INTERNATIONAL REGIME OF INTELLECTUAL PROPERTY LAWS AND ITS IMPORTANCE IN TRADE

Introduction

Innovation is inherent to human nature. The quest to conceptualize and create a better version of everything drives human innovation,[1] and makes the human race alter the status quo every moment of its existence on this planet. Since innovations characteristically cater to a utility, it is imperative that such utility will induce commerce. In this age of extensive globalization everything, right from new and creative products to new ideas and advancements in technology are today being traded faster and wider than ever.  

The corporations and individuals involved in various businesses are interested in expanding their own business, and to do the same they promote innovation to appeal to the consumers as it would yield a greater market acquisition.  Then, these innovations are packaged into appealing capsules to be ingested by the customers through several marketing gimmicks. Hence, big corporations today are willing to pay hefty prices to own the most trivial-looking innovations related to their fields.

Intellectual Properties (IP) today are regarded as basic business assets, as often entire businesses are built on single or multiple IPs, or rely upon these IPs for a big chunk of their business. Jingles and taglines are associated and used interchangeably with the product, as we often hear people ask for a Colgate (a toothpaste), a packet of Nutrela (Soya Bean nuggets) etc. 

With the more play-back kind of IPs like patents and copyrights, the situation is quite similar too, corporations and individuals intending to use the patented/ copyrighted IPs pay hefty license fees to be able to do so, and yet they continue doing so to further their own business interests. For instance, there are technology giants which are very much capable of making software that may suffice their purpose, yet they opt to license the more famous software so as to appeal to the customer. 

With the apparent increase in global trade, and advancement in communication and transportation technologies, international trade and commerce throughout the globe is booming today. The customers are aware of the advancements in the technology almost as soon as they come in the public domain, and are unwilling to settle for anything below the latest most efficient piece of equipment. Indian globalization which begun with the opening up of the economy in the early 90s is currently on its peak, riding on the gift of affordable and almost universally available mobile internet devices. 

The scope of IPs cannot be limited today, with the various growths and developments, new and upcoming areas involving IP rights are being recognized. In such times, the need for a comprehensive set of IP Laws at a global level is very much felt throughout the nations. However, each nation has its own understanding, expectations, and reasons to enforce laws which inadvertently tend to be detrimental to the interests of certain other nations.[2]

The needs and expectations of a developing nation is bound to be different from a developed nation, hence the laws which cater to these needs are different. Certain nations such as Brazil, Argentina and India failed to accord extensive patent protection to the pharmaceutical products as the domestic industry was reliant on the same for its indigenous industry.[3] It therefore becomes very difficult to reconcile various national interests while legislating with respect to Intellectual Property at a global level.

International Regime of Intellectual Property Laws

Intellectual Property rights were first recognized at an international level at the Paris Convention for the Protection of Industrial Property, 1883.[4] There was a growing two-fold need to acknowledge the protection of IP rights by way of legislation, these can be summarized as follows:

  1. To give statutory expression to the rights of creators and innovators in their creations and innovations, balanced against the public interest in accessing creations and innovations
  2. To promote creativity and innovation, so contributing to economic and social development.

The Paris Convention however was revised from time to time. After every such revision, a new Act of the Paris Convention was adopted. The latest Act is that of Stockholm, 1967.[5] The convention provides for the following key provisions:

  1. Right to National Treatment- Accord same rights to the nationals of the member nations as available to one’s own nation.
  2. Right of Priority- Treatment of a later application with retrospective effect if filed in a member nation.
  3. Universal rules to be adopted by the member nations.
  4. Establishment of an administrative framework to implement the convention. 

The World Intellectual Property Organization administers major patents, trademarks and copyright treaties as per the convention.

The General Agreement on Tariffs and Trade governed the various crucial aspects of international trade from the Second World War. Thus, when the discussions on IPs and their commercial governance begun, the discourse on Trade related aspects of IPs originated from the GATT in 1995 in the Uruguay round.[6] When GATT culminated into WTO and the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement, the global trade in IPs begun to be universally governed by the TRIPS agreement. 

The agreement comprehensively sets out the various IPs including the nascent IPs relevant to developing economies such as Geographical Indications[7]along side Trademarks[8], Patents etc. The agreement further provides for the signatory members to enact relevant statutes to accord protection to the various recognized IPs. TRIPS agreement further discusses the process of acquisition and management of IPs and also provides for settlement and dispute prevention. 

The Anti-Counterfeiting Treaty, along with several bilateral and multilateral treaties are also currently in operation at various international levels to facilitate the trade in IPs and related aspects.

International Trade and Intellectual Property

International trade and intellectual properties interface regularly. Trade of any sort is targeted at revenue creation, and a robust framework to administer intellectual property laws proves to be instrumental in helping out the individuals, businesses, consumers and governments.

Even though the entire liberal dialogue favours a lassiez faire economic structure with free markets and no regulation, at times, it becomes pertinent to regulate certain aspects of trade so as to protect the interests of the sellers and to promote development and innovation in the market. These regulations with respect to the various IPs give rise to trade in IPs. The legal recognition of ownership with respect to a certain IP helps the overall trade of a nation. 

While trading domestically involves a lot of physical trade, and trade in essential commodities, the corpus of international trade is largely driven by more qualitative factors apart from the usual market forces of demand and supply. The global village today is very receptive to change and welcomes the same. The trade in IPs at an international level is much easier to realize as the considerations are not as stringent as they are in traditional trade. Extensive migration, increase in the growth rates of developing nations and major policy reforms around the globe has today changed the entire discourse around international trade, and has made Intellectual Property a key subject matter of international trade.

Importance of Intellectual Property in Trade

Intellectual properties are often subject matters of trade. Businesses often employ the use of certain software which subsist in the form of a copyright in India, and patents in some other nations including the US. Certain industries such as the defence industry pay a premium for the license to manufacture a certain military technology, other businesses such as secondary sector manufacturers employ the use of such technologies which might be licensed to them as an IP. Further, corporate re-structuring is at times motivated by the growth and development of the other competitors in the industry, and at times motivated by goals of self-development and expansion. Intellectual Property Rights can be utilized by the individuals or companies to spearhead further innovation in an industry by improving their product through incorporating the acquired knowledge. Further, often such acquisitions are done to eliminate potential and actual competitors with an aim to increase the market share of one’s product. Failing to acquire a key IP asset might vitiate the entire purpose of the acquisition in certain cases. E.g. a technological giant acquiring a small start-up which is engaged in manufacturing tailored softwares for mobile phones wants to acquire the start-up for one particular Operating system, the start-up’s working on, the technological giant will not settle for the other software and would definitely insist for the Operating System which it plans on integrating with the devices produced by the giant and, also develop and license to other competitors. A similar acquisition was that concerning Google’s acquiring android, which would have not gotten through unless the Operating system was a part of the deal. 

IPs such as patents in technology or copyrights in codes facilitate trade in the following manners[9]

  1. They incentivize innovation and makes the market competitive- The other players in the market cannot simply sit idle if a patent for a superior good/ technology exists[10] that would push the market players to innovate and improve the status quo.
  2. Provide technological and market information- Preconditions to the grant of the IP rights include the mandatory disclosures to be made before the government, if these are in the nature of public welfare, the information may be dissipated to the public in a few years’ time, depending on the jurisdiction. The information can also spearhead a related development.
  3. Shields the domestic market- The subsistence of a patent prevents a foreign player to be awarded one. This effectively protects the domestic goods and technology from predatory trade practices of big nations. This is extremely important for a developing nation.
  4. Helps expand the reach to other nations- The grant of IPs in foreign nations, helps a corporation expand its reach to a foreign territory, this is more often than not a very strategic move targeted to capture a developing/underdeveloped nation’s market with lots of potential.[11]
  5. License fee- The royalties due out of the licensing of various IPs runs into millions and billions of Rupees. Certain evident royalties accrue when a book is turned into a feature film or a television series. Royalties also arise out of patents vested in technology and licensed software. The income from license fee hence propels innovation and creation of IPs.
  6. Trademarks provide product recognition in the international markets.[12] If the product proves to appeal to a certain community or a nation, the chances of the trademark’s acceptability increases, the trademark brings along with it repute to the owner and the nation as well. 
  7. Economic growth- Trade concerns itself with revenue generation, creation of opportunities and cumulative growth of a nation. Trade in IPs help in all of the above, in addition to which it helps the economy extract more money by investing in education, innovation and skill-training. The economic growth follows as a by-product of trade in IP.

Apart from the discussed significances, IPs shape up the nature of businesses, creates new areas of trade and enhances the overall awareness level of the trading community by making them keep up with the recent developments.

Conclusion

While the international regime definitely sets down the guidelines to be followed, at times they are motivated and driven by vested interests of certain nations. Several developing nations and their IPs such as Geographical Indications, Traditional Knowledge etc. has not been given due deliberation at the international levels. 

Further, the entire idea of Intellectual Property Rights ends up creating monopolies which aspire to merely control the market and make it anti-competitive and less favorable towards the customers. The creation of universal IP laws can hence prove to create global monopolies over very essential and very trivial things, which might not be in the larger interest of the public.

Suggestions

  1. Rather than being dictated by global organizations, similar economies such as India, Brazil, and Argentina etc. should formulate its own IP laws pertaining to trade and commerce.
  2. The universalization of the laws despite being enforced through the popular TRIPS Agreement, remain to be soft law, nations should come up with their own legislations combining the elements of the agreement and their own policies like India did.
  3. Trade usually operate between two parties; hence more and more bi-lateral accords should be entered into by the nations to give full and fair effect to the IP laws.

The focus of IP laws should be to incubate the small industries rather than equip the big ones with more teeth, hence awareness regarding formal recognition of IPs should be brought about by domestic governments, and an attempt to reconcile the interests of the masses with the interest of the in


[1] Christopher M Kalanje, Role of Intellectual Property in Innovation and New Product Development, Consultant, SMEs Division, WIPO.

[2] Kenneth W. Dam, The Growing Importance of International Protection of Intellectual Property, The International Lawyer, Vol. 21, No. 3, 627 (Summer 1987).

[3] Annual Report on National Trade Estimates 9 (1985) (U.S. Trade Representative’s report to Senate Finance Comm. and House Ways and Means Comm. on National Trade Estimates for year ending Oct. 31, 1985.

[4] Understanding Industrial Property, https//:www.wipo.int, 8th August, 2018.

[5] Paris Convention, History, https://www.wipo.int/export/sites/www/about-ip/en/iprm/pdf/ch5.pdf.

[6] John M. Curtis, Intellectual Property Rights and InternatIonal Trade: An Overview, CIGI Papers No.3, May 2012.

[7] Art. 22.1, TRIPs Agreement, 1994.

[8] Art 15, TRIPs Agreement, 1994.

[9] Gerald J. Mossinghoff, The Importance of Intellectual Property Protection in International Trade, Vol.7, Issue 2, 8-1-1984.

[10] Mansfield, Patents, Innovation and U.S. Technolngy Policy, 10 AM. PAT. L.A.Q.J. 42 (1982).

[11] Grabowski & Vernon, The Pharmaceutical Industry, in GOVERNMENT AND TECHNICAL PROGRESS 292-95 (R. Nelson ed. 1982).

[12] Lunsford, Consumers and Trademarks: The Function of Trademarks in the Marketplace, 64 TRADE-MARK REp. 81 (1974).

This article has been authored by Anurag Shankar Prasad.


Categories: Legal

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