Have Developing Countries Gained From the Marriage Between Trade Agreements and Intellectual Property Rights?

Have Developing Countries Gained from the Marriage Between Trade Agreements and Intellectual Property Rights? Sumner J. La Croix and Denise Eby Konan In 1995, the new WTO Agreement incorporated rules on trade-related intellectual property rights (TRIPS). The TRIPS Agreement mandated that all member countries establish minimum standards for copyright, patent, trademark, trade secrets, and geographical indications; have public and private remedies for violations. Have developing countries gained from the marriage between trade agreements and intellectual property rights (IPRs)? We use historical, theoretical, and empirical methods to answer this question. First, U.S. history clearly demonstrates that it is unnecessary for a developing country to recognize foreign IPRs to experience strong growth. Second, recent theoretical contributions to the patent literature show that patent harmonization can lead to world welfare gains if developing countries are provided with lump-sum compensation to offset higher royalty payments. Third, we show that the dismantling of the MultiFibre Agreement did not provide this compensation. Fourth, stronger patent laws generated an array of generally positive effects with respect to foreign direct investment and licensing. Fifth, digitization has combined with the internet to radically change the incentives to copy and distribute copyrighted works. We argue that the extensive copying of copyrighted works in Asia represents a breakdown in relations between the developed and developing countries. Finally, we conclude with a brief discussion of critical issues in patent and copyright law.