Investment: US to claim damages against IPR abuses

Daily Times (Lahore), 3 February 2005

US to claim damages against IPR abuses

By Khalid Mustafa

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

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

This demand has been proposed in the draft of a proposed Bilateral Investment Treaty (BIT) by the US, an official of the Law Ministry told Daily Times.

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

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

He said that keeping in view the US’s unjustified demands, talks on the BIT are likely to remain inconclusive. Under the BIT, both countries would protect the investments of each other’s investors. Pakistan’s delegation for BIT talks will comprise Jehangir Bashr, secretary of the Board of Investment, Makhdoom Ali Khan, attorney general of Pakistan, the additional secretary of the commerce ministry and a representative of the Central Board of Revenue.

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

The official said that during the first formal TIFA talks, the US had demanded the protection of investments that it had made so far in various sectors in Pakistan and had demanded that the ICSID be the arbitrator in the case of any disputes over the implementation of intellectual property rights in Pakistan. “Pakistan declined protection to existing investments by US companies saying it would only protect and provide guarantees to investments that came in after the signing of the treaty,” he said.

Effective arbitration system: The official said the USA had also demanded an effective system of arbitration in the case of disputes after the investment was made and termed Pakistan’s judicial system “very poor and ineffective”. However, Pakistan’s attorney general did not agree with the US officials and said that the existing commercial court system in Pakistan would be sufficient in this regard.

The official said both sides would once more take up these issues during the talks in London to seek a solution so the BIT draft could be developed with consensus, ensuring future US investment in Pakistan. “We are currently formulating our modus operandi to negotiate the BIT talks and safeguard Pakistan’s interests,” the official said. On violation of intellectual property rights in Pakistan, which has been a grave US concern, the official said Pakistan had effectively banned the export of pirated CDs and DVDs.

He said eight known facilities in Pakistan had produced 180 million discs in 2003, nearly all illegal, which were exported to at least 46 countries around the world.

“Companies in the US and other developed countries which are members of IIPA suffered a loss of $68.5 million in 1999. This swelled to $126 million in 2003. Over 12,000 retail outlets, kiosks and stores remain in operation all over Pakistan, selling pirated products for a fraction of the cost of the genuine articles,” the official said quoting IIPA’s petition.

“Markets like Rainbow Centre in Karachi and Hafeez Centre in Lahore still contain hundreds of retail outlets filled with pirated products. Even the duty-free area of Karachi International Airport has a retail shop filled with pirated CDs and DVDs.”

source: Daily Times