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This paper provides a bargaining aspect into the analysis of intellectual property protection across borders. We investigate the conditions under which a mutually accepted level of intellectual property enforcement can be agreed upon between two negotiating governments. We also explore the implications for optimal R&D of the varying degree of intellectual property protection. We find that intellectual property infringement need not always hamper an innovator’s investment choices ; zero patenting across borders can be a mutually agreed level of protection in equilibrium ; and the degree of ‘trust’ can have a significant impact on the negotiation outcome.