms in the region. There is even some evidence that terrorist and other criminal groups have combined forces in the counterfeiting trade, thus doubling the determination to crack down on the trade.

New technologies are being employed to deter fakes from being sold. In apparel, DNA signatures are being woven into the cloth. Fancy watermarks and holograms are apparently too easy to copy. At the Sydney Summer Olympics in 2000, 34 million labels of games merchandise were tagged with unique strands of DNA. Revenues lost at the Sydney games were estimated at less than 1%, netting the games organizers an additional $700,000 in royalties. The Atlanta games committee in 1996, however, estimated that half of the merchandise sold around the world was fake (Daviss 2004). The DNA can be sprayed on to a product as a film, embedded in thread or powder coatings, or mixed into the product compounds. A fluorescent reaction with a special reader authenticates the presence of the DNA.

Another side of this story, however, is the rush to patent even simple technologies or even indigenous plant varieties, without adequate review by the US patent examination process. The Electric Frontier Foundation (EFF) cites examples such as one-click online shopping, online shopping carts, pop-up windows, or paying with a credit card online. One large software company (no prizes) has even patented the double click on the computer mouse. Patent holders are now beginning to target small businesses and individuals with million dollar legal demands, clearly aware that they cannot adequately defend themselves. EFF intends to challenge some of the more egregious cases through a Patent Busting Project, aimed at overturning unjustified patents.

Where is the balance to be found between legitimately copying or modifying Western products and blatant theft of intellectual property? Nothing less than a sustainable development path for least developed countries is at stake.

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