Rethinking counterfeiting in light of the relationship between intellectual property and development

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The thesis takes a critical approach to examine the meaning, the impact and the cause of counterfeiting within the context of the ever-increasing standards of international intellectual property right (IPR) protection and anti-counterfeiting enforcement. It finds that, while the TRIPs agreement does not require imitation to constitute counterfeiting, in practice using an identical trademark on the same goods will almost always involve product imitation as well as trademark imitation. Drawing on economic and historical studies that demonstrate the value of imitation to development, this thesis argues that counterfeiting involves product imitation that can benefit consumer welfare and the original brand owner, support the local economy in regions where counterfeiting takes place, and facilitate the development of innovative capacity in developing countries. This value of imitation is supported by the history of the early stages of development in developed countries, which adopted protectionist policies, including intellectual property policy, to encourage importation, imitation and improvement of foreign technologies and products, so as to advance their national interest in increased innovative capacity. It has been commonly accepted that strong IPR protection does not always stimulate innovation and promote development. Rather, when inappropriately designed, stringent IPR protection is very likely to stifle innovation and hamper growth. One important measure of whether IPR protection is appropriately designed depends on the balancing of such protection against the demands of development. In developing economies, the lack of innovative capacity determines that these economies still rely substantially on imitation and assimilation of foreign advanced technology and other forms of knowledge. Within this conceptual framework, this thesis argues that the prohibition of counterfeiting as illegal imitation reflects the imbalance between high standards of IPR protection and low levels of development. These arguments are further tested and confirmed in the case study of counterfeiting in China. This thesis compares several Chinese terms with similar meanings to the English word counterfeiting, and conducts a doctrinal analysis of the Chinese approach to defining and regulating counterfeiting. Based on empirical data on patent statistics and development, this thesis argues that China remains largely an imitative economy with limited innovative capacity and still relies on imitation of foreign technologies and other forms of knowledge. It is thus not surprising that China adopts a cautious attitude towards prohibiting counterfeiting, which in a sense enables the pervasiveness of imitation in its domestic society.
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