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Pirates on the High Seas
The United States and Global Intellectual Property Rights
Bénédicte Callan
1998
American Goals
The Challenges To Strong, global IP rights are easy to identify: recalcitrance in the big emerging markets, the difficulty of behind-the-border monitoring and enforcement of IP agreements, and the emergence of new technologies that challenge existing concepts of intellectual property. Less easy to pin down are American objectives. Ideally, the United States would like global intellectual property protection of a breadth and strength equivalent to that available in the United States, and judicial systems capable of enforcing the letter of the law. 84 American officials would be much happier if more IP regimes resembled that of the United States, and this guides U.S. IP rhetoric and policies.
But a global intellectual property system that mirrors the U.S. model is unrealistic for others. To begin with, the American IPR system has quirks that the rest of the developed world does not share or want. Most prominent is the convention of establishing priority by the date of invention rather than the date of filing. 85 American firms themselves are not eager to export some peculiarities of the U.S. system, such as overly broad patent coverage and the expensive litigiousness of intellectual property disputes. 86
The main obstacle to a harmonization of U.S. norms, however, is the fact that a country’s intellectual property regime is a central part of its research and development system. Each nation’s IP regime consists of a series of trade-offs between producers and consumers, inventors and improvers, and even between generations. Advanced countries bicker about the details of how to strike a balance between interest groups, and developing countries, which often favor the consumer, improvers, and the present generation, are even warier of harmonization to an American standard. Every IP regime presents a series of fundamental choices about the amount spent on development, the type of research that is economically viable, and the rate at which new technologies spread through society. 87 The natural desire of individual countries to maintain control over their R&D policy makes it difficult for the United States to pursue harmonization to the U.S. norm or, for that matter, to make any other country’s IP system the standard.
The United States cannot re-create the world in its image, but it has not identified alternatives either. Part of the uncertainty over how to proceed since the ratification of TRIPs stems from an American aversion to admitting that there are choices, each with pros and cons and each implying different commitments and strategies on the part of the United States. In order to create a consensus, to proceed rationally, and to win developing countries’ commitment to higher levels of protection, clearer U.S. objectives are needed.
As a first step, we can identify two very general points on which American industry and government agree: (1) stronger global IPRs are desirable and should be pursued, and (2) all efforts should be made to minimize any loss of sovereignty over our domestic intellectual property rights system. Given these two tenets, the United States is aiming for a fixed minimum level of protection to which all countries must agree and which theoretically allows for variation among developmental strategies. The United States must narrow its goals still further, choosing between a simple enforcement of TRIPs on the one hand and a deep harmonization of national IPR systems on the other.
TRIPs Enforcement
The most conservative goal is simply to monitor and enforce existing IP agreements. Without doubt, making sure that countries fully implement TRIPs would substantially raise standards above present levels. If tomorrow there could be complete implementation of TRIPs, most U.S. firms would be very satisfied. But in terms of U.S. policy, this option is essentially the status quo. The showdown with China during the spring of 1996 was precisely about compelling the PRC to monitor and enforce its own laws. And the WTO already has a dispute settlement procedure that reviews countries accused of violating the TRIPs Agreement. The Clinton administration has initiated 20 WTO dispute settlement proceedings, leaving no doubt that the United States will push for strict enforcement of existing agreements. Five cases—against Japan, Portugal, India, Pakistan, and Turkey—involved intellectual property complaints. 88
Monitoring and enforcement, therefore, are the bottom line strategies for the United States. From a policy perspective, it would require a commitment to and faith in the WTO’s dispute settlement mechanism, a desire to bring in countries not yet party to the WTO, and bilateral negotiations to extend TRIPs-like standards to countries unable to accede. However, TRIPs enforcement is unlikely to be our only strategy: TRIPs has too many loopholes and ambiguities to make it acceptable as a permanent solution.
Uniform Global IPRS
The most ambitious goal moves far beyond harmonization to unification of the disparate intellectual property systems. A supranational body would be created and made responsible for the administration and coordination of IPRs. Advantages over the present system are numerous: single applications would lower filing costs; prior art searches for patents would be necessary only once and property rights assigned would be recognized in all member countries. 89 To a degree, elements of a unified system are present in the Patent Cooperation Treaty, the European Patent Office, and other IP conventions that try to simplify international filing. Unification would coordinate and deepen these various agreements, to create one or several joint and centralized administrative systems. Of course, a unified IP regime raises familiar problems of sovereignty and control over domestic R&D systems. The U.S. Congress would fight any loss of U.S. autonomy, so from the American perspective a prerequisite to unification is harmonization to U.S. standards. This makes unification an ambitious and long-range goal, if feasible at all.
TRIPs-Plus
Somewhere in between enforcing the status quo and creating strong international organizations are options that combine different elements of institutionalism and different levels of standardization. Borrowing a classification scheme from the Brookings Institution, the real choice lies somewhere between further coordination of differing national IPR regimes and higher standardization levels than embodied in TRIPs. 90 Remember that there is no trtte international system of intellectual property protection. Domestic IP regimes are overlaid with international agreements about the type and length of protection and enforcement signatory countries agree to provide. In TRIPs-plus, national IP systems remain distinct, but standards and norms could be negotiated in a multi-nation context to create greater congruence between individual IP systems (minimizing differences among national IP regimes), and standards of protection raised. 91 The objective is a harmonization of laes and a gradual ratcheting-up of internatioinal IPRs. The standards options is a middle road between a conservative strategy and actually creating a supranational body. It is what most American industries hope the United States will pursue. But the standards option leaves open the level of institutionalism necessary and how much breadth and depth of protection will be demanded. It requires that the United States be more explicit about its goals for the global system. More specifically, it demands consideration of the following issues:
There is a surprising degree of agreement in the United States on many of these dimensions. According to the U.S. Trade Representative’s office, while an impartial system for dispute resolution is necessary, the United States will retain its right to use sanctions in cases not otherwise covered, as with China, which is not a member of the WTO. Enforcement is the single greatest challenge for stronger global IPRs, as many countries do not have the funds or political will to create the legal and administrative structures to support an IP system. The United States will not abdicate the occasional use of pressure to catalyze change. Given that TRIPs is roundly criticized for its lag time, the timetable for action on intellectual property should be accelerated to well before 2010. A deadline of 2000 for full implementation of TRIPs and a renegotiation of problem areas would be ideal. The U.S. government is very open to regional and bilateral agreements on IPRs. The momentum for sweeping multilateral negotiations is not strong in the mid-1990s, and as we shall see, regional agreements may be more tractable. New technologies should be addressed promptly, but probably not before a consensus has been reached in the United States on how best to protect and promote them. Finally, the creation of supranational offices to oversee or administer intellectual property should be pursued as a long-term goal, rather than a top priority, because of the difficulty of dealing with sovereignty issues. 92
The U.S. government and its innovating industries want an accelerated TRIPs agreement that includes all the BEMs, strengthens protection for the new technologies, and is enforceable. Unfortunately, this goal is not well articulated either within the government or to U.S. trade partners.
TRIPs-plus necessitates a multitrack approach. First, the United States would rely on the WTO to maintain the basic TRIPs level of protection in most countries. Second, the U.S. would need to negotiate higher levels of protection with specific countries. In all likelihood this will be done outside the WTO framework, in either regional or bilateral forums, as it is unlikely that the United States will be able to get faster implementation or broader protection within the WTO framework in the immediate future. Finally, achieving stronger levels of protection will mean giving something in exchange—be it technology transfer or market access—to win the compliance of the target country. The WTO has placed limitations on U.S. sticks, requiring a greater reliance on carrots to change IP behavior in third countries.
The United States needs to make clear its IP goals. Although muddling through is fine under some circumstances, it is not the optimal strategy for intellectual policy. A consistent, universally applied, and achievable set of goals is necessary because the United States has limited monetary and political resources to spend on this particular trade issue. A lack of political momentum for intellectual property issues—at home and abroad—requires that the country choose its battles well.
Endnotes
Note 84: Breadth refers to the number of product and process categories covered in the IP system. Even in countries with relatively strong IP Systems, products like pharmaceuticals and recombinant plants or animals often have not received IP protection because governments believe that public interest dictates that drugs and food be available at reasonable prices or because such IP protection would violate public order or morality. The strength of patent protection includes the length of time the protection is offered (e.g., 20-year patent terms, 50-year copy-right terms plus life of the author) and the ease with which one can defend the protection from infringers. The United States, for example, has long claimed that Japan’s protection is weak because it does not have a doctrine of equivalents and tends to narrowly interpret patent claims. In Japan, if the claims in two separate applications do not literally infringe, competitors are allowed to make similar products; in the United States, the courts would hold that if the products perform substantially the same function in substantially the same way, the second product would infringe. Back.
Note 85: While the "first to invent" system in the United States more accurately reflects who came up with an invention, the "first to file" system used by most other countries is easier to administer. At the prodding of Europe and Japan, the United States is considering harmonizing to the de facto world standard. Back.
Note 86: The consensus within industry is that patent coverage is much too broad and blocks the ability of later developers to use the technology. In the biotechnology field, for example, profits from 30% of sales go to pay legal expenses in disputes, most often to protect a company’s intellectual property. Back.
Note 87: Take Japan and the United States. The two are at an equivalent stage of development, but the choices they have made for IP protection are very different and have heavily influenced their national innovative capabilities. Back.
Note 88: The case against Japan was filed in February 1996 for "failure to protect the rights of U.S. performing artists and producers who recorded in the 25-year period between 1946 and 1971." See the USTR press release of April 30, 1996 "USTR Announces Two Decisions: Title VII and Special 301." Turkey is cited for its tax on receipts from the showing of foreign films; India and Pakistan because they have not set up a "mailbox" system for pharmaceuticals and agrochemicals; and Portugal because its patent term was inconsistent with TRIPs. Back.
Note 89: In patent applications, prior art searches are performed (a) to determine whether a patent has already been issued for the product or process, and (b) to make sure that the invention is not already part of the public domain of knowledge arid therefore not patentable. In the absence of cooperative agreements, prior art searches must be performed in every country in which the patent application is filed. Back.
Note 90: The Brookings Institution publishes a series entitled "Integrating National Economies The editors distinguish between six levels of international convergence national autonomy, mutual recognition, mutual decentralization, coordination, explicit harmonization, and federalist mutual governance. I believe that international IP protection has already attained a significant degree of coordination. The question facing WTO members—and participants in WIPO or other IP agreements—is whether further harmonization is possible, or even whether federalist mutual governance is feasible and desirable. The relevant volume here is Miles Kahler, International Institutions and the Political Economy of lntegration, Washington, D.C.: The Brookings Institution, 1995. Back.
Note 91: Robert Sherwood makes the distinction between creating a single global IP system and making the individual national systems more uniform and congruent. Back.
Note 92: However, some supranational organizations are being considered seriously. For example, to decrease the costs of setting up a patent system in developing countries, regional resource sites for prior art searches of already patented innovations are highly recommended. Back.
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