How China and Pakistan Can Benefit From a Common Interests Initiative on Intellectual Property
Given the broad scope of the China Pakistan Economic Corridor (CPEC), it is inevitable that the question of intellectual property will become relevant at some point.
In 2017, SIPO (the English name abbreviation of China’s National Intellectual Property Administration, known after August 28, 2018, as CNIPA) called upon the Ministry of Commerce, Pakistan, whereby it was agreed that a Memorandum of Understanding (MoU) would be signed between SIPO and the Intellectual Property Organisation (IPO) of Pakistan. The meeting might have been based on the realisation of the important role that intellectual property rights (IPRs) will eventually and inevitably play in CPEC, and even beyond it. The exact motives are not the concern here, though. What is of significance is the collaboration and cooperation that can result because of any realisations and understandings. Pakistan’s IPRs, although adequately protected by legislative instruments, are in a decrepit state when we talk about their enforcement. China, on the other hand, has made significant advancements and improvements to its once decrepit IPR regime. Therefore, there exists an opportunity for both the countries to chalk out a framework for any such collaboration. The China Pakistan Free Trade Agreement (CPFTA) does offer an opening and perhaps some skeletal features as well. However, for a mega-project of such a large scale which spans over many dimensions, a more comprehensive, elaborate and complex mechanism might be more appropriate.
The National Intellectual Property Strategy (NIPS) 2017-2021 promulgated by IPO has attempted to address some of the issues and deficiencies which have been in existence in the IP regime in Pakistan. For example, the Strategy has mentioned that a legislative readjustment in certain areas is necessary. However, the readjustment is not to bring the legislation in harmony with international standards, it is so that legislations can have ‘coherence’ and ‘consonance’ with the IPO Act, 2012. To achieve that, the Strategy felt necessary that Rules under Industrial Design Ordinance, 2000 and Integrated Circuits and Layout Designs Ordinance, 2000 should be formulated. Apparently, the Strategy has tacitly recognised that the existing legislative framework is adequate as has neither stated nor expressed a need for reform of governing instruments (IPO has recently prepared drafts of copyright and patent laws which will be submitted to the legislature: http://ipo.gov.pk/news_detail.php?id=67). It is not clear how governing instruments are not ‘synchronised’ with the IPO Act and it not explained by the Strategy either. However, the Strategy does state that due to rapid technological advancements and digital revolution, there are many more ways available in which copyrighted work may be reproduced – something not foreseen or mentioned in the key legislation governing copyrights. The Strategy states that this issue, along with the issue of overlapping provisions and anomalies present in the existing legislation on trademarks, copyrights and designs, will be resolved via amendments.
The Collaboration Under the Proposed ‘Common Interests Initiative’
In the wake of the current situation, it is imperative that both China and Pakistan take proactive measures for their common interests in relation to intellectual property. As mentioned above, the Strategy has already recognised some of the deficiencies and has proposed some measures to mitigate the situation. However, that is a one-sided venture upon which only the Pakistani side can embark on. Furthermore, there is no express provision in the Strategy which vehemently deals with CPEC. Therefore, the two countries need to address the problem of intellectual property jointly. This will enrich the ‘win-win’ flavour of CPEC and the Belt and Road initiative.
There are five key areas related to intellectual property where both sides have shared interests. These include:
- Legislative protection;
- International compliance;
- Imitation; and
It is for the benefit of both sides that intellectual properties are offered adequate and sufficient legislative protection. Therefore, the legislative framework, which is the backbone of the IP regime, should be strong, robust and flexible all at the same time. Strength should not translate into rigidity. The tremendous speed of advancement in the digital age and cyber world is unparalleled and only expected to increase in future. Therefore, a degree of flexibility in the legislative framework will enable the current system to evolve and adapt smoothly according to emerging needs. Consequently, a strong legislative framework will benefit both nations.
The protection offered by legislation to intellectual properties in Pakistan is generally adequate. There are only very few loopholes and anomalies which usually do not result in very big gaps or lacunas. However, what is generally lacking is adequate and proper enforcement. The enforcement mechanism for all IPs in Pakistan is very weak and the enforcement itself is brittle and scarce. The IPO Act, 2012 was a positive step which intended to improve the enforcement situation of intellectual property rights in Pakistan. The tribunals are also empowered but they are still not sufficiently and adequately equipped to deal with the alarming situation which prevails in Pakistan. Furthermore, enforcement goes beyond the mere handing down of judgments and involves administrative measures. Therefore, strong, timely and swift enforcement will curb many of the problems plaguing the current IPR regime. A strong enforcement is in the common interests of both China and Pakistan.
China’s accession to the World Trade Organization (WTO) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) was a long process and required many reforms in the country. China had felt it necessary to integrate itself in the global intellectual property order to reap some of the benefits of trade and strengthen its economy. China has taken many steps to illustrate its desire to comply with the international obligations. TRIPS has laid down the minimum standards and obligations which are the same for all WTO member states under the treaty. This increases uniformity and certainty when nations trade intellectual property goods.
TRIPS is one of the many international instruments which lays down obligations on member states in the context of IPRs. The international framework of treaties and various instruments has attempted to address different issues which have emerged in different times. The digital age has given birth to very new questions which pertain to IPRs. International bodies like the WTO and World Intellectual Property Organisation (WIPO) are platforms that aid nations to achieve a certain degree of coherence in the realisation and recognition of these changes.
The National Intellectual Property Strategy (NIPS) has also addressed this issue in its Strategic Objective 2, where it says that IPO will consider acceding to international instruments including the Madrid Protocol for international registration of trademarks, the Marrakesh Treaty for visually impaired persons, the WIPO Copyright Treaty, the WIPO Performance and Phonograms Treaty (Internet Treaties) and the Patent Cooperation Treaty (PCT) for international registration of patents and the Beijing Treaty on audiovisual performances. Compliance with the international instruments not only creates homogeneity but also improves the image of the countries. In the context of IPs and CPEC, compliance with international obligations is beneficial for both China and Pakistan and increased compliance will further benefit the two nations.
The imitative ability of a nation can be beneficial for it, though it is inherently an ability that the investors demur. Imitative ability is counterbalanced by a strong protection of IPRs. In the context of CPEC, both China and Pakistan would benefit if the imitative ability of the host country is at its minimum. China, being the investor, would certainly benefit from it. It may sound counter-intuitive that Pakistan would also benefit from it but an assured management and reduction of imitative ability will encourage China to invest with confidence and catalyse the projects of CPEC, thereby attracting further investment. Moreover, this should be taken by Pakistan as an opportunity to bolster its innovative ability supported by a strong IPR regime, which should displace the imitative ability that prospers under a weak IPR regime.
Pakistan’s economy suffers greatly because of the widespread infringement of IPRs. The dilemma of infringement has legal, social, political and educational aspects. This is, by far, the biggest challenge that IPO will have to face and probably the hardest to curb. The problem is so deeply rooted in the society that radical re-education is needed to address it. Most people are unaware of the concept of IPRs and to add insult to injury, many people do not regard an infringing act as constituting infringement. Strict enforcement by the courts and other institutions solves only half the problem. However, steps should be taken immediately to address the problem. An exhaustive assessment of the problem along with proposed solutions should be examined by IPO. Furthermore, lessons from nations that have successfully countered the menace of IPR infringement should be used for guidance. China has made dramatic progress in this area so it will be a good time to bring China to the table and seek its counsel over the matter. Overall, the lower the infringements, the better it is for both Pakistan and China.
The factors identified above may affect both the countries in a direct way and any increase or decrease in them might impact CPEC simultaneously. Furthermore, a scheme is also outlined above showing the direction in which the factors should move. In addition, there are five factors which can benefit both the countries individually. They are:
- Tariff jumping or reduced tariffs,
- Free zones,
- Knowledge spillovers,
- Technology transfer, and
- Innovative ability.
Reduced tariffs can benefit China and will encourage Chinese investors to invest in Pakistan. This is one of the factors that multinational enterprises (MNEs) consider before deciding to invest in a country and is a crucial element of the overall business environment of a country. In the context of CPEC, China can be the major beneficiary of tariff jumping or reduced tariffs. Free Economic Zones (FEZs) are established by countries to encourage economic activity because such zones are either taxed lightly or don’t have taxes levied on them at all. Businesses see this as a major incentive as taxes can play a significant role in their economic activities. Many countries, including the UAE, have derived significant benefits from the establishment of such zones. CPEC includes the establishment of such zones in Pakistan. This will increase the business and economic activities in the country, although it will benefit China more.
Knowledge spillovers and technology transfers are often accompaniments of Foreign Direct Investment (FDI). Pakistan should focus to benefit from the knowledge spillovers as much as possible and should maximise such spillovers. Technology transfer is possible if a favourable IP environment is present in a country. China’s meteoric rise is often attributed to technology transfer, which China has exploited using its large manufacturing base along with imitative ability. Technology transfer and knowledge spill-overs, in the context of CPEC, will benefit Pakistan mostly. This should be accompanied by Pakistan striving to improve its innovative capability. In the hyperactive cyber world, innovation is the new trend and it is not only recognised but also rewarded. Therefore, Pakistan should take measures at all levels to increase its innovativeness. In the context of CPEC, innovativeness will benefit Pakistan more.
The views expressed in this article are those of the author and do not necessarily represent the views of CourtingTheLaw.com or any organization with which he might be associated.