Property rights, trademarks and consumer protection

* This is my article in BusinessWorld last September 18, 2017.

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Private property rights that people and businesses enjoy are among the cornerstones of a free and dynamic society. People have exclusive rights on what to do with their private properties — use them, sell, rent out, or donate.

However, when rights to private property — both physical and intangible assets — are unprotected, society can quickly degenerate into disorder. As a result, consumers will be unable to recognize which among manufacturers and service providers are trustworthy and which are suspicious.

Measuring the extent of property rights protection across many countries is done annually by the Property Rights Alliance (PRA), a Washington DC-based think tank. It produces the International Property Rights Index (IPRI) annually and partners with independent, nongovernment, and market-oriented think tanks and institutes from many countries.

IPRI is derived by getting the score (1 to 10, 10 being the highest) of each country covered in three major areas:

  1. Legal and Political Environment (LP), covers judicial independence, rule of law, control of corruption, and political stability of a country or economy.
  2. Physical Property Rights (PPR), includes registration and protection of physical properties, access to loans.
  3. Intellectual Property Rights (IPR), includes protection of patents, trademarks and brand, and copyrights.

Countries with high scores in two or all three of these areas will have a high IPRI overall score and global rank (see table).

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Among the important insights in the above numbers are: One, the more developed the economies are like Singapore and Japan, the higher the IPRI score and global rank. Which implies that as private property is better recognized and protected, there are more economic activities and innovations that occur.

Two, the Philippines experienced some improvement in its global rank, from 77th out of 131 countries in the 2013 report. It rose to 64 out of 127 countries in 2017. Its low score in legal and political environment was compensated by its high score in physical property rights.

One emerging issue in IPR non-protection is plain packaging (PP) of tobacco products purportedly for health reasons. Besides being slapped with high taxes, tobacco products also feature graphic warnings on packaging. Advertising tobacco products have also been restricted and smoking in may areas have been disallowed, which are part of several moves to deter people from lighting up.

These have been tried in many countries but smoking incidence does not seem to significantly decline as people shift to cheaper and often, illegal, illicit products. So the next step is to prohibit the use of a tobacco brand, logo, or trademark. This has been done in Australia and there are plans to introduce legislation in Singapore, Malaysia and Taiwan.

This plan does not appear to be right because a brand or logo of a company represents how effective it is in developing consumer loyalty and service. Imagine also if all ice cream, all soft drinks, all beer, all wine, etc. will simply be labeled as “ice cream,” “soda,” “beer,” etc. with no brand recognition of who produced or manufactured the products.

Or all government departments and agencies (DoH, DoF, DPWH, NEDA, etc.) will lose their logo and will simply have a generic brand “Philippine government,” it would not seem right.

I have never been a smoker nor have I been a fan of smoking but was once a fan of tobacco ads in cycling or in the F1 race. But I will not recommend the scrapping of a brand or trademark of companies in a particular industry. People who hate the companies should attack them as such and they may even use the company brand for their attacks.

Intellectual property rights like medicine patents, song copyrights, company brand or trademarks, play an important role of recognizing efficiency and innovation. Consumers look up to these brands and decide which ones to support and patronize and which ones to reject based on their specific needs and interests.

Governments therefore, should respect and protect these IPRs the same way it should respect and protect physical private properties. Moreover, people own their bodies and not the state nor NGOs.

After rising taxes, health warnings, and business regulations are in place, governments should leave individuals and allow them to seek their own happiness without harming other people.

Bienvenido S. Oplas, Jr. is the president of Minimal Government Thinkers, which is a member of EFN Asia and the Property Rights Alliance (PRA).

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IPR protection in Vietnam

I just saw this report three months ago in Vietnam Plus:

VN
The President stated that Vietnam wants favourable conditions to participate further in WIPO institutions and increased technical cooperation with the organisation, particularly in devising a national master plan on intellectual property.

For his part, Francis Gurry congratulated Vietnam on recent socio-economic attainments based on clear economic and technological development strategies.

Vietnam joined the WIPO in 1976.-VNA 

Good. Vietnam’s score and ranking in the International Property Rights Index (IPRI) 2016 Report shows improvement.

vn2
Other related info here:

1. A Foreign Investor’s Guide to Understanding Intellectual Property in Vietnam
Posted on October 20, 2014 by Vietnam Briefing.

2. Vietnam — Protecting Intellectual Property
by Export.gov, 1/24/2017.

Plain packaging, from tobacco and soon to soft drinks, alcohol, ice cream products

I am reposting this good interview of my friend, PRA Exec. Director, Lorenzo Montanari, published in The Financial last May 29, 2017.

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“We are really worried about the new regulations,” Montanari commented. “Plain packaging – removing all signs of the brand from the packaging of cigarettes – is a direct attack on the trademark system. The first plain packaging was implemented in Australia in 2012. We were against it and criticized it of course. As a reaction to that we have already published an International Coalition letter against plain packaging. We collected more than 40 think tank signatures from around the world; New Economic School is also amongst them. We claim that if one wants to reduce smokers’ numbers then that’s fine, but it can be done in another way, for example educational campaigns can help. The countries that have approved the law on plain packaging, for example France and Ireland, are also considering moving on to another sector, like wine, soft drinks, junk food, etc. I want to say that it is not about the tobacco itself, we care about the trademark. This is our mission because it’s intellectual property.”

Q. At present, in terms of Georgia, does it only affect the tobacco sector?

A. It has started with tobacco. It is very easy to attack this sector. In Thailand and Indonesia for example they have already started to talk about plain packaging in the wine sector too. The point is to think about the Georgian wine producer. At the moment Georgian wine is famous throughout the world. Local producers have invested so much money in building brand identity. Imagine what would happen if they weren’t able to show their label. I have heard that the Ministry of Economy, the Ministry of Finance, and even the Prime Minister of Georgia are against it. If parliament decides to implement the new law, what will happen hereafter to Georgia wine? This is the point we are strongly criticizing.

Since we analyzed the 128 country index, Georgia held 90th place. In terms of the legal political environment Georgia is not performing too badly. By registration of property Georgia is the best country in the world. The problem in Georgia is the protection of intellectual property rights. In this case we discovered the score is 2.4 – the lowest in our ranking. A policy like plain packaging will not help to improve the protection of intellectual property. I had the pleasure to speak to the Chairman of Sakpatenti. He is against this new regulation about plain packaging. We want to collaborate with them also.

Q. Can you tell us more about the experience of foreign countries which have already implemented the law?

A. The Australia National Drug strategy household survival has shown that in 2014 the daily smoking use rate was 2.5 and 1 year after the implementation was 3.4. Plus, according to the dates, afterwards a 20% increase of contraband cigarettes can be seen. Since there is no trademark it’s very easy to fake, they don’t need to reproduce the logo of the brand or label.

Even if plain packaging will reduce the number of smokers, we are still against it, because of the policy being against the principle of the trademark. I have seen interesting research by IPM. According to it, 81% of Georgians don’t have information about plain packaging. 54% of Georgians think that it will simplify the reproduction of fake cigarettes.

The Georgian Government is doing everything to make Georgia the best performing in terms of economic freedom. We are worried that parliament is moving in the opposite direction. Even in the EU, the European directive of tobacco has been approved, for example Germany is completely against plain packaging.

Q. You mentioned the EU. Georgia has signed an EU Associate Agreement which requires some changes to tobacco regulations. They also have some recommendations for approaching European standards. Do you think that this might be the reason for these regulations?

A. Germany, the leading country in the European Union, is not implementing it. This demonstrates perfectly, that even if the EU gives a recommendation, the country can still disagree. Italy and Greece are against the implementation also. If you want to cut down on the number then it’s better to hold educational campaigns. We believe that an attack on the trademark system is bad for the economy.

Q. Due to the law the tobacco industry will not have the right to conduct any philanthropy hereafter. They won’t even have the right to conduct any ads or marketing action. What do you say to that?

A. My mission isn’t to judge a law, it’s up to the Government to decide. In general, since I believe in a free market economy, if you have legal activity you can advertise. If you are legally working why should someone forbid advertising? This type of banning is against freedom of speech and expression. Removing one’s brand is the same. You can’t describe your product anymore.

Q. How can the new regulation affect the tobacco business in general and the economy as well?

A. I think that in the future if any company thinks that plain packaging will touch them they won’t invest in Georgia anymore. I honestly don’t know what tobacco companies are going to do in the future. I understand that they aren’t happy. I don’t know what will happen afterwards. What I do know is the law is violating trademarks. If we take into consideration foreign countries’ examples, in France ex-president Nicola Sarkozy criticized the plain packaging law for wine. It’s impossible to survive without brand identity.

Q. What do you think, if the Parliament of Georgia passes this new regulation, will it force some tobacco companies to leave the Georgian market?

A. I honestly don’t know. It could cause this too. For sure it is not going to be a positive signal to other companies who want to invest. Afterwards these companies might ask for help from the World Trade organization. They might find themselves in a very bad situation, because they have put millions into advertising and creating brand awareness which they now might lose.

Written By Tamta Kldiashvili

IP updates in Asia

I am reposting some updates from the monthly (sometimes bi-weekly) e-newsletter of the Property Rights Alliance (PRA). These are news last month.

(1) US FDA sounds alert on quality issues in Indian pharma

Quality is a challenge for the Indian pharmaceutical sector, the largest supplier of drugs to the United States, according to a recent blog by the US Food and Drug Administration (US FDA). Of the 42 warning letters sent out by its office of manufacturing quality last year, nine – about one-fifth – were addressed to Indian facilities.
http://www.business-standard.com/article/companies/quality-issues-persist-for-indian-pharma-firms-says-usfda-117040800759_1.html

(2) Bayer cancer drug faces new patent problems in India

Nexavar (sorafenib tosylate), a crucial drug for kidney and liver cancer for which German pharma major Bayer (BAYN: DE) was granted a patent on March 3, 2008, has come under fire in India, whereby a landmark court ruling is set to define the contours of Bolar exception provisions in the Indian Patents Act, reports The Pharma Letter’s India correspondent.
https://www.thepharmaletter.com/article/bayer-cancer-drug-faces-new-nexavar-patent-problems-in-india

(3) Thailand Update: Plans to Expedite Patent Examination

The Thai Government is considering plans to expedite patent examination in Thailand and help clear the country’s backlog of patent applications.As of October 2016, the Thai Patent Office was still examining patent applications filed in 1998. Although the Department of Intellectual Property (DIP) earlier initiated plans to increase the number of patent examiners, the 36,000 currently pending patent applications pose a serious obstacle to the country’s technological and economic development, as well as the ability of patent owners to protect and enforce their patents.
http://www.lexology.com/library/detail.aspx?g=f19cd081-e7b6-49f8-9b37-1ebc443edfd6

(4) About 18,000 convicted for IP piracy, counterfeiting in China

Around 18,000 people were convicted on charges of intellectual property (IP) piracy and producing counterfeit products last year, said Vice Premier Wang Yang Tuesday. Police investigated more than 200,000 cases involving IP piracy and counterfeiting last year and seized 22,000 suspects, said Wang at a national meeting on IP piracy and counterfeit control.
http://news.xinhuanet.com/english/2017-04/11/c_136200640.htm

(5) Alibaba Sued Over Counterfeit Fire Extinguisher

Alibaba, China’s leading ecommerce company, is facing a lawsuit from the Thai maker of the Elide Fire Ball Pro fire extinguisher for reportedly allowing the sale of a fake version on its website. According to a report in the Bangkok Post, Elide Fire Ball Pro, the manufacturer and vendor of the patented Elide Fire Ball, alleged in a lawsuit that Alibaba and AliExpress sold a knockoff of its product.
http://www.investopedia.com/news/alibaba-sued-over-counterfeit-fire-extinguisher/

(6) Trademark registrations up, designs down as the Japan Patent Office reveals the top registrants for 2016

The Japan Patent Office (JPO) received its highest number of trademark applications in 10 years during 2016, according to the agency’s latest annual report. Of the top 10 registrants last year, nine were Japanese entities (the exception being South Korea’s LG Electronics).
http://www.worldtrademarkreview.com/Blog/Detail.aspx?g=c462446d-21d9-4735-92a9-af9a073cc521

Letter to WIPO on World IP Day

On April 28, 2017, the World Intellectual Property Day was celebrated. The Property Rights Alliance (PRA), publisher of the annual International Property Rights Index (IPRI), sent a letter last April 25 to the head of WIPO, below. MGT is one of four ASEAN-based free market think tanks that signed the letter.
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Celebrating the 2017 #WorldIPDay

Open Letter To
WIPO DirectorGeneral Dr. Francis Gurry

We the undersigned are proud to celebrate World IP day with the World Intellectual Property Organization (WIPO). Intellectual property (IP) rights play a crucial role in growing economies, driving innovation, and saving lives. Robust IP systems provide the greatest incentives for innovators to create the next generation of goods and services, artists to produce original works, and entrepreneurs to enter the marketplace. They also allow for the sharing of knowledge and technological advancement. Invention comes out of the shadows with good intellectual property protections.

IP Rights Grow the Economy

IP-intensive industries are the cornerstone of modern economies. Between the U.S. and E.U., IP-intensive industries employed between 30%-38% of their workforces—more than 127 million jobs. As a matter of fact, these industries are responsible for generating nearly 40% of the combined US & EU gross domestic products.

IP-intensive industries in these economies paid workers 46% higher wages than those employed in comparable jobs in non-IP-intensive industries. Similarly, per capita income in countries with robust property right is 21 times more than per-capita income in countries with weak protections.

IP Rights Drive Innovation

Human ingenuity is boundless, and IP rights create an environment where human creativity can be unleashed. In 2015, a record 2.9 million new patents were filed worldwide—ranging from groundbreaking technological processes to cures of catastrophic disease to modernizations of everyday conveniences.

To thrive, innovation must be protected. Enforcement of IP rights prevent production of counterfeits that undermine economic growth and finance criminal organizations. This underground economy is responsible for nearly 2.5% of global imports, threatening iconic retail brands and next-generation medicines alike. Copying is not the same as inventing.

IP Enhances Lives

Each patent offers an innovative approach to solving a human problem. Around the world 1.2 million people die in traffic accidents, and commuters waste years of their lives on the road. Now, over 33 companies around the world are investing billions of dollars, hiring thousands of researchers and engineers, and inventing new driverless car technologies aimed to reduce traffic deaths and save time, a truly non-renewable resource.

However, the intellectual property that delivers these benefits and many others has never been more at risk. Even within the United Nations system, initiatives such as the High-Level Panel on access to medicines threaten to undermine the very protections that are so necessary to solve today’s global challenges. WIPO must play a more active role in informing international debates.

Therefore, the undersigned call on WIPO to 1) review the ways that IP enhances economic development and access to new products; 2) proactively work with countries to stabilize, grow, and enhance their IP regimes and protections; 3) support IP as a property right and a right to enhancing human growth and development, and oppose adoption of policy to the contrary such as the UN High-Level Panel report.

World IP Day is an opportunity to celebrate that which is uniquely human: constant innovation, reinvention, and curiosity. Intellectual Property fuels the economy, drives innovation, and saves lives. We look forward to working with WIPO to advance this understanding of intellectual property rights, and to produce complimentary efforts aimed at accelerating the adoption of robust IP protections across the world that make intangible futures tangible.

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Health reality on drug patents — Philip Stevens

I am reposting this good article by a good friend, Philip. Enjoy.

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MAY 3 — Debates on how to improve healthcare in developing countries often start from the same premise: patents can potentially raise drug prices, so they should be abolished for better public health.

In the early 2000s this argument drove the campaign against patents on HIV drugs in South Africa. This week it is motivating campaigners against the Regional Comprehensive Economic Partnership in Asia — a proposed Free Trade Agreement between 16 Asian countries that may impose new intellectual requirements.

NGO disquiet about drug patents has even led to the creation of a UN High Level panel on access to medicines, due to report its recommendations in New York next month.

Such concerns may in fact be overblown. This is an implication of an interesting new study by researchers at the University of Ottawa and published in April by the World Intellectual Property Organization (WIPO) in Geneva.

To better understand how patents impact access to medicines, the researchers counted how many of the World Health Organisation’s (WHO) List of Essential Medicines are subject to patent protection in developing countries. This list contains 375 or so medicines considered most important by WHO experts.

It’s a hugely influential list, and one based purely on the clinical usefulness of a medicine, not cost or patent status. Developing country governments and large international donors use it to guide which medicines they will procure.

The researchers checked national patent registries in developing countries and double-checked with manufacturers. They found that patents for 95 per cent medicines on the list had expired.

Put simply, patents are not relevant to the vast majority of drugs typically used by physicians in developing countries.

Most of the remaining 5 per cent of medicines — around 20 products — on the WHO list with patent protection are for HIV/AIDS. But patent owners either don’t register or enforce their patents in the poorest countries. For middle-income countries, manufacturers often enter into voluntary licensing deals with generic manufacturers to broaden access, meaning there are cheap generic copies on the international market.

The one medicine with no generic equivalent is the cancer drug, bevacizumab (marketed as Avastin by Swiss patent-owner Roche). This modern so-called ‘biologic’ drug is used against many cancers, and works by starving tumours of their blood supply through blocking a key protein.

Patented or not, these biologic drugs are difficult for generic competitors to copy cheaply.

Unlike most drugs, which are chemically synthesised and made from just a few  molecules, biologic drugs are manufactured in living systems such as plant or animal cells, and have complex molecular structures. Their manufacture demands significant investment and technical know-how, meaning such drugs will never be as cheap as, say, generic aspirin.

One implication of the study is that if patents were abolished tomorrow it would make little difference to the cost or availability of most medicines used in developing countries.

Even so, these medicines are frequently unavailable in public health systems.

In 2014, researchers at the University of Utrecht in the Netherlands found that, on average, essential medicines are available in public sector facilities in developing countries only 40% of the time.

While generic medicines are cheap to make with no royalties to pay, they are still too costly for most people in developing countries.

One example from the WHO list is budesonide, commonly used by asthma sufferers. A single inhaler costs a staggering 50 days wages in Mozambique. In the US, one inhaler costs only US$5 to US$7 (RM20 to RM27) — around 30 minutes work on the median hourly wage.

The reasons behind the expense and scarcity of essential medicines in developing countries are complex, but failures of governance loom large.

Mark-ups along the distribution chain inflate the final price of medicines and include import tariffs, sales taxes, value-added taxes and retailers’ and wholesalers’ margins. In Kenya, mark-ups add 300 per cent to the manufacturer’s price; in Brazil it’s 200 per cent, says IMS, the global healthcare data provider.

Dysfunctional medicine supply chain management is another culprit. A 2015 survey by humanitarian NGO Medecins Sans Frontières reported one in three health facilities in South Africa have shortages of key HIV and tuberculosis drugs. The drugs are imported in sufficient quantities but fail to reach patients due to “local logistical and management problems, ranging from inaccurate forecasting to storage or transport issues”, said MSF.

Governments under-invest in health too. While most European Union countries commit 8 per cent to 11 per cent of GDP to health, few Asian and African countries spend more than 5 per cent: not nearly enough given their enormous health challenges.

These are the major influences on access to medicines. Public health would be best served if the political focus were on these issues, rather than patents.

* Philip Stevens is senior fellow at the Southeast Asia Network for Development (SEANET) and director of Geneva Network, a research organisation focusing on health, intellectual property and trade.

On tobacco plain packaging proposal in Singapore

This is my letter to the HPB yesterday. The auto reply said they have received it and will look into it.
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Subject: Singapore’s plan on “Standardized packaging” of tobacco products
To: HPB_Mailbox@hpb.gov.sg

Health Promotion Board
3 Second Hospital Avenue,
Singapore 168937

Dear Sir/Madam,

I have read your campaign to control tobacco use and promote good health among Singapore citizens, it is a good objective. But I notice that you also plan to introduce or legislate “standardized packaging” or “plain packaging” in tobacco products, and I think it can adversely affect Singapore’s good image on protecting intellectual property rights (IPR).

It is true that smoking is dangerous to one’s health. I myself am not a smoker, never smoked a single stick in my whole life, never worked for the tobacco industry or its allied industries. But I think people have a choice for their body. They recognize the danger of smoking — and drinking, drugs, over-eating, sedentary lifestyle, etc. — and still they do it. They compare the health risks with the pleasure of those actions then they decide whether to continue doing it or not; if they continue, whether to smoke 1 or 20 sticks a day, drink 1 or 10 bottles of beer a day, etc.

Plain packaging (PP) is wrong for the following reasons.

  1. Singapore is known for its clear and strong property rights protection, both physical and intellectual property. Abolition or significant reduction of the trademarks and corporate logo of tobacco companies via PP will dent this image and put Singapore’s adherence to IPR protection in a question mark.
  1. If Singapore is to be consistent in its policy, then it will be pressured in the near future to also introduce PP for alcohol products like beer and whiskey, soda, chocolate bars, other high sugar, high fat content meals and snacks.
  1. People who derive pleasure in smoking will continue to smoke despite PP and they will likely shift to cheaper and illicit products. Overall smoking incidence can either flatline or even increase because tobacco companies will produce cheaper but cool-tasting products, which will attract new  smokers or entice the few-sticks-a-day smokers to become one pack a day smokers. PP will only adversely affect the sale of known and premium products of the big multinational tobacco  companies but not the cheap products of lesser known companies.
  1. If drawn in a graph, the supply curve of cheap cigarettes will move to the right as manufacturers of premium brands will soon produce lots of plain pack but cheap cigarettes. Equilibrium price goes down while equilibrium quantity goes up, even if the demand curve does not move.

Discouraging the people from smoking can be done via more public education. The graphic health warnings, campaigns by the  Ministry of Health and health NGOs or groups are part of such public education.

But some people will continue to  smoke – and over-drink, over-eat, over-sit in  sedentary lifestyle – despite learning more and new things  about the dangers of smoking, over-drinking, and so on. Government cannot micro-manage the lives of people all the  time. What Singapore should continue protecting is its image  as the bastion of IPR  protection, whether companies are in  IT, pharma, healthcare, hotels, food,  alcohol or tobacco.

Thank you very much.

Sincerely,

Bienvenido Oplas, Jr.
President, Minimal Government Thinkers
Manila, Philippines
https://ipinasia.wordpress.com/
http://funwithgovernment.blogspot.com/