[Ecommerce] Chinese Outlook on Exclusive Rights Policies

[Seth Johnson]

> http://www.shanghaidaily.com/art/2006/05/27/279534/IPR_protection_hot_potato_not_black_and_white.htm


IPR protection hot potato not black and white

Mei Xinyu

2006-05-27


Intellectual property right (IPR) protection is becoming an
increasingly important concern in the business disputes between
the United States and China.

Admittedly, proper IPR protection is reasonable and advantageous
in some ways. But in some aspects, the US is going to extremes.

It is worth considering if the IPR system is helpful to promote
the economic development and technological innovation at all.

A great deal of research shows that a too strict IPR system may
not encourage innovation, for the ultimate driving power of
innovation actually comes from competition.

In essence, strict IPR protection is a kind of monopoly, which
effectively ensures rewards for innovators but also enables them
to rely on monopoly rather than on further innovations for their
high profits.

Therefore, the more forceful the protection of innovation, the
higher the monopolistic profits, and thus the weaker the driving
power for further innovation.

It is obvious that too strict IPR protection also worsens the
conditions for innovation by forcing innovators to concentrate
more on avoiding violating others' rights than on innovation.

In the past, the US granted patents to each newly developed piece
of software. But nowadays, the US grants a patent to almost each
code used in certain software.

Although this appears to be beneficial to the protection of
innovators' rights, it is in fact discouraging technological
innovation on the whole.

Now anyone who wants to develop new software has to consider if
each code he or she uses is violating others' patents.

For this reason, many American enterprises have begun to seek
development out of the country as they can no longer stand the
continuous patent disputes there.

In addition, certain requirements by the US concerning IPR in
China contradict with some other requirements.

For example, China is making great efforts to promote authorized
software in all enterprises as is required by the US. However,
such requirements violate China's commitment to the entry of WTO,
which was made according to the requirements of Western countries
including the US and European countries.

Not to mention the fact that the Chinese government has no right
to require non state-owned enterprises to use authorized
software.

Even in the case of state-owned enterprises, according to Article
46 of the Report of the Working Party on the Accession of China
(into WTO), the Government of China would not influence
commercial decisions on the part of state-owned or state-invested
enterprises.

Last but not least, the complaint of certain Americans that China
is not punishing IPR violation acts enough is groundless. In
China, the punishment on certain IPR violation acts is much more
severe than that of the US.

(The author is a senior researcher at the Ministry of Commerce.
The views are his own. He can be reached at www.meixinyu.com)