Ventures Dialogue

“As we strengthen our work on domestic intellectual property rights, we will continue to promote international exchanges and cooperation in order to encourage the healthy development of trade relations.” 

This was part of the statement made by Yao Jian from the Chinese Ministry of Commerce after the World Trade Organization (WTO) stated that China must institute more complex laws to battle copyright infringement.  This WTO ruling is the result of a United States suit brought against China in 2007 claiming that certain parts of China’s intellectual property rights (IPR) regime is not compliant with its Trade-Related Aspects of Intellectual Property Rights (TRIPS) arrangement.  This 2007 suit came after seven years of bilateral discussions between the US and China did not resolve the issues.  The International Intellectual Property Alliance (IIPA), a grouping of US music and movie producers, authors and other private sector groups, estimate that China’s IPR regime cost more than $3.7 billion (USD) in lost sales.  The IIPA was formed in 1984 in bilateral and multilateral efforts to improve international protection of copyrighted materials.

In its case, the US brought up three main concerns about China’s IPR enforcement.  First, the US argued that allowing pirated materials (unauthorized trademarked and copyrighted goods) to be sold at auctions is not WTO compliant.  The WTO panel agreed and disapproved of China allowing seized counterfeited goods to be publically auctioned with the stipulation that the fraudulent trademarks, designer labels and brands are removed.  The US has argued that simply removing the labels harms the reputation of the legitimate makers as well as can confuse consumers when in fact, measures should be instituted to deter piracy and copyright infringement. 

A second point brought against China is that it does not provide a venue for copyright holders to file a grievance about copyright infringement until the work has been approved by official censors.  In this case, if a copyright is being violated, the owner does not have a recourse if the product has yet to be cleared.  The US has stated in a press release that this too is inconsistent to TRIPS because the “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.”     

The third point was that copyright breakers don’t have a fear of Chinese laws because the bar for bringing a case is set too high and therefore counterfeiters are rarely prosecuted.  This was one of the points in a 2006 Report to Congress On China’s WTO Compliance by the United States Trade Representative (USTR).  The WTO panel did not agree with this US claim however, and did recognize Chinese enforcement of its IPR laws. 

Though not focusing on any specific country, the Ontario Chamber of Commerce released the report, Protection of Intellectual Property:  A Case for Ontario in 2007, in which the cost of piracy and counterfeiting to the Canadian economy is estimated to be $22.5 billion.  This then translates into a $9 billion cost for Ontario.  The report also stresses that in order to tackle IPR issues, coordinated action is necessary by all stakeholders, including government, enforcement officials, industry and consumers.

For further reading: USTR’s 2008 Report to Congress On China’s WTO Compliance.

Photo by MikeBlogs