Intellectual property and intangible assets
Whilst the international frameworks and treaties governing IP apply to all 193 members of the World Intellectual Property Organization (WIPO), the way different economies interpret and apply their legal and regulatory frameworks can differ greatly. As a result, businesses need to deal with variations in local ownership rules, challenges associated with protection and enforcement as well as tax barriers to value-creation chains that have highly centralized IP.
The IP environment in many countries is evolving, often in positive ways. China, for example, is seeking to establish more comprehensive IP protection laws. The opening paragraph of the US-China trade agreement (pdf) signed in 2020 states: “China recognizes the importance of establishing and implementing a comprehensive legal system of intellectual property protection and enforcement as it transforms from a major intellectual property consumer to a major intellectual property producer.”
In contrast, a Brazilian Court has recently created significant uncertainty for patent holders. In 2021, the country’s Supreme Court declared that an element of industrial property law that enabled patents to be enforceable for 10 years from the date they are granted was unconstitutional. This meant that patents are now limited to 20 years from the date of application, regardless of the date they were granted – and it is not uncommon for the Brazilian patent office to take well over a decade to grant a patent. The ruling meant patents being approved with reduced duration of protection; and in the case of pharmaceuticals, the ruling was applied retroactively, resulting in terms being shortened.
Data privacy and commercial secrecy
There are also marked variations in data protection regulations between different territories. Even the developed world has no common standard and there is a wide divergence between the US and EU. Without a global consensus on how to protect data, it is anticipated that mismatches between regulations at domestic level will continue to create friction and risk around trade. Overseas retailers expanding into India, for example, have discovered that regulatory amendments have forced them to change their business models.
Establishment and financing
When establishing a presence in a new market, businesses must consider a number of regulatory requirements. They may, for example, encounter restrictions linked to quotas, joint venture requirements, residency rules covering legal entities and management. Other restrictions might apply to nationality obligations, licensing or equity caps. Different sectors face higher barriers to establishment than others. Traditionally, the BRICS countries and other emerging economies have higher barriers than the US-Europe-Japan grouping, although new barriers and protectionism have been rising globally since the 2007-08 financial crisis.