Even China has to respect intellectual property rights, but only because of the World Trade Expo

It is indeed considered a rare event that China had to secretly negotiate with Japanese singer-songwriter Mayo Okamoto to get permission for using her song as the theme song for the Shanghai World Trade Expo which opens in May 1, 2010. It was not meant to be that way. The song was among many submitted by the public to be used as the theme song for the expo. Unknowingly, the organizing committee selected the song, without realizing that the person who submitted it had copied from Ms. Okamoto. Perhaps, even that was not intentionally done. But when the accusation of copying was posted on the internet, the expo committee realized that they had to do something, like seeking permission for the use of the song (even though it only faintly resembles Okamoto’s work), which in itself was rarely heard of in China. Fortunately, Ms Okamotor had agreed to allow the use of the theme, otherwise it would have been a big embarrassment for the organizer.


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This goes to show that even big bad giants, when faced with an embarrassing moment, would choose to eat humble pie when there are putting out their best act in front of a wide audience! Were it not because of the world trade expo, would China have acceded to such an act? Obviously not, if we were to look at those recent events like the tussle with Google and Yahoo! This would be a very good lesson for all of us. How to deal with the big bad wolf? Use trade sanctions or weapons of mass destruction? Certainly it will not work as shown by the intransigence of North Korea and Burma. The only way would be like the Shanghai case. Draw them out, let them face the world. Put them in a position where their face would be their destiny. When you are the showman, and the spot light is on you, no one will be allowed to make you leave the scene in disgrace. You just have to stay put and the show has to go on, whatever happens! Maybe all the shouting about China not respecting intellectual property rights is of no avail. Perhaps, relocating WIPO to Beijing might be a better option!

Is China observing intellectual property rights?

It is true. China is gearing up its machinery to practice intellectual property rights. But it is only protecting IPs that has an indigenous origin! It is protecting patents belonging to its own citizens, not those of foreigners. They have now informed foreign countries that they will only buy if there is a Chinese owned patent on the products and services. In other words, they have turn one hundred and eighty degrees and will only respect intellectual properties owned by Chinese. If foreigners wish to win state procurement tenders, they will have to dish out half of the inventor ship to Chinese citizens. That precisely is throwing up a wall to contain foreign imports. From court records, there is very little prosecution of its citizens for intellectual property infringements. But it does bring to prosecution where foreigners are caught ripping off Chinese video games!

We must understand that China is run by an authoritarian regime. What the authority says goes. No objection what so ever. And they know they are wining the intellectual property game. If required, China can close its doors now and still be able to make it to the next cycle. The west would have to look somewhere else for their markets, and in these bad climate, they and not China will be the first to go under. Such is the scenario: the new game is protectionism, and its survival for only the fittest. Obviously the fittest is the one with the most cash around. No matter what pressure the US is putting up, China will normally play the delaying game. One thing that comes to mind is the controversy over the Iranian nuclear embargo which Washington spearheaded. China has a lot of interest in Iran, and will not agree to any sanction, but instead see to it that its money is not getting burn.

China is now sailing to its near neighbors. For the moment, it is more interested in striking a working relationship with ASEAN, Japan, Korea, India, Australia, Brazil, Russia and Africa. It has already struck a free trade deal with ASEAN and will be signing more deals with Japan and Korea. It has used its large pool of funds to acquire companies around the world. It has bought iron mines, oil concessions, and other world brands. Whilst the west is struggling to overcome the recession, China is diligently building up its asset base. Its maxim is buying when it is cheap and when others can only look and not act. In the meanwhile, it is dragging its feet as far as revaluing its currency is concerned, much to the consternation of the US and the rest of the world.

Japan to drag China to the WTO Court!

Japan, like many of China’s other trading partners is peeved by China’s insistence of only buying from companies that have “indigenous innovation”. It is considering going into negotiation with China to trash out the issue, but in case it fails, then Japan would want the option to drag its erstwhile partner to the WTO Court in Geneva. However, like everything China does, there have so far been no clarifications of what constitutes as indigenous innovation. At issue is China’s government procurement of product and services which according to a report reached 90 billion dollars a year, and China’s insistence of foreign suppliers to register their intellectual property in China and also to have at least one of the inventors a Chinese citizen. Most suppliers see it as China unjust shifting its goal post and creating trade barriers in a time of economic uncertainties.

In reality, it is not only China that has created trade barriers, but almost every country has some sort of wall created. Take the case of the US. It is reported that the US is seriously taking up the suggestion by Nobel Laureate Paul Krugman’s call to put a twenty percent tariff on all Chinese imports besides the imposition of tax on Chinese steel products. So have Japan’s barrier to rice imports and the EU’s slapping of tax on Chinese nuts and bolts. China could have remained silent on the issue of state procurements but instead choose to make it known. Perhaps, it is China’s way of diverting Washington’s attention away from its insistence of China revaluing upwards its currency? Or maybe China is preparing to face the consequence of withdrawing its economic stimulus? But seriously, what can Japan achieve if it succeeds in bringing China to the WTO Court? It might loose more than it can gain!

Just who controls the patent system?

Do you know that there are over three hundred patent trolls? And together they owned about twenty thousand patents! What does it mean? It simply means they are the force to reckon with, and not the patent office! Well, the patent office (US) grants about a hundred and fifty thousand patents a year, but the patent trolls skimmed off the most important ones (those available for sale). The rest of the patents are kept in silos at universities and research institutions, and they will lay there gathering dust. With the bulk of the useful ones being in the hands of the trolls, it would mean that companies that have their own patents and are using them to make products have to be very careful, least they become the target of money extrication by the trolls. Even if you think you are safe using your own patents, you might eventually be made to pay because the trolls can exact you to pay for their license by threatening you in court for disputed infringements. They have the money and they have good lawyers and anybody standing in their way will be brought to their knees by a mere lawyer’s letter of demand. Nobody could afford to be targeted by the trolls. This is just how powerful they have become.

Understandably, the United States Patent and Trademark Office (USPTO) are concerned. The very fact that the patent system was created to help people to come forward and have their inventions protected will ring hollow if the trolls have the upper hand. They are like the Mafia of the intellectual property world. If the situation gets out of hand, then nobody would be bothered to get their inventions registered. Industries would suffer. The world economy would suffer. Rest assured that more people would be brought to the courts for infringements, even if they did not infringe at all. Companies, big and small would not dare to innovate, and mankind will suffer even more. Already there is a prediction that the trolls will be targeting life sciences in future. They have been actively buying up all those bio-technology patents available from the market. With a shrinking budget, university research departments are quietly selling off quickly those patents just to bring in funds to continue research and developments. If you have been granted a patent, and that patent has a far reaching implication to the industry, then you can be sure that the trolls will call you up and offer you money that you can’t refuse! Such is the future and if you think that the trolls will sooner fade from the scene, you will be disappointed as there are more funds being channeled into new troll setups everyday! Our hope then will rest in the hands of USPTO who are reported to want to introduce new rulings to stamp out the influence of the patent trolls league. Will the good people succeed? Maybe it’s too late already! It is like asking if the authorities will ever get rid of the Mafias.

With mask will travel

Don’t be mistaken, these cyclists are not donning mask to filter out H1N1 virus. They are wearing the protective face cover to prevent sand and grit from getting into their lungs. This scenario is in China where sandstorms are getting very common. Scientist doesn’t know yet why the storms are getting so prevalent. It could be change in climate or perhaps too the deserts growing in size due to drought. Anyway, according to a World Bank report, 16 out of the 20 most polluted cities in the world are situated in China. China has of late being inundated with air pollution. On a bad day, whole cities can be shrouded in fine mist, and people going to work have to endure with traffic congestion due to poor visibilities. It was during the Beijing Olympics that vehicles were forced to be allowed on the streets on consecutive days; this to cut down on the number of cars in order that the air be cleared of smog. But looking at the pace of development in China, there is no telling when China can get a fresh envelope of clean air space. In the meantime, people will have to wear face mask, like wearing clothing!