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Trademarks in Developing Countries

Published online by Cambridge University Press:  11 November 2008

Peter O'Brien
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Extract

The concern with the impact of industrial property legislation and practices on the developing countries, at both the national and international levels, has so far been confined almost entirely to patents and patent-related transactions. This focus on the protection of knowledge concerning production processes reflects, on the one hand, a preoccupation with the terms and conditions which owners of technology may be able to obtain for its sale or lease, when their proprietary position is reinforced by legal instruments; and on the other hand, a recognition that unless the developing countries can themselves control the generation of a significant proportion of the technology they employ, it is unlikely either that appropriate technology will be produced, or that good use will be made of what is already available and relevant.

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Articles
Information
The Journal of Modern African Studies , Volume 14 , Issue 2 , June 1976 , pp. 297 - 309
Copyright
Copyright © Cambridge University Press 1976

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References

page 297 note 1 See, in particular, U.N.C.T.A.D. document TD/B/AC. 11/19, ‘The Role of the Patent System in the Transfer of Technology to Developing Countries’, Geneva, April 1974.

page 297 note 2 This does not mean that mastery of a patented process is a necessary or sufficient condition for domestic control of the generation of technology; what is patented may not be appropriate, and in any case a great deal of existing technology is retained through industrial secrecy.

page 297 note 3 Perhaps the best known study is Tella, Guido di, ‘La Manipulación de la Demanda: el problema de las marcas’, in Revista de la Integración (Buenos Aires), 1973,Google Scholar published in English as ‘The Manipulation of Demand: the problem of trademarks’, in World Development (Oxford), I, II, November 1973, pp. 91–101. Thomaz Thedirn Lobo, ‘A Empresa e A Marca’, an undated mimeographed study in Portuguese, also contains an analysis of trademarks, with particular reference to Brazil.

page 297 note 4 The other subjects of industrial property which indicate source are service marks, trade names, indications of source per Se, and appellations of origin.

page 298 note 1 This has been forcefully illustrated, in a somewhat perverse way, by recent experience in Pakistan where the Government has forbidden the use of trademarks in the pharmaceutical industry. The Pfizer Company published an advertisement showing two bottles of pills, neither carrying a trademark, with the caption ‘they may look alike… but Pfizer knows the difference. One of them does not live up to Pfizer's quality standard. And because Pfizer takes no chance all products undergo strict quality control before they reach you. That's why when a doctor recommends a Pfizer product you know he is doing the best for you.’ Pakistan Economist (Karachi), 20–26 April 1974, p. 323.

page 298 note 2 On the approach to consumption goods as satisfying certain ‘bundles’ of wants, see Lancaster, Kelvin J., ‘Change and Innovation in the Technology of Consumption’, in The American Economic Review (Providence, R.I.), 56, 2, 05 1966, pp. 14–23.Google Scholar

page 298 note 3 See Caves, R. E., ‘International Corporations: the industrial economics of foreign investments’, in Economica (London), 38, 02 1971, pp. 5–28.Google Scholar

page 298 note 4 A vivid picture has been painted by Stephen Hymer. See, in particular, his written and oral remarks in U.N. Department of Economic and Social Affairs, Summary of the Hearings Before the Group of Eminent Persons to Study the Impact of Multinational Corporations on Development and on International Relations (New York, 1974), ST/ESA/15, pp. 255–54.Google Scholar

page 299 note 1 The aggregate figures given in this and subsequent paragraphs were calculated from the World Intellectual Property Organisation document, ‘Industrial Property, Statistics for 1973’, 1 November 1974. The figure for the world somewhat underestimates the true total since, although more than 100 governments provided data, a few important developing countries, such as Mexico and Nigeria, are not included in the total. Territorial extensions requested under the Madrid Agreement Concerning the International Registration of Marks are included in the total.

page 299 note 2 ‘The Role of the Patent System…’, para. 247.

page 299 note 3 As contrasted with about 6 per cent of world patent grants registered in developing countries; ibid. para. 257.

page 299 note 4 Some of these renewals could be for the second time or more.

page 299 note 5 This is established formally in The Paris Convention for the Protection of Industrial Property (Geneva, 1974), World Intellectual Property Organisation document. Article 4 C(I) indicates that the right of priority for registering trademarks in countries other than that of initial registration shall be 6 months.

page 300 note 1 With regard to the same phenomenon in the patent field, it has been noted that ‘in recent years the number of patents granted in the world has been a little more than three times the number of separate inventions, and that slightly more than one-fourth of the total number of inventions are protected in more than one country, the average number of countries being about seven.’‘The Role of the Patent System…’, para. 250.

page 300 note 2 Ibid. para. 251.

page 300 note 3 Ibid. para. 262. Assuming that developing-country ownership of trademarks abroad is small, the text figure, coupled with the 26 per cent of the world stock of trademarks registered in developing countries, implies that they own about one-seventh of the trademarks in the world.

page 300 note 4 See ‘The Role of the Patent System…’, para. 279: ‘the use in production of patents held by foreigners in developing countries could hardly be above 5 to 10 per cent of the total’.

page 301 note 1 A complication enhanced by the practice of ‘patenting around’ an original invention.

page 301 note 2 Helleiner, C. K., ‘The Role of Multinational Corporations in the Less Developed Countries' Trade in Technology’, in World Development, III, 4, 04 1975, p. 164.Google Scholar

page 302 note 1 The more important of these legislative provisions are contained in ‘Preparation of a Draft Outline of a Code of Conduct on the Transfer of Technology. Selected Principal Provisions in National Laws, Regulations and Policy Guidelines’, U.N.C.T.A.D. document TD/B/C.6/AC.I/2/Supp.I/Add.I, February 1975. Of particular interest are sections I (Argentina), 10 (Mexico), 13 and 14 (Spain), and 27 and 29 (Andean Group).

page 302 note 2 Here and later, the figures for Mexico are calculated from information given in Soberanis, Jaime Alvarez, ‘La Función Económica de Los Acuerdos de Licencia de Uso de Marcas en Los Pulses en Desarrollo: el caso de México’, mimeographed, 04 1975.Google Scholar

page 302 note 3 Instituto Nacional de Tecnología Industrial, Aspectos Económicos tie la Importación de Tecnologīa en la Argentina en 1972 (Buenos Aires, 1974).Google Scholar

page 302 note 4 See ‘Major Issues Arising from the Transfer of Technology: a case study of Spain’, U.N.C.T.A.D. document TD/B/AC.11/17, 1974, para. 66.

page 303 note 1 ‘Restrictive Business Practices’, U.N.C.T.A.D. document TD/B/C.2/159, 1975, para. 28.

page 303 note 2 Ibid. p. 11, fn. 45.

page 303 note 3 This is not a formal requirement but a criterion used by the Mexican National Register in its work of evaluating contracts; in the same vein, the Register does not admit royalty payments in excess of I per cent of net sales of trademarked products when the licence agreement is between firms which have no equity capital relation. See Soberanis, op. cit. p. 36.

page 304 note 1 It may be occasionally difficult to decide what is generic and what is not. In an article entitled ‘Champagne Name Dispute before Courts Again’, in The Financial Times (London), 25 February 1975, it was reported that ‘Bulmer and Showerings are suing J. Bollinger and Champagne Lanson Père et Fils, of Rheims, representing all champagne makers, who claim that they alone can use the word ‘champagne’. Mr David Hirst, Q.C. for the English companies, said the descriptions ‘champagne perry’ and ‘champagne cider’ had been used for so long that the champagne houses could no longer complain about the usage. Altogether Bulmer has used the word ‘champagne’ for 100 years and Showerings for 35 years’.

page 305 note 1 Computed from data in Chudnovsky, Daniel, Empresas Multinacionalesy Ganancias Monopolisticas (Buenos Aires), 10 1974, p. 113.Google Scholar A still more striking example is the following: ‘The sectorial study…identified about 15,000 different presentations of pharmaceutical products in the Colombian market. Yet research for the study in the hospital of San Juan de Dios in Bogota indicated that 120 generic products used were sufficient to cover most of the needs of the hospital in general medicine’. Constantine Vaitsos, V., Intercounty Income Distribution and Transnational Enterprises (London, 1974), p. 38.Google Scholar

page 305 note 2 The ‘at least in theory’ is especially important in the pharmaceutical field, where it is usually the doctor, and not the patient, who prescribes what the latter is to consume. Even then the doctor’s choice is itself likely to be more apparent than real due to the flood of brand- name preparations. Doctor Maria Dolores Torres Pons has described the situation in Spain as follows: ‘From the discovery of penicillin to the present day, an infinite number of antibiotic products have been isolated and synthesized even though many of them have had to be rejected because they are toxic or ineffective. Nevertheless, this great proliferation of substances has brought with it such a confusion that the utilisation of antibiotics, at least in hospitals, may not be adequate, sometimes because they are administered in excess and on other occasions because their use is unjustified… To all qualified personnel, but most especially to doctors, propaganda concerning the distinct pharmaceutical preparations and forms that invade the market arrive constantly. Most of the time this does not refer to recent discoveries or new molecules but to those which already exist, expressed with different nomenclatures or related in a distinct fashion.’ Cited in Caballero, Oscar, Las Multinacionales del Dolor (Madrid, 1974), p. 10,Google Scholar my translation. A similar point is expressed in general terms in the subsequent quotation given in the text.

page 305 note 3 Lall, Sanjaya, ‘The International Pharmaceutical Industry and Less Developed Countries, with Special Reference to India’, in Oxford Bulletin of Economics and Statistics (Oxford), 08 1974, p. 151.Google Scholar

page 306 note 1 See, for example, Stewart, Frances, ‘Choice of Technique in Developing Countries’, in The Journal of Development Studies (London), IX, I, 10 1972, pp. 99–121.Google Scholar

page 306 note 2 A well-known case is the use of artificial baby milk.

page 306 note 3 Helleiner, loc. cit. p. 174.

page 307 note 1 A lump-sum payment for the use of a trademark during a specified period probably would not help, since the figure would tend to reflect the expected discounted value of future sales of the branded item. If the local licensor were buying the trademark outright the situation would, of course, be different — but in that case the price should be greater than zero only if the trademark owner had actually amassed some reputation in that market.

page 307 note 2 Without attempting to attribute reasons for takeovers, U.N.C.T.A.D. document TD/B/C.2/159, p. 9, states that ‘it has been estimated that about 57 per cent of the manufacturing subsidiaries of transnational corporations established in developing Countries were formed by way of acquisitions’.

page 308 note 1 Of course, the owner retains the option of not selling the brand-name product at all in the country concerned. Leaving aside temporary delays between registration and the commencement of sales, the only reasons for not selling through one channel or another would seem to be a genuine inability to create demand, and the possibility that the enterprise holds several trademarks for very similar products, and has decided to promote only part of its product range during a given period.

page 308 note 2 See ‘Control of Restrictive Business Practices in Latin America’, U.N.C.T.A.D. document ST/MD/4, 1975, para. 170.

page 308 note 3 Some changes in industrial property laws have occurred; e.g. in Brazil, Law 5772 of ii establishing a Code of Industrial Property, and Decision85 of the Commission of the Cartagena Agreement relating to Regulations for the Application of the Rules concerning Industrial Property. Nevertheless, they are essentially modifications to fit in with an overall negotiating posture rather than attempts to alter drastically trademark law as such.