The Enforcement of Intellectual Property Rights in Developing Countries

Abstract

The development and advancement of economy in today’s world focuses on information-based technology. Therefore, an intellectual property right has played a major role as a protection of considerable interest of developed nations. As a result of initiation of the World Trade Organization (WTO) and the progression of an agreement for standards of trade-related intellectual property rights, backed up by tough measures from United States, system of intellectual property rights protection has been globalized. Nevertheless, developing countries have to encounter some problems with regard to enforcing and implementing westernized intellectual property rights law.

I. Introduction

Since economy in this modern world has increasingly developed and is forwarding themselves further into information-based community, intellectual property rights protection has become a considerable interest for developed nations. According to the initiation of the World Trade Organization (WTO), the progression of an agreement for standards of trade-related intellectual property rights along with tough measures from United States, world society is moving to a global system of intellectual property rights protection. However, there are some problems with regard to enforcing and implementing intellectual property rights protection especially in developing countries. By analyzing the implementation of TRIPS agreement and the tools which it is enforced, this paper illustrate the consequences of progressive system of intellectual property rights protection for developing countries and the problem of implementation and enforcement of intellectual property law in developing countries. Part II will provide a broad background of intellectual property. Part III will state the principles of TRIPS agreement. Part IV illustrates the unilateral pressures from United States to developing countries. Part V will discuss the problems of IPRs enforcement in developing countries. Finally, Part VI reaches the conclusion by providing some recommendations to deal with IPRs problems in developing countries.

II. Background Information of Intellectual Property Rights

An intellectual property, mostly known as IP, allows people to own their creativity and innovation in the same concept that they can own physical property. The owner of IP can control and be rewarded for its use. [1] In some cases, IP gives rise to protection for ideas but in other areas more elaboration of an idea shall be proven before protection can arise. It will often not be possible to protect IP and gain IP rights (or IPRs) unless applications have been submitted and being granted after some procedural consideration, but some IP protection such as copyright arises automatically, without any registration, as soon as there is a record in some form of what has been created. [2]

Common description of intellectual property law often divides the subject into patent, copyright, trademark and trade dress and trade secret law. These definitions can be indistinctive sometimes. However, these categories provide general information of these subjects.

1. Patent: Patent specifies “inventions” and offers the inventor the right for a limited period of time to prohibit others from copying, using, selling or even developing product that incorporate the invention without the permission of the inventor. [3] It is an agreement between an inventor and the state in which the inventor is allowed a short term monopoly in return for allowing the invention to be publicized. Patents include practical and technical expressions of products and processes. Most patents are for expansionary developments in known technology – evolution rather than revolution. However, the technology does not have to be complex, in order to get a patent.

Some conditions are also required to obtain a patent. Firstly, the invention must be new which means it must not comes from parts of the “state of the art.” The state of the art is everything that has been made available to the public before the date of applying for the patent. This includes published documents and articles, but can also include use, display, spoken description, or any other way in which information is made available to the public before the applying date of such patent. [4]

Secondly, obviousness is another requirement. The patentable invention patent must involve an inventive method. As well as being new, the patentable invention must not be obvious to someone with knowledge and experience in the subject. The final conditions of obtaining a patent is that such invention must be industrially applicable. This condition requires that the invention can be made or used in any kind of industry. [5]

When all above conditions have been fulfilled, the patented invention will be recorded in a patent document. The patent document must have a description of the invention, possibly with drawings, with enough detail for a person skilled in the area of technology to perform the invention. It must also contain claims to define the scope of the protection. The description is taken into account when interpreting the claim. [6]

A patent can be of value to an inventor. As well as protecting his business, patents can be bought, sold, mortgaged, or licensed to others. They also benefit society other than the inventor himself because large amounts of information can be learnt from other people’s patents. Patents can also deter people from reinventing things. Patents also help many people develop an idea further, and once the term of the patent expires it can be freely performed by anyone in order to benefits the public and the economy. [7]

2. Copyright: Copyright provides the creators of a wide range of sources, such as literature, art, music, sound recordings, films; and broadcasts. These economic rights entitle creators to control the use of their material. It also provides moral rights to be identified as the creator of certain kinds of material, and to object to any distortion or impairment of it. However, copyright does not protect ideas, or such things as names or titles. The purpose of copyright is to allow creators to gain economic rewards for their efforts and to encourage progressive creativity and the development of new material which benefits whole society. Copyright material is usually the result of creative skill and devoted labor. Without protection, it would be too easy for others to exploit material without compensating the creator. [8]

Therefore, most uses of copyright material uses require permission from the copyright holder. However, some minor uses may not infringe copyright such as for non-commercial or academic purposes “which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interest of the right holder” [9] .

Copyright protection is automatically applicable as soon as there is a record in any form of the material that has been created, and there is no official registration form or fee. Creators, nevertheless, can take certain steps to help prove that they are the true creators, such as depositing a copy with a bank or solicitor. [10]

3. Trademark and trade dress law involve the rights of a seller to market a product or service in a particular manner and to prohibit others from transferring their goods and services in misleading fashion.

Trademarks are beneficial for a seller when they come to symbolize a level of quality or value of existing goods or services. Moreover, trademarks enable sellers to use a symbol or brand to identify their goods and increase uniqueness of their products. Concurrently, trademarks enable consumers to instantly identify the good or service of a manufacturer. [11]

If there is no trademark protection, other sellers might then be tempted to deceive consumers by using the trademark established by another entrepreneur which owns more popular brand. Additionally, even when the trademark itself is not used by another, similar packaging or other manner of presentation (trade dress) can lure consumers to make mistaken purchases. Falsifications or misguiding manifestation of geographic origin is another source of concern. Moreover, misguiding statements can cause people to engage in fraudulent transactions.

In addition, if sellers can misguide purchasers with impunity, purchasers will no longer trust trademarks or trade dress as symbols of quality. It will later become more difficult for sellers to obtain the rewards from efforts to produce high quality goods and services, and the ambition to provide quality in the marketplace will deteriorate. [12]

4. Trade secret law is most similar related to patent law. Generally speaking, a trade secret is information that has value to the holder, which will be impaired if it is broadly known. Some trade secrets are the appropriate matter of patents, but their holder may choose not to follow a patent for some reasons, such as the fact that many significant information must be disclosed in the patent application procedure or that the application procedure and subsequent litigation may be costly.

Other trade secrets are simply unpatentable (such as customer list). Protection for trade secrets is usually limited to a prohibition on the use of “improper means” to secure them. Corporate espionage is actionable, as may be the reveal of trade secret by a former employee. However, there is usually no protection if a trade secret is discovered through proper means, for example, reverse engineering or independent innovation, which is opposite to patent rights. These differences increase a number of questions that are not fully understood. One might wonder why protection for trade secrets is not broader or, why it exists at all if the secret is not patentable. We shall not try to solve these questions here, but simply note that some form of trade secret law seems to have evolved in most developed nations, although the details of that evolution and the extent of protection under the law has considerably varied. [13]

Worldwide Unity of Intellectual Property Rights

Intellectual property may probably be the most global nature commodity in history in today’s world, where another side of the world can be reached within less than one second. Intellectual property rights (IPRs), at the international level, have been subjected to many series of international conventions and treaties. One of the most prominent is Paris Convention for the protection of Industrial Property of 1883 and the Berne Convention for the protection of Literary and Artistic Works of 1886 which are under the supervision of the World Intellectual property Organization (WIPO). [14]

The protection under Paris and Berne Conventions is conceptualized on the doctrine of “national treatment”, which confirms that each sovereign state shall grant foreign nationals the same protection as they do for their own citizens. Another concept also standardize the minimum requirement that the laws of any member state shall be “no less favorable” with respect to foreigners than with respect to nationals. [15]

In the meantime, the trend toward global markets and the considerably increasing number of multinational enterprises has pressured many countries to liberalize their trading laws by treating domestic and foreign producers equally, and by giving the same standards of intellectual property protection as their trading partners. Therefore, there was an increasing motivation to promote wider uniformity in the content of domestic IP law. [16]

As a result, at the end of 1980s, developed countries, especially the United States which its economy was definitely affected from IPRs infringement, began to take out the IP infringement debate from WIPO, attempting to combine the intellectual property rights issue with the issue of free trade. This was the reason why the Uruguay Round trade negotiations under the General Agreement on Tariffs and Trade (GATT) included negotiations about intellectual property. This told us that free trade negotiation was attached with negotiation on IPRs, which became the Agreement on Trade Related Aspects of Intellectual Property (TRIPS). TRIPS is now the minimum standard for national and regional IPRs systems in the world. [17]

Accordingly, in Marrakesh on April 15 1994, 111 countries signed the GATT agreement which contains the outcome from the Uruguay Round of multilateral trade negotiation. TRIPS is attached in Annex 1C of the GATT Agreement, which enforce the protection of intellectual property by signatories. [18] The TRIPS Agreement created common minimal baseline standards in significant scope of intellectual property, higher than the Paris and Berne Convention. This emphasizes the prominence of shifting IPRs protection to a universal level of protection. [19] However, in the mean time, this is also a challenging problem for many developing countries to enforce their IP law to meet such international standards and to further their own priorities in terms of economic and social developing.

Different Legal Tradition of IPRs: Difficulty for Developing Countries

Before the domination TRIPS Agreement, member nations were not bound to develop intellectual property protection systems. The Paris and Berne conventions only require a member nation to grant the same rights and obligations of intellectual property to non-nationals as it does to its own citizens. However, under TRIPS, states can be obliged through WTO enforcement mechanisms to adopt certain standards that are unfamiliar with their legal tradition. [20]

Each nation has different cultures, traditions and histories which result in differences of each unique domestic legal system. There are various attitudes in intellectual property between developed and developing countries especially in the east.

In Westerners’ attitudes, copyright is a social incentive and a reward to encourage individual creators to create. On the contrary, Eastern artists gain validity from mimicking previous works instead of from creating. Since, in eastern cultural view, comprehension of the concept of the civilization is proven by mimicking, therefore, South Korea used this as an argument in the delegation at the Uruguay Round, reasoning that copying the work from other creators was a form of flattery; hence they were not culturally suitable for certain copyright protection. [21] Additionally, in Japan, a katana (Japanese sword) is not only a lifeless metal object, but also the residue of creator’s living spirit. This cultural perception still exists in the craftsmanship of Japan industrial products. [22]

Lack of individualism is another source that differentiate attitude concerning IPRs between Western developed and developing countries. In Western countries, only the individual (or corporate juristic person) is considered a “creator.” Conversely, in many developing countries, for example, to the Balinese, artistic knowledge is not restricted to a special intellectual class. The words of art or artist do not exist in Balinese. If someone have made a beautiful contribution such as carving a temple gate, or playing a musical instrument and doing any works of esthetic importance that are produced incognito. They are deemed to be done entirely as a service to society and religion with no thought of personal gain. [23]

This kind of cultural attitude also exist among Koreans who pursues a similar historical viewpoint on scientific inventions. They consider intellectual property as “public goods” for everyone to share freely instead of treating it as a private property. By this traditional way of thought, creativity is encouraged by cultural esteem rather than material gain. [24]

Nevertheless, concepts of “private rights” and “trade-related” rights of intellectual property are clearly defined in the preamble of TRIPS Agreement but exclude community intellectual property rights. This exclusion nullifies all kinds of knowledge, ideas and innovations produced by the intellectual community. [25]

In developing countries, intellectual property is seen as the product of intelligence or cultural heritage, embodying the soul and spirit of the people. Such concept is unfamiliar in the Western legal system. However, since TRIPS agreement is a prerequisite to accession of WTO, developing nations had to inevitably accept the intellectual property laws of the West. This causes an everlasting dispute between developed and developing countries until now. [26]

III. The Principles of TRIPS Agreement

The TRIPS agreement came into effect on January 1, 1995. Member countries are bound to strengthen their IPR laws by providing the minimum degree of IPR protections. Countries are mandated to accept the provisions of the four previous IPR agreements [27] and are bound to give the same treatment accorded to their own foreign intellectual property. [28] The TRIPS emphasizes significance of patentability [29] ; and impose protection for plant varieties [30] , computer programs [31] and databases. [32]

The minimum standards of IPRs protection which each Member are mandated to implement are illustrated in Part II of the Agreement. It stipulates, defines and names fundamentals of IPRs protection and the subject-matter to be protected; the rights to be conferred and permissible exceptions to those rights, and the minimum duration of protection. Under this agreement, member states shall standardize their IPRs laws to comply with the substantive obligations of the main convention to the WIPO, and the Paris and Berne Conventions in their most recent versions. Moreover, TRIPS Agreement fulfills numbers of obligations on the issues which are ignored by the pre-existing conventions or were seen as inadequate. [33]

Although it is quite common knowledge that TRIPS standard is more difficult for developing countries to enforce than for developed countries which already have previous similar standard, since TRIPS standard is the obligation which must be primarily met by member countries before entering WTO of protection, developing nations must inevitably accept such commitments despite they are excessive for the actual level in any developing country. [34]

The regulations about enforcement of intellectual property rights that the Members must follow are illustratively structured in Part III of TRIPS. Effective enforcement, fair and equitable procedures are indentified as general commitments which Members must respect. [35] The Agreement also delineates remedies in both civil and administrative aspects that Members must preserve, including injunctions, damages, and –under certain circumstances- the removal from commerce or destruction of infringing goods. [36] Furthermore, Part III contains provisions relating to provisional enforcement measures, special requirements related to border measures, and criminal sanction procedures on “willful trademark counterfeiting or copyright piracy on commercial scale”.

In addition, with intention to strengthen IPRs protection, section 5 of the agreement requires that member nations must enforce sufficient measures to “provide a deterrent consistent with the level of penalties applied for crimes of a corresponding gravity”. [37]

Article 41.5 may seem to limit the comprehensive outline of civil, administrative, and criminal remedies. In brief, the provision merely states that Members do not have to put in place a specific judicial system for enforcement of IPRs (such as a court of specialty) distinct from court system that already exist in member states. [38] Nevertheless, the language that urges a Member State to equally distribute resources between intellectual property enforcement and general law enforcement may impact the developing countries where the governments have limited resources to devote even for general laws enforcement. [39]

Handicap for Developing Countries.

Because the TRIPS agreement is a prerequisite to accession of WTO [40] , developing nations, in order to enjoy the benefits of membership of the WTO, have to fully implement it while encountering large amounts of difficulties. Fortunately, Part VI of TRIPS describes transitional arrangements that Developing Members can enjoy. [41] The TRIPS transitional arrangements provide a special extension period and give some exceptions to the implementation of TRIPS to certain Members. For instance, under special situations, TRIPS allows developing countries Members and Members which are transforming their economies from centrally-planned to market, free-enterprise economies to benefit from a period of delay for following up TRIPS provisions [42] .

The obligations under the Agreement apply the same to all Members, but least developed countries are granted a longer period to phase them in [43] . However, the transitional period granted for developing countries to enjoy the delay of implementing intellectual property protection seems to confront with obstacle due to the use of unilateral pressure from United States to tackle its IPR disputes [44] .

IV. Tension from United States

In the past 20 years, compared to other countries, United States has been more devoted to the innovation of establishment of uniform intellectual property rights. [45] In addition, the prospect of United States’ economy significantly depends on the export of intellectual property. [46]

Therefore, United States has tried to build up a harmonious connection between requirement of enforcement of universal intellectual property standards and the international trade regime and the development. Then, finally, countries which desire to enjoy free trade had to agree on TRIPS.

Most member nations, especially developing countries normally import intellectual property rather than export. Therefore, they have less concentration than the United States to firstly prioritize IPRs legal protection because it did not worth enough for their budget to devote resources to serve the benefits of foreign IPRs holders, or to hinder local duplication industries from doing imitation business since such hindrance could negatively impact their national economies. [47]

United States enforced section 337 of the US tariff Act of 1930 (as amended) to pressure developing countries. By virtue of this provision, U.S. companies can protect themselves from imports into the United States of goods made by foreign companies that infringe U.S. intellectual property rights. It legalizes complete exclusion of imports which has been produced in such a way as to violate the intellectual property rights of American companies or individuals under domestic US law. However, only the products that are imported into United States are subjected to this provision. [48]

Generalized System of Preferences (GSP) is another tool enforced by United States to pressure developing countries which are under GSP agreement. If intellectual property protection, either de facto or de jure, of particular developing countries is decided to be vulnerable, any tariff preferences that previously granted to such nations under GSP can be withdrawn. In order to use this tool, a particular American industry is not required to show the injury nor something that show the discriminatory practice or inferior-international-standard of intellectual property laws of the country concerned. [49]

‘Special 301’ is another well-known, multi-purpose and roomy provision which US has relied on. It is a part of the of the US trade Act of 1974 since US Trade Law was amended by the Omnibus Trade and Competitiveness Acts of 1988. The so called section 301 provision of the Trade Act of 1974 empower the US government to penalize countries which apply inadequate or ineffective protection of intellectual property rights. Under Special 301, the US Trade representative (USTR) is assigned to identify foreign countries that impair adequate and effective protection of intellectual property rights or impair fair and equitable market access for US persons who rely on intellectual property protection. [50] Moreover, with the intention to optimize the effectiveness of Special 301, its amendment came out in the 1994 Uruguay Round Agreement Act clarifying that although a country is in compliance with its obligations under the TRIPS Agreement, it still can be determined to deny adequate and effective intellectual property protection even if it. It was also amended to direct USTR to consider a previous status of a country under Special 301. [51]

Once a country is identified because it does not follow up on its commitments for IPR protection and enforcement, the USTR is required to decide whether it should be designated in priority watch list as Priority Foreign Country. Such country is defined as the one that:

has the most onerous and egregious acts, policies, and practices which have the greatest adverse impact (actual or potential) on the relevant U.S. products; and

is not engaged in good faith negotiations or making significant progress in negotiations to address these problems.

If a trading partner is identified as a Priority Foreign Country, USTR must decide within 30 days whether to start an investigation of those acts, policies, and practices that were the basis for identifying the country as a Priority Foreign Country. [52