WTO Dispute DS362
China vs. United States
Measures Affecting the Protection and Enforcement of Intellectual
Property Rights
Overview
• In April 2007, the United States approached the World Trade
Organization (WTO) with concerns over the protection and
enforcement of intellectual property rights in China.
• The United States claimed that China had acted against its
obligations to certain parts of the TRIPS Agreement (Agreement on
Trade-Related Aspects of Intellectual Property Rights).
• The four matters that the United States sought consultations on are:
1) The thresholds that must be met for counterfeiting and piracy
to be subject to criminal procedures
2) How goods that infringe intellectual property rights are
disposed of
3) The scope of coverage of criminal procedures and penalties for
IP counterfeiting or piracy
4) The denial of copyright and related rights protection that have
not been authorized for publication or distribution in China
Arguments
United States’ Arguments
China’s actions are within the limitations • China has breached Articles 9, 41,
46, 59, and 61 of the TRIPS
of the TRIPS Agreement
Agreement by:
Part (5) of Article 41 is written – “it is
– Lacking criminal procedures for
understood that this Part does not create
commercial scale
any obligation to put in place a judicial
counterfeiting and piracy
system for the enforcement of intellectual
– Requiring that infringing goods
property rights distinct from that for the
be released into the channels
enforcement of law in general, nor does it
of commerce rather than being
disposed of
affect the capacity of Members to enforce
their law in general”
– Foreign nationals not receiving
the same level of copyright
Therefore, China cannot be prosecuted for
protection as Chinese nationals
its actions as this Article clearly does not
– The fact that willful copyright
obligate China to put in place a judicial
piracy on a commercial scale
system for IPR enforcement or change
may not be subject to criminal
their current laws (China’s Copyright Law)
procedures and penal
China’s Arguments
•
•
•
to align with this Article
International Standards in Question
• The TRIPS Agreement requires WTO member countries to align their
intellectual property standards with the main provisions of the WIPO’s Paris
Convention (industrial property protection) and Berne Convention (copyright
protection).
• The Articles of the TRIPS Agreement in question are:
– Article 9: “Works originating in one of the contracting States must be
given the same protection in each of the other contracting States as the
latter grants to the works of its own nationals”
– Article 41: “Members shall ensure that enforcement procedures…permit
effective action against any act of infringement of intellectual property
rights” and that “procedures …shall be fair and equitable”
– Articles 46 & 59: Judicial authorities have the right to order that infringing
goods be disposed of outside the channels of commerce in a way that
would not cause harm to the right holder
– Article 61: “Members shall provide for criminal procedures and penalties
to be applied at least in cases of willful trademark counterfeiting or
copyright piracy on a commercial scale”
Resolution by the WTO’s Dispute
Panel
• Criminal Thresholds
– The Panel found that China did not violate Article 61 of the TRIPS
Agreement as the article does not require Members to
criminalize all copyright and trademark infringement.
• Customs Measures:
– The Panel found that the way in which China’s customs auctions
goods (releases infringing goods into the channels of commerce
in a way that could harm the right holder) was inconsistent with
Article 59.
• Copyright Law:
– China’s failure to protect copyright in prohibited works (so that
the copyright in such prohibited works cannot be enforced) is
inconsistent with Articles 9 & 41 of the TRIPS Agreement.
US Customs Counterfeit Seizures
from 2002-2004
Oct 1, 2003 – Mar 31, 2004
Oct 1, 2002 – Mar 31, 2003
Trading Partner
Value
% of Value
Value
% of Value
China
$37,578,952
58%
$26,693,641
70%
South Africa
$4,444,218
7%
--
--
Mexico
--
--
$1,519,150
5%
Russia
$3,865,043
6%
--
--
South Korea
--
--
$1,433,690
4%
Malaysia
--
--
$902,532
2%
Hong Kong
$2,205,328
3%
$1,882,366
5%
Vietnam
$2,181,094
3%
--
--
All other trading partners
$14,128,704
23%
$5,553,764
15%
Total domestic value
$64,403,339
$37,985,143
Total number of seizures
3,693
3,117
Source: USCBC. “Intellectual Property Rights in China: Background and Figures.” June 2005.
Implications
• In April 2009, China informed the Dispute Settlement Body that it
intended to implement their rulings and that a reasonable time
period for them to implement these changes was 12 months from
the adoption of the report.
• By 2010, China had completed all necessary actions for
implementing the rulings into its domestic legislation, although the
United States claimed that it was still skeptical that all changes had
been effectively implemented and were being followed.
• As we see today, although there has been progress between
merging China’s and the United States’ interpretations of
appropriate intellectual property protections, there are still plenty
of conflicts between the two countries in this realm.
• For more information on this WTO dispute, please visit:
http://wto.org/english/tratop_e/dispu_e/cases_e/ds362_e.htm
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