MASTER INTERNATIONAL TRADE & COMMERCIAL LAW Essay Example

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    Law
  • Document type:
    Essay
  • Level:
    Undergraduate
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TRIPS AGREEMENT

Introduction

The international community has always had the challenge of rewarding creativity and innovation, a factor which may with time kill the morale of researching on new products which will have helped make live easier. This prompted for the creation of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) to provide the framework where this treaty will ride on and the various enforcement channels with the objective of safeguarding intellectual property. The treaty has really helped developing countries a lot when it comes to creativity since by rewarding innovations with patents; the private sector has joined the governments to help fund research initiatives which suit local communities.

This paper looks at:

  • How developing countries will benefit from the TRIPS agreement

  • Challenges and constraints faced when enforcing the TRIPS agreement

  • The support from developed countries which helps to propel the developing countries in their quest to champion the implementation of the TRIPS agreement

  • Criteria for enforcement of the TRIPS agreement

  • Benefits which accrue from the TRIPS agreement and the implementation costs and what needs to be done to help minimize such costs

  • How to handle patent wars and the remedies available to all the parties involved while solving intellectual property cases and technical assistance available to them

TRIPS agreement and developing countries

The TRIPS agreement was put in force with a major aim of enabling inventors to gain from their innovations by helping to prevent copycat of the already developed products, which means overly to reduce investment friction in the developing countries. In the past, most countries did not take seriously the issue of patenting innovations. Countries like Brazil and India in particular did not allow at all patenting of drugs with the main goal of making the drugs cheaper and accessible to all people, and they achieved this goal at the expense of the inventors. With the evolution of patents, people are investing more into the invention of new products since they are assured their inventions will earn royalties once patented. In this regard, with the advent of new technology, absence of government protection could have led to many confrontations among countries if we did not have the idea of patenting more especially on the social welfare of individuals.0

Costs associated with Intellectual Property

Most developing countries have the challenge of converting the patenting authorities from individually owned to state owned semi autonomous organizations thereby converting the copyright gains from a few individuals to public gains. Developing countries should develop mechanisms for transforming citizens from the rent-transfer operations to well managed development ventures which will help build up national technological bases just like in developed countries. Benefiting from the TRIPS agreement will depend on the political will of the developing countries to motivate technological innovations and the full implementation will lead to developing countries to have high chances of stimulating certain activities that will positively influence the entire economy.0

There are many determinants though which lead to proper implementation of the TRIPS treaty and some of them are: Openness of trade policy where by the government will not have any hidden costs or agenda while implementing the treaty. This will be crucial in developing countries where all systems are expensive and unreliable and so needs proper government intervention. Size of the market, if it is big, then the economy will gain more due to higher numbers of consumers and this will result into more innovations. General level of development also plays a key role in the success of the TRIPS agreement in that with higher levels of development, all resources for development of user applications will be cheap and means of utilization of resources will not be a hindering factor. Level of public knowledge also determines a lot the nature and extent of development within the economy since highly educated consumers will tend to utilize the innovative and technological products more compared to non-educated citizens who relies on nature. An example is Mexico where majority of the citizens were ignorant and the country did not see the need to enforce patenting till late 70s. After that, patenting was enforced and it was made stricter as from 1994 with the resultant increase in the number of biotechnology patents being filed and the sprouting of many micro-companies with technology as their source of income and are able to secure financing through their patent protection rights. The state prosecutor has dealt with a number of patent violation cases which shows that the TRIPS agreement is a system which is working slowly but as expected. The economy is becoming vibrant and Mexican companies have the capability and incentives to lure back professionals in specific fields who are based abroad to come and work and are offered very good packages. South Korea also enforced robust protection of its systems and patents from 1987 and what we have seen there is vigorous judicial involvement to enforce the implementation of the agreement.0

Innovation

This is directly linked with the motivation available in the economy in terms of usage of the products and the kind of support coming from the government. Globally, motivation for increased innovation comes from the fact that there could be global users for the product who require customization of the product to be carried to suit local needs for instance, for a computer application, it will be translated into the local language.0

Price wars

The TRIPS agreement fails to provide for what happens in a scenario whereby the product gets patentable while it has been in the market for some time and so in such cases, the price will not change at all. Inventions which are made after the law was enacted are the ones enjoying patent protection and must not have imitation from other producers of similar products. This is where both the developing and developed economies get to enjoy the advantages of patent protection by the governments. The Italian case which is a developed country is however very unique for inventors since the prices of the products rose within a period of 10 years after the 1978 TRIPS agreement and consequent patenting. The price in the developing countries has been held constant because of the competition available from already patented products and those that are innovated and the future threat of competition since the government will patent similar products as long as they are not exactly the same with an aim of keeping prices manageable, 2000).0

What happens though is that the government will patent a totally different product which offers the same services however the price can be pegged on the earlier product or it can be different and prices may increase to a point where customers prefer inferior products as long as they offer the services the consumers want and the products are healthy for consumption. The patents expire after a 20 year duration after which period other manufacturers are free to imitate the patented product and in this case the price wars may be on the rise depending on the cost of manufacture and speed of production and consumption. So the immediate role of patenting may not be to safeguard against price movements but rather imitation of a successful product or service. In the pharmaceutical and agricultural chemical industries however patenting may lead to an upward price movement which is because such industries are highly price sensitive. Before 1970, the US law courts were of the opinion that patenting was monopolistic and was aimed at controlling prices but to many developing countries, patenting is rent seeking and helps the patented product to enjoy some technological growth since a product must be technologically different from the one patented in order for it to be allowed for patenting and also patenting helps in the distribution of resources evenly. The price of patented products may in some cases be controlled by the government if there is no much innovation to bring competing products into the market but in situations where there are a number of similar products, the consumer’s choice of the products will determine pricing more especially in developing countries.0

Technology acquisition

Companies holding patents may not reveal the technology for producing their products if they fear this will lead to severe competition. The company can reveal the technology to trusted employees or family members and only allow the market to access older technology but keep secret the winning combination technology. A good example is Coca-Cola which has managed to keep secret the formula for its patented product more than one hundred and twenty five years since the soft drink was first manufactured. In some cases like in software industry, copying of a successful product may take place but the final product will be slightly different and given that the process for manufacture may not be revealed, then this product may still be allowed to operate in the market under its own patent. So one only imitates the product but not the technology for producing the product and this will help to manage price movements in the developing markets. At the same time, the skills for imitation of the product are totally different from the skills for manufacturing and testing and even servicing the new patented product. Also, some companies fear to copy technology from developed markets to local markets because there will be some inherent imitations so the company will have invested so much on manufacturing but may not get back the value for their money. The TRIPS agreement facilitates willing transfers of technology in some instances where capital investment is likely to be high and so not many firms will be able to copy the technology and produce similar products. This is irrespective of the capability to see the exact components of the technological innovation resulting from reverse engineering which has the main objective of revealing the process of assembling or knowing the ingredients for the manufactured product.0

Human skills development

In developing countries, most innovations go unpatented and the ideas are stolen by developed markets, which go and re-invent the product or they come up with similar products, which are better in quality and this result to the loss of rent seeking opportunities to the company, which came up with the innovation of the product. This uncertainty in patenting leads to employees being paid less competitive salaries than their counterparts in similar positions in developed countries. Much needs to be done locally to help safeguard innovations and this includes government incentives in protection so as to enable companies to invest more in research and innovations and also fund their laboratories well and pay competitive salaries to help retain their employees.0

Science in agriculture

Developing countries rely heavily in agriculture for sustaining their economies. Many private institutions are applying science in agriculture first because governments are facing challenges to fund technological innovations in all sectors, secondly because biotechnology which has originated from private institutions is the driving force in agriculture and this is mostly patented though it could originate from developing economies. Traditionally, the governments chose the best breeds for cross breeding with an objective of getting better crossbreeds. The governments also helped to teach farmers how to take good care of the animals and plants for enhanced yields. Nowadays the best products are transgenic and countries with robust protection systems for patenting are likely to get better products from the science funded private organizations.0 This means that if there are countries where protection may not be possible, companies may fear to introduce their technologies there. The issue of soil composition, climatic changes and diseases in different local markets demand that any new product needs to be bred locally to have better yields. This input may not be there in cases where it is not possible to safeguard this kind of input through patenting.0

Industrial base

The level of industrial development tends to be higher in a highly patent protected robust economy as compared to a non-robust economy. The kind of protection offered by a developing economy determines a lot the kind of technology the developed markets are willing to transfer given the benefits to accrue for such investments. Also, the direct investment by foreign countries in developing countries in highly technological industries like pharmaceutical tends to rely heavily on robust protection. Robust protection attracts new high techniology firms in the market with old technology firms exiting or adapting into new technology. Without adequate protection, an economy will experience many imports for given products, which are manufactured from nearby economies with robust protection.0

Private risk capital

To get venture capital investment in an economy, the investor demands robust protection as a requirement. When inventors are aware that there is risk venture capital which will help launch their products more especially in the developing markets, they will work hard to come up with a unique product and get it patented. The venture capital normally looks at the level of creativity and if there is the possibility of imitation within a given period of time before funding. They normally fund those products or innovations that seem to have no possibility of successful imitations.0

University education

Universities in developing countries have been known to fund bright minds who will lead to more innovations particularly in technology that will suit the requirements of the local communities. In most cases, university research is freely utilized by local companies since the economy may not be robust. This has led to such universities being mostly theoretical in studies as opposed to being practical in searching for solutions to problems affecting the local economy. Today, the universities are changing the mode of making publications in that they require scholars to inform the administration of any innovations and inventions they have come up with before making any official publications. The university officials will gauge the commercial implications of such technology and if they find it viable, they ill patent the idea and them publish it. This will help universities in developing economies to fund more development locally as long as the economy is robust. In some economies, the universities after patenting their work will sell it to local companies and in return they will get money to fund further research. There is a tendency for people to lack interest in university research if it will be made available to the general public but when such results are released to interested parties after paying for the research, more parties all of a sudden show interest. This is what is happening in developed countries like USA and the same needs to be done in developing countries with an aim of funding local inventions and helping the universities to get money for further development.0

Macro economic impacts

The macro-economic impacts under TRIPS agreement may not be seen immediately except on those technologies from developed countries that are introduced into robust economies. Purchase of foreign technology even for a little price is remarkable in the long run more than locally developed technology for developing economies. This was the case with Japan which decided to buy foreign technology after World War II then she perfected on that technology and the results is what we see today. This stimulation arose from the challenge the locals received when working with the foreigners who had introduced the purchased technology and they helped stimulate technicians and scientists to an above par level to the extent the Japanese became better than the exporters of the technology. This shows that benefits from protection may be long-term and can only sprout more in robust investment oriented economies. A higher level of protection should be given for local inventions as opposed to foreign ones since this will help developing countries to come up with products suited to their local economies and most likely this may not be expensive to produce and use. Initially, the public may not be active to endorse the TRIPS agreement but after sometime, say two years after the agreement has been in force, the public will begin to see more patented local innovations but this will work with public education.0

Public administration

This plays a major role in enforcing the TRIPS agreement and particularly in the developing economies; this may prove to be a challenge more especially with regard to designing, patenting and creating known trademarks as well as protecting new products and also technological integrated circuitry products. Proper enforcement will make the administration get revenue from the purchase of patents or from the export of the products and this gives an incentive for economies to become robust in protection.0

Cost estimates

There are administration costs involved with enforcement of TRIPS agreement and this can be quite a challenge in many developing countries. Intellectual property fees are therefore normally levied on the use of inventions and this is what will be paid to the administration centers inform of a budget.0 Developing countries have under funded offices and may not be able to adequately pay staff unless they receive patent fees and this becomes quite a challenge to function effectively. These budgets constraints may lead to a gradual lose of qualified personnel and inability to attract newly qualified officers as they relocate to the private sector or foreign countries and if the sector will not acquire modern equipment, the office becomes fully dysfunctional. The alternative to this is to establish semi autonomous bodies which have powers to levy fees on their on, apply revenue collected to settle their expenses, be able to hire and dismiss employees and have a management team and board of directors who are not politically inclined to the government.0

Cost reductions

Many developing countries face the challenge of administration expenses for the patent protection against infringement. To register a patent, the registering office has to carry out a product technical examination to gauge its substance by comparing the product against the world’s new innovations to gauge if that product qualifies to be new and consequently qualify for a patent. Most developing countries however lack the capability to conduct conclusive tests with an aim of finding out if the product really is unique and warrants a patent. The challenges are budget constraints which result to employment of fewer employees and lack of equipment and equipped libraries which help in researching on already existing products with patents. USA for instance has more than 2200 examiners and a budget of over $300 million, Brazil has 100 examiners and a budget of $60 million while Pakistan has over 100 million people and 4 examiners who are fully qualified but face the challenge of an under equipped library and no modern equipment for their daily operations.0

Reference system

It has been globally agreed that many developing countries face the challenges of well-equipped means to carry out comprehensive examination before they issue a patent. In that respect the developing countries are allowed to offer patents pegged on the research and surveys done by their counterparts in developed countries. Under reference, the examining officer will grant a patent with respect to a patent which has been issued by examiners from developed countries and this will really help the developing countries to deal with the enforcement of patent provision at minimal cost. The developing country will pay a small fee for these services and the patent granted will expire when the patent in reference expires.0

Requirements for TRIPS

Patent holders are always educated on the means to protect their patents against any infringement, the procedures are very easy to follow and not so expensive and the verdicts are usually given without much delays. What this means is that parties in developing countries can very comfortably enjoy the benefits of patenting and this will help motivate others who were thinking this is a difficult venture to be able to push though the patenting exercise. Acts of infringement are usually met with resistance in developed countries but in the developing countries, incase of an act of infringement and the office is notified, normally a court is quickly set up and the judges are given the necessary support which is the material that forms the basis of their verdict. Ideally, each country should have a few specialized judges who have an expansive knowledge in that field and will help so much to give satisfactory rulings with regard to actions of infringements.0

Conclusion

From the discussion, it is evident that developing countries are loosing a lot by not enforcing the TRIPS agreement compared to their developed counterparts. A good idea if not patented will easily sneak its way and be patented elsewhere and it will generate revenue in that country while the inventor will remain wondering the way forward while struggling to fight off imitations and no cash to pay for the costs associated with the invention and testing of that idea to bring it into use. The message goes to all nations to go beyond having the treaty appearing on paper in theory and enforce it fully as this may be the gateway for their economies to gain considerably from patent purchases by foreigners.

Work Cited

Adrian Otten, ‘Implementation of the TRIPS Agreement and Prospects for its Further Development’ (1999) 1 Journal of International Economic Law 4.

Bhavya Nain, ‘Impact of TRIPS Agreement on Developing Countries’ (2007) Working Paper Series.

Daya Shanker, ‘Competition Policy and Abuses in the TRIPS Agreement’ (2004) Working Paper Series.

Daya Shanker, ‘Legitimacy and the TRIPS Agreement’ (2002) Working Paper Series.

Dharam Verma, ‘Review of Article 27.3(B) Under TRIPS Agreement: A Critical Analysis’ (2010) Working Paper Series.

Frederick M Abbott, ‘Are the Competition Rules in the WTO TRIPS Agreement Adequate?’ (2008) 7 Journal of International Economic Law, Florida State University College of Law 3.

G A Desmedt, ‘European Court Rules on TRIPS Agreement(1999) 1 Journal of International Economic Law 4.

Geertrui Overwalle, ‘The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and Patent Law’ (2010) Accepted Paper Series.

Giuseppe Vita, ‘The TRIPS Agreement and Technological Innovation’ (2010) Working Paper Series.

Haochen Sun, ‘The Road to Doha and Beyond: Some Reflections on the TRIPS Agreement and Public Health’ (2005) 15 European Journal of International Law 123.

James Gathii, ‘Approaches to Accessing Essential Medicine and the TRIPS Agreement, intellectual property and information wealth’ (2010)
Greenwood Publishing Group.

James Gathii, ‘How Necessity May Preclude State Responsibility for Compulsory Licensing Under the TRIPS Agreement’ (2010) 31 North Carolina Journal of International Law and Commercial Regulation 943.

Jorn Sonderholm, ‘Intellectual Property Rights and the TRIPS Agreement: An Overview of Ethical Problems and Some Proposed Solutions’ (2010) 5228 Working Paper Series, World Bank Policy Research Working Paper.

Kato Gogo Kingston, ‘The Implications of TRIPS Agreement of the World Trade Organisation for the Developing Countries’ (2011) 1 African Journal of Social Sciences 1.

Laurence Helfer, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking’ (2004) 29 Accepted Paper Series, Yale Journal of International Law 1.

Matthijs Geuze and Hannu Wager, WTO Dispute Settlement Practice Relating to the TRIPS Agreement’ 2
Journal of International Economic Law 2.

Mohamed Towhidul Islam, ‘TRIPS Agreement and Economic Development: Implications and Challenges for Least-Developed Countries like Bangladesh’ (2011) 2 Nordic Journal of Commercial Law1.

Peter Yu, ‘The Objectives and Principles of the TRIPS Agreement’ (2010) 46
Accepted Paper Series 1.

Srijana Regmi, ‘Compulsory Licensing Under the TRIPS Agreement’ (2011) Working Paper Series.

Thomas Cottier and Ingo Meitinger, ‘The TRIPS Agreement Without a Competition Agreement?’ (2000) 4Working Paper Series 2.

Tu Nguyen, ‘Competition Law in Technology Transfer under the TRIPS Agreement: Implications for Developing Countries’ (2009) Doctoral Dissertation, Lund University.

0
Adrian Otten, ‘Implementation of the TRIPS Agreement and Prospects for its Further Development’ (1999) 1 Journal of International Economic Law 4.

0
Haochen Sun, ‘The Road to Doha and Beyond: Some Reflections on the TRIPS Agreement and Public Health’ (2005) 15 European Journal of International Law 123.

0
Peter Yu, ‘The Objectives and Principles of the TRIPS Agreement’ (2010) 46
Accepted Paper Series 1.

0
Giuseppe Vita, ‘The TRIPS Agreement and Technological Innovation’ (2010) Working Paper Series.

0
Thomas Cottier and Ingo Meitinger, ‘The TRIPS Agreement Without a Competition Agreement?’ (2000) 4Working Paper Series 2.

0
Laurence Helfer, ‘Regime Shifting: The TRIPS Agreement and New Dynamics of International Intellectual Property Lawmaking’ (2004) 29 Accepted Paper Series, Yale Journal of International Law 1.

0
Geertrui Overwalle, ‘The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and Patent Law’ (2010) Accepted Paper Series.

0
Daya Shanker, ‘Competition Policy and Abuses in the TRIPS Agreement’ (2004) Working Paper Series.

0
Frederick M Abbott, ‘Are the Competition Rules in the WTO TRIPS Agreement Adequate?’ (2008) 7 Journal of International Economic Law, Florida State University College of Law 3

0
Dharam Verma, ‘Review of Article 27.3(B) Under TRIPS Agreement: A Critical Analysis’ (2010) Working Paper Series.

0
James Gathii, ‘Approaches to Accessing Essential Medicine and the TRIPS Agreement, intellectual property and information wealth’ (2010)
Greenwood Publishing Group.

0
Kato Gogo Kingston, ‘The Implications of TRIPS Agreement of the World Trade Organisation for the Developing Countries’ (2011) 1
African Journal of Social Sciences 1.

0
Jorn Sonderholm, ‘Intellectual Property Rights and the TRIPS Agreement: An Overview of Ethical Problems and Some Proposed Solutions’ (2010) 5228 Working Paper Series, World Bank Research Working Paper.

0
Mohamed Towhidul Islam, ‘TRIPS Agreement and Economic Development: Implications and Challenges for Least-Developed Countries like Bangladesh’ (2011) 2 Nordic Journal of Commercial Law1.

0
Bhavya Nain, ‘Impact of TRIPS Agreement on Developing Countries’ (2007) Working Paper Series.

0
James Gathii, ‘How Necessity May Preclude State Responsibility for Compulsory Licensing Under the
TRIPS Agreement’ (2010) 31 North Carolina Journal of International Law and Commercial Regulation 943.

0 Srijana Regmi, ‘Compulsory Licensing Under the TRIPS Agreement’ (2011) Working Paper Series.

0
G A Desmedt, ‘European Court Rules on TRIPS Agreement(1999) 1
Journal of International Economic Law 4.

0
Daya Shanker, ‘Competition Policy and Abuses in the TRIPS Agreement’ (2004) Working Paper Series.

0
Tu Nguyen, ‘Competition Law in Technology Transfer under the TRIPS Agreement: Implications for Developing Countries’ (2009)
Doctoral Dissertation, Lund University.