Cross-Border intellectual property rights enforcement and international technology transfer

99 Pages·2002·3.8 MB·English

by  Chiang, Eric P

CROSS-BORDERINTELLECTUALPROPERTYRIGHTSENFORCEMENTAND
INTERNATIONALTECHNOLOGYTRANSFER
By
ERICP.CHIANG
ADISSERTATIONPRESENTEDTOTHEGRADUATESCHOOL
OFTHEUNIVERSITYOFFLORIDAINPARTIALFULFILLMENT
OFTHEREQUIREMENTSFORTHEDEGREEOF
DOCTOROFPHILOSOPHY
UNIVERSITYOFFLORIDA
2002
ToourwonderfulEarth,whosebeautyand
wonderhaskeptmefascinatedwithUfe.
ACKNOWLEDGMENTS
Imustfirstthankmysupervisorycommitteemembers. Dr.LawrenceKenny,the
chairofthecommittee,devotednumeroushourstocarefullycorrectmanydraftsofthis
workandprovidedinvaluableguidanceanddirection. Thisdissertationhasdeveloped
andevolvedlargelyasaresultofhisdedication. Dr.BinXu,amember,provided
significantguidancetowardtheinternationalaspectsofmyresearch,andhasmentored
meonapersonallevel. Dr.DouglasWaldo,amember,providedimportantguidance
towardthecollectionofdataformyempiricalwork. Dr.SylviaChan-Olmsted,the
externalmember,providedmewiththeimportantideathatledtothedevelopmentofthe
mainchapters. Iherebythankthemallagainfortheirtimeandefforts.
Outsideofmysupervisorycommittee,IamgratefultoDr.DjetoAssane,my
undergraduateresearchadvisor,forinitiallysparkingmyinterestinintellectualproperty
rights. IamalsoindebtedtoDr.JamesAdamsfortakinganinterestinmyresearchand
forallowingmetocollaborateonseveralrelatedprojects. Ialsothanktheparticipantsof
allconferencestowhichthisresearchhasbeenpresented;theprofessionalexperienceand
valuablecommentsreceivedwereinstrumentaltothecompletionofthiswork.
IgivespecialthankstotheCenterforInternationalBusinessEducationand
Research,whichprovidedsignificantfinancialsupportthroughoutmygraduatestudies.
Dr.MarkJamison,PattiJamison,andDr.CarolWesthavesupportedmeinmoreways
thancanbedescribed. Finally,Ithankthegraduatefacultyaswellasthesecretarialstaff
foralwaystakingakeeninterestinmywelfare.
iii
TABLEOFCONTENTS
page
ACKNOWLEDGMENTS
iii
ABSTRACT vi
CHAPTER
1 DETERMINANTSOFCROSS-BORDERINTELLECTUALPROPERTY
RIGHTSENFORCEMENT:THEROLEOFTRADESANCTIONS 1
Introduction 1
EnforcementMechanism 4
Framework 5
Data 9
EmpiricalModel 13
EmpiricalResults 16
FurtherSensitivityTests 24
Conclusion 27
2 MARKETCOMPETITIONINTHEUNITEDKINGDOM:THEEFFECTON
INTERNATIONALINTELLECTUALPROPERTYRIGHTSLITIGATION 29
Introduction 29
IPRProtectionandIPREnforcement 31
EmpiricalOutline 34
Data 40
EmpiricalModel 44
Results 45
Conclusion 55
3 TECHNOLOGYDIFFUSIONANDCOSTLYKNOWLEDGE
SPILLOVERS:ACROSS-COUNTRYANALYSIS 57
Introduction 57
Framework 50
ProductivityandGrowthEquations 60
InnovationEquations 61
Data 52
EmpiricalFindings 54
iv
Conclusion 70
APPENDIX
A THEIDEALINTELLECTUALPROPERTYENFORCEMENT
MECHANISM:CHOOSINGBETWEENCROSS-BORDERCOURT
LITIGATIONANDUSITCTRADESANCTIONS 72
Introduction 72
TreatiesandLawsofthePastCentury 73
InternationalIPRLitigationFrameworkundertheBrussels/LuganoConventions 74
CourtStructureoftheUnitedKingdom 76
USITC 76
Section337Background 77
JurisdictionalIssuesUnderSection337 78
KeyDifferencesbetweenCourtLitigationandUSITCMechanisms 79
Conclusion 82
B APPENDIXTOCHAPTER3 84
REFERENCES 87
BIOGRAPHICALSKETCH 91
V
AbstractofDissertationPresentedtotheGraduateSchool
oftheUniversityofFloridainPartialFulfillmentofthe
RequirementsfortheDegreeofDoctorofPhilosophy
CROSS-BORDERINTELLECTUALPROPERTYRIGHTSENFORCEMENTAND
INTERNATIONALTECHNOLOGYTRANSFER
By
EricP.Chiang
May2002
Chair:LawrenceKenny
MajorDepartment:Economics
Thisdissertationaddressescurrenttopicsontheenforcementofintellectual
propertyrights(IPR)acrossnationalborders.Italsodiscusseshoweconomicgrowthvia
internationaltechnologytransferisinfluencedbyforeignpatentingandIPRprotection.
Thefirstchapteranalyzesfactorsaffectingthedecisiontotakeenforcement
actionsagainstallegedIPRviolationsabroadthatresultintheexportofinfringedgoods
backintotheinnovatingcountry. Theenforcementmechanismstudiedisthatof
investigationsaffordedbytheUnitedStatesInternationalTradeCommission. Usinga
largesampleofcountriesinanindustry-specificmodelalongwithasetofinstitutional,
political,andeconomiccontrols,wefindevidencethatinvestigationsaremorefirequent
inindustriesthatfaceintenseimportcompetitionamongIPR-protectedgoods. In
addition,greateraccesstoU.S.technologybyfirmsinforeigncountriesisfoundto
increasecasefilings. Finally,variousfactorsthatinfluencetheextentofviolations
subsequentlyaffecttheuseofinvestigations;thesefactorsincludethelevelofcorruption,
vi
thelevelofpatentprotectionanddomesticenforcement,andtheimplementationofthe
Trade-relatedIntellectualPropertyRightsAgreement(TRIPS).
Thesecondchapterstudiestheeffectofmarketcompetitionandforeign
penetrationwithintheUnitedKingdomontheextentofIPRcourtlitigationunderthe
U.K.legalsystem. Alargesampleoflegalproceedingsiscollectedoveraperiodof20
yearsandanalyzedwithindustry-specificandcountry-leveleconomicdata. Wefindthat
courtlitigationismorecommonforindustriesthatfaceheavyforeignpenetrationvia
foreigndirectinvestmentandthathaveforeignaffiliatesoftrans-nationalcorporations.
TyingtheeffectofIPRprotectionandenforcementtoeconomicgrowth,afinal
chapterexploreshowIPRprotectioninfluencestechnologytransferbywayofforeign
patenting,whichultimatelyaffectstotalfactorproductivity(TFP)atthecountrylevel.
Thiscross-countryanalysisofbothdevelopedanddevelopingcountriesfindsthatTFP
growthissignificantlyinfluencedbycostlyknowledgespillovers,implyingthat
technologytransferisnotautomatic,butratheraresultofacountry'seffort.
Toconclude,theliteraturehasbeenrelativelysparseinthestudyofcross-border
enforcementofintellectualpropertyrightsanditscorrespondingeffectsontechnology
transferandeconomicgrowth. Thisdissertationcontributestothisliteraturewiththree
distinctempiricalessaysthatattempttoaddressanumberofcontemporaryconcerns.
vii
CHAPTER
1
DETERMINANTSOFCROSS-BORDERINTELLECTUALPROPERTYRIGHTS
ENFORCEMENT:THEROLEOFTRADESANCTIONS
Introduction
Theenforcementofintellectualpropertyrights(IPR)acrossnationalbordershas
becomeincreasinglyimportant. FrequentlyIPRareusedtodisseminateandprotectthe
developmentofnewtechnologies,academicknowledge,andartisticworks. Inthe
internationalsetting,ithasbeenfoundthatIPRpromotetechnologytransferbetween
countriesandpromoteproductivitygrowth. Thus,bystrengtheningthelegalprotection
affordedIPRandenforcementoftheselaws,individualcountriescanencouragefurther
technologygrowthviainternationalknowledgetransfer. However,theextenttowhich
thisoccursdependscriticallyonhowinnovatingfirmsviewtheeffectivenessofIPR
I
protection. Inparticular,firmsareinterestedinhowcostlyitistoprotecttheir
irmovationsabroad,whichdependsontheabilitytoimposesanctionsagainstthose
suspectedofinfringementthroughvariousenforcementmechanisms.
MuchcanbelearnedabouttheeffectivenessofIPRprotectionbystudyingthe
circumstancesthatleadfirmstotakeactionstoprotecttheirintellectualproperty. Court
litigationisatraditionalvenueforenforcingIPR. Recentstudieshaveanalyzedfactors
influencingpatentlitigafionintheU.S. LanjouwandSchankerman(2001)findthatthe
valueofapatent,theextenttowhichpatentsareusedwithinanindustry,andmarket
competitivenesswithinindustriesallincreasethelikelihoodofpatentlitigation. Lanjouw
andLemer(1998)presentastylizedmodelonthepropensitytofileIPRlitigationthatis
1
2
basedonthecomparisonoftheexpectedbenefitsandexpectedcostsoftakingacaseto
trial. Theirestimationresultssuggestthatfirmsdoindeedhingetheirdecisiontolitigate
apatentbasedonexpectednetbenefits. Thefactorsanalyzedbythesestudiesprovide
insightsintothosethatarelikelytoinfluenceinternationalIPRenforcement,where
countrycharacteristicsbecomeimportantdeterminantsinthedecisiontotake
enforcementactions. Currentlythereisvirtuallynoempiricalresearchonthefactorsthat
affecttheextenttowhichfirmsprotecttheirIPRabroad.
Courtlitigationrequiresthatallpartiesbesubjecttothejurisdictionofthe
presidingcourt. Forexample,factoriesinanumberofcountriesreproduceU.S.-patented
pharmaceuticals,andthensellthembothathomeandabroadatasubstantiallylower
price. BecausethesefactorieshavehttletonophysicalpresenceintheU.S.,thepatent
ownersoftencannotsueintheU.S. Thus,U.S.firmsoftenareunabletouseU.S.courts
toprotecttheirIPR. EveniftheyhavestandinginaforeigncountrytosueoverIPR
violation,litigationabroadoftengivesU.S.firmsverylimitedIPRprotectiondueto
corruptionandweakIPRlaws.
Fortunately,U.S.firmsalsoareabletorelyontheU.S.InternationalTrade
Commission(USITC)forIPRprotectionbecauseitcanimposetradesanctionsonguilty
foreignparties. Inthepastthreedecades,manyfirmshaveusedthisavenuetoprotect
theirIPR. Thisstudyexaminesthedeterminantsofthenumberofinvestigationsfiledfor
allegedIPRviolationsusingasampleof78countriesand7industriesoverfourtime
periodsspanning1973to2000.
ThepoweroftheU.S.InternationalTradeCommissionextendsbeyondissuing
tradesanctionsforIPRviolations. Recentliteratureonantidumpingcloselyparallelsthat
3
ofinternationalEPRenforcementinthatbothaddresscross-borderunfairtradepractices.*
Recentempiricalstudieshavefoundapositiverelationshipbetweenindustrylevel
importsandtheextentofantidumpingfilings(i.e.Blonigen2000,Sabry2000). Knetter
andPrusa(2000)analyzetheinfluenceofmacroeconomicfactorsonUSITCantidumping
filingsfrom1980to1998againstfourmajorexportcountries. Theyfindthatexchange
rateappreciationsaswellasU.S.economicdownturnshaveincreasedantidumping
filings. Thisstudybuildsonthisliteraturebyexaminingtheroleoftradesanctionsin
protectingIPRandbystudyinghowcountrycharacteristicsplayaroleinUSITCcase
filings.
TheabilitytoimposetradesanctionsforIPRviolationsinforeigncountriesisan
importanttoolforIPRprotection. ThisallowsaU.S.firmtopunishfirmsthatexport
IPR-violatingproductstotheU.S.,butoffersnoprotectionforproductviolationsthatare
notexportedtotheU.S. Thus,U.S.computerfirmsaremorelikelytoseektrade
sanctionsagainstcomputerfirmsinaforeigncountryiftherearesubstantialcomputer
importsfromthatcountry. Wefindconsiderablesupportforthishypothesis.
Interestingly,sincemuchoftheimportsinIPR-protectedgoodstotheU.S.arefrom
industrializedcountries,tradesanctionstendtoprotecttheU.S.fi-omIPRviolationsin
developedcountries.
Anumberofotherfactorsaffecttheuseoftradesanctions. Morecomplaintsare
filedagainstcountrieswheretherearemoreU.S.patentstoprotect,whichsuggestsa
trade-offbetweengreatertechnologyaccessandmorepatentviolations. Inaddition,
'BlonigenandPrusa(forthcoming)provideareviewoftheempiricalliteratureonthedeterminantsand
effectsofanti-dumping.Oneconclusionisthatanti-dumpingfilingdecisionsareinfluencedbymarket
conditions.