Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World

from the cui-bono dept

Thu, Jul 16th 2009 6:24pm — Kevin Donovan

This is the fourth post in a series of posts looking at the question of intellectual property rights in both China and India. We'll be adding new posts to this series each week for the next few weeks.

India and China face profound, perhaps even existential, economic challenges as they seek to continue providing growth for the hundreds of millions of impoverished citizens who demand economic opportunity and empowerment. As low- and middle-income countries, respectively, the desirability of policies that prove charitable to other countries, especially developed ones, is minimal. Yet, evidence from India shows that intellectual property enhancement involves the transfer of rents from poor countries to rich ones. Although proponents of increased IP believe the process is mutually advantageous, the small absolute market size of developing countries like India and China does not provide adequate incentives to change the level or direction of total R&D expenditure (Dutta & Sharma PDF).

Intellectual property harmonization actually allows foreign rights holders to capture profits, obtain jobs, decrease the balance of payments, and cause dependency (Lanjouw 1997). The anti-competitive, monopolistic nature of intellectual property makes it harder for developing countries to gain access to the most valuable technologies needed for economic convergence (Reichman 1997). One study showed that even if stronger intellectual property could accelerate FDI, it would limit the imitative capability of indigenous firms (Lai 1998). Other work found that there is a strong positive effect of intellectual property on domestic imports, leading to a decrease in the balance of payments (Maskus 1995). Moreover, stronger global IP encourages American exports, something India and China should not necessarily favor (Smith 1999). The world’s most successful economies, such as Japan or the United States, rose to prominence by specifically limiting the scope and breadth of patents (Maskus 2000).

Other posts in this series:

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Filed Under: china, india, intellectual property

6 Comments

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Anonymous Coward, 16 Jul 2009 @ 6:26pm

*yawn*
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IP attorney, 16 Jul 2009 @ 6:59pm

i'm all for strong IP
but at some point it goes overboard.

the long list includes:
* "product by process" patent infringement requiring no evidence that the defendant actually practiced the process (fixed only 2 months ago)
* the elimination of first sale on patented goods (fixed a year ago)
* the elimination of eligibility requirements (fixed a year ago)
* blatant forum shopping (still not completely fixed, but it's getting there). certain judges in a certain court demand require fast trials and refused to stay litigation during re-examination proceedings. as the re-examination proceedings have finished years after the litigation did, the patents have been completely busted, but the plaintiffs typically won hundreds of millions and an injunction (one-click is a perfect example of this).
* injunctions automatically granted in every single patent case (fixed a few years ago)
* the elimination of the obviousness requirement by the TSM test (to be considered prior art for the purpose of obviousness, someone actually had to discuss the patented invention... but that's novelty, not obviousness. fixed a few years ago)
* the ongoing joke that is obviousness. inventions are not patentable if they're obvious to a person having ordinary skill in the art (aka PHOSITA). in litigation, courts regularly rule that PHOSITA has a PhD or a masters and x years experience working in a particular field... but rarely ever does the examiner who processed the patent have this level of experience or education. in fact, in the last round of hiring, the PTO didn't accept anyone with a masters because then they'd have to pay them GS7-9 instead of GS5-7, and they're going through major budgetary issues. this is an ongoing problem that has not been addressed at all.
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Michael Long, 17 Jul 2009 @ 12:25am

Gotta love
Gotta love an article that makes a broad series of sweeping claims on a variety of points, but fails to provide discussion or analysis. We assume all of the links back up his claims (should we want to dive into all of them), but for each we again have no discussion or analysis or points/counter-points.

In fact, much is made of the fact that such IP laws are bad for China and India, while mention of how they're apparently good for the United States and for other developed nations seems to be ignored. You know, the ones who spent the dollars doing the R&D and developing those technologies in the first place?
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Anonymous Coward, 20 Jul 2009 @ 12:35am

The purpose of laws in China and India should be to benefit China and India, respectively, not the United States. You are suggesting that China and India should pass laws that favor other countries instead of themselves. That would be outright treason by their respective legislatures.
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Mike Masnick (profile), 20 Jul 2009 @ 1:41am

Re:
The purpose of laws in China and India should be to benefit China and India, respectively, not the United States. You are suggesting that China and India should pass laws that favor other countries instead of themselves. That would be outright treason by their respective legislatures.

Try reading it again, more slowly this time. Kevin's not saying what you think he's saying. He's explaining why it does NOT make sense to pass such laws. His argument is that it would be a MISTAKE for such laws to be passed because the benefit would go outside the country.

Basically, the exact opposite of your interpretation.
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Anonymous Coward, 20 Jul 2009 @ 4:24am

I was not replying to Kevin. I was replying to the comment directly above mine, by Michael Long. He said: "In fact, much is made of the fact that such IP laws are bad for China and India, while mention of how they're apparently good for the United States and for other developed nations seems to be ignored." I explained the reason why that is being ignored: because the purpose of Chinese (resp. Indian) legislation should be to benefit the Chinese (resp. Indian) people, not the United States. (Ignoring for the time being the numerous abuses of the Chinese government, and considering the ideal, to wit, the situation if they had proper representative governments.)
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