A popular debating point among both supporters and opponents of IP concerns the strength and reliability of domestic IP rights in developing countries: which is the best way to attract inward investment into a developing economy? (i) establish a regime of strong IP rights that are easy to enforce, in order to protect investment in innovation and its commercial exploitation; (ii) keep IP to the bare minimum that is necessary for TRIPS compliance in the hope that, freed from the restraints of IP monopolies that are generally exercised by absentee landlords, the local economy will become more competitive and generate its own export-driven momentum. It is assumed for the purpose of this debate that the attraction of inward investment is the desired objective, so this discussion will exclude for this purpose the third, fairly popular option; or (iii) take protectionist steps to control the exploitation of indigenous and collectively held rights in, for example, geographical indications, traditional knowledge, folklore, and bio-materials, while allowing a more laisser-faire approach towards the West’s ‘traditional’ creator-based rights in inventions, designs, and copyrights. While opinions are passionately expressed on this debating point, it is frustratingly difficult to create a methodology for attributing inward investment to any particular set of IP policies. This is because the strength or otherwise of IP rights is not an isolated criterion for determining where foreign investors place their confidence: it is part of a web of interrelated criteria so complex that it is almost impossible to tease out any strand from it and attribute to it any causative function. Some investment criteria are quite unrelated to the excellence or deficiency of domestic IP rights. These include the domestic tax regime, the ability (or otherwise) to remit foreign earnings, the political stability of the target market, and the availability and quality of its skilled labour. Thus, it makes more sense to invest in software development in India, where there is already a vibrant software culture within the workforce, than in countries where familiarity with programming techniques is absent. And countries suffering from substantial civil unrest or economic turmoil, of which Zimbabwe is a sad epitome, are unlikely to attract any sort of foreign investment even where local skills are present. The size and potential of a market may make it attractive for investors too. Thus, China enjoyed a large volume of joint ventures with foreign IP-rich businesses even when the local laws were relatively rudimentary, and their interpretation and enforcement untested, since overall business benefits outweighed any IPrelated risks. Another criterion appears at first blush to be more IP-related. Is the country which seeks foreign investment a member of the major IP conventions and treaties that provide for international filing of registered rights? But does membership of the right club guarantee, or even offer, a promise of inward funding? The Patent Cooperation Treaty and the Madrid and Hague schemes have brought transnational filing within the grasp of many businesses in the developed world, but WIPO statistics suggest that developing countries that crave inward investment do not receive it on the basis of the availability of protection through these systems since the number of rights that are protected in those countries is a small fraction of the scale of protection sought in developed markets. The good news for developing economies may be that, if the possession of a good IP system does not attract inward investment, its absence may not act as a positive deterrent. If this is so, what lessons does this teach us? First, the experience of the past 40 years or so teaches us that you can no longer justify IP rights in developing economies by suggesting that there is any direct causative link between having a good IP rights system and attracting foreign investment. Given the efficiencies of manufacturing in the age of cybernetics, with regard to many products the output of a single plant will be sufficient to satisfy global demand, no matter how many countries provide it with patent protection. Secondly, the internet provides a medium for the delivery of copyright works that is effectively unrelated to local legal, manufacturing, and market conditions. Particularly, where digital rights management is employed, copyright can be effectively and conveniently exploited without the need to establish a presence in each target market. Journal of Intellectual Property Law & Practice, 2009, Vol. 4, No. 4 225
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