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United States Files WTO Cases Against China Over Deficiencies in China¡¯s Intell

source: author: time:2007-08-22  

U.S. Trade Representative Susan C. Schwab announced today that the United States will make two requests tomorrow for World Trade Organization (WTO) dispute settlement consultations with the People’s Republic of China: one over deficiencies in China’s legal regime for protecting and enforcing copyrights and trademarks on a wide range of products, and the other over China’s barriers to trade in books, music, videos and movies.

"Piracy and counterfeiting levels in China remain unacceptably high,” Ambassador Schwab said. “Inadequate protection of intellectual property rights in China costs U.S. firms and workers billions of dollars each year, and in the case of many products, it also poses a serious risk of harm to consumers in China, the United States and around the world. We acknowledge that China’s leadership has made the protection of intellectual property rights a priority and has taken active steps to improve IPR protection and enforcement. However, while the United States and China have been able to work cooperatively and pragmatically on a range of IPR issues, and China has taken numerous steps to improve its protection and enforcement of intellectual property rights, we have not been able to agree on several important changes to China’s legal regime that we believe are required by China’s WTO commitments.

Because bilateral dialogue has not resolved our concerns, we are taking the next step by requesting WTO consultations. We will continue to welcome dialogue with China in an effort to resolve these issues. We also look forward to continuing fruitful bilateral discussions with China on other important IPR matters we have been working on together, since achieving comprehensive IPR protection requires concerted efforts on many fronts. Ultimately, it is in the best interest of all nations, including China, to protect intellectual property rights.”

“In the same vein, we have discussed with China in detail the harm to U.S. industries, authors and artists who produce books, journals, movies, videos, and music caused by limiting the importation of these products to Chinese state-owned entities, and the problems caused by Chinese laws that hobble the distribution of foreign home entertainment products and publications within China. These products are favorite targets for IPR pirates, and the legal obstacles standing between these legitimate products and the consumers in China give IPR pirates the upper hand in the Chinese market.”

“As we continue to have an open dialogue with China in an effort to resolve these particular issues with the help of the WTO dispute resolution mechanisms, we will of course also continue to put serious efforts into our joint work with China on innovation policy, intellectual property protection strategies, and the range of other important matters in our bilateral economic relationship through the U.S. – China Strategic Economic Dialogue and the Joint Commission on Commerce and Trade.”

IPR Consultations

The United States’ consultation request on IPR protection and enforcement seeks to eliminate significant structural barriers that give pirates and counterfeiters in China a safe harbor to avoid criminal liability, to reduce the volume of counterfeit goods crossing the border into China, and to give copyright owners more tools to prevent unauthorized copies in China.

The U.S. IPR consultation request focuses on provisions of Chinese law that create a substantial “safe harbor” for wholesalers and retailers who distribute or sell pirated and counterfeit products in China. China has established quantitative thresholds that must be met in order to start criminal prosecutions of copyright piracy and trademark counterfeiting. China appears to have lowered some of these thresholds recently, which is an important recognition of the problems thresholds create. However, wholesalers and distributors still will be able to operate below high thresholds without fear of criminal liability. These thresholds appear to effectively permit large-scale piracy and counterfeiting.

The U.S. IPR enforcement consultation request also focuses on the rules for disposal of IPR infringing goods seized by Chinese customs authorities. Those rules appear to permit goods to be released into commerce following the removal of fake labels or other infringing features, when WTO rules dictate that these goods normally should be kept out of the marketplace altogether.

The third IPR enforcement issue concerns the Chinese copyright law’s apparent denial of copyright protection for works poised to enter the market but awaiting Chinese censorship approval. It appears that Chinese copyright law provides the copyright holder with no right to complain about copyright infringement (including illegal/infringing copies and unauthorized translations) before censorship approval is granted. Immediate availability of copyright protection is critical for new products entering a market, and it appears that copyright protection is available immediately to Chinese works.

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