IP as trade retaliation heats up again -- US v Brazil

As I mentioned last September, the WTO ruling on US cotton subsidies allows Brazil to impose counter penalties on US trade. Those countermeasures could include penalties on services and intellectual property. Now Brazil has announced that is exactly what it will do. According to the Economist (Brazil, America and trade: Picking a fight):

Brazil's government says that it intends to do this with measures later this month, to the value of $238m--the "remaining annual amount of retaliation to which Brazil is entitled"--which will be applied to intellectual property and services.

Business Week (Brazil Raises Tariffs on U.S. Goods, to Break Patents) adds:

The government of President Luiz Inancio Lula da Silva plans to take additional steps and break U.S. patents as part of the $829 million retaliatory measures, [Brazilian Foreign Ministry official Carlos Marcio] Cosendey said. The ministry will publish a draft for public consultation of sanctions over intellectual property March 23, he said.

However, this may backfire. As Joff Wild at the IAM Blog asks:

if I were a US IP owner I would also be asking myself whether I wanted to have anything to do with Brazil in the future. Why on earth would I want to invest in a country that is prepared to use IP as a political football in this way when there are other countries I can go to where I will not have this problem?

Brazil seems to understand the dangers here. According to a story in Bloomberg:

"These measures don't change policies or our commitment to protection of intellectual property," Carlos Marcio Cosendey, head of Foreign Ministry's economic department told reporters in Brasilia. "These are temporary measures aimed to force a change in the U.S."

Given that the US seems to be in no hurry to change its cotton subsidies, that "temporary" measure may be around for a long time. And other nations may be tempted to use the same tactic in the future. It could get very interesting.