China has said it will be more cooperative in the global fight against counterfeit goods after a World Trade Organisation (WTO) dispute settlement panel found important aspects of China’s intellectual property rights regime to be inconsistent with its obligations under the WTO’s TRIPS Agreement.
The WTO ruled in late January that China ignored piracy of DVDs and that its customs policies were lax.
In finding that China had breach trade rules, the WTO panel agreed with most of the US claims against China, including that Chinese customs authorities allowed seized goods to be reintroduced into the market and that Chinese authorities had ignored the piracy of DVDs and CDs. The panel recommended that China “bring the copyright law and the customs measures into conformity with its obligations.”
“On customs policies and copyright protection law, [the WTO] did not support China’s stance. The Chinese side expresses its regret,” Ministry of Commerce spokesman Yao Jian told reporters after the decision was announced. “As we continually strengthen domestic intellectual property rights, we will continue to promote international exchanges and co-operation on IPR and promote the healthy development of global trade relations.”
US officials lauded the decision. “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 US Trade Representative Peter Allgeier. “Having achieved this significant legal ruling, we will engage vigorously with China on appropriate corrective actions to ensure that US rights holders obtain the benefits of this decision.”
The WTO panel did not agree with the US on its allegation that China’s thresholds for prosecution are too high to effectively combat counterfeiting and piracy through criminal prosecution. In order to prosecute infringers, Chinese authorities must first find at least 500 copies of a pirated DVD or about US$7,000 worth of counterfeit goods.
“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 or resolve future disputes concerning obstacles to criminal enforcement against counterfeiting and piracy,” Allgeier told the Hollywood Reporter.
Allgeier told the magazine that the complaint has met some success in this regard: immediately before the case was filed, China dropped its criminal copyright threshold from 1,000 to 500 infringing copies.
The United States initiated the WTO dispute in April 2007, after bilateral discussions spanning several years failed to resolve US concerns.
