Intellectual Property Right Protection Issues Concerning FDI

JVC spouses in developing states frequently cite engineering transportation as an of import expected result of their collaborative activities, but for developed state spouses, the hazards that such engineering will be misused or ‘leaked ‘ to other domestic companies are important.

Discuss the issues faced by foreign spouses when come ining markets where rational belongings rights have traditionally been ill protected. What commissariats can spouses do to protect their involvements? ( 60 % )


In this assignment, I would wish to concentrate on rational belongings right protection issues while foreign investors come ining market where rational belongings rights have traditionally been ill protected, every bit good as the possible commissariats can investors do to protect their involvements. On the face of it, rational belongings right protection would look to be a simple construct, as a outstanding part on international policy docket, the importance of IPRs barely needs to be questioned further. However, although the Trade-Related Aspects of Intellectual Property Rights ( TRIPs ) had been made understanding, there are still many developing states and economic sciences such as China and India are less refering about heightening their Intellectual Property Rights because they thought there might be some ‘invisible benefits ‘ inside the hapless protection of IPRs. Hence a better comprehension of possible benefits from a higher Intellectual Property Rights government should be profoundly discussed. For case, stronger IPRs will pull more influxs of foreign direct investing. In another facet, as globalization has became one of the most regnant ‘buzz words ‘ in the universe, International Joint Ventures play an of import function in modern universe, in other words, the protection of IPRs, which is the chief issues faced by foreign investors, go more and more important. Structurally, foremost I would wish to discourse the differences between a weak and strong IPR to get down this paper, and so I would wish to discourse the chief issues such as right of first publication and hallmarks which foreigner investors will be faced. At last, a concluding decision will be given.

A weak and strong IPR

To do a better apprehension of the IPR issues for foreign investors, in this portion, I would wish to discourse the relationship between Intellectual Property Rights protection and foreign direct investing ( FDI ) . General speech production, it is a small spot complex between IPR protection and FDI. On the one manus, harmonizing to Javorcik ( 2002 ) , strong IPR protection will switch the willing of transnational companies from FDI towards licencing. On the other manus, if that state ‘s Intellectual Property Rights are to some extend weak, it will increase the chance of imitation, which could take that state a less attractive location for foreign investors ( ibid ) . In other words, the first issue faced by foreign spouses when come ining markets where IPRs have been ill protected is that the phenomenon of imitation.

Fake iPhone in developing state

For illustration, it is no uncertainty about how popular when the iPhone was born since the June 2007. Its alone operating system and exoteric port made it became gizmo lover ‘s dream. However, as clip goes by, there are many imitation of iPhone had been created in many developing states such as China. It should hold surprised no 1 if people would desire to purchase a bogus iPhone, merely like people want to purchase a bogus Louisiana Pneumonia pocketbook. At the minute, in the China ‘s biggest online C2C store – TAOBAO, there are many sorts of ‘iClone ‘ with adequate good of the Apple logo and similar form to the existent iPhone. The bundle every bit good as direction book are wholly same as existent iPhone, which means it is truly difficult to happen out what are the differences between the existent and forge one. The merely obvious difference is simply the monetary value. The image below is from a friend who bought a bogus iPhone several months ago, it can be found that from the image there are no differences between two )

The impact of imitation

From the IPR protection position, the ‘imitation company ‘ should necessitate a lesson of IPRs Torahs. However, it is evidently that such imitation company did it intentionally by taking advantage of ailing rational belongings rights of that state. The impact of imitation is that Apple is to some extend losing their gross revenues ; there are unimpeachably amendss to the Apple, which is the most well-thought-of and cleanest engineering company in the universe. In add-on, more important impact is that such phenomenon will impact other foreign investors ‘ assurance every bit good as enthusiasm, which put developing states such as China at a serious disadvantage. Hence the betterment of IPR protection is of import and important. From another facet, harmonizing to Mansfield ( 1994 & A ; 1995 ) , as studies of IJV have shown, the significance and importance of rational belongings rights protection have different degrees of amendss to different industries. Besides, the intent of investing undertaking besides decides the degrees of amendss that IJV might be taken. Companies such as Research and Development installations would be the highest whereas companies concentrating on entirely on distribution and gross revenues would be the lowest. From this point, it can be found that Apple Company evidently belongs to the first affair, which is based on the high engineering and research.

Provision that Apple make to protect their involvements

In this portion, I would wish to brief explicate how hi-tech corporations such as Apple protect their involvements when they against ill protected IPRs in developing states. By and large talking, the manner of supporting can be divided into two parts: foremost of all, which is the most hard one, nevertheless, at the same time the most effectual one, is that make their merchandises to hold a really rare quality, a good quality means tantamount monetary value. For case, boulder clay today the engineering of Apple ‘s iPhone has been updated six times. After each upgrade the new iPhone is more slender and delicate than old merchandise. One the one manus, after several times ‘ ascent, new iPhone became harder to copy than earlier, both from stuff textures and interior concept. Hence it will be more to those who produce forge iPhone. Harmonizing to the TaoBao online store in China at the minute, it can be found that ‘fake iPhone ‘ is considerable lessening than before, which indicates that rare quality can highly increase the trouble of copying hi-tech productions such as iPhone, therefore the effect is disappearing of imitation, which is a manner to protect intellective belongings rights.

On the other manus, the system between China and developed states is important different. For illustration, in the UK, people normally do non direct purchase a phone ; alternatively, they prefer gestural contracts within 12 or 24 months, and pay measures monthly so that they can acquire that phone free. Although this system is advance, nevertheless, such system is rather unfamiliar to those people in China. Hence transcript of that system in China could take an highly lessening of gross revenues ‘ volume. In other words, the civilization and ingestion wont should be considered every bit good for those JVCs when they come ining developing states ‘ market. In my sentiment, as sustained, rapid and sound economic development of developing states such as China, the people ‘s buying power has invariably risen, which means the monetary value issues are non the first ground when people buying. Alternatively, the quality, trade name name consciousness, advertizement, every bit good as selling scheme plays a more of import and important function in such circumstance. Hence, after understanding these elements, JVCs should concentrate more on bettering the qualities of their merchandises every bit good as selling schemes, so that their merchandises would pull clients, and set up some sort of ‘trust ‘ between clients and them, this besides benefits for the future net incomes because in China people is more tendency oriented instead than analyse merchandises themselves.

Copyright in developing state

In this paragraph, I would wish to discourse another of import issue of rational belongings rights – right of first publication. Take Chinese market as an illustration every bit good, the chief right of first publication issues can be divided into two facets: book and computing machine plans. In this portion, I would wish chiefly concentrate on the windows plan as an illustration, windows operation system is a type of operating system for computing machines, produced by the Microsoft Corporation, which allows users to run several plans at the same clip in separate countries of the computing machine screen. Windows systems include Windows NT, Windows 2000, Windows 98and Windows XP ( Longman lexicon, 2009 ) . Harmonizing to the WTO web site ( 2009 ) , the TRIPS understanding ensures that computing machine plans will be protected as literary plants under the Berne Convention and outlines how databases should be protected. This regulation is really important because computing machine plans are truly difficult to project in developing states, both for the native computing machine plans and transnational companies ‘ plans such as Microsoft ‘s Windowss.

Through the reform and opening up in the last two decennaries, China had established a financial direction system which was compatible with the rules of a market economic system. In other words, Chinese market has a immense potency value, hence since decennaries before, Microsoft made a batch of collaborative activities with Chinese company such as Huawei ltd. They developed many specific plans every bit good as betterment on Windowss operation system aiming on Chinese clients. However, harmonizing to a statistic, ‘China ‘s buccaneering rates, at 82 per cent harmonizing to the Business Software Alliance, are non the universe ‘s worst. But the state ‘s sheer size means buccaneering generates immensely bigger losingss there – $ 6.7bn for all package companies last twelvemonth – than in any other market, harmonizing to the industry group ‘ ( scheme page, 2008 ) . Form this statistic, it can be found that the state of affairs of privateness lead a immense harm to companies such as Microsoft. In extra, there are many comparative plans such as sound entering plan attached in Windowss operation system besides have been damaged at the same time.

Harmonizing to the WTO web site for the protection of computing machine plan ( WTO, 2009 ) , ‘It besides expands international right of first publication regulations to cover rental rights. Writers of computing machine plans and manufacturers of sound recordings must hold the right to forbid the commercial lease of their plants to the populace. A similar sole right applies to shoot where commercial lease has led to widespread copying, impacting copyright-owners ‘ possible net incomes from their movies ‘ . In add-on, the understanding says performing artists must besides hold the right to forestall unauthorised recording, reproduction and broadcast of unrecorded public presentations ( bootlegging ) for no less than 50 old ages. Manufacturers of sound recordings must hold the right to forestall the unauthorised reproduction of recordings for a period of 50 old ages ( ibid ) . All the regulations indicate that buccaneering behaviours are highly prohibited since China enter the WTO ; nevertheless, the defence of Microsoft is non that easy in China.

Defense of Microsoft: another manner to protect involvements in developing state

The initial action of Microsoft is that they launched an anti-piracy plan in 2008 ; this plan will place all users who use Windowss without licence in worldwide, so that they can coerce them to but legal transcript of windows plan. However, things became complex when Microsoft roll-out hit China, this anti-piracy plan will do the background of desktop into wholly black on computing machine if the user utilizing Windowss without licence. Hence, this plan made Chinese users became truly anger. During that period, Chinese users ‘ choler can be found in every package forums every bit good as media such as newspaper and telecasting. In add-on, the authorities of China criticised Microsoft as good, harmonizing to Liu ( 2008 ) , Commissioner of the National Copyright Administration: ‘Violating consumers ‘ rights in order to protect your ain rights is inappropriate, ” He adds that in future he wants the company to discourse anti-piracy steps with the authorities before they are launched. ( Strategy page, 2008 ) From above, it can be concluded that Chinese authorities have a strong inclination to protect their ain people ‘s right, which means multinationals such as Microsoft can non merely follow the IPRs in China, even if it is right. In other words, the most hard things that multinationals need to see in China in that they should carefully analyze the civilization political orientation of people and authorities ‘s willing, otherwise, they will lose a really large ‘cake ‘ in their concern. Hence merely like other collaborative companies making concern in China, there is no ground that Microsoft should disregard such sort of message from the authorities.


From the instance of Microsoft, in my sentiment, Microsoft should seek more communicating to authorities of China, and discourse more sensible strategies to its rational belongings rights. In add-on, Microsoft should seek another manner to set their anti-piracy to suit the civilization political orientation of people in China. For illustration, they can restrict some of the maps in Windowss operation system alternatively of doing the desktop wholly black, and invariably better the quality of Windowss so that they can hold on the chief market portion of desk operation system in China. The good intelligence is that Microsoft applied scientists are working on ways to better the user experience, ” says Garth Fort, Microsoft ‘s selling caput for Greater China ( ibid ) .

As globalization has become a chief tendency in the hereafter, the manner of JVC will play a more important function in this sphere. Since developing counties are going a big and of import market in the universe, issues such as ‘technology leak ‘ can non be perfectly avoided due to the imperfectness of IPRs in developing states. Therefore, from the above instances I have been discussed, hi-tech companies should non seek to work out these IPR jobs instantly, alternatively, they should concentrate more on how to better their merchandises ‘ qualities so that they can hold on the consumer ‘s bosom. At the same clip, they should invariably negociate with the IPR jobs with authorities, and fix for the ‘long-term conflict ‘ , and I thing as clip goes by, the mechanism of IPR protections will be more and more perfect, and the lost involvements of IPRs during the hard clip will finally ‘refund ‘ by the immense market portion they have obtained.

Question 2

Choose a development states where JVCs are prevailing and discourse the ‘pitfalls ‘ of join forcesing within that state with regard to IP rights, and where applicable remark on any recent betterments to the legal model protecting spouse ‘s involvements.


In this inquiry, I would wish to concentrate on the issues of ‘pitfalls ‘ of join forcesing companies respect to IP rights on China, every bit good as some applicable remark on any recent betterments to the legal model protecting spouse ‘s involvements. Thomas ( 2009 ) had been said in his article ‘Protecting your Intellectual Property Rights ( IPR ) in China ‘ : ‘IP Protection is an of import issue today for any steadfast contemplating merchandising merchandises in China ‘ . In other words, if joint venture companies do non fix good, they are likely confronting a batch of ‘pitfalls ‘ while they are making concern in China. Therefore, a good apprehension of China ‘s rational belongings rights every bit good as native civilization has become important of import. For case, except those traditional goods, things like cognition and thoughts are an of import portion of trading. Besides, there are many low-tech merchandises such as brandnamed vesture really contains designs and innovation inside them, which means they has their ain values and go no longer cheap. However, in China people do non hold a strong rational belongings rights consciousness ; hence the ‘pitfalls ‘ that JVCs sometimes encountered really can be avoided by necessary steps such as bar. Hence in this inquiry, by supplying some statistics, I will exemplify illustrations to explicate some of common ‘pitfalls ‘ in China. At last, a concluding decision will be given.

Doctrine behind the rational belongings rights in Western states

Although the construct of rational belongings rights dates back to the 4th century B.C. , the minute toward making an international criterion for protecting invention is a comparatively new development. ( Karen, 1995 ) The most important measure in this tendency is the recent deputation of rational belongings issues to the decision-making and regulative organic structures of the World Trade Organisation ( ibid ) . China as a developing state in the Asia, the possible market attracts a big figure of investings, nevertheless, at the same clip, there are many ‘pitfalls ‘ come along with such actions for JVCs. Therefore, it is deserving to discourse such troubles every bit good as recent betterments to the legal model to protect spouse ‘s involvements. Before this, I would wish to briefly talk about the basic doctrine behind the rational belongings rights. Thomas Edison one time said, ‘Genius is one per centum inspiration and 99 per centum sweat ‘ . This stating indicated the basic doctrine behind IPRs. Intellectual belongings rights are founded on the premise that innovations are the merchandise of nil more than single labour and investing. ( Tansey, 1999 ) IPRs create private belongings rights in developers of new cognition to compaensate them for the labour and resources expended during the originative procedure. ( Kate, 1994 ) By honoring research and development, IPRs systems are intended to further the creative activity and airing of new cognition, thereby profiting society in general every bit good as the single discoverers. ( Sarma, 1999 ) Most developed states such as UK adhere to this doctrine and have established extended protective systems for IPRs. ( ibid ) From above, it can be easy concluded that the doctrine of rational belongings rights in most Western states is fixed, that is, the consciousness of IPRs protection had been profoundly accepted by the people. In other words, Peoples respect other people ‘s working and will non steal other ‘s accomplishment, otherwise they will be condemned.

Doctrine behind the rational belongings rights in China

However, although dominant among developed states, this individualistic doctrine is non globally accepted. Many developing states such as China respect cognition as communal instead than private belongings. ( ibid ) These societies value and promote intergenerational invention, comprehending innovations non as strictly alone personal accomplishments but as extensions of bing thoughts and finds. ( Rosemary, 1998 ) In other words, the doctrine of rational belongings rights in developing states such as China is wholly different from the Western states, that is the ground why I foremost discus the doctrine behind the IPRs. In China, industrialized opposite numbers are advanced than their engineering. As a public policy, China recognises copying as a manner of bettering its engineering, and such state of affairs determines that China can non purely follow IPR governments. For illustration, when a ‘child ‘ grows up, it is truly difficult to allow that child create new things ; alternatively, the best manner for that kid is imitate what he saw, so that he can fast turn up. Developing states such as China is merely like this kid, Western counties such as UK had been experienced twice industrial revolutions and has many advanced scientific disciplines and engineerings every bit good as instruction systems, which mean they have flush resources to allow China appreciate and copy. During this period, to some extent, it is really difficult for developing states to purely follow the rational belongings rights. Therefore, there are many ineluctable ‘pitfalls ‘ would be happened for JVCs.

‘Pitfalls ‘ of IPRs in China

From the above treatment, the chief point that I want to bespeak is that 100 % following IPRs in China is non a wise pick. Alternatively, happen a more balanced manner to set up a new method is merely a right determination. The success of Blizzard amusement is merely a good illustration. As I discuss above, rational belongings such as right of first publication in China is difficult to protect, when Blizzard amusement foremost enter the Chinese market, they are impressed by the possible net incomes of China, because China has a big population, which means even if they occupy 5 % of the whole market, they will acquire an incredible markup. However, at the get downing they spent a big figure of clip and money focal point on the rational belongings right in China. For case, some of their plan was modified by participants without any mandate, and the modified plans were quickly spread through the cyberspace. Blizzard amusement go really anger and complains such behaviour to the comparative sections of China. However, they found that even the participant was penalised, other participants will invariably make what the old one did. Finally the Blizzard amusement realised that the indispensable ground for such behaviours is the different doctrine behind the civilization. Therefore, they started to looking for a new way to confront Chinese market. They changed their schemes to suit Chinese clients ‘ wonts. For case, they freely open their plan ‘s codification, and allow Chinese participants freely modify their plan until most of them are satisfied. The effect is that this plan is become really popular in China, and made most of Chinese remembered the ‘Blizzard ‘ .

China is bettering Intellectual Property Rights Protection

Although China is still in a period of growing, nevertheless, as clip goes by, China will eventually go an ‘adult ‘ , which means its rational belongings rights will invariably consummate. The U.S. Embassy in Beijing studies that “ Since fall ining the World Trade Organization, China has strengthened its legal model and amended its IPR Torahs and ordinances to follow with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights ( TRIPS ) ( Global Spec, 2009 ) . Besides, China has invariably enhanced the IPR enforcement system to the legal model protecting spouse ‘s involvements. For illustration, Addressing violation of IP in China follows a two-track system. The first and most prevalent is the administrative path, whereby an IP rights holder files a ailment at the local administrative office. ( Global Spec, 2009 ) The 2nd is the judicial path, whereby ailments are filed through the tribunal system. ( China has established specialized IP panels in its civil tribunal system throughout the state. ) ( ibid ) Determining which IP bureau has legal power over an act of violation can be confounding. ( ibid ) Legal power of IP protection is diffused throughout a figure of authorities bureaus and offices, with each typically responsible for the protection afforded by one legislative act or one specific country of IP-related jurisprudence. ( ibid ) There may be geographical bounds or struggles posed by one administrative bureau taking a instance affecting buccaneering or counterfeiting that besides occurs in another part. ( ibid ) In acknowledgment of these troubles, some regional IP functionaries have discussed programs for making cross-jurisdictional enforcement processs. China ‘s tribunals besides have regulations sing legal power over infringing or forgery activities, and the range of possible orders. ( ibid ) From above, it can be found that the Chinese authorities ‘s motive is positive.


Throughout the whole treatment, my decision is double: foremost of all, there is no uncertainty that developing state such as China still has many imperfect mechanisms for the rational belongings rights, hence JVCs should be really careful of the ‘pitfalls ‘ of join forcesing within China with regard to rational belongings right such as right of first publication and hallmark issues. Second, China is still a ‘child ‘ who is in a period of growing ; hence, JVCs should besides understand the specific civilization and doctrine facets behind the Chinese. In other words, traditional western states ‘ political orientation is non that tantrum in China, JVCs should happen a more advanced manner before China become a ‘real grownup ‘ , merely like Blizzard amusement did.