RCEP and IP: Weakening The Rights Holders, Strengthening The Users

On November 15, 2020, 15 Asian nations signed the agreements of the Regional Comprehensive Economic Partnership (RCEP), establishing the world’s largest free trade zone with 30% of the world’s population, 29% of global GDP and more than 26% of world trade volume. The pact, which will come into force as early as the second half of 2021, will change world trade massively. The treaty also contains a comprehensive 44-page IP chapter, which provides indications of the RCEP’s influence on intellectual property in the region.  

The agreement will result in IP rights being fundamentally protected and enforceable in all RCEP markets, which in turn will encourage investment in innovation and the exchange of information, knowledge and technology in the region. The standardization of IP rules will help to streamline transactions, promote transparency and reduce the costs of doing business. This will promote creative and innovative industries in the region and increase the global competitiveness of the participating countries.

A striking feature of IP regulations is that they emphasize the balance of rights and obligations. The protection and enforcement of intellectual property rights should lead to mutual benefit for producers and users of technological knowledge and support technology transfer to society. IP should not primarily serve the competitiveness and profit maximization of right holders, but should promote the social and economic well-being of societies.

In addition, the treaties require RCEP members to prevent the abuse of IPR by right holders and trade restrictive or international technology transfer inhibiting practices by companies. The IP regime of the new free trade area is based on the assumption that developed countries have so far overemphasized the importance of protecting the IP of right holders in order to maintain their global competitiveness.

The RCEP aims at socio-economic welfare in the region and cares about the interests of the less developed countries. Accordingly, the Covenant takes a rather moderate approach to intellectual property and does not set too high standards and strict conditions for its protection. Requests for technical assistance from less developed countries are explicitly supported, for example the requests from Cambodia, Laos and Myanmar for assistance in setting up an electronic application system for the processing, registration and maintenance of trademarks.

The collective also has priority in case of dispute. The RCEP treats intellectual property as an investment by companies that can initiate Investor-State Dispute Settlement (ISDS) proceedings between companies and states in the event of a threat or infringement of their intellectual property. By submitting to international arbitration, however, the effect of national IP laws can be limited, which can lead to undesirable effects for the right holder. The bottom line is that in IP matters the RCEP weakens the rights holders and strengthens the users. Western companies will have to adapt their IP strategies in Asia. To what extent Chinese dominance in the free trade zone will make itself felt in intellectual property remains to be seen.

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