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U.S. Initiates Copyright-Related WTO Dispute Settlement Actions Against China

On April 10 the Administration filed two WTO complaints relating to China’s intellectual property practices. Under the WTO’s dispute settlement procedures, the U.S. and China have 60 days to consult on the matters in an effort to secure a mutually satisfactory solution. If those consultations are not successful, the U.S. can request the establishment of a WTO panel to rule on the dispute.

The first complaint concerns several Chinese measures affecting the protection and enforcement of intellectual property rights. One issue involves the high quantitative thresholds (i.e., 500 infringing works) that must be met in China before certain acts of trademark counterfeiting and copyright piracy will be subject to criminal procedures and penalties which, as noted by U.S. Trade Representative Susan Schwab in a press conference announcing the filing of the cases, essentially provides a safe harbor to pirates operating below the threshold. A second issue concerns the improper disposal of IPR-infringing goods confiscated by China’s custom authorities, including the release of the goods back into commerce once the offending logo or other infringing features are removed. This case also addresses China’s failure to protect copyright and related IPR protection to creative works of authorship, sound recordings and performances that have not yet been authorized for publication or distribution in China, and also China’s failure to treat the unauthorized reproduction of copyrighted works by itself as a criminal matter nor, similarly, the unauthorized distribution of copyrighted works by itself as a criminal act.

The second complaint concerns Chinese measures affecting trading rights and distribution services for certain types of publications and audiovisual entertainment products. This case addresses the following practices: (1) the exclusive or preferential treatment accorded Chinese state-designated and wholly or partially state-owned enterprises with respect to the importation of films for theatrical release, audiovisual products such as DVDs and video cassettes, sound recordings, and publications; and (2) limitations imposed by China on foreign service providers attempting to engage in the distribution of publications and certain audiovisual home entertainment products.

In Federal Register notices published on April 23 (one for each case), USTR announced it will accept written comments from interested parties at any time during the preliminary 60-day consultation process. However, to be assured of timely consideration, the agency recommends that comments be filed by May 7.

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