Saturday, July 25, 2009

IPR Enforcement and Impact on BRIC Economies

With the TRIPS Agreement coming into force in 1995, BRIC countries have undertaken significant reforms in their intellectual property systems. A relatively new analytical definition of the industrial components of the economy is 'Creative industries', in which creativity being an input and intellectual property is the output. Globally, mapping exercises have concurred that the creative industries are indeed 'economically significant' and legitimately comparable to other high profile sectors in terms of their contribution to income, employment and trade.

Concept of IPR in BRIC

Brazil enacted its first intellectual property law in 1887. Brazil meets International Standards of Intellectual Property Protection. Brazil is a signatory of several conventions, treaties, and agreements that define basic, internationally-accepted standards of intellectual property protection including, among others, the Patent Cooperation Treaty (PCT). Brazil is also a member of Trade-Related Aspects of Intellectual Property Rights (TRIPS). The new Industrial Property Law came into force in May of 1996. This law brought Brazil's patent and trademark regime up to par with the international standards specified in TRIPS. Intellectual Property protection in Brazil includes Copyright Law, Software Law and also some secondary laws.

In Russia the concept of IPR was understood as mostly patents during the times of the former Soviet Union. The owner of the Patents as well as all innovations was always the state. The concept of IPR has already been drastically changed in Russia and now IPR is seen in consisting of Patents, Trademarks, utility modes, designs, domain names and copyrights. After 10 years of Russia's independence, the country has started to come into compliance with International requirements for intellectual property rights protection. Today also much work is needed to be done to bring Russia up to International standard.

Indian Intellectual Property Laws keep pace with the technological developments & Intellectual Property Laws of other countries. India has different positions with respect to intellectual property right in prior to the member of TRIPS and after the signatory of TRIPS agreement. Patent, Copyright, Trademark and Design were only existed as branch of IPR prior to TRIPS agreement. However, at present Patents (Amendment) Act 2005, TradeMarks Act 1999, Copyright Act 1999, Design Act 2000, Trade secrets, Layout Design of Integrated circuits 2000, Geographical Indications 1999 and Plant Variety 2001 related to IPR are enforced in India. India signed the TRIPS agreement in 1995, joined Paris convention in 1998, Budapest Treaty in 2001, Universal convention for Copyright (UCC) in 1952, Washington Convention for Integrated Circuit in 1989, and convention in Bio-diversity (CBD) in 1994. India is signatory to Berne Convention and Indian Government has already approved Madrid Protocol.

China has had a history of 25 years in the filed of Intellectual property rights protection. China's current legal IPR framework began in the 1980s, however, in that short time, China has made impressive strides in protecting and enforcing IPR. China became the member of WIPO in June 1980. The patent law of the People's Republic of China (PRC) was adopted in 1984. In 1993 the law of the PRC against unfair competition was enacted and the copyright law was enforced in 1990.

Enforcement of IP Rights

The originate and history of IPR in BRIC countries as explained above indicates the protection and enforcement of intellectual property rights in the BRIC countries has also been introduced long back , and the journey is clearly far from over.

In spite of having diverse histories, the BRIC economies are receiving roughly similar treatment from the wealthiest nations. Copyright and trademark piracy have always been chosen as a topic for the assessing the future of BRIC intellectual property regimes. However, other areas of intellectual property protection have broader significance to most industries and play a vital role in the economic development of the industry as well as the nation. In particular, the impact of patents on innovation and economic performance is so complex that a well organized patent system is crucial to ensure maximum benefit for a country's firms and its overall economy.

Despite divergent pasts, the BRICs are generally on the same page today when it comes to the protections afforded pharmaceuticals. The revised law in Brazil now complies with TRIPS, at least in regard to subject-matter protection. Brazil instituted a formal system for the approval of generic pharmaceuticals. After Russia instituted modern patent property rights with individual ownership, Russia currently protects pharmaceutical patents. The previous Indian Patents Act (1970) recognized patents on pharmaceutical 'processes', but not on 'products', allowing domestic pharmaceutical companies to produce cheap copies of patented drugs made by foreign companies using alternative production methods. India's introduction of product patents in 2005 heralded innovation and rapid development of that nation's pharmaceutical sector and delivery of new medicines. The Mashelkar Committee revised report was submitted in March 2009 concluded that every effort shall be made to provide drugs at affordable prices to people of India. The report also stated that it would not be TRIPS compliant to limit granting of patents for pharmaceutical substance to NCE (New Chemical Entities) only, and exclude an entire class of inventions i.e incremental pharmaceutical inventions. According to the conclusion of this report, incremental innovations" involving new forms, analogs, etc with significantly better safety and efficacy standards shall be encouraged.

Chinese social environment for the protection of intellectual property right is complex. The locally produced generics and copy products dominate the Chinese drug market. It is estimated that about 97 percent of the drugs produced by local companies are generics or counterfeits in China.

The component available in all the BRIC compulsory licensing statutes is the provision for government use in times of national emergency. Commercial working of patent is mandatory in India, Brazil and Russia. The failure to manufacture a patented article locally may lead to the imposition of a license. According to Indian Patent Act importation does not amount to working of a patent. Perhaps the most significant compulsory license use by BRIC countries will come not from supplying the home market, but rather from exporting pharmaceuticals to developing or least-developed countries that have taken out licenses. As explained above, India, China and Brazil each have significant pharmaceutical manufacturing sectors and are accomplished at producing generic medications and all of them are the members of TRIP. Natco had filed application for compulsory licenses for export of generic anti-cancer drugs Sunitinib and Erlotinib, both patented in India to Nepal under section 92A of the Indian patent law. However, Natco subsequently requested Controller of Patents to withdraw its applications for compulsory licenses.

Despite the similarities in compulsory licensing provisions, there is a significant divergence in how those flexibilities have been historically utilized in the BRICs. The differences serve as an outline of relative intellectual property development, and may provide a metric for future evaluation. More importantly, it is possible that one path will provide the paradigm for the other BRICs seeking a balance between rights and access.

Economic Significance of IPR on BRIC economies

With the BRICs strengthening their IPR systems during the past decade they have experienced increases in real flows of imports and increases in the real stock of inward FDI (Foreign Direct Investment). The authorities in BRICs have exhibited stronger IPR policies, because of the recognition that infringement activities impose a cost in terms of foregone tax revenues and job creation, with adverse affect on inward technology transfer as well as domestic innovation.

Between 2000 and 2005, the BRIC countries made a contribution of 28 percent of the global growth in dollar terms and 55 percent in purchasing power parity terms. The intra- BRICs trade also reported to accelerate to 8 percent from 5 percent in 2000. In BRIC countries technology transfer via trade and FDI has been an important factor into developing technological capabilities. There have been countless signs of developing trade relationships, including the sharp spurt in Brazilian trade with China, Chinese investment commitments in Brazil and the exponential growth in trade between China and India.

IPR alone does not determine technological success or even increased access to technology, other complimentary factors that specifically affect innovation and technology diffusion such as quality of knowledge institutions, financial system, availability of trained human capital, and networks for research collaboration or interaction are the important factors which BRICs have to facilitate for the technological success.

Software Patents: A unique field of patenting

There is intense debate over the extent to which software patents should be granted. Different countries and regional offices have different standards for granting software patents. Section 3(k) of the Indian patents act prohibits the grant of the patent an invention that is directed to software per se. Indian Patent Office has now introduced Draft Indian Patent Manual 2008. As per section 4.11.6 of Draft Indian Patent Manual 2008, the method claim should clearly define the steps involved in carrying out the invention. It should have a technical character. In other words, it should solve a technical problem. The claim orienting towards a "process/method" should contain a hardware or machine limitation. Technical applicability of the software claimed as a process or method claim, is required to be defined in relation with the particular hardware components. Brazil provides special protection to software by copyright and software laws which came to effect on 19th June, 1998 and Feb 1998 respectively. A US federal court Judgment on disallowing business method patenting, may have a direct impact on the ongoing debate over amendments to the Indian patents manual. It has been studied that Business method patents are seven times more likely to be litigated as compared to other patent.

In Brazil infringement of copyright in software can give rise to criminal penalties. After the Berne Convention, computer software was treated as a kind of literary work under the Copyright Law in China. Software is still barred from patenting in Russia.


BRICs have all found their own way in preserving at least some legal sovereignty in the intellectual property arena. Although the BRICs have so far grown more than envisaged, yet all is not satisfactory as far as the economies of BRICs are concerned. Current success is obviously no guarantee of future performance. More progress is required if they are to continue to deliver the best possible outcomes over a longer period of time.

Snigdha Rani Das is a Managing Associate in the patent department of Anand and Anand and a registered patent agent as well as a trademark agent. She holds a B.Tech degree in Electronics and Instrumentation Engineering.

Her area of expertise is in prior art and patentability search, patentability assessment, drafting of the patent specification conforming to Indian and International level, prosecution in India and Internationally, providing opinion, handling opposition and infringement analysis in the area of Electronics, Software, Business methods, and Mechanical. She actively participated in various workshops in the IP sector and given lecture in the International conference.

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