The Way Forward On Intellectual Property For China And India

from the what-to-do-now... dept

This is the final post in our series on intellectual property in China and India. Feel free to read through the whole thing.

The continued development of the knowledge economies in both China and India requires thoughtful, practical policies that will give the needed incentive and capacity to innovators while providing benefits to as many as possible. In contrast to the beliefs of many, further strengthened intellectual property rights are unlikely to provide a positive impact on the economies of China and India. Instead, the two emerging giants should dedicate maximum attention to the other ingredients of a knowledge economy while structuring, to every extent possible under international treaty obligations, their domestic intellectual property regime to provide the optimum balance between incentives and access, bearing in mind that to diffuse the gains from existing innovations, the latter is to be favored.

Perhaps the single-most beneficial thing China and India can do to promote innovation and a dynamic knowledge economy is to provide high-quality education for all. This can be done in numerous manners, but it is important that science and technology education is promoted, perhaps even subsidized, to make it more attractive and affordable. Developing highly-skilled workers will provide the creativity and drive essential to the invention, adoption and productive utilization of new technology. While providing training for scientists and engineers, China and India must also create a strong managerial class to absorb and adopt technologies from around the world (Maskus 2000).

Additional policies can promote innovation, as well. Labor laws, especially in India, should be restructured to create maximum mobility and provide competitive salaries for the best and brightest. Government procurement laws, the rules of science and technology ministries and funding sources can be reformed to provide the incentives that intellectual property seeks to create, but without the unintended consequences of limited access and monopoly prices (Graff 2007). Universities, an important source of knowledge, should be connected with industry and receive funding for basic and applied research. Further, economic policies should encourage open competition, macroeconomic stability and a robust ICT infrastructure.

China and India should seek to structure their respective intellectual property regimes to best promote their individual interests, not an unclear global compromise that is driven by nations far wealthier than themselves. China and India are unique due to their size in which advanced capabilities exist in parallel with deep-seated poverty. Although existing international treaties largely confine China and India, they do have some room for flexibility. For example, TRIPs leaves room for domestic standards regarding novelty, nonobviousness and the scope of patent protection (Abramson 2007). This can be used to tilt the intellectual property regime towards second-comers, especially domestic innovators (Reichman 1997). For example, nonobviousness should be interpreted widely, allowing Chinese and Indians to legally utilize overly blatant foreign patents. Disclosure should be strengthened, leading to additional information spillover. And competition laws can be used to curb many of the adverse effects of IP. In the face of overly-strong intellectual property abroad, China and India should structure their legal incentives to encourage long-term competitiveness, establishing an innovation system that will be increasingly attractive to MNCs who find innovation difficult in the West.

A number of specific recommendations are possible, as well. Think tanks and research institutions focused on issues concerning intellectual property should be established with independent, objective and well-trained staff. Both existing IP systems should be run efficiently and with social interests in mind. This means training judges, administrators and bureaucrats in the nuances of intellectual property and their costs and benefits. When addressing university commercialization, India and China should fund and manage research in the public interest, mandating transparency, avoiding exclusive licensing unless necessary for commercialization, and potentially retaining government use rights for resulting innovations (So 2008). Although it has not been the focus of this paper, on the topic of traditional knowledge, China should follow India’s lead in actively defending the public use of exiting knowledge by fighting attempts to reappropriate the public domain through marginal changes to traditional knowledge. India’s successful challenge of patents on neem and Basmati rice provide useful examples (Boldrin 2008). Finally, the capacity of domestic institutions to support limited intellectual property should be strengthened, most prominently by prosecuting misuses of the IP regime (Okediji 2006 PDF).
With increased global prominence, China and India should accept their rightful place in the international system. As far as it is in their populations’ interests, they should resist further elevation of intellectual property, seek expanded compulsory licensing capability, and promote exceptions and limitations for educational materials for students.

Above all, China and India should seek consistency and transparency in their intellectual property policies to create a business environment conducive towards investment and innovation. IP should not be strong; IP should be efficient. As an imperfect tool, it should be used pragmatically and critically.

Robust, clear and enforced intellectual property is very likely a part of a successful knowledge economy, but the advantage of strengthened IP is frequently overstated. In contrast to the other parts of a knowledge economy, intellectual property has a tendency to be misused to the detriment of the economy. For both China and India, placing faith in exclusive rights will limit the ability of the impoverished masses to find productive employment and threaten the long-term sustainability of their innovativeness.

Other posts in this series:

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Comments on “The Way Forward On Intellectual Property For China And India”

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1 Comment
Richard says:

What they will do

Phase 1 – Ignore IP more or less completely

Phase 2 – Introduce a regime that weights the dice in favour of domestic IP and creates difficulties for foreign firms and artists by requiring unique bureaucratic procedures to establish protection.

Phase 3 to be introduced once they are a net exporter of IP – Move from a laxer regime than the rest of the world to a stricter one – and insist that everyone else follows suit – using their (by then) dominant economic power to force the issue.

This was the historic pattern of the US, which should they behave differently. At present we seem to be entering phase 2.

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