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QUOTE:

DOMESTIC ECONOMIC INTERESTS, NOT COMPLAINTS BY FOREIGN GOVERNMENTS, ALMOST ALWAYS DRIVE CHANGES IN IP LAWS

and received government help in repelling com- has never provided much protection for drug petitors that copied their innovations. By the innovations. Prior to the 1990s, Brazil did not time of World War I, the U.S. economy was even allow patents on medications. With little solidly industrial, and its IP laws reflected this. domestic industry in pharmaceuticals in BraThe focus remained on protection of domestic zil, there was no benefit to IPR protection. The companies from other domestic companies, Brazilian government did not care that foreign but globalization eventually changed this, too. companies wanted patent protection. Today, After World War II, the U.S. adopted significant Brazil is reportedly the eighth largest pharmaenhancements to its patent laws, reflecting the ceutical market in terms of revenue. Despite need to further protect domestic companies the huge market size and international treaty obligations, drug innovations get little protecfrom other domestic companies. Eventually, U.S. industry suffered severely tion in Brazil. This simply reflects the small from foreign competition, especially from Jap- size of Brazil’s pharmaceutical manufacturing anese electronics and auto manufacturers. The industry. Turning back to China, one can readily see U.S. government stepped in to help. At the time, many Americans believed that the Japanese how it falls neatly into these historical models. were mere copyists, and that their Asian cul- Like the U.S., the Chinese economy transture promoted copying. The U.S. government, formed from agrarian to industrial. In parallel led by President Ronald Reagan, reacted to the with its breakneck pace of industrialization, demands of domestic companies by enacting Chinese IP laws have developed quickly—maysignificant enhancements to the patent laws. be quicker than anywhere else. Like elsewhere, These enhancements gave U.S. companies new the Chinese government has enhanced IPR protection because domestic companies have weapons to fend off the foreign competitors. The Reagan-era IP laws helped many demanded it. At best, foreign companies are U.S. companies, most notably Texas Instru- secondary beneficiaries. Thus, Chinese techments. These companies used the U.S. courts nology companies like Huawei want protection and Super 301 actions before the Internation- from copying by domestic rivals such as ZTE; al Trade Commission to secure huge mone- they do not worry much about copying by Aptary transfers and injunctions against foreign ple. This also disproves the view that China has a culture of copying that will not change. The competitors. Over time, Japanese manufacturers felt the culture of copying in the U.S. came to an end, pressure of competition, especially domestic as it did in Japan and elsewhere in Asia. Domestic economic interests, not comcompetition, and matured into incredible innovators who also demanded domestic IPR plaints by foreign governments, almost always protection from their government. In more drive changes in IP laws. Perhaps the Trump recent years, Japanese companies have suffered Administration will succeed where prior addomestic market-share losses at the hands of ministrations have failed. This may mostly companies from South Korea, Taiwan, and reflect the maturation of Chinese industry, China. The Japanese government has reacted and may also arise from President Trump’s by studying and adopting some Reagan-era IP asymmetric approach to deal making. Time will tell. end law reforms. Other historical examples abound. Consider India and its protection of pharmaceutical innovation. The Indian pharmaceutical manufacturing industry dates to the 1970s. At that time, for young Indian drug companies, generic drugs were their easiest path to market. Copying allowed the Indian companies to grow strong. By 2018, India supplied almost half of all generic drugs in the U.S. In time, though, competition and market-size limits led the Indian pharma companies to move up the value chain to development of proprietary drugs. Inparallel with industry maturation from generic (i.e., copied) drugs to proprietary drugs, the Indian patent laws have been strengthened to protect the domestic pharma industry. Contrast India’s story with Brazil’s. Brazil

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