US Trade Rep Calls China to Carpet for IP Law Violations

The office of U.S. Trade Representative Rob Portman initiated a special process under World Trade Organization (WTO) rules today to obtain information on China's intellectual property (IP) enforcement efforts.

The United States is exercising a process established under WTO Agreement provisions on Trade-Related Aspects of Intellectual Property Rights (TRIPS).

Among other things, TRIPS allows WTO members to request information pertaining to judicial decisions or administrative rulings in the area of IP rights that affect their rights under the TRIPS Agreement.

Japan and Switzerland joined the United States in submitting similar requests. The U.S. anticipates a response from China in approximately three months.

"The United States is deeply concerned by the violations of intellectual property rights in China," said Portman. "The development of intellectual property is one of the driving forces of U.S. economic competitiveness, and we will utilize all tools at our disposal to ensure that U.S. intellectual property rights are protected."

Report: China Unwilling

Many people think of software piracy when talk of Chinese IP violations arise -- and with good reason. The Business Software Alliance reports that 35 percent of the software installed on computers is pirated, and much of that occurs in developing countries like China.

But according to USTR's "Out of Cycle Review (OCR) of China" published on April 29, 2005, industry sources believe that China's inadequate IP Rights (IPR) enforcement is resulting in infringement levels of approximately 90 percent or above for virtually every form of intellectual property.

USTR observed at that time that "lack of transparent information on IPR infringement levels and enforcement activities in China continues to be an acute problem." The special report also noted expressions of concern by several industry groups about the Chinese government's unwillingness to provide sufficiently detailed enforcement information.

The OCR results also noted that "when criminal prosecutions are pursued, a lack of transparency makes it difficult to ascertain whether they resulted in convictions and, if so, what penalties were imposed."

A Complete Picture

The U.S. request seeks to obtain a more complete picture of China's intellectual property enforcement efforts since 2001. The U.S. transparency request calls upon the Chinese government to make available detailed information concerning the application of criminal, administrative, and civil remedies for infringement cases that affect U.S. right holders.

"Based on all available information, piracy and counterfeiting remain rampant in China despite years of engagement on this issue. If China believes that it is doing enough to protect intellectual property, then it should view this process as a chance to prove its case," Portman said. "Our goal is to get detailed information that will help pinpoint exactly where the enforcement system is breaking down so we can decide appropriate next steps."

Reap What You Sow

Enderle Group Principal Analyst Rob Enderle told the E-Commerce Times that without the support of the Chinese government, it is unclear how the U.S. will make headway for its intellectual property holders. But, he added, the solution could come in the law of reaping and sowing.

"China has properties it want to protect and if it doesn't protect the property of others very quickly, then other geographies will simply start copying what China has," Enderle said. "So what's probably going to make this problem more manageable is China's own increasing requirements to protect the intellectual property it is beginning to develop."