As American companies develop and sell products abroad, they must balance protecting their IP rights with sustaining losses in nations that are increasingly important consumer markets. Of these nations, the BRIC economies (Brazil, Russia, India, China) pose the greatest US policy concerns. How should US companies protect their assets in BRIC countries while maintaining government-business relations? One solution suggests making friends with foreign governments through unilateral initiatives.

In a paper by Professor Robert Bird from the University of Connecticut, Defending IPRs in the BRIC Economies, 43 Am. Bus. L.J. 317 (2006), the importance of BRIC nations arises from predictions, by Goldman Sachs, and others that: "In less than 40 years, the BRIC economies collectively will be larger than the (2003) G6… only the US and Japan may be left of the current six largest economies in the world." 318. The problem now, to Bird, is that in BRIC countries “IP infringement ranges from rampant to merely widespread. Nonetheless, U.S. firms cannot afford to ignore the market opportunities in these rapidly growing nations.” 317. Added to that, "the rise of technologically focused industries also (gives) IP enhanced importance." 321.

To propose how American companies can most effectively curb foreign piracy with long-term effects, Bird finds that “unilateral initiatives have been given insufficient attention in IP rights strategies and should become a part of any measure to protect such rights in the BRIC economies.” 318. This observation draws from Bird’s belief in the limited value of coercion by the US on other economies. 334. Bird cites several reasons why coercion is limited to enforce international IP: “Coercive efforts to change a foreign nation's behavior can provoke a variety of reactions ranging from immediate compliance to a threat of a trade war.” 338.

While Bird admits that unilateral initiatives have not totally eradicated foreign piracy, they have helped make host governments allies with American interests overseas. He writes:

…unilateral initiatives by an economically dominant power have the effect of increasing trust between two competing economies and can break lock-in problems between deadlocked representatives. Such initiatives, planned for the long-term, wellpublicized, and backed with the possibility of sanction or withdrawal, can have a significant effect on the target’s willingness to bargain. 362.

Bird envisions unilateral initiatives by American companies that will “positively impact the treatment of U.S. corporations in a developing nation.” 354. As an example, Bird argues that American companies plan unilateral initiatives without “any expectation of reciprocity.” 355. He further describes these initiatives:

a voluntary, conciliatory action presented by one party to the benefit of the other... neither conditioned upon past compliant conduct or immediate expectation of future compliance. Unilateral initiatives are not merely gifts, but constitute any action that is taken without immediate expectation of response from the receiving party. 350.

The company skillfully used a variety of unilateral initiatives to induce positive change. The firm publicly announced a long-term commitment to the Chinese market even when it appeared unprofitable in the short term to do so. The firm wisely donated charitable gifts and offered elaborate training regimes to Chinese citizens. The company made sure to publicize these initiatives, make commitments, and adhere to those commitments over time to the benefit of the Chinese economy. The firm also executed initiatives with an eye toward having the maximum effect. The firm’s deliberate choice to donate to charities favorable to government officials is just one example of the kind of interests savvy approach that can maximize the effect of these practices. 356.

The result is one Bird suggests other American companies pursue through unilateral initiatives: "...the firm became one of a few that Chinese leaders cited when discusses foreign MNC’s whose activities are beneficial for China.”

posted by Noel Le @ 4:57 PM | International

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