by While many countries have some form of IPR protection, the degree to which IPR is protected varies greatly. For economists, IPR protection represents a trade-off between the benefits of innovation and the costs of exclusivity. Property rights encourage the development of new technologies, products, music, and other creative output. Exclusivity, however, protects IP owners from competition and, in some cases, can grant monopoly power. For this reason, IPR protection is always limited in either the length or scope of protection. After expiration, for example, the knowledge embodied by a patent enters the public domain.
The U.S. has a relatively well-defined IPR policy that is enforced and protected by its applicable laws. However, this is not the case for many of its trading partners around the world. In particular, developing countries often lack any substantial IPR protection. In a recent report, the Organization for Economic Co-operation and Development (OECD) estimated that “international trade in counterfeit and pirated goods could account for up to US$200 billion in 2005.” (OECD 2007) This amount does not include any counterfeit products produced and consumed in the same country or counterfeit digital products sold over the Internet. Consequently, the U.S. and other developed countries have called on other, often less-developed, nations to adopt IPR protection or increase its current protection in order to stop counterfeiting and piracy.
The US government’s Office of the United States Trade Representative (USTR) monitors intellectual property rights around the world and fights IP theft because IP theft impacts the 18 million Americans whose livelihood depends on IP protection. United States Trade Representative, “USTR Releases 2010 Special 301 Report on Intellectual Property Rights.
The USTR evaluates countries and rates them according to how those countries enforce IP rights. The Special 301 Report is an annual review of the global state of IPR protection and enforcement issued by the USTR. The worst offenders are put on a “Priority Watch List.” The countries on the 2010 Priority Watch list are China, Russia, Algeria, Argentina, Canada, Chile, India, Indonesia, Pakistan, Thailand, and Venezuela. China, which has been on the Watch List before, continues to be on the list not only because of IP theft and counterfeiting but also because of government practices that severely restrict the market for foreign goods while giving favored treatment to “indigenous innovation. “United States Trade Representative”.
