WTO: China’s IPR protection not enough

WTO: China’s IPR protection not enough    The WTO has formally ruled that several aspects of China's legal regime for protecting and enforcing intellectual property rights are inconsistent with China's obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), U.S. Trade Representative Ron Kirk said March 20.
   The United States brought a dispute against China on the matter over concerns that Chinese law does not adequately provide for the protection and enforcement of copyrights and trademarks on a wide range of products.
   'Today, the membership of the WTO agreed that China must bring its intellectual property rights enforcement regime into conformity with its WTO obligations,' Kirk said in a statement. 'As this dispute demonstrates, the United States will not hesitate to use all appropriate tools at our disposal to ensure that our industries, authors and artists are protected — and that our trading partners observe their WTO commitments.'
   Kirk said he expects China to live up to its WTO obligations, and that bilateral trade between the United States and China shouldn't be affected by the dispute.
   'China has consistently repeated its intentions to abide by WTO rules,' he said. 'In that spirit, I look forward to China's prompt compliance with the WTO's rulings in this dispute as a positive step toward addressing the continuing challenges of counterfeiting and piracy in China. We also look forward to continuing bilateral discussions with China on these and other important IPR matters. A great deal of work remains for China to improve its IPR protection and enforcement regime.'
   The United States initiated the WTO dispute in April 2007, after bilateral discussions spanning several years failed to resolve U.S. concerns. A panel was established to examine the matter in September 2007, with a report from the panel released on Jan. 26, 2009.
   The United States sought to eliminate three significant structural barriers in China's IPR enforcement laws. The WTO agreed with the United States on two of these, but found there was not enough evidence concerning the third.
   According to Kirk's office, the WTO ruled that the Chinese Copyright Law does not protect copyrighted works that do not meet China's 'content review' standards. This blanket denial of protection deprives certain copyright owners of vital enforcement tools to prevent unauthorized copies from being produced in China and distributed there or exported to other markets.
   Second, China's rules for disposing of IPR-infringing goods seized at the border provide for counterfeit goods to be auctioned subject only to the condition that the infringing trademark be removed. Returning these goods to the marketplace with only the infringing mark removed, however, could confuse consumers and harm the reputation of the legitimate product, facilitating — rather than deterring — further acts of infringement involving these goods.
   Lastly, China's laws provide for criminal prosecution of counterfeiting and piracy only when the trademark counterfeiting or copyright piracy exceeds specified legal thresholds (expressed in terms of the volume or value of infringing goods, e.g., 500 copies of a pirated DVD or about $7,000 worth of counterfeit goods).
   The TRIPS Agreement requires criminal penalties and procedures to be available for all 'commercial scale' copyright piracy and trademark counterfeiting. The United States pointed out that this provision means China has an obligation to establish standards for prosecution and conviction that capture all commercial-scale activity, and it cannot create thresholds so high as to be divorced from market realities.
   The WTO, in its report, said it would need more evidence to determine if China's thresholds are set too high. ' Chris Gillis