[Ip-health] Chinadaily: Flip side of IPR-Chinadaily

Joan-Hu-Yuanqiong joan_hu_msf at yahoo.com
Tue Feb 15 01:13:50 PST 2011

--- On Tue, 2/15/11, joan hu <joan7511 at gmail.com> wrote:

Flip side of IPR protection

By Mei Xinyu (China Daily)

 Updated: 2011-01-20 17:36
Champions of 
intellectual property rights (IPR) say it is the driving force of 
economic growth and technological innovation. China has made its 
legislators perfect IPR laws ever since it decided to embrace market 
economy, and asked its law-enforcement agencies to ensure that they are 
properly implemented and protected. The country's increasing foreign 
trade has further strengthened this demand, and the government and 
judicial authorities have made great efforts to perfect the IPR system. 

China has enacted and implemented a 
series of laws and regulations on IPR protection and issued the Outline 
of the National Intellectual Property Strategy in 2008. Its judicial 
authorities at various levels continue to crack down on people and 
companies violating IPR. On the whole, the country has made considerable
 progress both in legislation and enforcement of IPR laws. 

But the purpose of an IPR system is not 
only to protect intellectual property, but also to encourage innovation,
 maintain social justice and thus promote comprehensive economic and 
social progress. 

The present tendency to lay undue 
emphasis on intellectual property both at home and abroad may go against
 the original intention of an IPR system. Some practices and disputes in
 the United States and other Western countries have taught a lesson to 
China, rather than being experiences worthy of emulation. 

The fundamental driving force of 
innovation is competition, while IPR protection in substance is a kind 
of monopoly. Monopoly can provide incentives for innovation, but it can 
also prompt former innovators to gain high return by relying on the 
products they have already innovated, rather than pushing them toward 
further innovation. Such a situation will ultimately weaken the power of
 technological innovation. 

Moreover, a stringent IPR protection 
system will encourage enterprises to take moral risks. To maintain their
 competitive edge, some enterprises can use a strict IPR system to set 
up barriers for their competitors. 

Some scholars describe the IPR disputes 
raised by developed countries against developing countries as "removing 
the ladder of development of developing countries". Enterprises in 
developed countries often erect trade barriers against their foreign 
competitors, especially those from developing countries, in the name of 
"infringement of intellectual property". 

Very stringent IPR protection laws can 
worsen the conditions needed for innovation. They can force innovators 
to focus less on further innovation, and more on "infringement". The 
patent project in the US is now subdivided. In the past, engineers used 
to apply for a patent on complete software. Now, nearly each code has a 
patent right. Apparently, such an approach helps protect the interests 
of inventors. But in reality, it greatly hinders technological 
innovation, because an engineer now has to ensure that he/she is not 
using a code in his/her new software that has been patented by someone 

People championing the cause of IPR say 
that the huge expenditure in the early days of technological innovation 
needs to be compensated by high returns now. What they do not realize is
 that by selling more products at a lower price they can recover the 
cost in relatively less time. 

In their economics paper, Perfectly 
Competitive Innovation, Michele Boldrin and David K. Levine argue that 
in many current and historical markets, innovation has thrived in the 
absence of copyrights, patents and other forms of monopoly power. They 
say that the presence of rents induced by government monopoly grants, 
intellectual property in the form of copyrights and patens may be 
socially undesirable, and that government grants of intellectual 
monopoly could lead to fewer innovations than under competition. Their 
conclusions may not be absolutely correct, but they can be used for 

Developed countries have transformed 
their will into "international rules" through multilateral, regional and
 bilateral channels. They force developing countries to accept these 
"international rules" which usually are in favor of the West. Such 
tactics are given full expression in the disputes over formulation, 
passage and implementation of the World Trade Organization's Agreement 
on Trade-Related Aspects of Intellectual Property Rights. 

 approach used by developed countries is to infiltrate the proceedings 
of developing countries' domestic legislation and strive to formulate 
laws and regulations in line with their interests, leading to imbalance 
in the legislative process of IPR in developing countries. 

After all, foreign institutions with 
abundant experience can easily gain the upper hand and are more likely 
to include their selfish motives into the seemingly reasonable proposals
 in the name of "international convention" in developing countries, 
which are busy mulling legislation in newly emerging industries. 

In such cases, legislators must ensure 
that the voices of other market players are fully reflected in the 
legislative process to guarantee impartiality in rules. Hence, neutral 
and objective Western observers should not label China's efforts to seek
 justice as "protectionism". 

Every coin has two sides. The system to 
protect IPR is no exception. Whether the system can be the driving force
 of innovation or turned into barriers impeding technological progress 
depends on whether we can get rid of the shackles of some presumptuous 
interest groups. 

The author is a research scholar 
with the Chinese Academy of International Trade and Economic 
Cooperation, affiliated to the Ministry of Commerce.


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