Title
Government Policy and ‘Standards-Based Neo-Colonialism’
Author
Andrew Updegrove, Partner, Gesmer Updegrove LLP
Date
4/04/2008
(Original Publish Date: 8/1/2007)
(Original Publish Date: 8/1/2007)
Abstract
From the sixteenth through the nineteenth centuries, European powers colonized most of the rest of the world in order to exploit the natural resources, inexpensive labor, and new markets that became available in the wake of the great voyages of discovery. These comparatively more developed nations were able to do so in part as a result of their superior technology and capital resources. Today, the developed world and its institutions are sometimes criticized for "neocolonial" activities that allow them still to exploit, or unduly influence, their former colonies. One manner in which multinational corporations can engage in similar conduct is through their control of the patents that underlie many important standards. When such standards bear royalties, the patent owners can relegate emerging nations to low-cost job shops that are able to build products, on order and at low profit margins, for foreign brands, but not to sell similar products under their own brands at higher profit margins. The predictable result is the development by nations (most notably China) of duplicative "home grown" standards. Unless greater efforts are made to avoid royalties and other restrictive terms in standards-related patent licenses, it is therefore likely that increasing numbers of standards wars will break out in the future, obstructing international trade. In this article, I explore the roots of this phenomenon, and suggest ways in which the situation might be redressed.
Link