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Eight years ago, the world began an ambitious journey toward a global intellectual property system, which would give real protection to creation and innovation. Respect for intellectual property rights would in turn spur economic growth. So how has TRIPS gone? Let’s take a closer look at the IP situation in 13 countries — a baker’s dozen from Asia, Africa, the Middle East, Latin America, and Eastern Europe. The results are encouraging, but incomplete. The Agreement on Trade Related Aspects of Intellectual Property Rights came into force in 1995 in conjunction with the World Trade Organization. As a condition of WTO membership, each country had to build into its domestic laws the minimum patent, trademark, and copyright standards set out in TRIPS. For dozens of developing countries, constructing that intellectual property regime has not been easy. A workable IP system does not arise overnight. In addition to the enactment of substantive laws, an entire legal infrastructure must be built. To aid that process, Article 67 of TRIPS obliges industrialized countries to provide technical assistance to developing countries. A variety of entities have provided help, directed mostly toward drafting IP legislation and training in the enforcement of IP laws. The International Intellectual Property Institute conducts such technical assistance programs, research, and educational forums. Last year, we ran programs in the Philippines, China, Vietnam, South Africa, and Brazil for government leaders, judicial officials, law enforcement professionals, scientists, and artists. It’s not uncommon for IIPI teams to come home with the occasional horror story. But in our extensive travels we also see positive signs. While some countries show limited progress in stemming the tide on intellectual property violations, many others have taken giant leaps in their ability to stop rights infringements. The following article looks a bit closer at 13 developing countries. What we find is the good, the bad, and the ugly sides of global acceptance of intellectual property rights. JAMAICA Beyond Bob Marley:Jamaica releases more singles recordings on a per capita basis than any other country in the world. Jamaican music is at least a $1 billion industry. But only a very small portion of this globally generated revenue is earned by Jamaicans or finds its way back into the domestic economy. Music piracy is a costly problem for this poor island nation. What Jamaica still lacks is a system of intellectual property management and enforcement effective enough to harness musical talent and realize profit at home. Building Up:Jamaican authorities recognize the cost of music piracy. Since 1999, they have been busy overhauling intellectual property laws and redesigning the island’s legal infrastructure. The result? The Jamaican Intellectual Property Office opened in 2001 to consolidate IP-related administration, procedures, and activities. Ultimately, if such efforts to curb music piracy prove successful, Jamaica could boost its gross domestic product an impressive 10 percent. A Faster Bench:A new Commercial Court was also created in 2001 as part of the Supreme Court of the Judicature of Jamaica. The hope is that the new court will deal with IP cases more expeditiously. Previously, intellectual property disputes were treated like other civil cases — in other words, they were subject to lengthy litigation. Show Them the Money:Like Jamaica, the rest of the Caribbean sees the music industry as a potential money tree. Working with countries such as Trinidad & Tobago, Jamaica is helping establish a regional committee to manage and distribute royalties derived from the global use of Caribbean music. INDIA “We are seeing growing numbers of India’s young people entering engineering and [information technology]-related education courses. These are the copyright owners of the future, and we want to be able to protect the great new ideas which young IT professionals and engineers are creating from the effects of piracy. Providing protection of the moral and economic rights of the industry is fundamental to copyright owners’ ability to innovate, employ, and positively impact the Indian economy.” — Rajiv Kaul President, Microsoft India Mixed Bag:India continues to make major progress with copyright reform. The incentive: protecting domestic industries that depend on original thinking. Patent reform, however, has been slow in coming. Lax laws are credited for the tremendous boom in India’s generic drugs business. Now, some Indian pharmaceutical companies are interested in doing their own research and development. Will this force the needed change? Software Buzz:High-quality, low-cost talent makes India the logical choice for software development and outsourcing. Microsoft recently pledged $400 million to “deepen its India commitment” over the next three years. And local giants Tata, Wipro, and Infosys are enthusiastic about their prospects. But rest assured that global business is doing its due diligence on the government’s IP policies and how those policies will affect their business strategies. The Downside:India remains on the U.S. Trade Representative’s Special 301 Watch List of violators of the TRIPS Agreement due to rampant piracy. The availability of pirated software at the retail level remains at unacceptably high levels. The best guess: Six out of 10 business software programs in use are illegal. And pirates aren’t worried: Police take almost a year to put together charges against IP violators. Then cases can take 12 years to work their way through India’s notoriously slow legal system. Cable Culprits:Bollywood, India’s $1.3 billion film industry, faces a continual threat from the nation’s 40,000 cable systems, which regularly use pirated videos for their transmissions. In 2001, the Delhi High Court passed a restraining order against the cable companies to end the showing of unauthorized movies. But the jury is still out on its effectiveness. BULGARIA Reform Happens:Bulgaria has made significant progress enacting and enforcing intellectual property laws over the past several years. In 1999, for example, the legislature passed laws on trademarks and geographical indications, industrial designs, and integrated circuits. That same year, the U.S. Trade Representative took Bulgaria off the Special 301 Watch List. Legacy of the Pirates:But the situation was not always so promising. Once Bulgaria earned the dubious distinction of being labeled one of the world’s leading exporters of pirated entertainment and business CDs. In the mid-1990s, the country faced sanctions from the United States. A couple of years later, enforcement improved significantly once authorities moved to establish around-the-clock surveillance of plants known to manufacture counterfeit CDs. From Exporter to Importer:While Bulgaria’s crackdown on piracy worked brilliantly on the supply side, it didn’t sate the population’s hunger for bootleg CDs. Now, bogus copies come pouring into the country from places like Montenegro, Russia, and Ukraine. Estimates place piracy at a whopping 95 percent of all foreign sound recordings sold. Software Numbers:Total imports of software into Bulgaria for 1999 were $10 million — an eightfold increase from 1998′s paltry $1.2 million. The most important reason for this increase was a campaign undertaken to slash the rates of software piracy. The Bulgarian government worked to persuade private companies to buy licensed software, and it signed a deal with Microsoft whereby all government ministries would also buy licensed software. CHINA Socialism First:Intellectual property rights began to gain significance in China during the “Four Modernizations” campaign of 1978. A basic patent law was enacted in 1984, with a second revision finalized in 2000. The most recent law stresses two major goals: accommodating the socialist market economy and harmonizing China’s patent law with international standards and treaties. Delicate Moment:Because China has only recently been admitted to the World Trade Organization, the government is sensitive to the importance of policing IP rights violations. Currently, China is taking patent protection very seriously, dedicating resources and high-level official attention. Piracy, however, remains at extraordinarily high levels, reaching upwards of 90 percent depending on the product. No Honor Among Pirates:Sometimes the problem can draw a chuckle. When a Chinese publisher created a knockoff Harry Potter novel, pirates printed scores of unlicensed copies of the bogus story. Booming Biotech:Determined to expand their biotechnology industry, the Chinese know they must protect the IP rights of the nearly 1,500 foreign-funded biopharmaceutical enterprises on Chinese shores. Those companies brought in $4 billion in capital investment in recent years. China is already considered one of the fastest-growing medical technology markets in the world. The Test:With at least 1 million citizens already infected with AIDS, China will have its commitment to the global trading system tested in coming years. Will the government work successfully with the originators of AIDS drugs to produce affordable medicines? Or will domestic manufacturers turn out cheaper, generic drugs unprotected by patents or official agreements? Insiders say the government is torn: People are suffering now, but China also needs to maintain its reputation as a reliable place to do business. EGYPT “Piracy is the worst type of theft and is prohibited by Islam.” — Sheikh Ibrahim Atta Allah Religion and Politics:Tough new laws together with the issuance of fatwas (edicts from religious leaders) suggest that Egypt’s intentions to honor intellectual property rights are good. But change is slow. And with mounting political pressures in the Middle East, the West’s primary concern might not be the enforcement of patents and copyrights. Red Flag:With the largest pharmaceutical industry in the region, Egypt is the center of all eyes as it tries to enforce its new patent law. So far, Pfizer is not impressed. After the multinational company finally obtained a license to produce and market Viagra in Egypt, the government licensed 12 local companies to make a generic version. By treaty, developing countries are allowed to produce their own generic versions of patented drugs in times of medical emergency. But what “emergency” demands Viagra? Less Loss:Software companies estimate that they lost $17 million from piracy in Egypt in 2001. But this is actually good news. Recent reports indicate that the piracy rate dropped from about 88 percent in 1996 to about 58 percent in 2001. Arts and Crafts:Piracy in Egypt is devastating the local creative community — the artisans who make glass perfume bottles, furniture, jewelry, etc. They lose an estimated $161 million a year in royalties. Publishers Alert:IP theft in the publishing sector is notorious as well. Estimated piracy levels for professional books, such as medical and engineering texts, range from 60 to 75 percent. And this is after American publishers tried to adapt by discounting prices as much as 80 percent. SENEGAL High Hopes:Senegal, like many of its West African neighbors, is starting to see intellectual property reform as a tool for much-needed economic development. High on the agenda are efforts to update relevant legislation, modernize IP administration, develop suitable human resources to manage IP issues, and, ultimately, utilize IP protections to promote creativity and innovation. AIDS Effort:Senegal is a leader among poor countries willing to work with big pharmaceutical manufacturers to purchase and distribute discounted AIDS drugs. Together with the World Health Organization, the World Bank, and the United Nations, Senegal has signed deals with companies such as Boehringer Ingelheim, Bristol-Myers Squibb, GlaxoSmithKline, Hoffmann-La Roche, and Merck to reduce the cost of drugs by 85 percent on average. Making Music:Afro-pop started gathering momentum in Western Europe as early as the 1980s. But with the exception of international sensation Youssou N’Dour, few Senegalese have successfully capitalized on their music. Skyrocketing piracy and corruption in authors’ societies are believed to be holding West African musicians back. BRAZIL Past Tensions:Intellectual property violations have sparked more than a few tiffs between the United States and Brazil in past decades. Of particular concern is the piracy of pharmaceuticals. Rampant infringement prompted the United States to impose a Special 301 action against Brazil in 1987 as a means of highlighting Brazil’s weak IP laws. A Piece of the Action:In 1997, a new Industrial Property Law went into effect in an attempt to meet Brazil’s international obligations under TRIPS and to avoid further Special 301 sanctions. Under this law, foreign manufacturers receive patent protection for their products only if they make at least some portion of the product within Brazil. Failure to meet this “local” requirement means that Brazil may issue licenses to domestic companies to manufacture the product. For example, as a result of this law, local firms got the green light to make eight of the 12 drugs composing the AIDS cocktail. Reversal of Fortune:In a complaint filed with the WTO in 2001, the United States alleged that Brazil’s Industrial Property Law violated Article 27 of TRIPS by unfairly discriminating against foreign manufacturers who exported pharmaceuticals to Brazil. Since then, the two governments have talked some more, and the United States has withdrawn its case. For now, Brazil and the United States have agreed to cooperate both to combat AIDS and to protect intellectual property rights. Off Pitch:Brazil is one of the largest markets for legitimate copyrighted materials and one of the largest markets for bootleg goods. And who is especially harmed by this? The Brazilians themselves, of course. More than 70 percent of the piracy is of Brazilian creations. As in Jamaica, Brazilian record companies, performers, songwriters, and music publishers in particular pay the price of piracy. Acting Locally:While the federal government has made less-than-monumental efforts to curb piracy, some state and local governments have stepped up to the plate. The state government of S�o Paulo, for instance, has created a specialized police unit for piracy cases. VIETNAM Achilles’ Heel:Vietnam’s ambitions to foster economic development, attract foreign capital, and join the WTO could be held at bay as the country grapples with piracy rates near 100 percent. Organized crime’s association with piracy is also a major deterrent to global corporations. Photocopy City:Hanoi earned this dubious moniker thanks to the fact that virtually any copyrighted work you could want is available there in photocopy form. It’s not that IP laws haven’t existed in Vietnam for some time. But these laws are “paper tigers.” Vietnamese citizens do not heed them, nor does the government enforce them. Hope on the Horizon:The United States-Vietnam Bilateral Trade Agreement entered into force little more than a year ago. One chapter commits Vietnam to bring its IP regime and enforcement practices up to international standards within two years of the agreement’s implementation. The United States has committed to provide training and assistance to enable Vietnam to meet its obligations. (For instance, the International Intellectual Property Institute met with several hundred officials and entrepreneurs in the fall of 2002.) What Goes Around:Vietnam businesses should be highly motivated to support the trade deal. Since the agreement was signed, exports to the United States have increased dramatically. Footwear exports are up 600 percent, and apparel exports rose by 400 percent. POLAND Thorn in the Side:Poland is one of the biggest IP pirates in Europe, and that could prove very problematic. Rampant rights violations could hinder the efforts of this former communist state, currently only an associate member of the European Community, to further integrate with the West. World Market:Warsaw Stadium has become the symbol of Poland’s counterfeit trading boom thanks to the tremendous volume of unauthorized retail activity carried out on its premises. Most of the pirated goods are not actually produced in Poland; they come from places like Russia, Ukraine, and China. In a relatively new development, products from as far away as Vietnam, Cambodia, and Laos are also infiltrating the stadium. Patent Apathy:Meanwhile, Polish inventors do not pursue patent protection with great vigor. In fact, statistics show that the number of patent applications in Poland is decreasing. Excessively bureaucratic procedures and relatively high fees are believed to be the main culprits. Fast Acting:Pirates in Poland are so industrious that it is not uncommon to find localized versions of video game CDs on the streets before the legitimate producer can get its wares to market. Mad at the Mob:Unfortunately, fighting pirates is apparently getting more difficult thanks to organized crime’s growing interest in the bootleg trade. The volume of business undertaken by syndicates is so great that small-time vendors of pirated goods now complain that the mob is driving them out of business. Fighting Back:Frustrated with the lack of progress, the Polish Association of Audio and Video Producers, the Polish Foundation for the Protection of Audio and Visual Arts, and the Business Software Alliance Polish Group have banded together to combat piracy. JORDAN “Many decades of absent or minimal intellectual property protection in the Arab world has given us enough time to see that not protecting IP is not a solution.” — Talal Abu-Ghazaleh Jordanian Attorney Good Signs:Since assuming the throne upon the death of his father in 1999, King Abdullah has taken an active role in stimulating Jordan’s economy with global trade. Eager to seal a free trade agreement with the United States and to reap other benefits afforded by international organizations, Abdullah has moved quickly to bring his nation’s patent and copyright laws in line with TRIPS. Plus Factor:An enhanced trade position was clearly a major impetus, but Jordan’s newfound respect for intellectual property is also helping pave the way for its burgeoning information technology industry. U.S. and European companies appreciate the modern copyright laws — and the proof is in the figures. Total sales of software and IT-related services in Jordan jumped from a paltry $22 million in 1998 to a much more impressive $130 million by 2001. Slowly, Slowly:Jordan is certainly not an overnight success story, but it is moving in the right direction. Software piracy has decreased from a staggering 90 percent to a more palatable 70 percent. The number of copyright cases filed with Jordanian courts skyrocketed from six in 2000 to more than 350 since 2001. A Modest Prediction:The Jordanians see intellectual property protection as a key component in their future economic growth. This bodes especially well for IT companies looking to expand in the Middle Eastern market. Microsoft and Intel seem impressed with Jordan’s results. PERU “Our company has grown thanks to the copy protections we’ve developed for our anti-virus software . . . but our company is unique in Peru. In most Latin American countries, little respect is given to intellectual property matters. While the authorities understand that stealing a car radio is a crime, they don’t comprehend that making illegal copies of software is the same kind of theft.” — Jorge Machado Presidente de Directorio, Per Systems S.A. Computer Conundrum:Peru’s software market is growing steadily. Customized applications for small businesses such as drugstores, hardware shops, hotels, and restaurants are on the rise. But as in other Latin American countries, piracy remains a problem. Bad Records:It’s not hard to pick up bootleg music in Peru. More than 90 percent of the audiocassettes and CDs in the country are believed to be pirated. Maca Outcry:IP issues regarding maca, the high-altitude plant grown for centuries as a staple food and source of medicine, are causing controversy among indigenous peoples. They are calling on U.S. companies to abandon patents related to the plant and to condemn outsider claims on the traditional knowledge of farming communities. SOUTH AFRICA Topic No. 1:While South Africa’s IP laws comply with international treaties, including TRIPS, the country has faced criticism for arguably anti-patent actions. In a country where approximately 1600 people contract HIV every day, drug patents are a source of contention. In 1997, the South African Parliament promulgated the controversial Medicines and Related Substances Control Amendment Act. Under Section 15(c) of the act, the health minister may compel a patent holder to license another company to produce its drugs if the other company would sell the product at a cheaper price. New Reality:A 2001 lawsuit brought by the Pharmaceutical Manufacturers Association of South Africa to challenge Section 15(c) led to a revolution in the drug industry. After a drawn-out litigation process, the matter was settled. Several multinational drug companies re-examined their policies and entered into negotiations to significantly reduce the price of HIV/AIDS medications. The Wrong Lesson:Photocopying is widespread in South Africa, with up to 40 percent of the domestic textbook market being supplied by pirates. On a happier note, in July 2001, Microsoft and the South African Federation Against Copyright Theft destroyed more than 100,000 pirated copies of DVDs, videos, and game CDs worth an estimated $2 million. Big Ideas:One of the few developing countries with a scientific research community sophisticated enough to make a substantial contribution to the economy, South Africa is exploring ways to effectively exploit this knowledge base. The South African Research and Innovation Management Association (with assistance from the International Intellectual Property Institute) seeks to address gaps in the technology transfer value chain and to strengthen the role that technology and innovation transfer plays in the region. PHILIPPINES On the Books:In 1997, the Philippine government enacted an intellectual property code to reverse rampant infringement. So now the country’s problems with IP violations result not from the absence of laws, but from the lack of infrastructure to enforce them. In 2001, the Philippine National Police did create an Anti-Fraud and Commercial Crime Division to address IP rights violations. And training and educational programs for policy makers, judges, law enforcement authorities, and business leaders are now under way. Private Guards:A chronic lack of government resources has led enterprising companies and industry associations to hire independent security services, like Pinkerton, to orchestrate raids. The government then steps in to handle arrests and confiscations. Mob Bosses:Evidence suggests that international syndicates are heavily involved in copyright piracy in the Philippines — and, indeed, around the Pacific Rim. Underground CD production plants, for instance, are dependent on organized crime. Growing Concern:A proposed Plant Varieties Act would strike a balance between encouraging the development of new plant varieties and protecting the interests of farmers. Continued access to seeds is of paramount importance to assure the survival of small farmers on their own lands. A Future in Software:A strong domestic software industry is the goal of many Filipino officials. For now, production is dominated by foreign companies who use local talent as subcontractors. To encourage private investment in the domestic industry, the government must provide better mechanisms by which investors and entrepreneurs can reliably protect their intellectual property interests. The staff of the International Intellectual Property Institute assisted inthe research for this article. Stetson Sanders is executive director and Moushami Joshi is a researchassistant at the International Intellectual Property Institute. IIPI is aD.C.-based not-for-profit development organization and think tank working toincrease understanding of the use of intellectual property as a tool foreconomic growth. The authors can be reached at [email protected]and [email protected], respectively.

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