WTO sides with U.S. on China IPR deficiencies
A World Trade Organization dispute settlement panel sided with the United States by finding aspects of China's intellectual property rights protections to be inconsistent with China's obligations under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
The United States initiated the dispute in April 2007 because of serious concerns about several shortcomings in China's legal regime to protect and enforce copyrights and trademarks on a wide range of products.
'These findings are an important victory, because they confirm the importance of IPR protection and enforcement, and clarify key enforcement provisions of the TRIPS Agreement,' said Acting U.S. Trade Representative Peter Allgeier in a statement Monday.
'Having achieved this significant legal ruling, we will engage vigorously with China on appropriate corrective actions to ensure that U.S. rights holders obtain the benefits of this decision,' he said.
In specific, the WTO panel found China's denial of copyright protection to works that do not meet China's 'content review' standards is impermissible under TRIPS. The panel also found it impermissible for China to provide for simple removal of an infringing trademark as the only precondition for the sale at public auction of counterfeit goods seized by China Customs.
In addition, the WTO panel clarified China's obligation to provide for criminal procedures and penalties to be applied to willful trademark counterfeiting and copyright piracy on a commercial scale.
However, the panel found that it needed more evidence in order to conclude that actual thresholds for prosecution in China's criminal law are so high as to allow commercial-scale counterfeiting and piracy to occur without the possibility of criminal prosecution.
'While this conclusion is disappointing, the United States is encouraged that the panel, facing a case of first impression, set forth a market-based analytical approach that should help WTO members and panels avoid and resolve future disputes concerning obstacles to criminal enforcement against counterfeiting and piracy,' Allgeier said.
Both the United States and China have an opportunity to appeal the WTO dispute settlement panel's report.