US senior officials trying to sell the need for stronger intellectual property (IP) protection regulations as proposed in the free trade agreement (FTA) with Malaysia were in for a hard time yesterday from business and social groups.

Comments from participants at a briefing yesterday on IP protection, jointly organised by the US embassy and the Federation of Malaysian Manufacturers (FMM), suggest that many remain unconvinced that Malaysia will reap all the benefits outlined from an enhanced IP protection regime.

"Nobody in Malaysia can deny the need to protect IP," said M Supperamaniam, former ambassador for Malaysia to the World Trade Organisation (WTO), in his opening remarks to the briefing held at FMM headquarters in Kuala Lumpur.

But there remains the problem of "balancing between strengthening IP protection regulations and the socio-economic needs and public policy objectives" of developing countries such as Malaysia, said Supperamaniam, who is also FMM advisor on the WTO and FTAs.

The fear of increasing cost of medicines, for example, due to longer patent terms and increased protection of clinical research data have yet to be convincingly put to rest by advocates of enhanced IP protection, he noted.

Citing the suspension of the US-Thailand FTA negotiations last year, Supperamaniam said among the reasons the talks stalled was the inability of the two governments to agree on the IP protection provisions of the FTA, particularly in relation to HIV/Aids medicine.

Reports that stronger IP protection regulations have led to the growth of the new and generic medicines industry in some countries, for example, are contradicted by other reports suggesting declining public health standards.

He further said that biotechnology company Hovid Bhd had recently announced plans to relocate to India out of fears that it would lose out to US pharmaceutical companies following the implementation of the FTA's patent laws restricting generic medicines production.

Attorney-Advisor at the US Patent and Trademark Office (USPTO) Karen M Hauda on the role of IP protection in promoting new and low-cost drugs was followed by more questions about the results of stronger IP rights.

Superamaniam continued his line of questioning by recounting WTO discussions where developing countries had challenged the aims of greater IP protection.

Much-needed funds, he said, often go towards non-essential clinical research and pharmaceutical development instead of combatting critical diseases plaguing the developing nations such as in Africa.

Claims rebutted

Another USPTO official, senior counsel Peter N Fowler, cited a 1994 World Bank (WB) report on IP protection, foreign direct investment, and technology transfer to press the case for Malaysia to strengthen IP protection in order to secure foreign investment.

"When corporations were asked if they would invest in R&D (research and development), more than 80 percent stated the strength or weakness of the IP regime in a country would have a strong effect on whether to invest there or not," said Fowler.

"A clear and enhanced legal framework and regulatory regime aimed at the future, combined with a strong and proactive enforcement regime, will produce results, make Malaysia an attractive investment destination, and set Malaysia apart from others in the region."

Fowler was subsequently queried, however, by a civil society representative who pointed out that the 1994 WB report had been rebutted by subsequent studies.

Companies, according to one report cited by the participant, blamed the lack of laws preventing former employees of companies from revealing trade secrets as among their foremost concerns, not IP protection regulations.

The participant also recounted work by researchers from a local university that suggested companies conducting research and development in Malaysia were relocating to other countries, but not because of Malaysia's allegedly low standards of IP protection.

The companies were moving because Malaysia's population was too small a market size compared to India, for example, and because of the relative lack of skilled human resources, she said.

The issue, said an economist after the briefing, boils down to the question why Malaysia, which had already agreed to the WTO's Trade-Related Aspects of Intellectual Property Rights provisions, would want to go beyond them and implement even higher standards of IP protection.

Noting that 98 percent of patents in Malaysia already belong to foreign corporations, there will not be many gains in higher IP protection regulations, he said.

"Even after this briefing, the only conclusion one can reach is that Malaysia will not benefit to any significant degree from higher IP rights regulations - not as much as US companies, at least," said the economist who declined to be identified.

The Malaysian and US governments have been conducting negotiations on the signing of the FTA, but are unlikely to meet the July deadline.