Indian Intelligence Officials Want To Block Skype

from the as-if-there-aren't-alternatives dept

Skype and other VoIP tools have become quite useful for reaching people around the world. I know that, recently, when my wife happened to be in India on a trip, being able to call her via Skype was incredibly useful. It's a good thing she's back now, as reader Shailendra alerts us to the news that Indian intelligence officials are once again asking the government to consider banning Skype. The reason I say "once again" is that I remember similar proposals from a few years back that went nowhere. The official concern, of course, is that "bad people" may use Skype to communicate in a way that can't easily be tapped or traced. But that's going to happen no matter what. If Skype is banned, people will still figure out a way to use it, or they'll migrate to some other tool. Banning Skype or other VoIP providers isn't fixing a problem, it's pretending a problem doesn't really exist.

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Indian Company Sues Google For Showing Competitors Ads... Even Though It Places Ads On Competitors Too

from the what's-good-for-us... dept

There have been plenty of misguided lawsuits against Google, when someone gets upset and realizes that competitors are buying AdWords on their name or other trademarks. But, of course, that shouldn't be a trademark violation (unless the resulting ad is confusing). It's just well-placed marketing. Furthermore, even if it is trademark infringement, it shouldn't be Google's liability, but the party who bought and created the ad. However, the lawsuits still keep coming -- with the latest one being in India. But what makes this one special is that the complaining company seems to be buying those types of ads itself. So while it's complaining that competitors' ads show up on searches for its own name, it had no problem buying ads on competitors' names. Why not just try competing by offering a better service, rather than worrying about how competitors advertise?

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The Way Forward On Intellectual Property For China And India

from the what-to-do-now... dept

This is the final post in our series on intellectual property in China and India. Feel free to read through the whole thing.

The continued development of the knowledge economies in both China and India requires thoughtful, practical policies that will give the needed incentive and capacity to innovators while providing benefits to as many as possible. In contrast to the beliefs of many, further strengthened intellectual property rights are unlikely to provide a positive impact on the economies of China and India. Instead, the two emerging giants should dedicate maximum attention to the other ingredients of a knowledge economy while structuring, to every extent possible under international treaty obligations, their domestic intellectual property regime to provide the optimum balance between incentives and access, bearing in mind that to diffuse the gains from existing innovations, the latter is to be favored.

Perhaps the single-most beneficial thing China and India can do to promote innovation and a dynamic knowledge economy is to provide high-quality education for all. This can be done in numerous manners, but it is important that science and technology education is promoted, perhaps even subsidized, to make it more attractive and affordable. Developing highly-skilled workers will provide the creativity and drive essential to the invention, adoption and productive utilization of new technology. While providing training for scientists and engineers, China and India must also create a strong managerial class to absorb and adopt technologies from around the world (Maskus 2000).

Additional policies can promote innovation, as well. Labor laws, especially in India, should be restructured to create maximum mobility and provide competitive salaries for the best and brightest. Government procurement laws, the rules of science and technology ministries and funding sources can be reformed to provide the incentives that intellectual property seeks to create, but without the unintended consequences of limited access and monopoly prices (Graff 2007). Universities, an important source of knowledge, should be connected with industry and receive funding for basic and applied research. Further, economic policies should encourage open competition, macroeconomic stability and a robust ICT infrastructure.

China and India should seek to structure their respective intellectual property regimes to best promote their individual interests, not an unclear global compromise that is driven by nations far wealthier than themselves. China and India are unique due to their size in which advanced capabilities exist in parallel with deep-seated poverty. Although existing international treaties largely confine China and India, they do have some room for flexibility. For example, TRIPs leaves room for domestic standards regarding novelty, nonobviousness and the scope of patent protection (Abramson 2007). This can be used to tilt the intellectual property regime towards second-comers, especially domestic innovators (Reichman 1997). For example, nonobviousness should be interpreted widely, allowing Chinese and Indians to legally utilize overly blatant foreign patents. Disclosure should be strengthened, leading to additional information spillover. And competition laws can be used to curb many of the adverse effects of IP. In the face of overly-strong intellectual property abroad, China and India should structure their legal incentives to encourage long-term competitiveness, establishing an innovation system that will be increasingly attractive to MNCs who find innovation difficult in the West.

A number of specific recommendations are possible, as well. Think tanks and research institutions focused on issues concerning intellectual property should be established with independent, objective and well-trained staff. Both existing IP systems should be run efficiently and with social interests in mind. This means training judges, administrators and bureaucrats in the nuances of intellectual property and their costs and benefits. When addressing university commercialization, India and China should fund and manage research in the public interest, mandating transparency, avoiding exclusive licensing unless necessary for commercialization, and potentially retaining government use rights for resulting innovations (So 2008). Although it has not been the focus of this paper, on the topic of traditional knowledge, China should follow India’s lead in actively defending the public use of exiting knowledge by fighting attempts to reappropriate the public domain through marginal changes to traditional knowledge. India’s successful challenge of patents on neem and Basmati rice provide useful examples (Boldrin 2008). Finally, the capacity of domestic institutions to support limited intellectual property should be strengthened, most prominently by prosecuting misuses of the IP regime (Okediji 2006 PDF).
    
With increased global prominence, China and India should accept their rightful place in the international system. As far as it is in their populations’ interests, they should resist further elevation of intellectual property, seek expanded compulsory licensing capability, and promote exceptions and limitations for educational materials for students.

Above all, China and India should seek consistency and transparency in their intellectual property policies to create a business environment conducive towards investment and innovation. IP should not be strong; IP should be efficient. As an imperfect tool, it should be used pragmatically and critically.

Robust, clear and enforced intellectual property is very likely a part of a successful knowledge economy, but the advantage of strengthened IP is frequently overstated. In contrast to the other parts of a knowledge economy, intellectual property has a tendency to be misused to the detriment of the economy. For both China and India, placing faith in exclusive rights will limit the ability of the impoverished masses to find productive employment and threaten the long-term sustainability of their innovativeness.

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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There Is No Harmony In A Patent Thicket

from the just-thorns dept

This is the sixth post in a series of posts looking at the question of intellectual property rights in both China and India. We've got one more post to go.

Why Intellectual Property Is Insufficient For Economic Development In China And India

The strong focus on intellectual property presented by advisers to China and India miss the ecosystem in which useful innovation takes place. This ecosystem includes, among other things, education, entrepreneurship and openness. For example, intellectual property can only add to growth when coupled with trade liberalization, something India significantly lacks (Gould 1996). However, because a larger market provides a larger incentive for commercial innovation, some researchers have found that with increased market size should come decreased intellectual property (Boldrin 2005). This finding, that for every 2% of economic growth, the duration of IP should be reduced by 0.5% would have significant implications in rapidly growing China and India, but it receives little to no attention amidst the drive for ever stronger intellectual property. Finally, even though intellectual property may stimulate cross-border licensing of technology, it is unlikely to bring a sudden inflow of foreign investment because other facts account for the variation in the behavior of MNCs in different countries (Fink 2005).

Watch out for the Patent Thicket

As China and India are exhorted to increase intellectual property protection and enforcement to higher standards - “harmonization” in the rhetoric of its proponents - they risk emulating the detrimental IP systems of the developed world. The United States, widely viewed as the most innovative nation in the world, has a patent system that  has, according to Jaffe, "become sand rather than lubricant in the wheels of American progress” (Jaffe 2004). Even more worrying, the trend in international intellectual property is actually speeding past the American level of protection, raising concerns that the incredibly strong IP in countries will diminish, rather than promote, innovative capabilities.

Patent thickets - "a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology" - and the "tragedy of the anticommons" - where "too much ownership... wrecks markets, stops innovations and costs lives" - are useful concepts for policy-makers in China and India to keep in mind as they are encouraged to increase their intellectual property. Instead of being incentives for innovation, 47% of firms are using patent portfolios in negotiations and 50% as defensive protection from lawsuits (Boldrin 2008). If China and India grant patents too broadly, they risk overshooting privatization, likely stunting the domestic growth of complex technologies and innovations whose production will be covered by dozens of competing patent claims (Jaffe 2004). This will only be exacerbated by bad standards that do not restrict exclusive rights to truly novel, useful and non-obvious inventions (Boyle 2008).

Are China and India Overshooting Optimal Intellectual Property?

There is already evidence that the two emerging superpowers are making these errors. East Asian countries are patenting at a per capita rate of 4 times the developed world, leading to quick patent quantity convergence (Brahmbhatt 2007). China, whose patent office led the world with 800,000 applications in 2008, is now also home to the most patent lawsuits per year (“Battle of Ideas”). While, prima facie, the enormous absolute populations of China and India will likely make their patenting activity among the highest, given the relatively small sectors engaged in truly innovative work, these figures are worrying. In fact, the same motivations that have been fingered as the causes of the American patent system’s woes – government downsizing and competitiveness – are currently present in China and India, increasing the likelihood that they follow America’s folly (Jaffe 2004).

Another American policy of uncertain quality that is being emulated in China and India is university commercialization. The Bayh-Dole Act, passed by Congress in 1980, encouraged universities to commercialize their innovations through patents, but its effectiveness is highly suspect. Bayh-Dole changed “academic norms regarding open, swift and disinterested scientific exchange” (So 2008). In India, this is already a concern with 71% of surveyed executives feeling “that lack of collaboration between industry and research institutes was the main hurdle to innovation in India” (Dutz 2007). The facilitators of that exchange, Technology Transfer Offices, have “become gatekeepers that in many cases constrain the flow of inventions and frustrate faculty, entrepreneurs, and industry” (So 2008). Yet, China and India are both encouraging university patents (Graff 2007).

Flying Right Past the USA

Unfortunately, simply recreating the flawed American system is unlikely. The world’s largest economic force, the USA, is actively using its trading power to increase international IP standards beyond the current TRIPs-mandated level. Through bilateral free trade agreements (FTAs) and the multilateral Anti-Counterfeiting Trade Agreement, currently being negotiated in secret, the United States is promulgating even more expansive intellectual property policies. The FTAs have strengthened intellectual property rights beyond the high standard already set by TRIPs in dozens of countries. These measures include extending copyright for an additional 20 years, preventing parallel importation of patented pharmaceutical products, limiting compulsory licensing ability, limiting copyright exceptions and limitations through the illegalization of technological circumvention measures, and explicitly extending patents to biological innovations (Fink 2005 PDF). Countries accept these provisions in return for lower tariffs and better quota allotments, but while those are temporary, the expansive intellectual property policies are not.

In addition to all the previously explained reasons why this is likely detrimental to the developing nations who agree, it is useful to note that these policies promoted by the USTR are deeply hypocritical, especially when it comes to copyright. The United States copyright laws give considerable breadth to consumers through the fair use provision. This limitation on exclusive rights has been estimated to contribute $4.5 trillion per year to the US economy (Rogers 2007 PDF). Consumer International, a nonprofit, ranks the United States as among the best copyright policies in regards to consumer protection; notably, it is joined by China and India, condemned by the USTR and copyright industries as too permissive (“IP Watch List” 2009).

Speaking of intellectual property as unidirectional makes little sense when one recognizes that the benefits are neither clear-cut nor absolute. Additional costs of further strengthened IP in China and India will be higher administrative costs, less imitation, and a decrease in the incremental innovation that provides real growth (Reichman 1997).

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Big Pharma Abusing Patent Laws To Seize And Destroy Legal Indian Generic Drugs

from the helping-the-needy dept

The deeper you look at how pharmaceutical companies use and abuse the patent system, the worse it looks. It's much more horrifying than what's happening in the tech industry in many ways (especially since lives are often at stake). The latest such example highlights the desperate lengths that Big Pharma will go to, in attempts to stamp out perfectly legal competition. India has a legal and thriving generic drug market that was built up initially via a ban on pharma patents in India (which, as an aside, shows again that a ban on patents can actually help create a thriving industry). More recently, India was forced, almost entirely against its own wishes, to implement patents on drugs. Even so, many of its generics are not covered by patents, and there are a number of developing countries that also do not recognize patents on certain drugs. Thus, it should be perfectly legal for Indian generics to ship those drugs from India to developing nations. And... it is. Except that pharma companies have convinced EU trade officials to seize and/or destroy such shipments that pass through EU borders in transit to these developing nations.

Thus, if a legal Indian generic drug maker has a shipment of those drugs to Peru, where the same drugs are also perfectly legal and not blocked by patent law -- those drugs might still get seized because en route to Peru, they may pass through some European countries, where Big Pharma has used its lobbying clout to get customs officials to search for and confiscate any such medicine, claiming they are violating patents in the EU. Because of this, the Indian firms need to spend a lot more money and ship via other means.

To deal with this, India is looking to file a complaint with the WTO, and at least according to the experts in the WSJ article above, India has a strong likelihood of winning. Big Pharma and the border patrol folks are defending their actions, claiming it's to stop counterfeit drugs, but that's not what's happening here at all. These drugs are not counterfeits. They're legal generics, not intended for the EU at all, and they're being confiscated for no good reason other than the fact that Big Pharma doesn't want to compete.

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Register A Complaint With The Indian Gov't; Have Your Private Info Revealed

from the um...-I-think-I've-got-a-complaint... dept

I think some folks in India may have multiple complaints with the government. That's because it's been revealed that the service that handles online complaints for the gov't just happens to be revealing all the private data of people who complain, including their passwords in plaintext. Apparently, when you looked at your own profile, you could see all of your own data (plus password) and then as you hit refresh you'd see others -- which you could edit if you wanted to. Not exactly a particularly secure system...

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In China And India, Stronger Intellectual Property Is Unnecessary

from the red-herring dept

This is the fifth 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.

Access Is More Important Than "Incentive"

China and India are countries of enormous internal economic differences, primarily stemming from productivity gaps. The technologies that enable world-class economic efficiency in some parts of China and India need to be diffused throughout the country, but the monopoly pricing associated with IPR limits the ability of the poor to access empowering technology.

Despite the presence of high-tech hubs like Bangalore and Hyderabad, India ranks 63rd out of 72 surveyed countries for the Technology Achievement Index (Dahlman 2005). In China, Beijing and Shanghai have knowledge-intensities 6.1 and 5.3 times the national average, respectively (Dahlman 2001).  These disparities indicate an inability to effectively diffuse innovations, likely resulting from the higher prices and protectionism associated with increased intellectual property. The low productivity in most Indian enterprises indicates an enormous opportunity to make better use of existing knowledge; one analysis “implies that the output of the Indian economy could be as much as 4.8 times higher if enterprises were to absorb and use the knowledge that already exists in the economy” (Dutz 2007). Intellectual property is certainly an important factor, but not the only factor preventing this diffusion: after all, India's remarkable agricultural productivity growth known as the Green Revolution took place prior to global intellectual property harmonization.

Because R&D requires much more than financial incentives (educated workforce, infrastructure, etc.), close to 80% of global R&D is carried out in the developed world. Therefore, innovation in the developing world is more appropriately adoption and adaptation of existing technology. Instead of hoping that increased intellectual property will attract it (likely a fool's errand), there are other ways to access global knowledge such as reverse engineering, imitation, utilizing diaspora linkages and networks, and simply purchasing knowledge-embodying goods. Even with broadly condemned intellectual property policy, China and India remain highly desirable locations for the R&D labs of major international corporations. Several surveys indicate that India is the preferred location for innovation centers, likely stemming from the critical mass of low-cost, highly-skilled knowledge workers – the average annual salary of a scientist or engineer in India is $22,600, compared to $90,000 in the United States. Additionally, given the ability to digitize and internationally transfer much of their work, India is attractive regardless of concerns about intellectual property infringement (Dutz 2007). And the benefit to India is impressive:

“Between 1998 and 2003, MNCs made $1.3 billion in R&D investments in India. More than 300 MNCs are setting up R&D and technical centers in India. They employ 80,000 scientists and engineers and spend about $4 billion a year. Planned investment totals $4.7 billion… The growth of MNC R&D centers generates positive spillovers to the Indian economy, with the demonstration effect to indigenous corporations being the most critical” (Dutz 2007).

Although MNCs state their preference for higher intellectual property, a recent study noted that “it is unlikely that product patents will make a dramatic difference to their choices;” instead a change in IP will likely most affect domestic firms who are increasing amount and type of R&D without the incentive of intellectual property (Lanjouw 1997). India, and China where a similar trend is present and increasing, can further their attractiveness to FDI through tax breaks, increased liberalization and actively utilizing their diaspora.

Unnecessary for Innovation. Period.

Stronger intellectual property may also be unnecessary in another way. Although they are promoted as a tool for enhancing economic competitiveness, readers of Techdirt will know that their effectiveness is, at most, questionable. In the 1980s, there was a boom in American patenting activity, seemingly corresponding with changes to intellectual property laws that were made in response to worries about diminishing national competitiveness (Dahlman 2001). A measure of useful innovation, Total Factor Productivity, should have increased accordingly with the rise in useful, novel and non-obvious inventions, but this has not been the case (Boldrin 2008), providing compelling evidence that, contrary to common usage, patent activity is not equitable with economic benefits.

But even if we take patent activity as a reliable indicator of useful innovation, the case for stronger IP is doubtful. Strengthened intellectual property is unlikely to have caused the increase in American patenting in the 1980s: a study of patent reforms over 150 years in 60 countries confirms “that reforms have few positive effects on patent applications by entities based in the country undertaking the policy change” (Lerner 2002).

If traditional patents are not indicative of innovation and productivity-enhancement, is it possible that newer, related exclusive rights could do so? One such right, known as Plant Breeder’s Rights, provides patent-like protection to agricultural innovations. Here again, the evidence fails to provide compelling support for monopoly rights. The premier international treaties on the subject, the PVPA/UPOV, have not led to an increase in experimental or commercial wheat yields; instead, agricultural rights take away from the public domain seeds by allowing commercial entities to patent hardly novel strains. When enforced, these exclusive rights price previously affordable agricultural inputs beyond the means of the millions of subsistence farmers in China and India (Boldrin 2008).

Instead of focusing on intellectual property as the sole source of incentive for innovation, China and India should actively explore and promote ways in which to promote investment in public goods without bringing the distortions of monopoly rights.  As legal scholar Larry Lessig writes in The Future of Ideas, “There is no necessity to marry the incentive to innovate to conferral of monopoly power in innovations” (Lessig 2002). Digital, networked technology expands the ability for people to collaborate across time and space, significantly decreasing the up-front costs of innovation that intellectual property seeks to recuperate through exclusive rights. Models of open source innovation have proven spectacularly successful in software development where innovation is a cumulative and competitive process (Jaffe 2004). Open licensing models also hold promise in biotechnology where much of the research costs are provided by academic researchers who have an interest in promoting knowledge widely (Kapczynkski 2005). In fact, IT and biotechnology were successful in large part due to the freely available research made possible by university knowledge (So 2008). Funding can also be provided by non-profit entities such as government-awarded prizes for socially desirable innovations (Love 2007). Finally, even in a market without intellectual property, large up-front costs associated with innovation can be recouped through trade secrecy and the first-mover advantage (Jaffe 2004).

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World

from the cui-bono dept

This is the fourth 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.

India and China face profound, perhaps even existential, economic challenges as they seek to continue providing growth for the hundreds of millions of impoverished citizens who demand economic opportunity and empowerment. As low- and middle-income countries, respectively, the desirability of policies that prove charitable to other countries, especially developed ones, is minimal. Yet, evidence from India shows that intellectual property enhancement involves the transfer of rents from poor countries to rich ones. Although proponents of increased IP believe the process is mutually advantageous, the small absolute market size of developing countries like India and China does not provide adequate incentives to change the level or direction of total R&D expenditure (Dutta & Sharma PDF).

Intellectual property harmonization actually allows foreign rights holders to capture profits, obtain jobs, decrease the balance of payments, and cause dependency (Lanjouw 1997). The anti-competitive, monopolistic nature of intellectual property makes it harder for developing countries to gain access to the most valuable technologies needed for economic convergence (Reichman 1997). One study showed that even if stronger intellectual property could accelerate FDI, it would limit the imitative capability of indigenous firms (Lai 1998). Other work found that there is a strong positive effect of intellectual property on domestic imports, leading to a decrease in the balance of payments (Maskus 1995). Moreover, stronger global IP encourages American exports, something India and China should not necessarily favor (Smith 1999). The world’s most successful economies, such as Japan or the United States, rose to prominence by specifically limiting the scope and breadth of patents (Maskus 2000).

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Why Might China And India Want To Strengthen National Intellectual Property Policy?

from the pay-attention-to-who's-talking dept

This is the third 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.

In the last post, we explained the numerous changes made to strengthen intellectual property in China and India. Yet, to many observers, it has not been enough. Governments, donors, academics and private industry encourage, some more subtly than others, China and India to “harmonize” their domestic intellectual property by strengthening regulations and enforcement.

The Vested Interests

According to the US-China Business Council, an industry group representing American companies operating in China, weak penalties, delayed enforcement and protectionist policies limit China’s ability to become a leading innovator (“Statement of the US-China Business Council” PDF). A survey of its members says intellectual property enforcement is China’s most serious shortfall in implementing WTO commitments, though 1/3 said it had improved. They advocate increased enforcement, more training for judges and prosecutors, public awareness campaigns and lower thresholds for criminal penalties.

The United States Trade Representative (USTR), too, condemns China’s IP regime. The USTR has placed China on the Priority Watch List of its annual “Special 301 Report” that evaluates the IP policies of dozens of countries. India, too, makes this list as a “significant concern,” though China is the primary country of concern (USTR Special 301 2008 Report). In the report, the USTR cites the US copyright industry’s estimate that piracy cost the United States $500 million in 2004 (USTR Special 301 2005 Report). Another estimate by the International Intellectual Property Association says that copyright piracy in 2008 in India and China cost the U.S. $1,096.2 million and $3,504 million, respectively (IIPA 2009 PDF). These sources also claim that counterfeiting reduces tax receipts and domestic growth. To combat this alleged threat to America’s economy, the USTR is actively working to increase global intellectual property standards through bilateral free trade agreements and the Anti-Counterfeiting Trade Agreement, currently being negotiated in secret (USTR Special 301 2008 Report). 

The Academics

These groups motives and facts should be viewed with caution - their statistics have been shown to be wildly innacurate and their motives dubious.  There are others, however, who advocate for stronger intellectual property in China and India, and believe it to be in the best interest of the two countries. Under this thinking, promoting IP in China and India will further their ability to capitalize on international information flows and promote domestic innovation. 

Most basically, the increased export opportunities available as a WTO member makes the adoption of new technologies profitable for more firms (Dutta & Sharma PDF). A recent study has shown that royalty payments for technology transfer, R&D expenditures and total levels of foreign patent applications all increase with intellectual property reforms (Branstetter 2006). One common line of thinking closely related is the belief that FDI will increase with stronger intellectual property. Executives at multinational corporations (MNCs) say that IP rules are a very important factor in deciding R&D locations – before investing substantially in new R&D, companies want to be assured that they will have the opportunity to recoup those costs through exclusive control of their innovations (Lanjouw 1997). China and India suffer from ineffective R&D – they devote a small share of labor and GDP to research, and in both countries much of the work is done by the government – so foreign investment in the sector could prove useful. India, especially, needs improvement in the commercialization of its patents (Dahlman 2005). It is argued that market incentives (via IP) would increase efficiency.

Unfortunately, the evidence is not clear-cut. A 2005 study found that IP laws have little discernible influence on the growth of R&D stocks, though the international transfer of and propensity to patent do seem to be influenced (Jaumotte 2005). Another study from the same year, though, shows that stronger intellectual property will improve the incentives for a foreign rights holder to enter emerging markets, but that it will also increase that firm’s market power, diminishing the ability of domestic firms to compete. However, technology has spillover effects, especially due to the disclosure required by patent applications, which can, in theory, make productivity gains from foreign firms available to domestic firms. Yet, although a 2004 study finds that FDI could theoretically lead to widespread gains in domestic productivity, because companies block spillover through various means, in practice, the sectoral gains are minimal. This is particularly worrisome for China and India because the sectors in which they presumably have some burgeoning capabilities will receive little benefit from international linkages.

One study found that increased intellectual property has a significant positive impact on the productivity of R&D, as measured by patents per dollar of R&D, though this metric is suspect because a patent does not necessarily translate into any economically or socially desirable outcome (Brahmbhatt 2007).

In the coming weeks, we'll discuss the likely downsides of increased intellectual property in China and India.

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Why Is It So Difficult To Understand The Difference Between A Platform And A User?

from the head-scratcher dept

In the US, thanks to safe harbor rules in the DMCA and the CDA, courts will often toss out misdirected lawsuits that go after a service provider for the actions of a user. To be honest, I've always questioned why we need such safe harbors in the first place, since it should just be basic common sense that a service provider shouldn't be liable for the actions of a user. But, of course, common sense just isn't that common. This can be seen, first, in all the lawsuits that require incantations of the safe harbors to get them tossed out, but even worse, in foreign countries that have no such safe harbor laws. Take for example, a case in India, where Google India is being blamed for content written by bloggers on Blogger. First, Blogger is run by Google, not Google India, so the lawsuit is doubly misdirected -- but, more importantly, Google itself cannot be responsible for what someone writes using its tool. That's like suggesting that Bic is responsible for what you write with its pens. The case involves a guy who was upset about what some bloggers wrote about him -- so of course, he had to sue Google. What's amazing is that the judge seems to have initially bought this as reasonable. It barred Google from hosting any blog that "defamed" this guy. Google has responded by trying to explain the basics of the internet to the judge and how it's impossible for Google to figure out if someone is defaming someone else using its software.

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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. 

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Do China And India Really Want Stronger Intellectual Property?

from the stay-tuned-to-find-out dept

Over the past few months, I have been researching the role that intellectual property plays in China and India, with specific attention to the frequent calls for increased protection in those countries. I believe that a careful and critical review of national goals, potential solutions and likely outcomes will, in fact, make intellectual property harmonization a disagreeable mechanism for bringing China and India to continued global prestige. This series, adapted from a recent paper, will first outline the role that intellectual property can play in economic development. Because of their relative importance, patents will be the focus. Following brief overviews of the intellectual property systems in China and India, it will examine the case for stronger IP in China and India. The most time will be dedicated to explaining why strengthened intellectual property is likely to disproportionately advantage the developed world, decrease the ability of China and India to diffuse productivity-enhancing innovations, prove both insufficient and unnecessary for promoting innovation, and even be counterproductive to the countries' innovation systems. Finally, the series will end with recommendations for the way forward for China and India.

Every year, in conjunction with the content industry, the US Trade Representative produces the Special 301 report that identifies other nations as significant concerns in regards to intellectual property. It is among the most prominent reminders of the substantial pressure placed on countries to consistently strengthen their national intellectual property regimes. For two developing nations, China and India, the pressure is particularly noteworthy. Governments, donors, private industry and academia give these rising superpowers dozens of reasons to believe that stronger intellectual property is a highly desirable improvement to their respective business environments. They propose international intellectual property "harmonization" - a process through which the developing world upgrades protection and enforcement of intellectual property to levels seen in the developed world, if not further.

A Brief Background On The Challenges Facing China And India

China's spectacular rise over the past three decades has been thanks, in large part, to good infrastructure and low-cost labor. But to continue its meteoric climb, China must make a sustained commitment to developing as a knowledge economy - one that effectively harnesses and uses new and existing knowledge to improve productivity and increase overall welfare. Right now, the service sector is very underdeveloped in China for a country of its per capita income; and although China is now the third largest spender in absolute R&D, productivity is low and regional inequalities are stark. China's leaders must take a multipronged approach to development by: promoting competition; upgrading education and learning; exploiting global knowledge; diffusing new technologies; supporting small and medium enterprises; and establishing a viable social security system.

Although China receives much of the media attention, India, too, has enjoyed historic success over the past couple decades. India's unique characteristics - skilled, English-speaking knowledge workers with diaspora linkage, free market institutions, a well-developed financial sector, and macroeconomic stability - make the knowledge economy an attractive national goal. However, the success stories of Indian IT firms betray the significant challenges facing India. India needs to strengthen the institutions supporting an efficient innovation system. It remains a relatively closed economy that receives minimal foreign direct investment (between 2003 and 2004, India received only $4.26 billion, compared to $53.5 billion in China) (Dahlman 2005). Further, it currently devotes little GDP to R&D, and private sector involvement is crowded out by government intervention. Finally, India must continue to develop a broad base of educated and skilled workers.

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Other posts in this series:

• Do China And India Really Want Stronger Intellectual Property?
• A Brief History Of Intellectual Property In China And India
• Why Might China And India Want To Strengthen National Intellectual Property Policy?
• Why Increased IP In China And India Is Likely To Disproportionately Benefit The Developed World
• In China And India, Stronger Intellectual Property Is Unnecessary
• There Is No Harmony In A Patent Thicket
• The Way Forward On Intellectual Property For China And India

Kevin Donovan is an expert at the Insight Community. To get insight and analysis from Kevin Donovan and other experts on challenges your company faces, click here.

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Software Audits In India Block Companies From Backing Up Their Data, Claiming It's Infringement

from the yikes dept

Gautam John writes in with a couple of posts concerning software audit "raids" done in India (also common in the US). The first explains how unfair the process is, noting how it's basically court-sanctioned extortion. Outside groups get to basically stop your business for a whole day, harming your reputation among both employees and clients (even if you haven't done anything wrong) and then can squeeze you to pay up. The Associated Press did a big expose on how the BSA, in particular, has a history of using underhanded means to squeeze many small businesses to pay up -- even noting that the BSA keeps the money, rather than distributing it to firms. The most egregious part, though, was where the "auditors" refused to allow the company to back up its data, saying that the data might be created with unauthorized software, and thus, backing up the data would be infringing.

The BSA quickly responded, asking the blog owner to post its detailed response, where it defends the raids. Unfortunately, its defense is incredibly weak. It starts off -- as does pretty much every BSA story -- with it claiming that "independent studies" show how much damage to the wider economy unauthorized file sharing does. That's not accurate at all. We've picked apart the numbers before, showing how the BSA numbers are totally bogus (and, while it's a third party that came up with the numbers, it's entirely paid for by the BSA). A big part of the problem is that the industry only looks at the downside to the economy, and doesn't include any factor to recognize that companies that use unauthorized software also help the economy. Perhaps the downsides outweigh the upsides... but totally ignoring all upsides and then double, triple and quadruple counting the downsides via "ripple effects" does not make for a credible study.

However, the BSA then goes on to defend the practice of not allowing companies to back up their data, by basically saying "hey, that's the law." But, of course, that only supports the original poster's complaint that this is effectively "court sponsored extortion." It does nothing to explain what's illegal about backing up your data (which is not covered by the copyright of the software companies).

Of course, in the end, all these sorts of tactics do is push people to explore open source alternatives, not just because they're cheaper (sometimes free, though, not always), but because they don't have to put up with legal bullying and extortion-like tactics.

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Indian Blogger Sued, Forced To Apologize, For Criticizing Journalist And Quoting Wikipedia

from the free-speech-isn't-free dept

Reader VivekM alerts us to an unfortunate news story in India, where a blogger who was critical of a journalist's coverage of the terrorist attacks in Mumbai last year was sued for his blog post, and then forced to take down the post and apologize. The specific issue appeared to be over a quote taken from a Wikipedia article about the journalist, rather than any actual personal attack on the journalist. Of course, in forcing the blogger to take down the content, it's kicked up quite a lot of attention and a fire storm of protest from numerous Indian bloggers who feel that this is an attack on free speech. Defamation laws are all too often used to stifle free speech, and it doesn't look like India has any sort of anti-SLAPP law to prevent these sorts of legal attacks. There's nothing wrong with being offended or bothered about criticism, but there are plenty of ways to respond to criticism without resorting to lawsuits.

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Courts Around The World Dealing With The Fact That There Are Mean People Online

from the but-is-it-illegal? dept

Here are two separate lawsuits, halfway around the world from each other that seem to be touching on quite similar issues: whether or not it's illegal to be a jerk online. The first, described by Eric Goldman, is about a student who has sued a bunch of high school classmates, their parents and Facebook, because those students created a private group on Facebook where they made fun of the girl. Goldman points out all the problems with the lawsuit: suing Facebook makes no sense and will get thrown out pretty quickly. The group was private, and limited to six students, so the total "audience" for any defamation was a grand total of five people -- and, while the comments were mean, they were also pretty obviously not true. Also, suing the parents for "negligence" in supervising their kids isn't likely to get very far. All in all, it seems like the case probably won't last very long.

However, the results on the other side of the planet were a bit different. VivekM points us to the news of a teen in India who started an Orkut group against a certain political party. Many people left anonymous comments as a part of the group, but the party sued the teenager who created the group, claiming he violated a local law against "hurting public sentiment." Rather than realizing the the kid starting the group should have no liability for the statements made by others, the Supreme Court in India has said that he can be charged, noting: "You are a computer student and you know how many people access internet portals. Hence, if someone files a criminal action on the basis of the content, then you will have to face the case. You have to go before the court and explain your conduct."

At some point, people and courts will recognize that there will always be jerks online, and it makes little sense to go around filing lawsuits against anyone in any way connected to those being jerky (even the jerky folks themselves), but until that time, the court systems around the world are going to be quite busy with similar cases.

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India Actively Sharing Knowledge Base Around The World To Stop Bogus Patents

from the good-for-them dept

Developing nations such as India and Brazil have been seriously hurt by patent regimes that have often allowed big multinational conglomerates to take traditional medicines, patent them, sell the drugs back to the country at greatly inflated prices... and then try to stop all traditional local use as "infringing." It looks like India is working hard to put a stop to such practices. Against Monopoly points us to the news that the Indian government has been putting together a database of traditional Indian medicine and actively sharing it around the world in the hopes that it can serve as prior art against such patents in the future. This has even gone so far as to have a bunch of yoga experts to try to stop the rather insane trend of applying intellectual property (including patents, copyright and trademark) to traditional yoga.

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India's $10 Laptop Isn't A Laptop... And Nobody's Sure Exactly What It Is

from the land-of-confusion dept

Earlier in the week, I posted that a new cheap laptop initiative from the Indian government was following the OLPC project's strategy of forging ahead on its own, instead of collaborating with market players and taking advantage of the benefits such collaboration could offer. Some more details about the project have emerged, and I'm glad to report they weren't doing what I predicted, in that they didn't launch a new student-focused netbook; instead, they launched... well, this thing that isn't a laptop. The problem is it's not very clear at all what, exactly, the device is. The Times of India calls it "a damp squib," and a storage device that could lead to the development of a $60 laptop. Photos aren't a lot of help, nor is the description that it "helps e-learners access the Web easily." Even the most detailed list of specs doesn't help. As far as we can tell, it's some sort of glorified 2GB thumb drive, in a 10-inch by 5-inch case, that may or may not include some networking technology. It's somehow related to a project to put textbook information online so it can more easily be accessed in remote parts of the country. So, congrats to the Indian government for not going down the laptop path, but if they could better explain just what they hell they have made, everybody would be grateful.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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India's Do Not Call List Now Covers SMS Spam, Too

from the would-you-like-to-extend-your-size-to-160-characters? dept

The problem of spam text messages sent to mobile phones has been a significant one in many countries, though it hasn't reached epidemic proportions (yet) in the US. Operators have done a pretty good job of stopping the messages from getting delivered, while the cost and difficulty of sending them has also been a useful obstacle. Some, however, still manage to get through. Over in India, the government has extended its do not call list to cover commercial text messages as well, and has mandated that operators must add some tracking information to the messages so regulators can track down their senders. In the US, it's illegal for telemarketers to call cell phones, while the not-particularly-effective CAN-SPAM act makes it illegal to send spam email to phones. At least one court has ruled that SMS spam is covered by the law banning telemarketing calls to mobiles, but it would be nice to see cell phones get some extra protection from spam -- especially since it often brings some financial pain as well as annoyance.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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India Latest To Try And Fail Where The Market Has Succeeded

from the one-more-time dept

One of the most puzzling aspects of the One Laptop Per Child project has been the apparent belief of its leadership that it and it alone had the right to try and deliver low-cost netbooks for the young and poor of the world. While netbook sales are booming, the OLPC project looks to be struggling. This once again has us scratching our heads at why the OLPC folks felt the need to go things alone, rather than working more closely with industry to deliver low-cost laptops with high functionality that combined the ability of a competitive market to drive down prices with OLPC's philanthropic goals and the innovations of its device aimed at its target market. But OLPC's struggles haven't deterred other groups from pursuing a similar path, including the Indian government. Following failed negotiations with OLPC, it said it would create its own $100 laptop, and that laptop is set to debut on Tuesday.

Initially, reports put the device's cost at $10, an error blamed on a mistranslation, leading to a lot of wonder about just how the Indian government could drive the price so low. But even if you accept the correct figure of $100, some of the questions are still valid: if cost is the metric deemed most important by the device's builders, does it put a limitation on the devices' utility? Put another way, is functionality sacrificed in the name of low cost to such a point that the devices become largely useless? Either way, it still seems hard to believe that small, individual efforts can deliver better devices at a lower cost than efforts that piggyback on netbooks' success in the market. This isn't to say that governmental and non-profit efforts can't deliver good innovations, but it seems slightly beyond belief that they will be better able to drive down manufacturing costs better than the competitive market. Wouldn't their resources be better focused on delivering specific innovations, particularly in software and systems, that could be paired with market-based cheap netbooks of any kind, rather than developing their own proprietary, expensive and underpowered devices? This is a lesson that the OLPC crew seems to finally be learning, given the recent news that they're open-sourcing their hardware. Hopefully other groups will pick up on it, too.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Police In Mumbai Shutting Down Open WiFi

from the blame-the-technology dept

Perhaps it's no surprise that, following the terrorist attacks in Mumbai, people are freaking out and blaming technology, as if that will prevent another terrorist attack. First, there were the calls to ban Google maps and now a large number of police are sweeping through all of Mumbai to find open WiFi networks and get the owners to shut the networks down. Of course, there are plenty of perfectly legitimate reasons for offering an open WiFi network, but it seems that no one is even considering that. Because such networks were used in the past by terrorists and possibly could be again, they all must go.

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