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WTO China Piracy Ruling: It Ain’t Worth A Thing….

Posted in Legal News

Forbes Magazine (which, BTW, does a consistently excellent job in covering China) has a new and interesting article out, entitled, “U.S. Talks Up WTO Piracy Ruling, But It’s All Wind” and subtitled, “Washington claims that the trade body took its side in a suit against China, yet the decision will not halt intellectual property theft.”
The article talks about how the United States government has been playing up its victory on two out of its three claims, but since it lost the one really important one, its victory claim is little more than spin control. To grossly oversimplify, the WTO ruled that China’s criminal IP laws are not inconsistent with China’s WTO obligations.
China Law Blog’s own Steve Dickinson is extensively quoted downplaying the U.S. “victory”:

The U.S. claim was trivial and hyper technical. They won on the hyper technical issue. The only serious issue was the criminal sanctions issue, and they lost on that one. So what this means is exactly nothing,” said Steve Dickinson, a Qingdao, China-based lawyer and partner at Harris & Moure.
Moreover, piracy involving China’s own copyrighted films, music and other works is just as rampant as that for foreign-licensed goods. “If China cannot solve the problem for their own domestic industries, how can they solve it for the foreigners?” Dickinson asked. Indeed, Chinese copyright owners are as unhappy as American ones: the Music Copyright Society of China and domestic record companies last year sued popular Web portal Baidu for offering unlicensed music content.

This goes back to something we have been saying on this blog since its inception: China is getting tougher on IP violations and it will continue to do so in tandem with the growth in the IP requirements of its own companies. IP in China is going to be much more closely tied to its own self interest, as opposed to the dictates of outsiders. Chinese companies are increasing their demands for IP protection within China and as that continues, we can expect to see IP protections in China continue to improve. But very, very slowly.

  • http://www.liquidassetdevelopment.com Greg

    I was advised long ago that in the eyes of most of the world, WTO paper victories for western companies and countries are just that, paper.

  • Baltimoron

    Does this mean WTO sanctions are meaningless? Are you making a case, that the WTO’s various rules and bodies are a waste of member-state resources which could be more efficiently used elsewhere?

  • http://www.liquidassetdevelopment.com Greg

    Any international treaty is only as strong as it’s most influential signers will to comply.

  • anonymous this time

    For many people, Chinese violations of IP are a problem, but for the Chinese themselves, it’s going to be an even longer haul towards anything semi-reasonable. The fast buck of stealing IP has lead to a biz culture which has little regard for original, creative drive and the establishment of a strong sense of guilt and ethics about ripping off not just mega-corps, but even the little guys.
    I know things are changing, and I know that tons of people will swear that R & D, etc are growing by leaps and bounds, but it’s still maddeningly in so many ways.
    With soooo many companies coming into China in recent years, prominent western firms are going to find themselves in deep poo over IP issues eventually. Years ago, I was asked to submit a writing sample to the Sh branch of a British company (intentionally vague) who wanted someone to write copy for them. I sent them something and they soon replied that my asking price was too high, would I be willing to work for .5 my asking price? I gave them a a polite no, and we went our (cordial) seperate ways.
    But several months later, when they again contacted me about yet another “creative” position, I decided to do a little sleuthing… it turns out that they had used the “thing” I wrote for them as part of their advertising for an upcoming trade show! When I called them on it, they apologized – with every bit of sincerity and earnestness – about the “mixup”, paid me for my work, la dee da dee.
    Now, that could and does happen everywhere, but the sheer frequency with which it happens in China is stunning. I cannot imagine a prominent company in N.Y. or Sydney stealing something from a potential hiree’s portfolio and then having the nerve/stupidity to use it in print AND web form! I mean, is saving a few $$$ that worth it?
    There are many other examples – copied websites, stolen ad jingles, etc. It’s beyond annoying, but over a few hundred or thousand of dollars of compensation, what can one do in such instances?
    Sigh.

  • zoe

    It’s beyond annoying, but over a few hundred or thousand of dollars of compensation, what can one do in such instances?
    This is the key point. With the unreasonablly and unproportionally low costs of being evil, no one would resist the saving of dollars with little chance to be caught.
    I had casual discussions with a few judges in China. They all told me that the reason the compensation is so low is because they do not want to encourage a flood of litigations! This is the reality in China, which stems from China’s traditional culture of he (meaning harmony).

  • http://www.forbes.com Paul Maidment

    Dan touches on a simple truth: when it matters to countries that they protect the IP of domestic firms more than they allow the ripping-off that of foreigners, then legislation and enforcement follow suit.

  • http://cbiconsulting.com.cn Richard Gould

    Steve is absolutely right. The only critical issue in front of the WTO was the criminal sanctions and the WTO dropped the ball.
    PRC criminal thresholds for IP infringement allow huge numbers of egregious offenders to escape criminal prosecution. Brand owners, both foreign and domestic, are perpetually frustrated by administrative sanctions and the lack of proper recourse against high-level counterfeiters.

  • http://www.foarp.blogspot.com FOARP

    The WTO isn’t going to be effective until individuals can hold states liable through their own national courts for non-compliance. State liability has been in place in the EU since the Frankovich decision, and has proved a powerful means of holding states to the terms of EU treaties/directives/regulations etc where the legislation clearly grants rights to individuals (and this is interpretted fairly broadly), where the state (also defined broadly) infringes their rights under the legislation, and where the breach causes damage. If for example, the UK makes a law discriminating against imports, either distinctly (“all imports will have to have X”) or indistinctly (“all Champagne will have to have X”), then individuals who suffer loss as a result can sue the UK in the UK courts for infringing their rights under the EC treaty.
    A lot of people probably wont like this idea, but it is clearly better than the system of national actions currently in place. The WTO court can serve as a court of final reference for interpretation of the treaty, with the national courts only making references if/when they want to.
    If states don’t want to be subject to this kind of liability (i.e., actually paying for the damage that their failure to implement causes) then they shouldn’t sign up to this kind of agreement.

  • Anonymous this time

    Interesting. First, upon being busted, Rand dares to turn his nose up at the information he’d first found so appealing. “Hey, if you catch me shoplifting, I’ll just say I didn’t want that candy anyway!”
    Maybe I am missing the humor in the statement that the info was “stale”, or about us all getting along? I do tend to be a bit thick on these matters.
    Also interesting is that this post/reply exchange appears so soon after another thread concerning the moribund state of IP in China, one in which I commented on how I’d been ripped off for my small potatoes work in Sh.
    A much more illustrative example of IP theft and the attitudes behind it than anything you’ll find in J school or any biz class :-)

  • http://www.chinalawblog.com/2009/02/the_wto_chinas_media_copyright.html China Law Blog

    The WTO, China’s Media, Copyrights And Other IP. It’s A Control Thing.

    By Steve Dickinson As we previously reported, the WTO decision in the copyright claim brought by the U.S. against China was recently released. As expected, the U.S. claims victory since it prevailed on two of three claims. However, careful review shows…

  • Samuel Ogun

    Nigeria is the king of Piracy,name the movie or tv series ,they are available here,made locally and shipped from china,with a pupolation of 150 million HERE,no major studio or major record label in my country,over 40 dvd replicators unregister,pirate’s open one 100% stock store ,bless by the police.
    Forget China they ship 70% of what they produce to Nigeria.
    Even the tv stations just grap a pirated movie and transmite it.
    I LOVE NIGERIA
    Welcome to the Real WORLD

  • Christian Louis

    You were right.