Future of TRIPS in Question After WTO’s China IP Ruling
The mixed WTO ruling on the U.S. case against China’s intellectual-property enforcement (WID Jan 27 p1) may raise questions about whether the 15-year-old Trade-Related Aspects of Intellectual Property Rights agreement can survive, said a law professor seen as a likely contender to become the Obama administration’s IP enforcement coordinator. George Mason University’s Victoria Espinel told the American Society of International Law’s annual meeting Wednesday that the WTO decision may also affect the chances for approval of the Anti-Counterfeiting and Trade Agreement. That proposed treaty has been sharply criticized by some companies and activists for its scope, rumored to include Internet distribution, and the secrecy it’s being drafted in (WID Sept 23 p1).
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Espinel served as the first assistant U.S. Trade Representative for IP when the job was created in 2006 but left before the U.S. filed the China case the next year. She declined to talk about whether she would be nominated.
The U.S. won two points of its case: That China violated WTO rules by denying protection to media undergoing a “content review,” and that customs officials must be given authority to destroy infringing goods. But the U.S. fell short on its most important claim, that China’s criminal thresholds for piracy were too high to create a significant deterrent. Another U.S. complaint against China, regarding market access barriers, is still being contested at the WTO.
The U.S. case was “not a hostile action” against China as much as an attempt to hand off disagreements to the “neutral third party” of the WTO and continue working with China on other matters, Espinel said. The government carefully weighed the risks of bringing a case, such as trade retaliation by China and harm to TRIPS, but China responded officially by giving the U.S. reduced IP cooperation for a specified time, she said. Officials also extensively considered whether a case would be “unfair” considering the “undeniable” progress that China has made elsewhere on IP, such as improving patent and trademark procedures.
The nature of the U.S. case -- involving both China’s application of its laws and their validity -- also presented a challenge, Espinel said. Most WTO cases are based on explicit contradictions between a country’s laws and WTO rules, and panels generally will disregard a country’s interpretation of its own laws only if the reading is “untenable on its face,” she said. John Thomas, a law professor at Georgetown University and the panel’s moderator, said “paucity of evidence” seemed to be a regular problem in WTO cases, as illustrated by the U.S. giving the WTO panel “articles from lay press” as evidence of IP violations. The panel had objected to what it called the “general statements or random pieces of information” on the level of unchecked piracy submitted by the U.S.
Several years ago, the copyright industries didn’t pursue many enforcement cases in China, and that stance “may have made sense as a practical business decision” due to the expense and low chance of getting damages or convictions, Espinel said. But she clarified later that companies were filing more lawsuits by the time the U.S. went to the WTO, providing a “good basis” for the evidence that the U.S. submitted.
Making copies good enough to “fool the trained eye” has a long history in China, and relative to other nations’ history of strengthening IP protection, China is coming along fairly well, said James Feinerman, a Georgetown University professor of Asian legal studies. Because piracy takes place very quickly now, and China has a huge role in trade, the country is “suffering for the sins of others,” he said. “There’s just much less patience, much less willingness to say this is just a phase.”
Local economic conditions should be considered in judging China’s response, Feinerman said. “Local protectionism” may drive a wedge between provincial officials who want to protect infringement-dependent jobs and national officials who promise to follow international treaties. Though China is increasing criminal prosecutions of infringers, the attitude among infringers is that officials will punish a “carefully selected scapegoat” to show it’s cracking down, but leave other violators alone. U.S. companies may get more bang for the buck by filing complaints at the International Trade Commission or patent lawsuits against U.S. partners of Chinese companies, Feinerman said. Espinel said some categories of products, such as pharmaceuticals, seem to get higher priority than others in Chinese enforcement, but cautioned it was her personal view from working with officials there.
China is showing “continuous improvement” in its IP protection system, said Zhipai Jiang, a retired chief judge of the Intellectual Property Tribunal. “First instance” IP cases in district courts rose 36 percent in 2008, to more than 24,000, and “second instance” cases rose 66 percent to 4,400, he said. China finished 3,300 criminal IP cases and convicted 5,300 infringers, he said. A high court, nine intermediary courts and 14 “basic” courts are running pilot projects to have a single tribunal hear IP cases, to optimize resources, Jiang said. The Supreme People’s Court is considering whether to create an IP appellate court in Beijing, and “qualified legal professionals” in IP are growing in number, he said.