This study focuses on the protection of intellectual property rights (IPRs), examining a North/South model in which market segmentation is incomplete. We investigate the way in which the existence of arbitrage affects the incentives of the two countries to set their appropriate duration of patent protection. Our results show that the North has no incentive to completely eliminate arbitrage after patents have expired in the South, despite the fact that enforcement may be costless. The results also reveal that if the demand function for an innovation is linear, then a noncooperative game of subgame perfect Nash equilibrium exists between the North and the South. Furthermore, we demonstrate that a uniform universal standard for IPR protection will never achieve global Pareto efficiency when markets are not perfectly segmented.