Fordham Intellectual Property ConFab II: China v US at the WTO

The last session returned to a discussion raised repeatedly at Fordham for several years now: China, violations of IP rights and what strategy the US is pursuing in this region. Minds had of course been focussed by the announcement of the initiation of a WTO case taken by the US just days beforehand. Victoria Espinel from the USTR insisted that this action should not be misinterpreted:

“We do not view these WTO actions as hostile…. but… a normal part of a mature trading relationship.”

At theat juncture I was actually tempted to shout from the floor:

“Are WTO actions just a frustrated cry for love?!”

But I resisted. In fairness she did elaborate on the complaints, and the substance was interesting. The US is not going after China in a general way, rather they are attacking on two seperate and discrete fronts. First they want improved enforcement, preferably the short sharp shock of criminal prosecution, and consequently they are looking for the quantity of copies required to instigate a criminal charge to be reduced. Currently the Chinese authorities must find more than a 1000 copies for criminal possibilities to come into play, otherwise it remains a civil and/or administrative matter. Secondly they want action to redress the situation where official distribution of works is held up by censorship review, while pirate versons are already available on the street. There are other issues, some of which marginal, others clouded by uncertainty as to the legal situation in China itself. The other line of attack regards market access questions. This revolves around limitations on importation, the requirement to use state-owned companies, and distribution rights.

Next up was Eric Smith, a lawyer form one of the most powerful IP firms in Washington who do a lot of work for industry. He is part of the China Copyright Alliance (MPAA, RIAA, IFPI) and simply equated piracy with a failure to provide market access while complaining about the turn-key nature of the black market trade: shops selling infringing copies are closed, only to reopen almost immediately.

Peter Wu is an IP professor in the US, but being Asiatic (?) was brought in to put forward the Chinese point of view. He outlined how the Chinese had made huge progress in compliance and argued that this case would only serve to weaken the government’s position. In addition he pointed out that IP is not the only case of inusfficient enforcement – they have difficulties with tax compliance as well. Insisting that the complaint was unfair and unwise, he noted that the US may not get the type of decision that it is expecting from the WTO and that the whole affair may rebound on them.

The next speaker was former HC Judge in Britian, Hugh Laddie, who is always good value, being both a hardcore authority and an acerbic panelist unafraid to whistle in church. Since retiring from the bench he has returned to practice and represents many clients in China. He described the complaint as ‘absurd‘, highlighting the extent of chinese efforts (speed of law reform, the training specialist IP judges etc), and then underlining the realpolitik aspects of the question. Piracy employs millions in China, and the substitution of its economic role will require time. Furthermore there are limited policing resources and IP enforcement is not considered a social priority. Sticking with this realist framework, laddie pionted out that even if the US won, the Chinese will always have the option of repsonding to a WTO decision in the same way that the US has: ignore it and pay an annual fine (ie what the US did in rsponse to the WTO case it lost to Ireland over copyright licensing: nothing!).