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Elizabeth FerrisBettina Garabelli

ITRN 603International Trade Relations

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Annual US losses on a global basis forcopyright violations alone have been estimatedat between $2.5 billion and $3.8 billion.In 2004, China accounted for 63 percent of the

total value of infringing products seized by USCustoms and Border Protection.

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The thresholds that must be met in order for certain acts of trademarkcounterfeiting and copyright piracy to be subject to criminal procedures

and penalties;

Goods that infringe intellectual property rights that are confiscated byChinese customs authorities, in particular the disposal of such goods

following removal of their infringing features; The scope of coverage of criminal procedures and penalties for

unauthorized reproduction or unauthorized distribution of copyrightedworks; and

The denial of copyright and related rights protection and enforcement tocreative works of authorship, sound recordings and performances thathave not been authorized for publication or distribution within China.

Source: www.wto.org

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The lack of criminal procedures and penalties forcommercial scale counterfeiting and piracy in China

as a result of the thresholds appears to be

inconsistent with China's obligations under Articles41.1 and 61 of the TRIPS Agreement.

Article 61 of the TRIPS Agreement states:Members shall provide for criminal procedures and

penalties to be applied at least in cases of willfultrademark counterfeiting or copyright piracy on a

commercial scale.

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The requirement that infringing goods be releasedinto the channels of commerce under the

circumstances set forth in the measures at issue

appears to be inconsistent with China's obligationsunder Articles 46 and 59 of the TRIPS Agreement.

Article 46 (Remedies) of the TRIPS Agreement States:

In order to create an effective deterrent to infringement, the judicial authoritiesshall have the authority to order that goods that they have found to be infringingbe, without compensation of any sort, disposed of outside the channels of

commerce in such a manner as to avoid any harm caused to the right holder, or,unless this would be contrary to existing constitutional requirements,

destroyed..

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Authors of works whose publication or distribution has not beenauthorized appear not to enjoy the minimum standards of protection

specially granted by the Berne Convention. In addition, the rights of authors of works whose publication or

distribution is required to undergo pre-publication or pre-distributionreview appear to be subject to the formality of successful conclusion of

such review.

Article 9 of the TRIPS Agreement States:

Members shall comply with Articles 1 through 21 of the BerneConvention (1971) and the Appendix thereto. However, Members shallnot have rights or obligations under this Agreement in respect of therights conferred under Article 6 bis of that Convention or of the rights

derived therefrom.

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To the extent that willful copyright piracy on a commercial scale thatconsists of unauthorized reproduction but not unauthorized

distribution of copyrighted works, and vice versa, may not be subjectto criminal procedures and penalties under the law of China, this would

appear to be inconsistent with China's obligations under Articles 41.1and 61 of the TRIPS Agreement.

Article 41.1 of the TRIPS Agreement states:Members shall ensure that enforcement procedures as specified in thisPart are available under their law so as to permit effective action against

any act of infringement of intellectual property rights covered by thisAgreement, including expeditious remedies to prevent infringementsand remedies which constitute a deterrent to further infringements.

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Criminal procedure and punishment offered byChina are not sufficient.Needs to be a change in criminal thresholds.Illegal goods released into the market

inconsistent with TRIPS.Public auction of private goods.

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The protection for authors and composers areminimalCopyright laws seem inconsistentThere is more protection for Chinese authorsthan for foreigners. However, none of theprotection is adequate.

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Production of copyrighted material illegal, butthe distribution is not always subject to

criminal law.Chinese administrative system is flawed:

Safe harbor for low level IP violationsRarely transfer cases from administrative system forcriminal prosecution.

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U.S. has not met burden of proofU.S. mischaracterizing Chinese law andpracticeExpanding obligations of TRIPSChina provides laws and punishment

appropriate to commercial context of theircountry as required by TRIPS

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U.S. misunderstands Chinese copyright laws3 effective forms to enforce IPR rights:

Criminal

AdministrativeCivil

Violations at all levels are subject to administrativeregulations.

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Data does not support assertion that violatorsproduce certain numbers of reproductions to

avoid criminal prosecution.Concrete standards of national law notrequired by TRIPS Article 61

An emphasis on the U.S. increasing the scope of theTRIPS agreement in this respect.

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The United States is trying to get China

to remove criminal thresholds whichgoes against deference to ChineseNational Law

TRIPS does not forbid public auction asmethod of disposal

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WTO Issued its decision late January, 2009.WTO found a number of deficiencies inChinas IPR regime, and they are incompatible

with its WTO obligations.The panel determined that is wasimpermissible for China to allow publicauction of counterfeit goods seized by ChineseCustoms authorities.

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The United States failed to persuade the WTOpanel on one main point of its case:

Chinese copyright pirates and counterfeiters have

no fear of criminal prosecution because thegovernments threshold for bringing a case istoo high.

However, the panel did not admit that Chinacurrently meets international standards in thisrespect.

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As a result of the WTOs rulings: Sovereignty of Chinese laws and practices come intoquestion

The United States will be able to protect its nationalauthors, recording artists and companies frominfringement of rights.

There needs to be cooperation within the international

arena to protect copyrightsInvestment and ingenuity could be negativelyaffected without sound laws

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Increase protections for Chinese companiesMany do not currently enjoy IP protection.

More joint ventures between China andAmerican companies

Fostering partnerships could result in newfoundmutual respect for products, ideas, etc.

As a last resort the United States could always considersanctions, though they are not desirable.

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www.wto.org MPAAs Glickman comments on WTO decision in China IPR case. Business of Cinema. 27 January 2009.WTO Issues Report on US -China Dispute Over Intellectual PropertyRights. 27 January 2009. www.cdrinfo.com .Berne Convention for the Protection of Literary and Artistic Works.

www.wikipedia.com

Intellectual Property Rights. Peterson Institute.Institute for International Economics. 27 February 2009.

http://www.wto.org/http://www.cdrinfo.com/http://www.cdrinfo.com/http://www.wto.org/