Thursday, July 10, 2008

Indian IP Roulette?

A rogues’ gallery

By PK Vasudeva

Financial Express

May 23, 2008

The International Intellectual Property Alliance (IIPA), a coalition of seven trade associations representing some 1900 companies, has expressed concern on the infringement of Intellectual Property Rights (IPR) protection at the global level. According to statistics in an IIPA report, the total loss in 2007 for American Copyrights was around $914 million against $752 million in 2006. The estimated losses for US Copyrights from India in business software area was $732 million in 2007; records and music at $14 million; entertainment at $130 million and books at $30 million.

In view of this, the US government has put India on its ‘Priority Watch List’, along with nine other countries, saying that the country’s failure to protect intellectual property rights (IPR) is putting the health, safety and jobs of its citizens at risk. India has been on this list for a number of years and its continued inclusion does not come as a surprise. Besides India, the US has put countries like China, Russia, Pakistan, Argentina, Chile, Israel, Thailand and Venezuela in the watch list.

Countries on the list will be the subject of close scrutiny during the coming year. In 2007, too, the US administration had put India on its watch list under “section 301” and threatened to impose trade sanctions for violating IPR. Earlier, the Indian government adopted a slew of measures to check violation of IPR, including strong patent laws. The Patent Act, 1970 was amended in 1999, 2002 and then in 2005 to conform to the Trade Related Aspects of Intellectual Property Right (TRIPS) Agreement of the World Trade Organisation (WTO).

The International Intellectual Property Alliance report on global IPR violations also focused on growing problem of internet piracy and counterfeiting of pharmaceuticals and other products that, it claimed, threatened the health and safety of consumers around the world.

Section 301 sanctions have always made countries pay more attention to their intellectual property protection policy as non compliance might lead to trade sanctions but whether such methods adopted by United States is in compliance of WTO norms remains unanswered.

While it continues to be unclear as to how being on this list affects India in any substantial way, because putting the countries in this list means that the US will subject them to extra scrutiny and in the event it decides to pursue complaints before the WTO, then economic sanctions could be imposed on these countries. Quoting the USTR, the report also states that “Priority Watch List countries will be the subject of particularly intense engagement through bilateral discussion during the coming year.”

Being dragged to the WTO might be a more substantial threat to India than the inclusion in the Priority Watch List. The WTO dispute resolution mechanism has, in the past, compelled India to amend its IPR laws [Patent Act 2005]. In the light of the recent discussions pertaining to the Trips compatibility of Section 107A (b), it might indeed be interesting to see the grounds on which the US might choose to file a case before the Dispute Settlement Body (DSB) of the WTO.

The piracy (along with the commercial use of undisclosed test and other data generated to obtain marketing approval for pharmaceutical products) and not Section 107A (b) seems to be the key concern of the USTR at present. Spicy IPR, a well-known weblog on intellectual property issues, has covered the issue of piracy in a number of posts.

A number of intellectual property issues have been thrashed out in considerable detail,
suggesting that policies such as price discrimination and price reduction, as has been practised by Moser Baer in India [ ], might be a better way to curb piracy.

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