A Brief History Of Intellectual Property In China And India

from the ups-and-downs dept

This is the second post in a series of posts looking at the question of intellectual property rights in both China and India. We'll be adding new posts to this series each week for the next few weeks.

To fully understand why increased intellectual property in China and India is unnecessary and objectionable, it helps to understand the relationship intellectual property has with economic development. Historically, intellectual property has generally increased with economic development, but the relationship is not straightforward. Although there is no reliable cross-country index of intellectual property policy, in large part due to the difficulty of quantifying concepts like enforcement quality, some trends are discernable. When a country is poor, IP is unnecessary for a host of reasons, not the least of which is the limited access to productivity enhancing technologies that intellectual property brings and the domestic inability to innovate in a commercially viable manner. But instead of constantly increasing with wealth, IP actually falls with an initial increase in wealth before dramaticaly growing (Maskus 2000). As a country develops, it obtains imitative abilities that make legal prohibition on copying foreign technologies an artificial obstruction to economic growth. However, with further global integration and increased domestic innovative capabilities, patent protection tends to increase. However, China and India have both realized that their relative poverty makes access to technology a more pressing concern, justifying relaxed IP standards.

India's On-Again, Off-Again Relationship With Intellectual Property

India' colonial status brought with it patent legislation, so by 1911 India's IP regime conformed with developed world status (Graff 2007). However, seeking to develop a domestic pharmaceutical industry, in 1970, India abolished patents on pharmaceutical products. This allowed domestic firms to imitate and adapt foreign therapeutic inventions. The policy was a success: the 2,237 licensed drug manufacturers in 1969-1970 grew to 16,000 by 1991-1993, production of drugs grew at an average rate of 14.4% per year from 1980 to 1993, India became a net exporter of pharmaceutical products, and the market share of foreign multinational corporations (MNCs) dropped from 80-90% to 40% (Fink 2005). In 1995, six of the top ten pharmaceutical firms in India were domestic, and employment in the sector had reached half a million people (Lanjouw 1997).

However, to gain access to the global market enabled by the World Trade Organization, India had to ratify the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the most influential treaty on global intellectual property. Doing so included introducing full product patents on pharmaceutical innovations, extending all patents from 5-14 years to 20 years, and accepting limitations on compulsory licensing (Abramson 2007). Observers noted that this was likely to lead to a loss of consumer surplus (Chaudhuri et al.). However, the government agreed against its wishes to TRIPs for the additional benefits of WTO membership (Lanjouw 1997). Under TRIPs regulations, patenting has accelerated in India (Dahlman 2005).

China As The Late Bloomer

China was a latecomer to intellectual property. Its first patent law came into effect in 1985, followed by a copyright law in 1990 (Graff 2007). However, since then, the pace of progress has been rapid; it has now joined all major international IP treaties (Maskus 2005). Its patenting activity is increasing rapidly, too, with domestic firms nearly doubling the number of patents they received in the past four years (“Chinese firms…”). China’s Patent Office now leads the world, reviewing 800,000 applications in 2008, and in 2009, domestic firms are poised to receive more patents than foreigners for the first time ever (“Battle of Ideas”). Chinese firms are also receiving more patents abroad: in 1999 they only won 90 patents in America, but by last year they had increased that number to 1,225, demonstrating a desire to use their inventions globally (“Battle of Ideas”).

Chinese intellectual property, however, is still frequently critiqued. Enforcement is notoriously weak with the United States citing “rampant counterfeiting and piracy problems.” Strikingly, according to the USTR, China was the origin for 67% of seizures of counterfeit goods at the American border in 2008. In response to these and other concerns, China has recently updated its patent laws, increasing statutory damages and expanding the investigative power of the patent office (Lim 2009).

In the next post, we'll take an extended look at the case made for stronger intellectual property in China and India. 


Other posts in this series:

Filed Under: china, developing nations, india, intellectual property, patents


Reader Comments

Subscribe: RSS

View by: Time | Thread


  1. icon
    bikey (profile), 2 Jul 2009 @ 1:03am

    Re: not creative?

    Half of humanity 'not creative'? What a ridiculous thing to say. No facts can convince a person who would willingly put such a statement in writing, but hey, China is pouring money into biotech research, and if you don't think this is creativity, take a gander at Chinese cinema. India not creative? Do you know what Europeans were wearing before they 'stumbled across' Indian textiles, prints, colors, etc.? Brown rags (see Braveheart for a taste of early European aesthetics) that's what. These are just a few of thousands of examples. Please, think before you tap.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here



Subscribe to the Techdirt Daily newsletter




Comment Options:

  • Use markdown. Use plain text.
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Advertisement
Report this ad  |  Hide Techdirt ads
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Advertisement
Report this ad  |  Hide Techdirt ads
Recent Stories
Advertisement
Report this ad  |  Hide Techdirt ads

Close

Email This

This feature is only available to registered users. Register or sign in to use it.