US Elevates WTO IP Case Against China By Seeking Panel

By Tove Iren S. Gerhardsen
The United States has asked the World Trade Organization to take to the next level a case it filed on China’s intellectual property rights protection after four months of consultations did not lead to the desired results, the US Trade Representative (USTR) said.

The case on copyright and trademark protection was filed in April together with a case relating to the access of US copyrighted goods to the Chinese market. On 13 August USTR called for the formation of a WTO dispute settlement panel on the protection case.

“The United States and China have tried, through formal consultations over the last three months, to resolve differences arising from US concerns about inadequate protection of intellectual property rights in China. That dialogue has not generated solutions to the issues we have raised, so we are asking the WTO to form a panel to settle this dispute,” said USTR spokesman Sean Spicer in a 13 August press release.

The panel request now will be considered by the WTO Dispute Settlement Body at its next meeting scheduled for 31 August, USTR said. Members often use the right of refusal the first time it comes up. China was not available for comment.

The United States originally filed the two cases 10 April (IPW, WTO/TRIPS, 12 April 2007).

The protection case relates to Chinese thresholds for the lowest amount of piracy or counterfeiting that would prompt criminal liability, Victoria Espinel, assistant US trade representative for intellectual property and innovation, said at an April IP conference in New York (IPW, Subscribers, 24 April 2007).

Other issues in the case are customs enforcement, as well as copyright protection during censorship reviews, Espinel said. This means that while the Chinese government is reviewing new books and other works, they cannot be copyright protected. The United States is concerned that pirated versions may be available during this time. The scope of criminal liability is also potentially an issue to the United States, which hopes to clarify whether China has resolved concerns that people who are caught reproducing movies cannot be found liable unless they also distribute them, she said in April.

On market access, the US has concerns regarding the importation and distribution rights related to copyright material, Espinel said. These include copyright-intensive items such as movies, music, home videos, publications, and USTR is weighing action on the case. “The United States has just completed supplemental consultations with China and is considering next steps,” USTR said.

The United States met with China in early June but failed to resolve differences, sources said (IPW, WTO/TRIPS, 11 June 2007). “China has not, however, taken any steps that address these US concerns during this period,” USTR said.

According to WTO rules, consultations are held after a dispute settlement case has been brought, and after 60 days the complaining party can ask the WTO to form a panel.

At the New York conference, the US move was welcomed by industry but criticised by others who said China should be given more time to catch up in terms of intellectual property rights protection and was already working hard on improving this area.

USTR acknowledged China’s “tangible steps” taken in recent years. “However, we still see important gaps that need to be addressed,” Spicer said. “We will pursue this legal dispute in the WTO and will continue to work with China bilaterally on other important IPR issues.”

Separately, the 18th US-China Joint Commission on Commerce and Trade (JCCT) will be held in Beijing during the week of 10 December, USTR said. USTR Susan Schwab and US Commerce Secretary Carlos Gutierrez will lead the United States representation.

The high-level government-to-government meeting is used to identify and work on resolution of bilateral trade issues. Recent accomplishments at the JCCT, according to USTR, included an agreement by China to preload legal software on computers, a Chinese commitment to join the World Intellectual Property Organization “Internet” treaties, and guidelines for bilateral technology trade.

The WTO cases are:
“China – Measures Affecting the Protection and Enforcement of Intellectual Property Rights” (WT/DS362/1).

“China – Measures Affecting Trade Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products” (WT/DS363/1).

Canada, European Union, Japan, and Mexico have joined one or both of the cases as third parties.

According to the WTO website, dispute settlement procedures follow this timeline:
60 days – consultations, mediation, etc.
45 days – panel set up and panellists appointed
6 months – final panel report to parties
3 weeks – final panel report to WTO members
60 days – Dispute Settlement Body adopts report (if no appeal)
(approximate) total = 1 year (without appeal)

An appeal can add another three months.

Tove Gerhardsen may be reached at tgerhardsen@ip-watch.ch.