INTELLECTUAL PROPERTY ARBITRAGE (How Foreign Rules Can Affect Domestic Protections)IntroductionArbitrage (What’s that ?)World Trade Organization (Creation)IP Arbitrages (Challenges posed)IP Arbitrages (Occurrence & Consequences)Parallel Imports (Grey Markets)Parallel Imports (Official Support)Implications of Differing RulesProhibiting Reverse EngineeringSlide 11Slide 12Products of Research ToolsSlide 14Country CodesPeer to Peer File-Sharing TechnologiesSlide 17Slide 18Possible Responses to IP ArbitragesEnhancing Domestic ProtectionPressurizing “Rogue” NationsPressurizing “Rogue” NationsReport to International OrganizationsProposing Harmonization of RulesChoosing Isolation or Accepting ArbitrationSummaryDiscussion QuestionsINTELLECTUAL PROPERTY ARBITRAGEINTELLECTUAL PROPERTY ARBITRAGE(How Foreign Rules Can Affect Domestic Protections)(How Foreign Rules Can Affect Domestic Protections)Author:Author: Pamela Samuelson Pamela Samuelson jointly withjointly with Suzanne Scotchmer Suzanne Scotchmer Presenter: Presenter: Kunal BansalKunal [email protected]@cs.odu.eduIntellectual Property ArbitragesIntellectual Property ArbitragesIntroductionIntroductionIntellectual Property (IP) can be easily undermined by Intellectual Property (IP) can be easily undermined by economic activity varying over jurisdictions with different economic activity varying over jurisdictions with different levels of protection. levels of protection. Enforcing anti-reverse engineering terms, guarding biological Enforcing anti-reverse engineering terms, guarding biological tools and crushing P2P are a few of the possible measures tools and crushing P2P are a few of the possible measures that could be taken.that could be taken.Options available to nations to respond, but the Options available to nations to respond, but the BIGBIG questions questions is, is, is it really going to help ?is it really going to help ?Intellectual Property ArbitragesIntellectual Property ArbitragesArbitrageArbitrage (What’s that ?)(What’s that ?)ArbitrageArbitrage is the practice of taking advantage of a state of is the practice of taking advantage of a state of imbalance between two or more markets. imbalance between two or more markets. Buying items at factory price and then selling them for a Buying items at factory price and then selling them for a higher price on auction sites like eBay is a form of crooked, higher price on auction sites like eBay is a form of crooked, but economically motivating arbitrage due to price imbalance. but economically motivating arbitrage due to price imbalance. Canada has been long regarded as “the pharmacy” of the US Canada has been long regarded as “the pharmacy” of the US due to its appealing low drug prices which are 20 – 30 % due to its appealing low drug prices which are 20 – 30 % lower than those in the states.lower than those in the states.Disputes regarding arbitrages are solved in a civilized manner Disputes regarding arbitrages are solved in a civilized manner through the World Trade Organization (WTO). through the World Trade Organization (WTO).Intellectual Property ArbitragesIntellectual Property ArbitragesWorld Trade Organization World Trade Organization (Creation)(Creation)WTO was seen as a medium where nations could negotiate WTO was seen as a medium where nations could negotiate treaties instead of going to war.treaties instead of going to war.Proposals for creation as early as 1944 but established only in Proposals for creation as early as 1944 but established only in 1995 to promote low trade barriers, provide a platform for 1995 to promote low trade barriers, provide a platform for member nations to resolve disputes.member nations to resolve disputes.Recent ruling saw a petition by 13 countries including the Recent ruling saw a petition by 13 countries including the European Communities victorious against US cotton European Communities victorious against US cotton subsidies for its farmers.subsidies for its farmers.Intellectual Property ArbitragesIntellectual Property ArbitragesIP ArbitragesIP Arbitrages (Challenges posed) (Challenges posed) Conclusion of Trade-Related Aspects of Intellectual Property Conclusion of Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994 led to a smaller list of items enjoying Rights (TRIPS) in 1994 led to a smaller list of items enjoying differing levels of protection in different countries. differing levels of protection in different countries. ““Implementation” however meant freedom for countries to Implementation” however meant freedom for countries to guard patented material in accordance with their own laws.guard patented material in accordance with their own laws.Resulted in significant variations since there is a contrasting Resulted in significant variations since there is a contrasting definition of the term ‘law’ across the globe and in part due to definition of the term ‘law’ across the globe and in part due to economic, social, legal and cultural challenges. economic, social, legal and cultural challenges.Intellectual Property ArbitragesIntellectual Property ArbitragesIP Arbitrages IP Arbitrages (Occurrence & Consequences)(Occurrence & Consequences)Market Imbalance can lead to widespread Market Imbalance can lead to widespread Parallel ImportsParallel Imports wherein genuine products are “imported” from a country wherein genuine products are “imported” from a country where the product has a lower price to one where it has a where the product has a lower price to one where it has a higher price purely due to economic interests.higher price purely due to economic interests.Lead nations into believing that implementing lower levels of Lead nations into believing that implementing lower levels of safeguard could trigger follow on inventions and probably safeguard could trigger follow on inventions and probably more investments than in highly protected economies.more investments than in highly protected economies.One nation could wreck another nation’s investments in R&D One nation could wreck another nation’s investments in R&D if kept unchecked.if kept unchecked.Measures beyond TRIPS might lead to an eventual depletion Measures beyond TRIPS might lead to an eventual depletion of profits to distant innovators.of profits to distant innovators.Intellectual Property ArbitragesIntellectual Property ArbitragesParallel ImportsParallel Imports