Who will be affected by counterfeits infringing intellectual property?

October 10, 2019

Who will be affected by counterfeits infringing intellectual property?

Kenichi Kumagai
Professor, Graduate School of Global Business,
Meiji University
 

In recent years, intellectual property issues including piracy have come under focus, and various policies including legal revisions have been implemented. This is the so-called formulation of IP strategies. At the root of the recent China-US trade friction is protection of intellectual property. As this is the case, protection of intellectual property has become a critical issue not only for Japan, but also for all countries of the world.

Protection of intellectual property is not only a concern for right holders, but also an issue involving consumers and the economy

Intellectual property is an intellectual creation produced by people, or by a product label such as a brand.

More specifically, there are a variety of intellectual property rights including “copyright” that protects creative expressions, “trademark” that protects business symbols to distinguish products of one party from those of others, “design right” that protects the creation of product designs, and “patent” and “know-how” that protect novel technical inventions.

In fact, the concept of protecting intellectual property has a long history.

Before Christ, there was already the idea that one cannot steal the techniques of others, and slaves could not use techniques they learned from former masters in their work with new masters. In short, there existed a concept of the protection of “know-how.”

It was during the Industrial Revolution that modern laws regarding intellectual property were established. As various industrial goods were manufactured in large quantities, patents and trademarks became important, and began functioning.

In Japan, the Trade Marks Law in 1884, the Patent Law in 1885, and the Designs Law in 1888 were respectively enacted. These laws were promulgated before the Constitution of the Empire of Japan was proclaimed in 1889.

Why were these ordinances to protect intellectual property rights enacted before the Meiji Constitution was proclaimed? – Because the Meiji government aimed at the “promotion of new industries” as one of the pillars for a modern nation.

The government understood that in order for them to introduce Western modern industrial technology, and set up and foster domestic industry, it was necessary to develop a system to protect the technology of industry as intellectual property.

Furthermore, one theory holds that Japan also needed to understand the concept of intellectual property and become a nation that could protect it in order to revise so-called unequal treaties which Japan had entered into with Western countries at the end of the Edo period.

In 1899, Japan acceded to the Paris Convention for the protection of patents and trademarks and the Berne Convention for the protection of copyrights. Japan is the only nation among Asian countries that acceded to the international treaties in the 19th century.

During the rapid economic growth after the war, Japanese companies aggressively protected the results of research and development as intellectual property and utilized their research and development to expand their businesses.

This was one of the outcomes of Japan’s efforts in having recognized intellectual property as a critical contributor to the promotion of industry as well as economic growth, and having advanced “intellectual property strategies,” to put it in more modern terms, since the Meiji period.

In the 1980’s, the United States announced the strengthening of protection of intellectual property. At that time, the US had trade and fiscal deficits. The US thought it had suffered economic damage due to intellectual property theft in spite of its technological expertise.

As a result, many Japanese companies were sued by American companies.

It was 2002 when Japan began strengthening its intellectual property strategy – about 20 years after the US took the same steps. The Koizumi administration at that time announced that Japan would aim to become a nation built on intellectual property, and the Intellectual Property Basic Act took effect in 2003.

Looking back at history with regard to intellectual property, it is understood that intellectual property rights do not simply protect the right holders, but are an issue involving consumers and the economy.

Behind the current China-US trade friction is the fact that the US has started to guard against the meteoric growth of China’s technological development. In other words, it is because China’s technological development has become a threat to the US.
International rules to protect intellectual property – TRIPS

When we look around, we realize that we are surrounded by a variety of products that use intellectual property.

We identify a product by its package design and trademark, the so-called brand. And products often use various patents in their mechanisms and quality.

However, if the product is popular, counterfeits sometimes hit the market.

Why does infringement of intellectual property cause problems? Chiefly, there are two reasons.

The first reason is that the circulation of counterfeits causes economic damage to the company that has invested a great deal of money and effort into the invention, development and quality maintenance and management of the product.

The second reason is that it might inflict damage on consumers or users. In recent years, some counterfeits have endangered the health, and even the life, of people.

For example, counterfeit foodstuffs of poor quality may lead to serious health problems. Counterfeit auto parts of poor quality may lead to accidents. It is a fact that some counterfeit copier toner has started fires.

The best thing we can do is not to buy such counterfeit products. However, sometimes it is even difficult for distributors that sell legitimate products to detect counterfeits, and such products are included among legitimate products and sold overseas.

Such counterfeit products purchased by users might invite accidents, causing serious damage to the users. This might also lead to a loss of trust in the legitimate company.

This is the reason WTO (World Trade Organization) established the Agreement on TRIPS (Trade-Related Aspects of Intellectual Property Rights) to protect intellectual property on an international basis.

The agreement is broadly categorized into three points. First, nations that enter into the TRIPS Agreement are required to establish an intellectual property law that provides the minimum level of protection. The protection level was actually very high, and even developing countries were required to provide the same level of protection as that of advanced countries.

Next is the establishment of a judicial system that ensures intellectual property rights can be exercised, as well as the effectiveness of exercising those rights. However, because judicial systems vary from country to country, minimum rules have been set down.

And the last point is fostering human resources for implementing such systems and rules.

Because it is often difficult for many developing countries to establish an intellectual property system, Japan has been providing support to them in their endeavors. I have also been involved in supporting the establishment of an intellectual property system in Myanmar since 2013.

An intellectual property system is vital to a country’s sound development

While China has such enormous technological development capacity that it has set US on its guard, it is also home to manufacturing hubs for counterfeits of intellectual property. In recent years the Chinese government has also put a great deal of effort in protecting intellectual property, but the reality is that it is difficult to eliminate such counterfeit manufacturing hubs.

Counterfeits manufactured in China flow in large amounts into countries like Myanmar, which shares a border with China. Prior to the development of these counterfeiting hubs, there were not many markets for counterfeits in Myanmar. But the number of markets has been increasing in line with economic development.

With this background, Japan—as part of a JICA (Japan International Cooperation Agency) legal development project—has been providing support in promoting the establishment of an intellectual property law as well as the dissemination and increased awareness of intellectual property. What is more important is that we let the people understand the true meaning and role of the intellectual property system.

For example, just telling them that manufacturing and selling counterfeits is illegal or arresting offenders is not enough. These jobs will be taken over by someone else and the vicious circle will never end.

Instead, it is important for them to understand that the intellectual property system is needed for the sound development of their own country, and such a system does not serve only advanced countries.

Japan learned the importance of intellectual property during the Meiji period. There is a background factor for this – Japan’s high educational standard. In the Edo period there already existed temple schools (small private schools) and domain schools. In the Meiji period, the education system was even more improved.

In Myanmar as well, education based on Buddhism is prevalent, and its educational standard is not low by any means.

Japan has cultivated the understanding of intellectual property over 130 years, but Myanmar has to achieve it within a few years. They may face difficulties, but it is possible.

Recently in Japan, infringement of a variety of digital content has become rampant. Because of this, the Japanese government is considering tightening regulations.

A life in which we are bound by and overly aware of laws may never be healthy. In nature, laws should be just like the air. A time when PM2.5 is talked about and we need to be aware of air pollution, is sure enough, when society is sick.

So, what is a life in which we are not aware of laws like? I think we are not aware of laws when we act with a conscience and the common sense required of a member of society. I think we all develop a conscience and common sense naturally through various experiences in the course of mental and physical growth.

If Japanese people today cannot do that and have to rely on the tightening of laws for their ethical norms, then both the educational and social systems may need to be reconsidered.

I hope I will be able to consider how laws should work in Japan through my support to Myanmar, which we call a developing country.

* The information contained herein is current as of October 2019.
* The contents of articles on Meiji.net are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

Profile

Kenichi Kumagai
Professor, Graduate School of Global Business, Meiji University

Research fields:
Intellectual property law

Research themes:
Comprehensive study on intellectual property policies including international protection of intellectual property and intellectual property systems in developing countries

Main books and papers:
◆“Tokkyo Ho Gaisetsu” (Outlines of Patent Law) (Coauthor) Yuhikaku Publishing Co., Ltd., 1998
◆“Kaisei Tokkyo Ho” (Clause-by-Clause Explanation of the Revised Patent Act) Yuhikaku Publishing Co., Ltd., 1995

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