Nations ‘strengthen’ ‘IPR’ ‘protection’ through expanding their scope of coverage, duration, remedies, or enforcement.

Intellectual Property Rights (IPR), including trademarks and patents, encourage creative activity for the benefit of a free society. Innovations are protected through IPR and inventors afford an opportunity to derive fair returns from their investments. The acquisition of Intellectual Property Rights is one of the primary tools for incentivizing creators in a modern economy. Property rights are human rights that spark innovation and nurture economic growth. It has been the most effective mechanism to guarantee civil rights and civil liberties. Protecting individual liberty is the fundamental reason for a system of strong private property rights.

Throughout the unprecedented pandemic crisis, there has been a continuing debate about pat- ents for medicines. The right balance provides early access to affordable medicines with sufficient flexibility to protect intellectual property (IP). Patents are a part of the solution for the COVID-19 vaccine. Dismantling patent protection is not correlated with IP. In fact, scientists developed vac- cines in record time because of the security and resources provided by IP systems.

A trademark recognizes the company's ownership of the brand and legally differentiates it from all other products of its kind. It is an efficient commercial communication tool to capture custom- er attention and make businesses, products, and services stand out. Trademarks safeguard the reputation of businesses and consumers, making them an important part of running a successful company. With a trademark, a business retains exclusive rights to mark its products, with no one

else being allowed to use its symbol, name, or slogan in that region. Trademarks are used as a way of protecting consumers because trademarked companies often work harder to provide quality services and products in order to protect their brand.

Patents provide protection against competitive assets in the business field, giving the right to ex- clude others from exploiting the patented technology. The inventor must disclose the invention in return for obtaining a time-limited exclusivity so that others may know how to replicate it. Effec- tive patent protection stimulates research and is a key requirement to overall economic growth. Patents have long been considered essential incentives to foster innovation. For both industry and small businesses, patents can convey their innovative spirit as concrete assets of value. The data of the International Trademark and Patent Index 2021 give insight to the protection of intellectual property in each country.

2. STRUCTURE-METHODOLOGY

An index of intellectual property rights (IPR) is based on whether various features of IPR systems exist in the laws or regulations. The level of IPR protection in country n at time t could equal:

Where ☐^1, . . ., ☐^J are the different categories of an IP system, and ωi’s the weights of each category.

Such an approach is developed in Ginarte and Park (1997) and Park (2008) which examine six major categories ((1) duration of protection, (2) coverage (e.g., what is patentable), (3) membership in international treaties, (4) enforcement mechanisms, (5) restrictions on patent scope, such as compulsory licensing and (6) patent applications). They assign equal weights to each of these categories (ωi = 1), but other researchers or practitioners may want to assign different weights. Reynolds (2003) and Park (2005) further develop indices of trademark protection using similar methodologies.

2.1 General Principles

First, the ITI and IPI indices are designed to capture the strength of national IPR laws, not the qual- ity or efficiency of IPR protection. From a social welfare point of view, stronger IPRs create both costs and benefits. Thus, the Index is composed of features measuring the strength of intellectual property rights rather than factors that contribute to the quality or efficiency of IPR systems.

Second, a guiding principle in choosing legal features is not to be exhaustive but selective: that is, to choose those legal features that yield maximum variability across countries. Adding information to the Index that marginally adds variability also dilutes the contribution of the rest of the features in the Index. The marginal value of adding such a factor needs to be weighed against the marginal reduction in value of the previous factors. Furthermore, the information must be widely available across countries. A legal factor may be an important element in the strength of IPR laws (e.g. doc- trine of equivalents), but information about it may only be available for a few countries. Including it will make it difficult to make the Index comparable across countries.

Lastly, it is important to avoid making biased judgements about whether a country’s measured protection level is too low or too high according to the country’s level of economic development; the a priori assumption being that richer countries should have stronger levels of IP protection. In general, this is the case, but there are instances where it is not (i.e. some rich countries have IP weak systems, and some poor economies have strong systems). In such cases, other factors are not held constant (for example, richer economies with weak IP systems may have good educational systems to compensate, or poorer economies with strong IP systems may follow poor fiscal and monetary policies which offset the effects of IPRs). In all these cases, it should be understood that the IPR indices are not measures of economic development. They may be important determinants of development but are not themselves indicators of it.

2.2 The International Trademark and Patent Index 2021

As an overview, the Trademark Index consists of four clusters: (1) coverage; (2) membership in trea- ties, and (3) procedures (which aggregate duration, restrictions, and enforcement mechanisms) and (4) Trademark applications. Each of the clusters contains a combination of variables that will then be averaged to come up with a cluster score. These clusters can then be combined to create the overall Index. The procedures cluster represents how procedural elements affect the strength of trademark laws from country to country. The cluster contains nine variables that each represents a different aspect of trademark law. In general, procedures in the cluster should strengthen a trademark holder’s position.

The International Patent Index 2021 follows the same methodology – the unweighted sum of six separate scores for: coverage (inventions that are patentable), membership in international trea- ties, duration of protection (0 to 20 years), enforcement mechanisms, restrictions (for example, compulsory licensing if a patented invention is not sufficiently exploited) and patent applications. This Index measures the strength of patent protection around the countries involved and not the quality of patent systems. The overall grading scale of the International Trademark Index and Patent Index is [0-1], where 1 is the highest value for each cluster and 0 is the lowest value. The variables for the Indices are extracted from all relevant laws published in WIPO’s journal, Intellectual Property, between 1960 and 2021.

Duration

For this category, the statutory duration of protection (in years) is compared to an international standard, namely that of TRIPS. Under TRIPS, the minimum standard duration is 20 years for pat- ents (from the date of patent application) and 7 years for trademarks. Thus, for each of these IPR, a score is obtained (ranging from zero to one) which equals the statutory duration of protection as a fraction of the international standard.

Coverage

IP regimes are stronger if they provide protection for a wider range of subject matter, such as computer programs, genetic innovations, and shapes of symbols. For each IPR – patents and trademarks – a score will be derived which indicates the fraction of a list of subject matter that can be protected. The coverage cluster measures the range of trademarks and patents that can be registered and pro- tected. In general, the more items protected in a law, the stronger the law is for trademark holders.

For example, the list of subject matter for patent protection contains software, plant and animals, food, chemicals, pharmaceuticals, business methods, biotechnology, and surgical products. The score for patent coverage will be the fraction of these 8 fields that are patentable under domestic law. Of course, these eight fields represent just a small part of the universe of patentable subject matter; others include industrial machinery, fixed construction, and so forth. Again, the principle here is not to cover every field but to select those areas that provide sufficient variability in coverage across countries and over time. Generally, the 8 fields that have been selected for consideration are those that have been the subject of much international policy debate, such as patent protection for drugs in developing countries, software, and business methods, and that vary in patentability across jurisdictions.

For trademark protection, the list of subject matter contains service marks, collective marks, certi- fication marks, colors, shapes, and protection for well-known marks.1 Countries vary over whether these types of marks can be granted trademark protection. Service marks are words, names, sym- bols, or devices that identify services. Certification marks are words, names, symbols, or devices that certify the origin (e.g. region) of types of goods, such as Champagne. These marks help identify the type of product. Collective marks identify trade associations or membership in some cooperative or other organization. The association (or its independent members) may be responsible for some product(s). The collective mark should tie the product(s) to the reputation of the collective. Well- known marks are those with an international reputation. Laws that protect such marks prohibit other agents from registering a mark that would benefit from (or free ride on) the reputation of an existing brand, name, or symbol.

The nature of a good should also not be an obstacle towards obtaining a trademark (as required by TRIPS Article 15.4, Part II), meaning that trademarks should not be denied on the basis of prejudicial views about the product (e.g., protection for tobacco). While this requirement is not a subject matter nor does it describe a type of mark, it does enhance the level of protection that any particular mark can receive if the underlying good or service identified by the mark is not subject to conditions. The trademark coverage score will be the fraction of these seven features that are available for trademark protection under the law. These ‘fractions’ rate the extent to which domestic IPR laws cover a wide range of different types of innovations and business symbols.

Restrictions

In many IP systems, intellectual property laws create rights and obligations. In certain cases, IP laws impose conditions or limitations which restrict the exercise of IPRs. This category measures the extent to which IP laws do not impose certain restrictions. That is, IP laws are stronger if they do not impose such restrictions (or weaker if they do). These conditions or limitations may well improve social welfare or economic efficiency, or they may not; but from the point of view of the rights holders, these conditions, limitations, or restrictions reduce the strength or level of protection.

For example, in the case of patent rights, working requirements (i.e., requirements to practice the invention within a certain time period) impose a restriction on patent holders, and weaken the strength of patent rights compared to a situation where patent holders are free to exploit the invention or not. Working requirements, from the point of view of the inventor, are restrictive because the patentee might either be financially unable to work the invention or find the market to be such that working is not profitable at the time. In the case of holding a foreign patent, the patentee might prefer to manufacture in her home country and then export her products. On the other hand, some patent regimes operate on the premise that the purpose of a patent is not to profit inventors but to bring economic value to the community. For this reason, in some countries, if a patent is not worked within a certain time, the patentee is required to give a license to a third party willing and able to work the patent (in exchange for a "reasonable" royalty).

Compulsory licensing weakens the rights of the patent holders. Licensing to third parties may be mandated if the patented technology is insufficiently exploited or worked in the local economy by a local firm or by importation, or if a third party is unable to obtain a license on affordable terms. In some countries, a patent right may be revoked for inadequate working or if the technology is deemed to be in the ‘national’ interest. The patent restriction score (ranging from zero to one) will be the fraction of these three elements (working requirements, compulsory licensing, and revoca- tion) that are not provided for under the law. It will be important, however, not to penalize countries that revoke a patent if the patent holder’s patent is found to be invalid or that issue a compulsory license for abuses by the patent holder. The score should reflect the extent to which rights can be abridged, not the extent to which they are protected unconditionally.

Trademark rights are subject to restrictions as well. IP laws may impose restrictions on the licensing of trademarks; for example, imposing quality standards on goods produced by the licensee (i.e., produced under a license from the trademark owner). Again, such standards may be in the public interest, but the standards may reduce demand for a license and thereby the potential earnings of a licensor. The assignment of trademarks may also be subject to restrictions; for example, a trade- mark may not be transferred without, or independently of, the underlying business. IP laws may also impose linking requirements, whereby a foreign trademark be linked to a domestic (locally owned) producer. Lastly, trademark laws may have “use or lose” provisions; that is, a loss of rights due to failure to exploit the trademark right adequately. This loss of protection due to non-use may extend to those marks that depended on their ‘well-known marks’ status. Trademark rights may not be renewed unless proof of use is established. The trademark restriction score (ranging from zero to one) will be the fraction of these four elements (licensing requirements, assignment conditions, linking requirements, and conditions of use) that are not provided for under the law.

Enforcement

In this category, the selected conditions are the availability of preliminary injunctions, contributory infringement pleadings, burden-of-proof reversals, border measures, and criminal sanctions.

While litigation, arbitration, and settlement comprise different enforcement ‘routes’ should in- fringement occur, patent holders may have recourse to a number of statutory provisions which can aid in enforcement. Preliminary injunctions, for example, are pre-trial actions that require the accused infringer to cease the production or use of the patented product or process during the trial.

Preliminary injunctions protect the patentee from infringement until a final decision is made in a trial. Contributory infringement refers to actions that do not in themselves infringe a patent right but cause or otherwise result in infringement by others. Thus, contributory infringement permits third parties also to be liable if they contribute negligently to the infringement. Burden of proof reversals put the onus on the accused to prove innocence. Given the difficulty IP owners may have of proving that others are infringing on their ideas, expressions, or symbols, the shift in burden can be a powerful enforcement mechanism. Enforcement can also be more effective if the laws put in place border security measures (where customs authorities can prevent the importation of infringing goods) and levy sanctions and other deterrents on IP infringement.

IP Treaties and Agreements

Various treaties are covered, each of which is a binary variable: yes/no to whether a country is a member at any point in time. The TRIPS agreement is the most comprehensive IPR agreement to date. The Patent Cooperation Treaty (PCT) offers a system for international priority filing and claiming of a right to an innovation. The Paris Convention establishes global and national proto- cols establishing a Union for the protection of industrial property. The Union for the Protection of Plant Varieties and Budapest Treaty protect agricultural, biotechnological innovations, and micro- organisms, along with a system for registration and deposits. The Trademark Treaty streamlines the process for applying for protection for marks. It also permits one application to apply to several different classifications as defined by the Nice (1957) agreement (articles 3 and 6). Other important trademark related treaties include the Madrid (1891), Lisbon (1958), and Vienna (1973) agreements.