BUSINESS RECORDER

Need to establish IP courts and amend IPOP Ordinance

December 30, 2006

The Intellectual Property Organization of Pakistan (IPOP) Ordinance, 2005 was promulgated on August 11th last year and established the IPOP. The Organization comes under the administrative control of the Cabinet Division. The IPOP Ordinance brings the Trademark office, the Patent office, and the Copy right office under the administrative control of the IPOP. These offices would continue working by their respective charters and laws but IPOP would have the mandate to hear complaints against them, to enforce their respective laws upon them, to allocate budget or to coordinate their activities. The mandate of this organization is to promote an IP rich environment in Pakistan by developing manpower, IT infrastructure, policies and advice to the government etc. (the IPOP has an independent budget). The IPOP has the mandate to guide or direct other arms of the Government to enforce and protect and strengthen IP Rights. Arguably they can issue policy related directions to Ministry of Health to prevent them from violating patent or to adopt Data Exclusivity legislation. However, their power in this regards is still to be tested. It is noteworthy that the Board of IPOP has been empowered to regulate itself and to carry out its objectives by drafting and promulgating rules and regulations. (Traditionally the Federal Government keeps such powers with itself. It is proposed by virtue of this paper that the IPOP Ordinance is amended so that the IPOP is given powers to establish special Courts. Generally the Federal Government (“FG”) has always reserved the right to establish special courts under specific legislation to administer the provisions of those legislations. Therefore, under the IPOP Ordinance, the FG may do the same by (a) amending the Act to empower it to establish Courts by notification in the official Gazette, and (b) establishing the Courts. These courts would consist of specialists as judges; sit at places directed by FG and would have such powers of administration as are given to district courts. The next steps would be that FG amends the existing IP framework, inter alia, the Patents Ordinance, 2000, the Trademarks Ordinance, 2001 and the Copy right Ordinance, 1962, so that the infringement complaints under these acts are filed with the special IP courts instead of the district courts. For instance, FG would have to amend the section 60 of the Patents Ordinance-this section empowers a patentee to institute a suite in a District Court for patent infringement or any other issue under the Patent ordinance. Similar amendments would be required in the Trade mark and copy right legislation. Appeal against the decision of the IP courts would lie with the High Court. The appellate mechanism to address refusals of grants of patents, trademarks or copyright given under their respective legislation would remain intact. The amendments in the IPOP Ordinance would have two objectives. Firstly to provide effective enforcement of rights granted under the IP legislation of the Country and secondly to provide for speedy and cost effective method for prosecution and disposal of cases involving IP infringements and matters lying under the domain of IPOP. It must be highlighted that a detailed institutional framework would have to be developed for establishment of the IP courts and of course a scheme of arrangement for changes would have to be submitted with any proposals in respect of this paper. (This could require amendments in the procedure codes whereby the District Courts are required to make a reference to these IP Courts as soon as they receive an IP dispute matter. It is reiterated that the IP courts should have the same powers conferred on a district court by the civil procedure code. Appeals against its decisions would then lie in the High Court.

The Jurisdictional scope of IP courts over IP related matters.


The IP courts should hear disputes arising under the following legislations:

(1) The Trade Marks Ordinance, 2001

(2) The Copyrights Ordinance, 1962

(3) The Patents Ordinance, 2000

(4) The Registered Designs Ordinance, 2000.

(5) The Registered Layout-Designs of Integrated Circuits Ordinance, 2000


The Courts should also have jurisdiction over any other matter that has IP issues at stake. The principles which should be embodied in any legislation or amendments that codify the above proposal should be (1) to handle cases in strict compliance of the IP laws. To do so in a timely manner and to ensure that the procedural provisions of the Civil Procedure are strictly followed and that the courts guarantee a party its full right of action. (2) to have judges who are experts in IP matters so that they are able to assess the merits of case better. (3) All parties are to be treated equal. (4) methods of Adversarial system followed.

DAILY AUSAF

Pakistan – U.S. long term strategic economic partnership

December 8,2006

DAWN

Why Sindh is lagging behind?

October 2, 2006

AS many as 94 per cent of the 60 American multinationals have a negative image of Sindh government, according to a recent annual survey. Sharing this perception, chief executives of a few British and German multinationals described “bad governance’’ the single most critical challenge to the development of the province. The World Bank too, carried out a survey of primary stakeholders in December 2004 to discover that “an overwhelming majority of them consider bad governance as the biggest challenge to the Sindh’s development’’. “Corruption and law and order, which are derivatives of weak governance system, emerge as the second and third most critical challenges’’. It is this candid observation of the World Bank report that has caused discomfort to the political leadership as well as the bureaucrats in Karachi. A recent report of Transparency International put Punjab government ahead of Sindh on corruption index has brought some consolation to the provincial administration. But the World Bank report, “Pakistan: Securing Sindh’s Future: The Prospects and Challenges Ahead’’ awaits official comments from the provincial authorities even after submission and presentation about nine months ago. According to World Bank sources in Islamabad, the bank gives the draft report to the government after carrying out surveys and holding sessions with stakeholders. A presentation is made and then the relevant authorities are expected to offer comments. The bank’s board then reviews the draft report in the light of comments of the government and gives it a final shape that accommodates all views and comments. Spread over 100 pages, the World Bank report is divided into seven chapters. The bank study has detected an all round deterioration. Thee province is falling behind in almost all sectors be it economy, manufacturing, agriculture, services education, gender equality and social sectors. What is startling is the fact of highest incidence of absolute landlessness, highest share of tenancy and the lowest share of land ownership in Sindh. The wealthy landlords with holdings in excess of 100 acres, who account for less than one per cent of all farmers in the province, own 150 per cent more land than the combined holdings of 62 per cent of small farmers in the province with land holdings of less than five acres. Crops and livestock have been devastated by the four years drought exposing more than 50 per cent of its rural population to extreme poverty. Being on the lower riparian, water supply remains less than what is needed and hence all the problems. The World Bank found Sindh to be endowed with many characteristics of a high growth region. At one time it was the most industrialized province accounting for 40 per cent of the country’s manufacturing output in the country. Rich in mineral resources, the province possesses one-third of total deposits of the country. At one time it was the most efficient producer of agricultural goods. The per capita income in Karachi was 55 per cent higher than the national average at the time of independence. Karachi was the first city in Asia to have a full fledged airport and its sea port was the main supplier of cotton and grains to Europe in 19th and 20th century. The city’s seaport is well connected by extensive road and rail network with all parts of the country and is well extended to India in East and up to Central Asia in North. The province has highest literate population, a strong entrepreneurial class, a large pool of educated labor with relatively low wages and home to many institutions of higher learning, According to the World Bank report “Sindh should be on a fast growth track and Karachi should have been a flourishing metropolis’’. Instead of building on the initial advantages to become country’s growth engine, the province, “has been gradually losing position of pre-eminence’’ the report notes and goes on to illustrate its observations with facts that show the rise in unemployment in the province. The report warns of deterioration in unemployment situation as it counts 610,000 unemployed in the year 2003-04 and nearly half a million persons are likely to be get added each year for next ten years. “Without a sustained growth rate of around 7-8 per cent per year, the number of unemployed in Sindh could go as high as 1.6 million by 2013-14’’ warns the report. The province’s share in the national gross domestic production (GDP) is found to have fallen in almost all sectors with the largest declines recorded in large scale manufacturing, finance and insurance, transport and communication sectors. Another significant observation of the World Bank is that the Sindh’s development indicators are not only low in absolute term, but are growing less rapidly relative to rest of the country. For example, its literacy increased by five percentage points from 51 to 56 between 1998-99 and 2004-05, while corresponding increase in the country was eight per cent, from 45 to 53 per cent. With a 41 per cent net primary enrolment rate, it was one percentage behind the national average. This gap widened to four percentage points by 2004-05. In 1998-99, the percentage of household with access to roads exceeded the national average by two percentage points but it fell by seven percentage points in 2004-05. Poverty headcount ratio increased from 23.4 to 40.4 per cent between 1995-96 to 01-02 when corresponding national poverty was 30.1 per cent in 95-96 and 36.4 per cent in 01-02. The report has raised issues as to why Sindh has grown below its potential and is lagging behind the other provinces in growth, poverty reduction and social indicators. The report addresses the growing inequality and disparity within the province across various dimensions. How can these barriers be removed, enabling the province to accelerate its economic growth, improve distribution and reduce poverty? This is one question that the World Bank tries to answer in the context of sound economic policies of the federal government. But in this utter dismal socioeconomic scenario, the World Bank report finds light at the end of tunnel. “Fortunately, the favorable conditions at the global and national levels and the province’s own existing and potential strengths provide an opportunistic setting for the government to embark on a broad and ambitious reform program’’ the report suggests. The report notes polarization in Sindh political environment, where political parties are formed on ethnic lines and it pleads for building a consensus in favor of reform among the existing political parties. According to the WB report, it is the only province where politicians are mobilized on ethnic lines with conflicting interests. As a part of its study, the World Bank in its earlier report given in May last year found that nature of coalition government seems to have been burdened by political stalemates that is holding the provincial government to focus on developing the “type of strategic vision, action program and implementation drive that made the province a leader in implementing reforms in earlier years. Moreover, a lack of attention to business related issues and sustained bureaucratic inaction has created a perception of severe policy uncertainty and has heightened the level of mistrust between the business community and the public sector institutions’’ the report pointed out while drawing attention towards economic stagnation and increase in the number of people being pushed down the poverty line. “It seems that the progressive policymakers, the resilient business community and the activist civil societies have given up any hope of creating a more prosperous Sindh’’, the report said. Top executives of about half a dozen multinationals and business leaders endorse most of the observation of World Bank. “ The government does not have any vision for future economic development’’ remarked a chief executive of a giant multinational. Except for Governor of province, the business leaders and executives of big corporations find difficulties in communication with the ministers and the bureaucrats. ‘Is there really any Investment Cell in the Chief Minister House?’’ asks an executive of a corporation who said he never knew if there was any cell working in the province. But his questions as to when the cell was notified, what are its terms of reference, who are its members and how many times it has met and whether it has given any approvals to projects and finally does it interact with local and foreign businessmen remain unanswered. So long as Kamal Mustafa was the provincial minister for IT there was some communication between the government and foreign investors. The Karachi Chamber of Commerce and Industry leadership including President Majyd Aziz have high hopes from the political leadership of the provincial government. “From the Governor to the Chief Minister, all area easily accessible’’ Majyd Aziz said. But he admits that the government does not have any vision for industrialization and agricultural growth. He concedes that lawlessness is growing out of proportion that now threatens the normal day-to-day economic activity. “But four times reshuffling in the cabinet portfolios is no issue for us’’ Majyd Aziz said and hopes for best in the coming days.

BUSINESS RECORDER

ABC Survey

September 29, 2006

EDITORIAL (September 29 2006): Briefing journalists in Karachi recently on the American Business Council's (ABC) annual survey regarding its members' perception of investment climate in Pakistan, the Council's country president, Zubyr Soomro, said that the outlook is positive. As it turns out, the positive relates only to a general satisfaction with the roles played by the State Bank, Securities and Exchange Commission of Pakistan, Central Board of Revenue, and income tax and customs departments. Which is nice. But the rest of the picture the survey presents is not so nice. In fact, it is pretty negative, except for the part where respondents described the domestic economy as "good" or "fair". The ministries of industries, health, interior, labour and manpower as well as the Export Promotion Bureau, and the outfit responsible for the protection of intellectual property rights are all viewed to be performing poorly in their respective fields. There is also a negative perception about the law and order situation, seen to be deteriorating rather than improving. And 47 percent of ABC's 85 percent members interviewed for the survey expressed reservations about internal and external political situation. So far as the performance of provincial governments, are concerned, the survey presents embarrassing results for the two larger provinces, Punjab and Sindh. Only 20 percent of the respondents thought the Punjab government was doing a "good" job. Sindh merited even worse evaluation with only six percent giving it "good" grade. Interesting, for the first time this year ABC had extended the scope of its survey to city governments. The result, though, is not very encouraging. The city government in Karachi, the nation's commercial capital, gets a "good" rating from merely 15 percent of the respondents while Lahore receives a similar rating from 29 percent, emerging as an overall winner. Needless to say, with only 29 percent votes in its favour Lahore's city government, too, has nothing much to be proud of. The image, nonetheless, is consistent with a slightly better rating that Punjab has received as compared with Sindh. Which is not surprising since the latter is more chaotic both in terms of day-to-day running of governmental affairs, coherent policy goals and implementation strategies. There are of course a number of factors that are responsible for shaping investor perceptions such as political stability, law and order, level of infrastructure development, the nature of regulatory mechanisms, public sentiments vis-à-vis demands of a market economy, donor agencies' views, and local investors' enthusiasm or lack of it. In the present context, the investor perceptions, as the ABC President explained, are based on the political, not economic climate. That should help clarify as to why despite the Federal government's best efforts to attract foreign investments, setting of ambitious targets and launching of a big President's Initiative for Investment, there are no worthwhile foreign investments in sight.

The News

Foreign investor worries

September 25, 2006

The annual perception survey conducted by the American Business Council, a grouping of American companies operating in the private sector in Pakistan, focuses this time on the issue of law and order in the country. The survey is an annual feature and is an accurate barometer for understanding the problems that face foreign investment and investors in Pakistan. Also, for the first time respondents have also been asked to give their input on the performance of provincial governments and also of city governments. The reason why this survey is also important is because prospective investors take such views from existing investors in Pakistan very seriously since the latter are in a good position to give reliable and sound advice. Law and order and good governance are both issues that are very close to the heart of investors the world over. The responses given by the members once again highlight some of the issues that foreign investors in Pakistan as a whole have been talking about for the past several years. The results of the survey indicate that the members of the ABC perceive the law and order situation in the country to be worse than it was one year back. There is also concern about the performance of the law enforcement agencies, particularly the Karachi city police. What is also interesting is that foreign investors have largely expressed satisfaction with the working of the Punjab government but far fewer make the same endorsement in the case of the Sindh government. Similarly, there is more acknowledgement by the respondents that the Lahore city government is doing some good as far as attracting potential investors is concerned, far less than what its counterpart in Karachi is seen to be doing. Foreign investors have a valid point. Law and order in the country as a whole has deteriorated. The troubles in parts of Balochistan have only intensified. Then there are problems in the tribal areas which are also cause for worry and they have the potential to have ramifications for investors in other parts of the country. Another area of concern is sectarian violence which continues to rear its ugly head on and off while the government looks on helplessly. The rise in such violence has meant that business and factories have remained closed as strikes are observed to protest one killing or another. This has meant loss of valuable time and business for foreign as well as local investors and businesses and it eats into their profits. Then there is the rise in streetcrime, particularly in the urban centres, which has become so significant that it is now being taken into account by potential and existing investors and by the public in general as well. Robberies and street crime as well as extortion and kidnappings have increased in many cities, while the performance of the police in terms of catching the criminals and ensuring that they get prosecuted has been by and large dismal. The ABC survey, however, is not all bad news. Respondents have appreciated the functioning of the State Bank of Pakistan and have also said that the Central Board of Revenue is also working better than it was one year ago. This shows that once the government puts its mind to reforming a certain sector or entity, there is all the possibility that things will improve. This should be reason enough for the government to work at reforming the police and law-enforcement agencies as a first step towards a better law and order situation in the country.