WTO Panel Rules in PRC IPR Case

January 26, 2009. The World Trade Organization (WTO) released a panel report [PDF] in its proceeding, initiated by the U.S. against the People's Republic of China (PRC), regarding the PRC's failure to protect intellectual property rights in movies, music, books and other content, and the PRC's access barriers for US content distributors.

The report finds that the PRC's copyright law and customs measures are "inconsistent" with the Trade Related Aspects of Intellectual Property (TRIPS) Agreement.

First, this report concludes that the PRC's "Copyright Law, specifically the first sentence of Article 4, 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".

Second, this report concludes that the PRC's "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".

However, this report finds that the US "has not established that the criminal thresholds are inconsistent with China's obligations under the first sentence of Article 61 of the TRIPS Agreement".

The report recommends that the PRC "bring the Copyright Law and the Customs measures into conformity with its obligations under the TRIPS Agreement".

The US filed its complaint (nominally a request for consultations) with the WTO on April 10, 2007. See, story titled "US to Complain to WTO Regarding PR China's Failure to Protect IPR" in TLJ Daily E-Mail Alert No. 1,562, April 9, 2007.

Peter Allgeier, acting head of the Office of the U.S. Trade Representative (OUSTR), stated in a release that "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. 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."

Allgeier added that the WTO panel "found that China’s denial of copyright protection to works that do not meet China’s ‘content review’ standards is impermissible under the TRIPS Agreement" and that it is "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 Chinese customs authorities".

Neil Turkowitz of the Recording Industry Association of America (RIAA) stated in a release that "We hope that today's decision leads China and other WTO members to enhance their protection of intellectual property." He added that "it is unfortunate that the panel felt that it needed more information on the technical issue of criminal thresholds".

Dan Glickman, head of the Motion Picture Association of America (MPAA), stated in a release that "Intellectual property theft in China is a serious problem, and our industry is committed to using all available tools to address it. While we recognize that the Chinese government has made efforts to tackle piracy since the filing of the WTO action, much more needs to be done. As such, we will continue to work jointly with the Chinese to resolve these problems. And, we look forward to working alongside the Obama administration on this and other international intellectual property issues."