Technology and State Enterprise in the WTO

Technology and State Enterprise in the WTO

in STATE TRADING IN THE TWENTY-FIRST CENTURY 121, T. Cottier and P. Mavroidis, eds., 1998

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Governments are intricately intertwined in the development and maintenance of technology. This involvement ranges from the most embedded interest of government as provider of education, to its varietal allocation of tax burden based on type of activity (e.g., research and development), to its indirect subsidization of technology development through procurement activity (including in the military sector), to its direct subsidization of research and development activity, to its provision of technology transport infrastructure, to its grant and deprivation of rights in intellectual property, and to its imposition of technology transfer requirements in international trade.

The World Trade Organization (WTO), through its extension to the new areas of services and TRIPS, and in conjunction with pre-existing GATT coverage of subsidies, government procurement, and related areas, imposes a substantial set of rules governing this technology complex. From the standpoint of private intellectual property rights (IPRs) holders, governments and state enterprises become problematic, inter alia, when they preempt commercial opportunities through the diversion of IPRs. Two of the circumstances in which such diversion is likely to occur are examined in this chapter.

The first of the circumstances is that in which the government or state enterprise uses the IPRs of a private party without its authorization or consent. This chapter begins by examining the rules of the Paris Convention on the Protection of Industrial Property (Paris Convention) and those of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) that apply to the ownership by governments and state enterprises of patents. It then examines the provisions of those two international agreements relating to the use by governments and state enterprises of privately held patent rights without the consent of the rights holder. Though all forms of IPR may be used as instruments to promote technology development, this chapter focuses on the patent grant because it is the major form of IPR most specifically directed to the promotion of technology development in connection with private commercial exploitation. It is suggested that the Paris Convention and TRIPS Agreement, taken together, afford considerable leeway to governments in authorizing their state enterprises to make use of privately held patent rights without the consent or authorization of right holders.

Second, this chapter examines WTO rules regarding government mandated transfers of technology to states, state enterprises, and contractors, particularly in the context of the aerospace sector. The aerospace sector is selected because private enterprises in that sector are among those that have been subject to the most visible demands for technology transfer by governments. This chapter concludes that there is some ambiguity in the relevant WTO provisions in this area. This ambiguity may be addressed in WTO accession negotiations with prospective new WTO members, such as China. Whether and to what extent WTO law permits members to mandate transfers of technology to state and other domestic enterprises is a question the answer to which may divide developed and developing members.