Growing counterfeit and pirated products demand stricter IPR law enforcement, protection of intellectual property is important for promoting innovation and creativity says EU.

Rajesh Uppal September 18, 2017 Industry Comments Off on Growing counterfeit and pirated products demand stricter IPR law enforcement, protection of intellectual property is important for promoting innovation and creativity says EU. 485 Views

In our increasingly knowledge-based economies, the protection of intellectual property is important for promoting innovation and creativity, developing employment, and improving competitiveness, says EU. The European Commission works to harmonise laws relating to industrial property rights in EU countries to avoid barriers to trade and to create efficient EU-wide systems for the protection of such rights. It fights against piracy and counterfeiting and aims to help businesses, especially small businesses, access and use intellectual property rights more effectively.

Today, counterfeiters are capable of reproducing food and beverages brands, medicines, electronics and electrical supplies, auto parts and everyday household products. Meanwhile copyright pirates have created multi-million dollar networks capable of producing, transporting and selling their unauthorized music, videos and software.

According to a report by World Health Organization (WHO), 10 per cent of pharmaceutical drugs in the world are counterfeited, rising to 60 per cent in developing countries. The FMCG sector looses 15 per cent of revenue due to IP crime.

U.S. Customs and Border Protection (CBP) stated in their annual report that the total number of products seized containing Intellectual Property Rights (IPR) infringements increased nearly 25 percent in fiscal year 2015. The collaboration netted 28,865 seizures of shipments, an increase from 23,140 in fiscal year 2014. Had these products been genuine, the estimated manufacturer’s suggested retail price (MSRP) of the seized goods would have been over $1.35 billion. This is a ten percent increase in the value of seized goods from the previous fiscal year, which were estimated at $1.23 billion MSRP.

The People’s Republic of China remained the primary source economy for counterfeit and pirated goods seized, accounting for a total estimated MSRP value of $697 million or 52 percent of the estimated MSRP value of all IPR seizures.

Counterfeit and pirated products put the health and safety of consumers worldwide at risk while robbing governments, businesses and communities of tax revenues, profits and legitimate jobs. The negative impacts of counterfeiting and piracy are projected to drain US$4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk by 2022, says ICC.

According to a U.S. Senate committee report in 2012 and reported by ABC News, “counterfeit electronic parts from China are ‘flooding’ into critical U.S. military systems, including special operations helicopters and surveillance planes, and are putting the nation’s troops at risk.” The report notes that Chinese companies take discarded electronic parts from other nations, remove any identifying marks, wash and refurbish them, and then resell them as brand-new – “a practice that poses a significant risk to the performance of U.S. military systems.

A strong IP regime is pivotal for consistent flow of commerce and foreign investments. Stronger IPR regime not only ensures in establishing a proper framework for industrial and trade policies but also results in progress and developments of country’s growth and development. A strong IP enforcement (as applicable in developed countries such as the US, the UK, etc.) with more rigid and stringent licensing restricts the entry of imitative players to enter the market, thus making them more attractive for investors. Majority of the Asian countries are perceived as the biggest markets for selling counterfeit products and services as that have weak IPR protection or enforcement of laws to protect it.

According to a report from Global Competitiveness Report 2015-16, Singapore has retained its ranking as second in the world for intellectual property protection. This is largely driven by business-friendly IP climate which is a key enabler to help enterprises choose their country for investments in business and research & development.

India, China on US’ Intellectual Property Shame List

The US trade representative office listed China, Russia and India on its annual list of countries with the worst records of preventing the theft of intellectual property and cited Switzerland for failing to curb online copyright infringements. The list, released by the US Trade Representative’s Office, carries no threat of sanctions, but aims to shame governments into cracking down on piracy and counterfeiting and updating their copyright laws. Overall, the agency has 11 countries on the “Priority Watch List”: Algeria, Argentina, Chile, China, India, Indonesia, Kuwait, Russia, Thailand, Ukraine, and Venezuela.

“Intellectual property is a critical source of economic growth and high-quality jobs for the United States, and it is more important than ever to prevent foreign governments and competitors from ripping off United States innovators who are trying to support high-paying jobs by exporting their goods and services to consumers around the world,” US trade representative Michael Froman said in a statement. The trade agency said that the value added of US-held intellectual property was approximately $5 trillion in 2010, contributing 34 per cent to US gross domestic product that year and supporting 40 million jobs in IP-intensive industries.

US report said China has undertaken some intellectual property law reforms, but the highest level of scrutiny was still warranted due to trade secret theft, rampant piracy and counterfeiting of online and physical goods, as well as newer requirements that condition market access on use of intellectual property IP developed in or transferred to China.

India stays on the highest priority watch list due to lack of measurable improvements to its intellectual property legal framework, despite stepped up enforcement efforts, USTR said. But Pakistan was upgraded to the regular watch list after it created specialized intellectual property courts, established a timeline for improving its legal framework and improved border security.

The IP rights were included in the international trade regulations as a part of the Uruguay Round (1986-94) and thus resulted in the TRIPS {Trade-Related Aspects of Intellectual Property Rights} Agreement. This agreement provided a framework on how the IP rights have to be protected, particularly of companies that invest huge amounts in inventions and creation of patents. In summary, these provisions demanded that every party to TRIPS will have to create domestic laws and regulations to create a sound protection system. However, within the TRIPs agreement, some flexibilities were included in favour of public interest for developing / least developed countries. These flexibilities allowed such countries relaxation in domestic laws.

China

China will encourage innovation through better protection of intellectual property rights (IPR) during the 13th Five-Year Plan period (2016-2020). A guideline has set targets to improve IPR rules and regulation in emerging fields, including internet plus, e-commerce and big data. Patents are expected to increase from 6.3 per 10,000 people in 2015 to 12 per 10,000 in 2020. Royalties earned abroad will rise from $4.44 billion in 2015 to around $10 billion in 2020, if expectations are met, according to Xinhua.

China has already introduced tougher penalties, but there are still shortcomings, including insufficiently rigorous protection and recurrent violations. Last year, in a circular on private investment, the Supreme People’s Court (SPC) called for yet tougher punishments for IPR violations. According to the work report of the Supreme People’s Procuratorate (SPP) China last year prosecuted about 21,000 people for IPR-related crimes.

“China is on the edge of a historic transition,” said Chen Hongbing, head of the World Intellectual Property Organization’s China office in an exclusive interview with China Daily. “With globalization and regional economic integration, the country’s commodities, technologies, brands and capital are moving into overseas markets at a rapid pace. “In this process, innovative products and technologies need to be protected with IPR. … Otherwise, difficulties may arise.”

The central government has put more emphasis on innovation in recent years, leading to a series of technological breakthroughs. In 2015, China’s patent office received a record 1 million applications, the most reported in any country in a single year. “The number of patent applications has soared, which shows a rising awareness about IPR, improvement of IPR system operations and an uplift of overall innovation performance by the country,” Chen said.

India

In the second week of May 2016, the Union Cabinet has approved a new National Intellectual Rights Policy to outline the future roadmap for IPR in India. This policy has been released with a vision statement that envisages an India where – creativity and innovation are stimulated by IP for benefit of all; IP promotes advancements in Science & Technology, arts & culture, traditional knowledge and biodiversity resources; knowledge is main driver of development and knowledge owned is transformed into knowledge shared. It endeavours for a “Creative India; Innovative India”.

The IPR policy has spelled out some tangible goals as follows: Reducing the time taken on clearing the backlog of IPR applications from current 5 to 7 years to 18 months by March 2018. Approve trademark applications within one month by 2018. Currently, a trademark approval takes around 13 months on average. Designate DIPP as nodal agency for coordination, guidance and regulatory works. Cover Films, music, industrial drawings by copyright. To review the policy in five years in consultation with stakeholders. The Policy also seeks to facilitate domestic IPR filings, for the entire value chain from IPR generation to commercialisation. It aims to promote research and development through tax benefits.

Intellectual property protection and access to capital are two challenges facing a new wave of biotech innovation and investment in India, according to James Greenwood, President and CEO of Biotechnology Innovation Organization (BIO). BIO is the world’s largest trade association representing biotech companies. “Here in India, I see two critical challenges that, if addressed, could usher in a new wave of biotech innovation and investment, saidJames Greenwood, President and CEO of Biotechnology Innovation Organization (BIO).

The first is intellectual property protection, and the second is access to capital,” Greenwood said. “Biomedical innovation cannot be sustained without a government committed to protecting your work product…No one will invest hundreds of millions of dollars to research new biologics unless government protects the underlying IP,” he said, while praising the present Narendra Modi government for taking steps in this direction.

Pankaj Patel, chairman and managing director, Zydus Group said,”We have full TRIPS compliance patent law.” “The only challenge was enforcement. But after PM Narendra Modi taking over, the enforcement has become proper.

Singapore

Singapore has benefited by embracing stronger IP regime and continues to build a conducive and progressive ecosystem to encourage businesses to perform IP activities in the country. Additionally, the country’s IP practices are aligned with the developed economies such as the US, the UK, and the European Union.

Some of the IP developments made by Singapore government to promote IPR include:

1. Create IP Awareness – The government has made effective policies for promotion and enforcement of IP rights and reward IP holders for their efforts. It also encourages others to innovate more and deter infringers from violating IP rights.

2. Fast-track processes – The IP holder does not enjoy his rights due to lengthy judicial process. The Singapore government has taken adequate steps to quickly resolve IPR issues with an appropriate time so that the IP holder can be rewarded and enjoy the fruits of his success.

3. Improvised Infrastructure – The IP process involves series of actions for the grant of a patent. For instance, the whole process of patent examination can take 6-7 years. But, the government has introduced several measures to expedite the process through the use of technology and methodology.

4. Managing cases electronically – It includes e-approaches and technique used by the government to manage the dependency of cases effectively. It has allowed the judicial authorities to accept filings and download documents and print them directly.

5. One-stop service centre – The Intellectual Property Office of Singapore (IPOS) has established a one-stop service centre called IP 101, which provides information, education, training, advice and facilitates filing.

6. Proactive monitoring for IP infringement – Singapore’s IPR enforcement agency conducts enforcement raids based on information received from the IP owners, through anonymous tips, referrals from other agencies, etc.

7. Developing Global IP Hub – The 10-year master plan recognized a window of opportunity for Singapore to become a hub for IP transactions and management, quality IP filings, and dispute resolution by leveraging its IP infrastructure, high quality workforce, and strategic geographical location.

Intellectual Property (IP)

Intellectual Property (IP) has been traditionally categorized into Industrial property and Copyright. The term Industrial Property includes patents, trademarks, industrial designs, and geographic indications of source.

Patent is a form of protection that provides a person or legal entity with exclusive rights for making, using or selling a concept or invention and excludes others from doing the same, also for claiming damages from those who infringe the invention.

In India an invention/product has to satisfy various criteria to qualify for a patent are:

New/ Novel- The invention has a feature that sets it apart from previous inventions and is unknown to the public.
Non-obviousness- The invention’s novelty must not be obvious to someone who has ordinary skill in the area of invention.
Utility- The invention is considered useful

Like other IP laws patent protection is territorial in nature. Registration of a patent ensures protection in all over India. If somebody wants to protect their invention in another country they have to file application in each and every country where the Applicant wants patent protection for their product/invention.

A trademark is the most valuable asset owned by a business. When a business is successful, others will imitate not only the ideas and market strategy, but very often they will also imitate the trademarks, product packaging, distinctive markings, etc. used by a successful company. Businesses with particularly successful products or services spend considerable amounts of time, effort and money creating, establishing and promoting their unique identities.

Copyright protection is granted to protect literary, artistic and musical works. Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and those of broadcasters in their radio and television programs. Intellectual property rights are generally said to be a bundle of exclusive rights granted to the lawful owner