Intellectual Property Rights Protection: What MNC Managers Should Know about GATT?

By Harvey, Michael G.; Lucas, Laurie A. | Multinational Business Review, Spring 1996 | Go to article overview
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Intellectual Property Rights Protection: What MNC Managers Should Know about GATT?


Harvey, Michael G., Lucas, Laurie A., Multinational Business Review


Multinational Corporations (MNCs) based in the United States have been the target of companies and individuals who have infringed on the property rights of these MNCs. This unauthorized use of patents, trademarks, copyrights, logos, brands and in some cases facsimile products has economic and non-economic consequences. This paper examines the present efforts of MNCs and the new provisions in the General Agreement on Trade and Tariffs (GATT) that address the unlawful commercial act of product counterfeiting and infringement on intellectual property rights.

INTRODUCTION

The attractiveness of international market opportunities has enticed United States based multinational corporations (MNCs) to aggressively expand globally. One of the consequences of this international growth has been the unprecedented counterfeiting of products and infringement on the intellectual property rights of these United States based MNCs (Harvey & Ronkainen, 1985; Harvey 1988; Griffin, 1992). It has been estimated that United States based companies, who pioneer new technologies and have high brand awareness, lose an estimated $61 billion because of patent and copyright infringement (Samuel, 1993).

Counterfeiting is a problem that has been recognized as a potential threat to fair competition for over a century in the United States. Recently, more attention has been paid to the intangible dimensions of products/services due to the value ascribed to them by customers. "Intellectual property" is a general term that describes inventions, identifying characteristics, or technological dimensions of a product that differentiate it from other products being sold in the marketplace. Patents, trademarks and copyrights are all intellectual property (Hill, 1985).

The improper use of intellectual property is considered to be unfair competition in the United States. Laws have been established to provide protection against such things as replicating trade packaging, using similar corporate or product identification, misappropriating trade secrets, as well as counterfeiting products to be sold as originals. The issue , therefore, becomes what are the rules and regulations relative to intellectual property rights in the international marketplace? This article examines some of the legal dimensions of intellectual property rights in the domestic and global market (see Figure One), including unilateral, bilateral, and multilateral arrangements to highlight potential gaps in protection of intellectual property. The article also explores proactive measures that can be taken by MNCs to reduce their risk of unauthorized use of their intellectual property.

REASONS FOR THE RAPID GROWTH OF INTERNATIONAL COUNTERFEITING

Product counterfeiting and infringing on intellectual property rights have been increasing since the end of World War II, but the most rapid growth has occurred in the 1980s and 1990s. By better understanding the reasons behind accelerated counterfeiting and infringement of intellectual rights worldwide, one can begin to appreciate the amount and kind of planning needed to combat the problem.

The world has recently experienced a communication explosion. Immediate correspondence is commonplace; satellite communication can beam information around the world. As a result, some advertising, once directed at a national market, is now receivedby a global audience. A tremendous amount of product information and publicity reaches the world community; with only a few exceptions, the bulk of it is for highly visible branded products. These promotions, coupled with the prestige associated with products produced in the United States, have resulted in a greater demand for these products. Wide product distribution and intense branding strategies also increase the visibility and desirability of United States' produced goods (Harvey, 1988). This increased demand is fueled by shortages of products in many foreign countries.

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