IIPI | home

House Caucus on Intellectual Property Event:
Intellectual Property and Trade – The Case of Jordan

Background Document:
The Role of Intellectual Property in Jordanian Industry
An Overview

Introduction

Over the last five years, the Hashemite Kingdom of Jordan has made several economic and regulatory reforms in compliance with its accession to the World Trade Organization (WTO) in 1999 and it’s signing of the U.S.-Jordan Free Trade Agreement (FTA) in 2001. Both agreements called upon Jordan to strengthen intellectual property laws and provide more effective enforcement of these laws. While many believed that the adoption of modern intellectual property standards would do nothing but harm Jordan’s economy, the available evidence indicates that the improved intellectual property regime has spurred greater investment and more activity in intellectual property-based industries.

Pharmaceuticals

Jordan’s pharmaceutical industry is the third largest export earner in the country. Prior to joining the WTO and signing the US-Jordan FTA, some believed that Jordan’s pharmaceutical industry would be especially hard hit by adoption of strong intellectual property rights since many companies were producing pharmaceutical products that were protected by patents in other countries and would qualify for patent protection in Jordan under the new rules. An industry insider predicted “half of [Jordan’s pharmaceutical companies] would close down, and the families of 2,000 bread winners will be out on the street.” Nevertheless Jordan adopted intellectual property rules in compliance with the WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) and the US-Jordan FTA, which included expanded data exclusivity rules, allowed for product patents on pharmaceuticals, and placed strict limitations on compulsory licensing.

Jordan’s pharmaceutical sector has adjusted to the new intellectual property regime and has capitalized on the trade benefits that the WTO and US-Jordan FTA provided. Jordan’s pharmaceutical industry has always been export oriented; a fact that has not changed in light of the new intellectual property protections, but the way they do business has changed dramatically, with a new focus on building international alliances. As a result, exports have led recent industry growth. In 2001, Jordan’s pharmaceutical exports amounted to $184 million; in 2002, this rose to $204 million, but fell in 2003 to $185 million due primarily to the loss of the Iraqi market. Current figures indicate that the market has rebounded in 2004, with exports totaling $170 million between January and September and a year-end projection of $226 million. Today, Jordan’s pharmaceutical export base is much more diversified, and serves over 60 markets worldwide.

Thanks in large part to the improved intellectual property climate, Jordanian companies have become attractive business partners for international pharmaceutical companies as well as diversifying the export markets. Over the last few years, Jordanian companies have established licensing relationships with pharmaceutical companies from the United States, Japan, Korea, Italy, Switzerland and the United Kingdom. Many of these companies are looking to their Jordanian partners to provide marketing and distribution expertise in the Middle East market, while Jordanian companies benefit from a broader product base and the transfer of know-how and technology.

Jordan is also benefiting from stronger intellectual property rights through an increase in pharmaceutical research and development investment. Clinical research activity has been growing at a healthy pace, with two new Clinical Research Organizations (CROs) established in the last three years, in addition to the three companies that were already in existence. Major international pharmaceutical companies like Organon, Novartis and Aventis have worked with both local CROs and Jordanian hospitals in clinical trial studies. Further, Jordanian pharmaceutical companies are beginning to invest more on product research and development; for example, Triumpharma and Advanced Pharmaceuticals are both investing in research to produce patent worthy drug delivery mechanisms.

Information Technology

Another burgeoning high-tech area where intellectual property has played a crucial role has been Jordan’s Information Technology industry. Revision’s to the country’s copyright law spurred by TRIPS and the FTA extended copyright protection to software, giving many in Jordan’s IT sector a firm legal grounding to base their IT businesses on. By some accounts, the adoption of a modern copyright law even caused the return of businesses that had left Jordan due to software piracy.

According to Jordan’s REACH Initiative, a collaborative effort between Jordan’s IT industry and government, the IT sector has performed very well over the last few years. Since 1999, the IT market has grown from $60 million to over $300 million, exports have gone from $10 million to $69 million and employment has skyrocketed from 1,250 to over 9,000. The Jordan Investment Board estimates that the country’s IT sector is growing between 15% and 30% per year. Many of Jordan’s IT firms are moving into software and IT services exports; an area that has seen a growth rate of more than 100%.

While the growing success of Jordan’s IT industry cannot solely be ascribed to enhanced intellectual property laws, as there have been a number of government and industry efforts to boost growth in the IT sector, it has been acknowledged that, “the first right thing Jordan did was promulgate and enforce world-class intellectual property rights legislation.” Indeed, unlike many other countries who have in recent years adopted strong intellectual property laws, the Jordanian government has taken copyright enforcement serious. In 1999, software piracy was estimated to be around 90%. According to a recent study by IDC, software piracy had fallen to 65% in 2003. Such remarkable improvement in intellectual property enforcement has been a signal to international IT companies like Microsoft and Intel that it is safe to invest in Jordan. In 2003, foreign direct investment reached $79 million and industry experts expect to see continued increases in the coming years.

Other Areas

While intellectual property has become a cornerstone for two of Jordan’s high-tech industry sectors, it is also getting attention from other areas. The Royal Scientific Society, Jordan’s premier government technological research organization, is looking into incorporating US-style technology transfer policies to more effectively move their intellectual property into the hands of the private sector. Likewise, the Royal Film Commission, a quasi-government organization working to build a film industry in Jordan, is providing copyright and business skills training for aspiring actors, directors and producers.

Interest in intellectual property, and more importantly intellectual property-based business strategies, has been steadily growing across different industry sectors. As a result, organizations like the Jordan Intellectual Property Association (JIPA) have been created to answer the need for education and training in all areas of intellectual property. JIPA, in association with other groups like the International Intellectual Property Institute, have organized several IP training activities, including the annual Jordan IP Week which has received the support of King Abdullah himself. It is clear that Jordanian businesses are beginning to realize the potential of intellectual property. As a board member of JIPA described, “the real value of IP is the way it can be integrated as part of your business strategies-marketing, capital raising, research and development or business development. A clever business uses IP to market itself, its products and services.”