Intellectual Property Right Security Issues Concerning FDI

JVC lovers in growing countries often cite technology copy as an important expected final result of their collaborative activities, but for developed nation lovers, the risks that such technology will be misused or 'leaked' to other local companies are significant.

Discuss the issues faced by international partners when getting into marketplaces where intellectual property protection under the law have customarily been poorly protected. What procedures can companions make to safeguard their hobbies? (60%)


In this assignment, I would like to give attention to intellectual property right coverage issues while overseas investors going into market where intellectual property rights have customarily been poorly guarded, as well as the possible provisions can buyers make to protect their pursuits. On the facial skin from it, intellectual property right protection would seem to be a simple concept, as a visible contribution on international coverage agenda, the importance of IPRs scarcely must be questioned further. However, although the Trade-Related Areas of Intellectual Property Rights (Outings) had been made agreement, you may still find many producing countries and economics such as China and India are less related to about enhancing their Intellectual Property Rights because they thought there could be some 'unseen benefits' inside the poor protection of IPRs. Hence a much better understanding of potential benefits from an increased Intellectual Property Privileges plan should be deeply talked about. For instance, more robust IPRs will entice more inflows of international direct investment. In another aspect, as globalisation has became one of the most ruling 'hype words' on earth, International Joint Projects play an important role in modern world, in other words, the safety of IPRs, which is the key issues encountered by foreign buyers, become more and even more significant. Structurally, first of all I would like to discuss the differences between a fragile and strong IPR to get started on this newspaper, and then I wish to discuss the main issues such as copyright and trademarks which foreigner investors will be encountered. At last, your final conclusion will get.

A poor and strong IPR

To make an improved understanding of the IPR issues for international traders, in this part, I'd like to discuss the relationship between Intellectual Property Rights protection and foreign direct investment (FDI). Basic speaking, it is a little bit sophisticated between IPR safeguard and FDI. On the one hand, corresponding to Javorcik (2002), strong IPR safety will move the happy of multinational companies from FDI towards licensing. Alternatively, if that country's Intellectual Property Rights are for some extend weak, it will increase the possibility of imitation, which could lead that country a less attractive location for foreign investors (ibid). Quite simply, the first issue faced by foreign partners when coming into markets where IPRs have been badly protected is usually that the occurrence of imitation.

Fake iPhone in producing country

For example, it is without doubt about how popular when the iPhone was created since the June 2007. Its unique operating system and exoteric port managed to get became gizmo lover's goal. However, as time goes on, there a wide range of imitation of iPhone had been created in many developing countries such as China. It should have surprised nobody if people would want to buy a fake iPhone, exactly like people want to buy a fraudulent Louisiana Pneumonia handbag. At the moment, in the China's biggest online C2C shop - TAOBAO, there are numerous varieties of 'iClone' with enough good of the Apple logo design and similar routine to the real iPhone. The bundle as well as instructions book are completely identical to real iPhone, this means it is very hard to determine what are the differences between your real and fraudulent one. The only obvious difference is only the purchase price. The picture below is from a pal who bought a fake iPhone several months ago, it can be discovered that from the picture there are no variations between two)

The impact of imitation

From the IPR security point of view, the 'imitation company' should need a lessons of IPRs laws and regulations. However, it is obviously that such imitation company achieved it deliberately by firmly taking advantage of terribly intellectual property protection under the law of that country. The impact of imitation is that Apple is for some extend burning off their sales; there are definitely problems to the Apple, which is the esteemed and cleanest technology company on the planet. In addition, more significant impact is the fact that such happening will have an impact on other foreign shareholders' self-assurance as well as passion, which put producing countries such as China at a serious disadvantage. Hence the improvement of IPR coverage is important and significant. From another aspect, regarding to Mansfield (1994 & 1995), as surveys of IJV show, the importance and importance of intellectual property protection under the law security have different degrees of damages to different establishments. Besides, the purpose of investment task also decides the degrees of damages that IJV might be taken. Companies such as Research and Development facilities would be the highest whereas companies focusing on exclusively on syndication and sales would be the lowest. From this point, it could be found that APPLE MACKINTOSH obviously is one of the first matter, which is based on the high technology and research.

Provision that Apple make to safeguard their interests

In this part, I would like to brief clarify how high-tech organizations such as Apple protect their pursuits when they against inadequately safeguarded IPRs in growing countries. Generally speaking, the way of defending can be split into two parts: to begin with, which is the most challenging one, however, simultaneously the most effective one, is that make their products to truly have a very exceptional quality, a good quality means comparable price. For example, till today the technology of Apple's iPhone has been kept up to date six times. After each up grade the new iPhone is more trim and delicate than past product. One the one hands, after several times' update, new iPhone became harder to imitate than before, both from materials textures and internal construct. Hence it will cost more to the people who produce false iPhone. According to the TaoBao online store in China at this time, it could be discovered that 'fake iPhone' is sizeable cut down than before, which indicates that uncommon quality can extremely improve the difficulty of imitating high-tech productions such as iPhone, hence the effect is disappearance of imitation, which is a way to safeguard intellective property privileges.

On the other side, the machine between China and developed countries is significant different. For example, in the UK, people will not point buy a cellphone; instead, they like sign deals within 12 or two years, and pay bills monthly so that they can get that mobile phone free. Although this system is advance, however, such system is quite new to those individuals in China. Hence duplicate of that system in China could lead an exceptionally decrease of sales' volume. In other words, the culture and intake habit should be considered as well for those JVCs when they entering growing countries' market. For me, as sustained, fast and sound economic development of expanding countries such as China, the people's purchasing vitality has constantly risen, which means the purchase price issues are not the first reason when people purchasing. Instead, the product quality, brand name awareness, advertisements, as well as online marketing strategy plays a more important and significant role in such situation. Hence, after understanding these elements, JVCs should focus more on bettering the qualities of their products as well as marketing strategies, so that their products would get clients, and establish some kind of 'trust' between clients and them, this also benefits for the future profits because in China people is more trend focused alternatively than analyse products themselves.

Copyright in growing country

In this paragraph, I'd like to discuss another important issue of intellectual property rights - copyright. Take Chinese language market as an example as well, the key copyright issues can be divided into two aspects: booklet and computer programs. Within this part, I'd like mainly give attention to the home windows program for example, windows procedure system is a kind of operating system for computers, made by the Microsoft Corporation, that allows users to run several programs at the same time in separate areas of the computer screen. Home windows systems include Windows NT, Glass windows 2000, Home windows 98and Windows XP (Longman dictionary, 2009). According to the WTO website (2009), the Journeys agreement means that computer programs will be guarded as literary works under the Berne Convention and describes how databases should be shielded. This rule is very significant because computer programs are really hard to task in producing countries, both for the local computer programs and multinational companies' programs such as Microsoft's home windows.

Through the reform and checking in the last two decades, China had set up a fiscal management system which was appropriate for the rules of a market economy. In other words, Chinese market has a huge potential value, hence since years before, Microsoft made a lot of collaborative activities with Chinese company such as Huawei ltd. They developed many specific programs as well as improvement on windows operation system concentrating on on Chinese language clients. However, corresponding to a statistic, 'China's piracy rates, at 82 per cent based on the Business Software Alliance, are not the world's worst. However the country's sheer size means piracy generates significantly bigger losses there - $6. 7bn for everyone software companies last year - than in any other market, in line with the industry group' (strategy site, 2008). Form this statistic, it could be found that the situation of privacy lead a huge damage to companies such as Microsoft. In additional, there are extensive relative programs such as reasonable recording program attached in windows procedure system likewise have been damaged simultaneously.

According to the WTO website for the security of computer program (WTO, 2009), 'It also expands international copyright guidelines to cover rental protection under the law. Authors of computer programs and producers of sound recordings will need to have the to prohibit the commercial rental of these works to the general public. A similar exclusive right pertains to films where commercial local rental has resulted in widespread copying, affecting copyright-owners' potential profits from their films'. Furthermore, the arrangement says performers must also have the to prevent unauthorized tracking, duplication and broadcast of live shows (bootlegging) for no less than 50 years. Suppliers of sound recordings must have the to prevent the unauthorized duplication of recordings for an interval of 50 years (ibid). All the rules signify that piracy behaviors are really prohibited since China enter into the WTO; however, the defense of Microsoft isn't that easy in China.

Defense of Microsoft: other ways to protect passions in expanding country

The preliminary action of Microsoft is that they launched an anti-piracy program in 2008; the program will identify all users who use home windows without certificate in worldwide, so that they can force these to but legal backup of house windows program. However, things became complicated when Microsoft roll-out struck China, this anti-piracy program will made the background of desktop into totally dark on computer if the user using windows without permit. Hence, the program made Chinese language users became really anger. Throughout that period, Chinese users' anger are available in every software forums as well as press such as newspaper and television. Furthermore, the federal government of China criticised Microsoft as well, corresponding to Liu (2008), Commissioner of the National Copyright Administration: 'Violating consumers' privileges in order to protect your own privileges is incorrect, " He offers that in future he desires the company to discuss anti-piracy actions with the federal government before they are really launched. (Strategy webpage, 2008) From above, it could be concluded that Chinese government have a solid tendency to safeguard their own people's right, this means multinationals such as Microsoft cannot simply follow the IPRs in China, even if it is right. In other words, the most challenging things that multinationals need to consider in China for the reason that they must carefully analyse the culture ideology of folks and government's prepared, otherwise, they'll lose an extremely big 'cake' in their business. Hence exactly like other collaborative companies doing business in China, there is absolutely no reason that Microsoft should dismiss such kind of meaning from the federal government.


From the case of Microsoft, for me, Microsoft should seek more communication to federal of China, and discuss more sensible schemes to its intellectual property protection under the law. In addition, Microsoft should seek another way to adapt their anti-piracy to match the culture ideology of men and women in China. For example, they can limit some of the functions in windows operation system instead of making the desktop totally dark, and constantly increase the quality of windows in order to grasp the main market talk about of desk operation system in China. The glad tidings are that Microsoft designers are working on ways to increase the consumer experience, " says Garth Fort, Microsoft's marketing brain for Greater China (ibid).

As globalisation has turned into a main trend in the future, the method of JVC will play a more significant role in this area. Since growing counties are becoming a big and important market on earth, issues such as 'technology leak' can't be absolutely avoided because of the imperfection of IPRs in developing countries. Therefore, from the above situations I have been talked about, high-tech companies should not seek to solve these IPR problems immediately, instead, they ought to focus more how to improve their products' qualities so that they can understanding the consumer's center. At the same time, they ought to constantly work out with the IPR issues with government, and prepare for the 'long-term fight', and I thing as time goes by, the system of IPR protections will be more and more perfect, and the lost passions of IPRs through the difficult time will finally 'refund' by the huge market show they have obtained.

Question 2

Select a expanding nations where JVCs are prevalent and discuss the 'pitfalls' of collaborating within that country regarding IP rights, and where appropriate comment on any recent advancements to the legal framework protecting partner's interests.


In this question, I would like to give attention to the issues of 'pitfalls' of collaborating companies value to IP rights on China, as well as some suitable touch upon any recent advancements to the legal platform protecting partner's pursuits. Thomas (2009) had been said in his article 'Protecting your Intellectual Property Rights (IPR) in China': 'IP Coverage is an important issue today for just about any firm contemplating selling products in China'. In other words, if joint venture companies do not put together well, they are likely facing a great deal of 'pitfalls' while they may be doing business in China. Therefore, a proper understanding of China's intellectual property protection under the law as well as indigenous culture has become significant important. For instance, except those traditional goods, things like knowledge and ideas are an important part of trading. Besides, there are numerous low-tech products such as brandnamed clothing actually has designs and invention inside them, which means they has their own principles and become no longer cheap. However, in China people don't have a strong intellectual property protection under the law awareness; hence the 'pitfalls' that JVCs sometimes experienced actually can be avoided by necessary options such as reduction. Hence in this question, by providing some statistics, I will illustrate instances to explain some of common 'pitfalls' in China. Finally, a final conclusion will be given.

Philosophy behind the intellectual property privileges in Western countries

Although the idea of intellectual property protection under the law goes back to the fourth century B. C. , the moment toward creating a global standard for protecting development is a comparatively new development. (Karen, 1995) The most important part of this pattern is the recent delegation of intellectual property issues to the decision-making and regulatory physiques of the World Trade Company (ibid). China as a developing country in the Asia, the actual market attracts a large number of purchases, however, at exactly the same time, there are numerous 'pitfalls' come along with such actions for JVCs. Therefore, it will probably be worth to discuss such complications as well as recent advancements to the legal platform to safeguard partner's hobbies. Before this, I'd like to briefly speak about the basic philosophy behind the intellectual property privileges. Thomas Edison once said, 'Genius is one percent motivation and ninety-nine percent perspiration'. This stating indicated the essential viewpoint behind IPRs. Intellectual property protection under the law are founded on the assumption that innovations will be the product of only specific labor and investment. (Tansey, 1999) IPRs create private property privileges in coders of new knowledge to compaensate them for the labor and resources expended during the creative process. (Kate, 1994) By fulfilling research and development, IPRs systems are designed to foster the creation and dissemination of new knowledge, therefore benefiting society generally speaking as well as the individual inventors. (Sarma, 1999) Most developed nations such as UK stick to this philosophy and also have established extensive protecting systems for IPRs. (ibid) From above, it can be easily concluded that the viewpoint of intellectual property privileges in most American countries is set, that is, the consciousness of IPRs cover had been deeply accepted by the people. In other words, People respect other's working and can not take other's achievement, in any other case they'll be condemned.

Philosophy behind the intellectual property privileges in China

However, although dominant among developed countries, this individualistic viewpoint is not internationally accepted. Many producing countries such as China respect knowledge as communal rather than private property. (ibid) These societies value and encourage intergenerational creativity, perceiving inventions not as solely unique personal successes but as extensions of existing ideas and discoveries. (Rosemary, 1998) Quite simply, the idea of intellectual property privileges in developing countries such as China is very different from the Traditional western countries, that is the reason why I firstly discus the viewpoint behind the IPRs. In china, industrialized counterparts are advanced than their technology. As the public policy, China recognises replicating as a way of increasing its technology, and such situation establishes that China cannot firmly follow IPR regimes. For example, whenever a 'child' grows up, it is actually hard to let that child create new things; instead, the best way for that child is imitate what he saw, so that he can fast develop up. Expanding countries such as China is just like this child, European counties such as UK had been experienced twice professional revolutions and has many advanced sciences and technology as well as education systems, which mean they have affluent resources to let China appreciate and imitate. During this time period, somewhat, it is very hard for developing countries to firmly follow the intellectual property rights. Therefore, there a wide range of inescapable 'pitfalls' would be happened for JVCs.

'Pitfalls' of IPRs in China

From the above mentioned discussion, the primary point that I want to indicate is the fact 100% following IPRs in China is not a wise choice. Instead, find a more balanced way to establish a new method is merely a right decision. The success of Blizzard entertainment is just an example. WHEN I discuss above, intellectual property such as copyright in China is hard to protect, when Blizzard entertainment first of all enter the Chinese market, they are really impressed by the actual earnings of China, because China has a huge population, this means even if they occupy 5% of the whole market, they will get a fantastic markup. However, at the beginning they spent a huge number of money and time concentrate on the intellectual property right in China. For example, a few of their program was changed by players without the authorization, and the altered programs were speedily disperse through the internet. Blizzard entertainment become very anger and complains such action to the comparative departments of China. However, they discovered that even the player was penalised, other players will constantly do what the prior one do. Finally the Blizzard entertainment realised that the fundamental reason behind such conducts is the different beliefs behind the culture. Therefore, they started to looking for a new path to face Chinese market. They changed their strategies to fit Chinese customers' habits. For example, they freely open up their program's code, and let Chinese players freely change their program until most of them are satisfied. The outcome is that program is become very popular in China, and made almost all of Chinese appreciated the 'Blizzard'.

China is bettering Intellectual Property Rights Protection

Although China is still in a period of progress, however, as time goes on, China will finally become an 'adult', this means its intellectual property rights will constantly consummate. The U. S. Embassy in Beijing reviews that "Since becoming a member of the World Trade Organization, China has strengthened its legal framework and amended its IPR regulations to adhere to the WTO Arrangement on Trade-Related Areas of Intellectual Property Rights (Travels) (Global Spec, 2009). Besides, China has constantly increased the IPR enforcement system to the legal framework protecting partner's passions. For example, Handling infringement of IP in China comes after a two-track system. The first & most prevalent is the administrative record, whereby an IP privileges holder documents a problem at the neighborhood administrative office. (Global Spec, 2009) The second reason is the judicial trail, whereby issues are filed through the court docket system. (China has generated specialized IP panels in its civil court docket system throughout the country. ) (ibid) Determining which IP company has jurisdiction over an take action of infringement can be complicated. (ibid) Jurisdiction of IP protection is diffused throughout a number of authorities agencies and offices, with each typically responsible for the cover afforded by one statute or one specific section of IP-related laws. (ibid) There could be geographical restrictions or conflicts posed by one administrative company taking a case affecting piracy or counterfeiting that also occurs in another region. (ibid) In identification of these difficulties, some local IP officials have mentioned ideas for creating cross-jurisdictional enforcement strategies. China's courts also have rules regarding jurisdiction over infringing or counterfeit activities, and the opportunity of potential purchases. (ibid) From above, it can be found that the Chinese government's inspiration is positive.


Throughout the complete discussion, my realization is twofold: to begin with, there is absolutely no doubt that producing country such as China still has many imperfect mechanisms for the intellectual property protection under the law, hence JVCs should be very careful of the 'pitfalls' of collaborating within China with respect to intellectual property right such as copyright and brand issues. Secondly, China continues to be a 'child' who is in a period of expansion; hence, JVCs also needs to understand the specific culture and idea aspects behind the Chinese. In other words, traditional traditional western countries' ideology is not that fit in China, JVCs should find a more ground breaking way before China become a 'real adult', exactly like Blizzard entertainment did.

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