US to claim damages against IPR abuses

ISLAMABAD: The US has asked Pakistan to pay damages to US companies fortheir future investment in case of the infringement of intellectual propertyrights and unilateral cancellation of licences.

If the government fails to immediately compensate affected US firms, theWorld Bank will pay the compensation and consider the amount as a loan givento Pakistan.

This demand has been proposed in the draft of a proposed BilateralInvestment Treaty (BIT) by the US, an official of the Law Ministry toldDaily Times.

He said that the World Bank (WB), under its arm of the International Centrefor Settlement of Disputes (ICSID), would pay the damages to US investmentin Pakistan in the case of violation of intellectual property rights and theunilateral cancellation of licences.

The demand is unacceptable for Pakistan and the law ministry is working tocounter the proposal during crucial talks between Pakistan and US on theproposed treaty to be held in London from February 7 under a TradeInvestment Facilitation Agreement (TIFA) signed between the two countries,the official said.

He said that keeping in view the USs unjustified demands, talks on the BITare likely to remain inconclusive. Under the BIT, both countries wouldprotect the investments of each others investors. Pakistans delegation forBIT talks will comprise Jehangir Bashr, secretary of the Board ofInvestment, Makhdoom Ali Khan, attorney general of Pakistan, the additionalsecretary of the commerce ministry and a representative of the Central Boardof Revenue.

Both countries had developed differences over the same issue during thefirst formal TIFA talks held in the USA. However, both sides decided to holdfurther talks in London to solve their disputes.

The official said that during the first formal TIFA talks, the US haddemanded the protection of investments that it had made so far in varioussectors in Pakistan and had demanded that the ICSID be the arbitrator in thecase of any disputes over the implementation of intellectual property rightsin Pakistan. Pakistan declined protection to existing investments by UScompanies saying it would only protect and provide guarantees to investmentsthat came in after the signing of the treaty, he said.

Effective arbitration system: The official said the USA had also demanded aneffective system of arbitration in the case of disputes after the investmentwas made and termed Pakistans judicial system very poor and ineffective.However, Pakistans attorney general did not agree with the US officials andsaid that the existing commercial court system in Pakistan would besufficient in this regard.

The official said both sides would once more take up these issues during thetalks in London to seek a solution so the BIT draft could be developed withconsensus, ensuring future US investment in Pakistan. We are currentlyformulating our modus operandi to negotiate the BIT talks and safeguardPakistans interests, the official said. On violation of intellectualproperty rights in Pakistan, which has been a grave US concern, the officialsaid Pakistan had effectively banned the export of pirated CDs and DVDs.

He said eight known facilities in Pakistan had produced 180 million discs in2003, nearly all illegal, which were exported to at least 46 countriesaround the world.

Companies in the US and other developed countries which are members of IIPAsuffered a loss of $68.5 million in 1999. This swelled to $126 million in2003. Over 12,000 retail outlets, kiosks and stores remain in operation allover Pakistan, selling pirated products for a fraction of the cost of thegenuine articles, the official said quoting IIPAs petition.

Markets like Rainbow Centre in Karachi and Hafeez Centre in Lahore stillcontain hundreds of retail outlets filled with pirated products. Even theduty-free area of Karachi International Airport has a retail shop filledwith pirated CDs and DVDs.