Research Notesjordan Kortlandt

Research NotesJordan Kortlandt

Summer Research Summer 2009

2Magazine/ Newspaper Articles

18Scholarly Papers

3Books

23Total Sources

Back, Aaron. Microsoft Tries Carrot to Fight China Piracy. Wall Street Journal, May 16-17, 2009

Microsoft is using incentives to stop piracy (discounted software, etc.)

Bird, Robert C. Defending Intellectual Property Rights in the BRIC Economies. American Business Law Journal, v43 issue 2

Quote- “The lack of intellectual property rights protection ranks for many firms as the single most significant threat to their international competitiveness” (318-19)
Part III concludes that while coercion is sometimes necessary, it is not an ideal strategy to sustain the long-term protection of IPR (direct quote)(319)
Top 324- US uses threats of trade sanctions to get developing nations to consider IPR’s a trade issue, and put it on the GATT agenda (General Agreement on Tariffs and Trade)
324- 1994- TRIPs agreement passed
325-26- Section 301 allows president authority to impose trade sanctions on countries engaging in unfair trade practices. Special 301 lists the countries providing weak IPR protection
328-34- US is bully, puts sanctions on brazil b/c of weak pharmecuetical ipr protection. US uses coercion to basically force countries to ramp up IPR protection. Laws get passed, but enforcement still remains lax
334-35- reproduction of IP remains commonplace, so coercion is not an effective long-term strategy
top 336- sanctions can hurt US industries too
bottom 338- quote- “Coercive sanctions do not address, but rather may exacerbate, the poverty and unemployment in developing countries that makes the production of pirated foods and the purchase of illegal patented drugs so tempting.”
340- 1992China and US sign a Memorandum of Understanding, China seriously improves IPR protection laws
340-43- China gets on US’s priority foreign country special 301 list 3 times in like 6 years, sanctions are only helping short-term.

Cheri, Grace. The Effect of Changing Intellectual Property on Pharmaceutical Industry Prospects in India and China. Considerations for Access to Medicines, June 2004

top 13- about 70% of domestic pharmaceuticals market is supplied by domestic firms in china

Greenhalgh, Christine, Rogers, Mark. The value of intellectual property rights to firms and society. Oxford Review of Economic Policy, v23 n4, 2007.

P4- “the basic justification for IPRs is that they give people an incentive to produce socially desirable new innovations”
P555- trademarks provide info on quality
P556- Social Returns to patents and trademarks- See fig. 3 p545
P557- spillovers  goes more into the theory. Can connect to easterly

US-China Trade Disputes. Institute for International Economics, OLD source, 2006 or 2007

P1- 1st foot note  note that total losses to ipr violation is consumer and producer surplus largely for Chinese citizens (gain PS even if its exported)
P2-“ IPRs are slowly becoming a domestic priority within China as well.”
As Chinese citizens get more educated, they want to produce higher technology goods. Ipr rights become essential in attracting foreign investment in high-tech sectors
Bottom P2- enforcement in china sucks
Top P3- from 1995-2002, US royalty and fee receipts from Chinese enterprises increased 300%
Mid P3- business taking matters into own hands, like WSJ article on Microsoft. Shows that business want to tap into Chinese human capital (education)
NOTE: look at Chinese PHD graduations
P3-4- Enforcement sucks, china has made pledges (they’ve made pledges before)
Mid P4- “New Chinese commitments appear minimal, given the very large scale of IPR infringement”
P5- little progress over 04-05
Top P6- companies buying software
Bot P6- Evaluation: US can target countermeasures (is happening)
NEED local support

Maskus, Keith. Intellectual Property Rights in the WTO Accession Package: Assessing China’s Reforms. December 16th, 2002

P4-5- WHY ipr’s exist
P7-8- how copyrights/ TM’s help in developing countries
Trademarks give incentive to firms to increase quality/ innovate cumulatively
P9- footnote 8- international trade in manufacturing is correlated to IPR regime
P9- “It is clear that the strength of IPR’s influences choices by international firms on where to invest and whether to transfer advanced technologies”
P10- stronger IPR’s in china may have short-run detrimental effects like: labor displacement (of people copying cds)
P10- TRADE SECRETS can become a problem, so firms may only share older technologies
“Stronger ipr’s make uncompensated imitation more difficult but improve the quality of technology flows”
P11- countries will see copied drug prices increase
P12- China has many characteristics of a middle income country, but still has a massive poor rural population
P17- big enforcement problem is regional coordination
This has good tables on patent applications and stuff

Massey, Joseph A. The Emperor is Far Away: China’s Enforcement of Intellectual Property Rights Protection, 1986-2006. Chicago Journal of International Law, v7 n1, 2006.

P1- in 1986, China’s IPR regime was practically non-existent.
P2 top- the government was a major pirate of US software
P2-3- provincial government officials may benefit from pirating, and the judicial process fails to impose deterrent policies
P5- province leaders don’t care about what national government says or agrees to
P6- central government leaders have come to recognize how important ipr’s can be, hopefully this will trickle down to provincial leaders.

Branstetter, Lee G, Fisman, Raymond, Foley, C. Fritz. Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from U.S. Firm-Level Panel Data. The Quarterly Journal of Economics, Febuary 2006.

P322- IPR’s reallocate rents to multinational patent holding corporations, but also could transfer technology to poorer country, making it mutually beneficial
P323 bot- “Both the level and growth rate of nonresidentpatenting also increase in the postreform period, and thesechanges provide additional indications that at least one component of the observable increase in licensing ﬂows is associatedwith the introduction of new technology following patent reform.”
P324-5- trade secrets problem
P326 “R&Dconducted by afﬁliates in less developed countries, which accountfor almost all of the countries in our sample, is focused on theabsorption of parent ﬁrm technology and on its modiﬁcation forlocal markets.”
P337- increase in royalty payments from affiliates to parent companies show tech transfer happens, increases after patent reform
P339 bot- R&D increases with patent reform
P347- “This paper empirically tests that hypothesis by analyzing the effects of reform on the royalty payments and R&D expenditures of U. S. multinational affiliates, as well as the leveland growth rate of patent ﬁlings by nonresidents, and ﬁnds thatall of these increase following reforms.

Battle of Ideas. The Economist. V391 n8628 April 2009.

Chart 1- Chinese patent applications have skyrocketed
Since 2006, more patent lawsuits have been filed in China that anywhere else
Chinese firms won 90 patents in the US in 1999, and 1,225 in 2008
Last line: “America, it is worth remember, was the great copyright and patent infringer when it was a developing country in the 18th century.”

Easterly, William. The Elusive Quest for Growth. MIT Press: 2001.

P146- people accumulate technological capital
P146- “Technological knowledge is likely to leak from one person to another. Technology reaches its potential when high-skilled individuals match with each other. And low-skilled people can get left out of the whole process and tuck in a trap.”
China doesn’t want high skilled people to leave, so may be implementing ipr’s early in development to keep intelligencia in country
P150- Increasing returns to investment in knowledge
P156- “The economy will exhibit strong concentrations of high skill in a few places, surrounded by large swaths of low skill.
P178- today’s technology contribute to tomorrows inventions.
P189- “Second, innovation will happen where technology is already highly advanced”

Du, Julan, Lu, Yi, Tao, Zhigang. Economic Institutions and FDI location choice: Evidence from US multinationals in China. V36 2008.

P412- Economic institutions are paramount to large returns on FDI
P413- topmid- there are huge regional disparities in economic institutions
P413- “Our empirical analysis shows that regions with stronger economic institutions are more likely to attract US-based multinational enterprises, to set up business operations in those regions”
P414- table 1: number of new entries  1992 chinese sign memorandum of understanding, this number jumps from 205-735
Table 2- distribution of investment by US manufacturing is concentrated on coast
The Tables are helpful in pointing towards what multinationals think about in where to invest in China  ties into regionality
P425-6- Concludes that multinationals prefer to invest in areas with low degree of gov’t intervention, lower gov’t, corruption, better contract enforcement, and better ipr protection

Rodrik, Dani. Whats so Special About China’s Exports? Harvard University Working Paper Series. January 2006.

P18-9-tech transfer through joint venture
P22- Foreign car companies are required to have a large percentage of domestic content, so must work closely with supplies to make sure their parts are technologically up to par.
John Sutton found domestic first-teir suppliers have achieved quality levels close to international best practice

Konan, Denise Eby, La Croix, Sumner J. Intellectual Property Rights in China: The Changing Political Economy of Chinse- American Interests. Blackwell Publishers, 2002.

P760- China is net importer of IPR and has incentive to resist change. Game is changed by China’s desire to enter the WTO.
P761- describes China’s accomplishments in ipr protection
P764- china closes some copyright infringing factories, but doesn’t do enough (in the 90’s)
P766- “Too weak IPR protection discourages creative activity and dampens the variety of products available while too strong protection provides excessive market power.”
P766-7- China has maintained low IPR protection to encourage low cost imitation. As IPR’s get stronger, royalties that formerly stayed within the country now go to foreign patent-holding companies.
Top P768- if the Chinese do not begin to innovate, then stronger IPR simply transfer royalties abroad and increase domestic prices
If stronger IPR incite FDI, then knowledge spillovers will occur
P769- Firms are less likely to transfer technology to a country with weak IPR’s
P770- Chinese citizens are also hurting
P771- foreign pressure may force a country to strengthen IPR’s quicker than their development requires
P771-2- Chinese government may lack authority because provincial leaders ignore their laws and profit from piracy
P772- “Strengthening IPR enforcement is particularly costly in a developing country, as it requires not only the application of scarce legal professionals but also the application of scare scientific and engineering professionals to this activity.”
P775- low Chinese imports in ipr intensive sectors may be due to ipr infringement
P781- bottom- Why US should focus on Chinese IPR infringing exports
P784-5- WTO and TRIPS changed China’s attitude on IPR’s

Maskus, Keith E. Yang, Lei. Intellectual Property Rights ,Technology Transfer and Exports in Developing Countries. CESIFO working paper. November 2008

P2- may want to use some sources from intro paragraph
P7- costs of transferring technology through licensing are reduced as IPR are tightened b/c it lowers the need for firms to hide proprietary knowledge
P16-7- When a country competes through imitation, increases in patent rights reduces domestic imitation firms’ profits, reducing social welfare
P17- eventually, patent protection generates positive know-how transfer, expanding competition and consumer gains.
While some of these gains may be offsetted by losses by imitation firms, provides a long run technological growth path
P17- maskus brings up the point about absorption capacity: welfare gains from stronger ipr’s are higher when the citizens absorb more.
P6- “A key parameter, the absorptive ability of S, is denoted by a [0, 1], where an increase in a indicates higher learning capacity. This capacity is exogenous and given by such characteristics of the South market as education level and infrastructure.”
P19- “To summarize, FDI involves a fixed setup cost but transfers know-how fully and achieves lowest marginal cost, while facing imitation risk. Licensing incurs a technology-transfer cost and generates partial knowledge transfer but does not face imitation risk.”
P20- top- in a country with weak IPR’s and high subsidiary setup costs, firms compete through exports and accept risk of local imitation.
P20- if a country decreases cost of technology transfer as well as the cost of absorbing knowledge, patent reforms could expand exports

Frietsch, Rainer, Wang, Jue. Intellectual Property Rights and Innovation Activities in China: Evidence from Patents and Publications. Innovation System and Policy Analysis. N13 2007.

P1- China gets less developed as you travel westward
P3-4- foreign patent apps suffered b/c first patent laws excluded chemical, pharmaceutical from patent protection. These were easily reverse engineered
Perhaps China did this to avoid dependence on foreign patents for public health  incentives/ china doesn’t do things that are disadvantageous
P6- imitation can lead to innovation (DVD example)
P8- Judicial Approach is costly and complicated. IPR courts require a portion of the claimed damages to be posted as a bond
P8- Intellectual Property Office handles all ipr disputes. The IPO receives cases, investigates, and implements a fine if necessary
P8- “The political power and administrative effectiveness of IPOs depends on the relationship between these offices and local government and the priorities of local government, which largely affects how intellectual properties are protected and enforced in that region (Mertha, 2005).”
P9- enforcement problems
P10- top – as china become more innovation-oriented, ipr protection will become stronger
P11-2- invention patents are better indicators of cutting edge technology and inventions
P12- as of 2002, domestic invention patents exceeded foreign invention patents.
P12-3- patents are not necessarily an accurate R&D output indicator
P15- Chinese inventors technically applied for more patents as of 2004
P17- Most research comes from universities, many foreign companies are reluctant to conduct research in China
P18- Chinese inventors do not register many patents abroad, possibly b/c it is much more expensive to do so.

Mertha, Andrew C. (2005), The Politics of Piracy: Intellectual Property in Contemporary China, Ithaca, NY: Cornel University Press.

P4- store that has ½ legitimate products, and ½ pirated products
P17- bot- national emergency (medicine)
P19- legitimate products are too expensive, so people create demand for pirated ones
P19- mid- state officials may get economic benefit from allowing pirates to operate
P19-20- allowing pirated goods may help maintain social stability
P24- IPR’s too early in development can stifle a country’s economic growth by forcing it to pay high royalties
P25- top- as a socialist government, china use to view IP as a public good
P196- below level of province, copyright enforcement falls to the cultural market management system.
P202- punishment for ipr infringement does not deter future counterfeiting
P203- the laws are deterrent enough, but the # of cases that end in criminal prosecution is too low
P204- companies recognize administrative channels only slow counterfeiting in the short run. To attain a long-run deterrent for counterfeiting, they must prosecute people in courts
P223-4- China uses administration to enforce IPRs
P225- “Top-down pressure can result in dramatic, substantive changes in China’s legislative, regulatory, and policymaking processes, but this same form of pressure has little, if any sustained effect on the implementation and enforcement stages.”
P225- Pressure must be applied to the local bureaucracies to be effective b/c they are the ones that actually enforce, etc.
P226- putting pressure on Beijing works for legislation, but not for enforcement
P227- bot- Chinese bureaucracies used to be largely independent, the function- or policy-related ones have been clustered
P229- trademark office gets low funding, often from local level, which means local leaders can manipulate enforcement through budgeting

Note: skipped ch 2-5

Branstetter, Lee, Raymond Fisman, C. Fritz Foley, and Kamal Saggi (2007), “Intellectual Property Rights, Imitation and Foreign Direct Investment: Theory and Evidence,” NBER

Working Paper 13033.

P 16- Found that in a two-country system, stronger ipr in the less developed country increases manufacturing in that country, and increases innovation in the other country. This decreases the number of imitators in the less developed country (which is a cost)
P17- “The Theory developed in Section 2 shows how stronger ipr can enhance the industrial development of developing countries, through the channel of multinational production shifting”
P24- top- the author’s results are consistent with their theory
P29-bot- “All of the evidence indicates that stronger IPR in the South accelerates the rate at which multinational production is transferred to Southern Countries”
P29- data measuring levels of industry activity suggest that any welfare loss from imitation firms exiting the market is offsetted by the production-shifting of MNC

Clarke, Donald. Private Enforcement of Intellectual Property Rights in China. National Bureau of Asian Research, v10, n2, 1999.

P31- ipr enforcement can be political, administrative, and private (or a mix)
P38- local protectionism is a problem in the lower level courts
P40- administrative penalties do not provide sufficient deterrent, and courts are often not cost-effective for the plantiff

Yang, Deli, Fryxell, Gerald E. Sie, Agnes K.Y. Anti-piracy effectiveness and managerial confidence: Insights from multinationals in China. Journal of World Business v43, 2008.

Administrative vs. Judicial vs. Private enforcement
P336- Administrative supports are connected to anti-piracy effectiveness, but diminishes when other anti-piracy measures dominate.
Note: see text, means this facilitates other anti-piracy measures
P336- political strategy should not be overlooking in early stage of IP
P336- top,right- speculate that spreading public awareness of counterfeit products may provide information on where to acquire these products
P337- bot- split manufacturing process

Seigal, Donald S. Wright, Mike. Intellectual Property: the Assessment. Oxford Review of Economic Policy, v23, n4, 2007.

P531- R&D is risky, so gets underfunded b/c private returns are less than social returns
P531- bot- IPR has issue between balancing the award of monopoly rights vs. breeding competition
P532- quality of patents may have fallen to reduce backlog on apps
P532- “A notable shortcoming in the operation of the IP system relates to difficulties in enforcing IPRs. These problems include the high cost of enforcement, sub-optimal regulation, conflicting priorities in tackling ipr infringements, and piracy and counterfeiting where copying and distribution is facilitated by the Internet.”
P533- firms may not want to license their patents b/c it would increase the competition

Maskus, Keith E. Intellectual Property Rights and Economic Development. University of Colorado, Boulder. 2000.