Foreign companies are dramatically increasing their investments in Asia. For years, the People’s Republic of China and India have ranked as the first and third most popular destinations in the world for foreign direct investment. The Global Business Policy Council, FDI Confidence Index, at 1-3 (October 2004, Vol. 7). More recently, the availability of financing and world-class scientific resources has encouraged companies not only to “outsource” manufacturing and processes in these markets, but also to research and develop cutting-edge technologies “from the ground up.” Id. at 16. This has led to cross-border flows of intellectual property on an unprecedented scale.
The problem for the investor, however, is that the IP protection offered by the local courts can be uneven at best. Parties often face long delays, rural judges with little knowledge of IP or sophisticated scientific processes and, occasionally, outright corruption and protectionism. To ameliorate this situation, foreign companies are increasingly attempting to use carefully tailored agreements — containing international arbitration clauses — to supplement court-based methods of IP protection. This article will outline some of the perils and pitfalls one may encounter in these regions and identify various strategies that might be employed to overcome them.
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