Transcript The main WTO Issues - International Trade Relations

Measures Affecting the Protection and Enforcement
of Intellectual Property Rights
DS362
USA vs. CHINA
ITRN 603
Dr. Stuart Malawer
October 7th, 2009
Catrina Ciobanu
Mark DeMicoli
Ericka Floyd
ECONOMIC IMPACT
• “Intellectual property theft’s impact on the global
economy accounts for $500-600 billion in lost sales each
year, or 5-7% of world trade.” (Source: World Customs
Organization)
• “Every year, American companies in fields as diverse as
energy, technology, entertainment and pharmaceuticals
lose between $200-$250 billion to counterfeiting and
piracy.” (Source: Washington International Trade
Association)
• “U.S. Customs and Border Protection reports that more
than 60 percent of the fake and counterfeit goods
intercepted at U.S. borders originate in China.” (Source:
International Trade Administration)
DISPUTE SETTLEMENT UNDERSTANDING
PROCESS BEGINS
• April 10, 2007: the United States requests consultations with the
Government of the People's Republic of China pursuant to Articles 1
and 4 of the DSU and Article 64 of the Agreement on Trade-Related
Aspects of Intellectual Property Rights ("TRIPS Agreement") with
respect to certain measures pertaining to the protection and
enforcement of intellectual property rights in China.
Consultations are being held on June 7-8,
2007 but do not lead to a resolution of the
dispute.
•
MEASURES AT ISSUE
U.S. claims regarding China's system for protecting IPR:
1. Procedural barriers to criminal prosecution of counterfeiters
2. Redistribution of seized counterfeit product
3. Withholding of copyright protection for works that have not
yet received approval from China's content censors
HISTORICAL TIMELINE
• August 13, 2007: the United States requests the Dispute Settlement
Body (DSB) to establish a panel pursuant to Article 6 of the DSU.
• September 25, 2007: the DSB establishes a Panel, to respond to the
request of the United States in document WT/DS362/7.
• December 13, 2007: the Director-General accordingly composes the
Panel.
HISTORICAL TIMELINE
• April 14 – 16, 2008 and June 18 – 19, 2008: the Panel meets with
the parties. It also meets with the third parties on April 15, 2008.
- Third Parties: Argentina,
Australia, Brazil, Canada, the
European Communities, India,
Japan, Korea, Mexico, Chinese
Taipei, Thailand and Turkey.
• October 9, 2008: the Panel submits its interim report to the parties.
• January 26, 2009: the Panel issues its final report to the parties.
THE MAIN WTO ISSUES
disputed by the U.S.
1. Criminal procedures:
“Thresholds for criminal procedures and penalties”
2. Customs Measures:
“Disposal of goods confiscated by customs authorities that
infringe intellectual property rights”
3. Copyright Law:
“Denial of copyright and related rights protection and
enforcement to works that have not been authorized for
publication or distribution within China”
INCONSISTENCIES
disputed by the U.S.
China’s National Laws vs. WTO Agreements:
• Article 213 of China’s Criminal Law:
“Whoever, without permission from the owner of a registered trademark, uses
a trademark which is identical with the registered (...) shall, if the
circumstances are serious, be sentenced to fixed-term imprisonment of not
more than three years or criminal detention and shall also, or shall only, be
fined (...)”
vs.
• Article 61, 1st and 2nd sentence and Article 41.1 of the TRIPS Agreement
61:“Members shall provide for criminal procedures and penalties to be
applied at least in cases of wilful trademark counterfeiting or copyright piracy
on a commercial scale. Remedies available shall include imprisonment and/or
monetary fines sufficient to provide a deterrent, consistently with the level of
penalties applied for crimes of a corresponding gravity.”
INCONSISTENCIES (CONTINUED)
• Article 30 of China’s Customs IPR Regulations:
“(...)Where the confiscated goods infringing on intellectual property rights
cannot be used for social public welfare undertakings and the holder of
the intellectual property rights has no intention to buy them, Customs can,
after eradicating the infringing features, auction them off according to
law.”
vs.
• Article 59 as it incorporates by Article 46 of the TRIPS Agreement:
46.4“In regard to counterfeit trademark goods, the simple removal of the
trademark unlawfully affixed shall not be sufficient, other than in
exceptional cases, to permit release of the goods into the channels of
commerce.”
INCONSISTENCIES (CONTINUED)
• Article 4.1 of China's Copyright Law :
"Works the publication and/or dissemination of which are prohibited by
law shall not be protected by this Law.”
vs.
• Article 61, 1st and 2nd sentence; Article 41.1 of the TRIPS Agreement;
Article 5(1) of the Berne Convention (1971), incorporated by Article 9.1
of the TRIPS Agreement :
5(1)"Authors shall enjoy, in respect of works for which they are protected
under this Convention, in countries of the Union other than the country of
origin, the rights which their respective laws(...) grant to their nationals, as
well as the rights specially granted by this Convention."
POSITIONS OF THE MAIN PARTIES
USA:
1. Not all IPR violations are criminal in China – The “illegal gains” have
to be “enormous” and “serious”. (Thresholds)
2. Destroying captured pirated goods is reserved as a last resort:
a. Offer to sell the goods to the rights holder,
b. Donate goods to social welfare organizations or
c. Auction off the items once the “infringing features” have been
removed.
POSITIONS OF THE MAIN PARTIES
(CONTINUED)
USA:
3. Some Intellectual Property such as film
and books are subject to review by
various censuring authorities before
they can be published and distributed.
If they don’t pass the review they are
denied copyright protection.
POSITIONS OF MAIN PARTIES (CONTINUED)
China:
1.
2.
3.
U.S. has failed to show enough proof that China is in violation of
TRIPS agreement.
U.S. is seeking to expand the scope of the TRIPS agreement to
serve its own interests
Different interpretation of “commercial-scale” language in TRIPS
in Article 61.
China interprets as: commercial purpose
or intent
U.S. interprets as: any production of
counterfeit good irrelevant of scale
or volume or profit motive
POSITIONS OF MAIN PARTIES (CONTINUED)
China:
4. Chinese Law is consistent with TRIPS agreement
5. Government Review
– All works created, pending review or being denied permission
for circulation are still protected by copyright laws.
– Berne Convention (Article 17): Recognizes the right and does
not limit “the sovereign right to impose censorship” (Source:
Annex B – 43)
PANEL CONCLUSIONS
The panel found inconsistencies in two areas:
Copyright Law:
• China’s Copyright Law is inconsistent with China's obligations under:
Article 5(1) of the Berne Convention (1971), as incorporated by
Article 9.1 of the TRIPS Agreement; and
Article 41.1 of the TRIPS Agreement.
Custom measures:
• The Customs measures are inconsistent with Article 59 of the TRIPS
Agreement, as it incorporates the principle set out in the fourth
sentence of Article 46 of the TRIPS Agreement.
PANEL CONCLUSIONS (CONTINUED)
Criminal Procedures:
• The Panel concludes that the United States has not established that
the criminal thresholds are inconsistent with China's obligations
under the first sentence of Article 61 of the TRIPS Agreement.
CONCLUSION AND RECOMMENDATION
• The Panel recommends pursuant to Article 19.1 of the DSU that
China bring the Copyright Law and the Customs measures into
conformity with its obligations under the TRIPS Agreement.
• In accordance with WTO rules, China has 30 days to announce its
intentions with respect to bringing its measures into compliance.
OBSERVATIONS
• According to U.S. Ambassador to WTO Peter Allgeier:
Success:
“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.”
Failure:
“The Panel did find 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.”
(Source: www.ustr.gov)
 China did drop its criminal copyright threshold from 1000 to 500
infringing copies.
OBSERVATIONS (CONTINUED)
Personal Experience
Tiananmen Square
Yu gardens - Shanghai
Market in Shanghai
Great Wall of China
OBSERVATIONS (CONTINUED)
Economic Impact
• The monetary value of unlicensed software – “losses” to
software companies – more than $50 billion for the first time.
(Anderson, 2009)
• “This compares to a legitimate PC software market of $88
billion in 2008, and a personal computer market of $244
billion. “ (Anderson, 2009)
OBSERVATIONS (CONTINUED)
Personal Experience
Tiananmen Square
Yu gardens - Shanghai
Market in Shanghai
Great Wall of China
QUESTIONS???
Sources
• Stuart Malawer, WTO Law, Litigation & Policy: Sourcebook of Internet
Material. (Hein 2007)
• World Trade Organization, Dispute Settlement: China — Measures
Affecting the Protection and Enforcement of Intellectual Property Rights ,
http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds362_e.htm
• United States Trade Representative, World Trade Organization Adopts
Panel Report in China - Intellectual Property Rights Dispute. March 2009,
http://www.ustr.gov/about-us/press-office/pressreleases/2009/march/world-trade-organization-adopts-panel-reportchina-i
• Lars Anderson, Many Countries Reducing Software Piracy, Study Says, But
Problem Remains A Serious Drag On All Economies. May 12 2009,
http://global.bsa.org/globalpiracy2008/pr/pr_global.pdf
• All pictures sourced from IStockPhoto.com and personal library