globalEDGE Blog: Global Impacts of Patent Laws

Global Impacts of Patent Laws

The problem of copying and product imitation has pervaded businesses from practically the beginning of time. The age-old debate about the nature of innovation has significant importance in the world of business. Patents were originally designed to help companies protect their intellectual property from competitors to ensure that innovation was rewarded not stolen. However, many have argued that products are never completely original and all creativity comes from some other idea. Albert Einstein said it best himself with the famous quote, “The secret to creativity is knowing how to hide your sources.” So what does this patent and creativity debate mean for businesses, and perhaps more importantly for global competitiveness?

There seems to be a thin line between copying and healthy competition. Finding the proper balance can be extremely difficult, especially for global businesses. Despite an increasingly globalized business climate where similarities have emerged across the world, patent laws actually differ by country. This makes it challenging for global businesses developing products that may infringe on patents in one market but be completely acceptable in another. Take for example, the case between Apple and Samsung where the United States court ruled that Samsung violated Apple’s patents but in Japan the court ruled just the opposite. While in South Korea, a judge ruled that both companies infringed on each others' patents. This case has large implications for international business and shows that in the future, patent laws may greatly affect how companies compete globally.

As global companies export their new products overseas, they now have to be aware of patent laws in each country. It’s highly inefficient for companies to develop a different product for each market based on patent laws. For this reason, international businesses will have to invest more heavily in the design stage of their products to ensure the originality of their products and to avoid potential lawsuits over product imitation. On a global brand level, greater and more dramatic differences between product designs could actually confuse customers and create a situation where consumers might be hesitant to switch from one brand to another. All these factors have the possibility of changing the landscape of global competitiveness among companies.

Down the road, each specific country will also have to decide if their domestic patent system is hindering or actually promoting innovation and global competitiveness. Creativity and innovation are two major factors that drive economic growth and many believe patents should safeguard these key components. However, the complexities of modern technologies and product designs are making it tough for the current patent system to keep up. In a more globally connected world, there might even be a strong case for the need of a universal patent system. But for now, let’s hope companies continue to create and innovate for the sake of global economic growth despite the surging patent debates.

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