Global questions raised by US-China dispute over TRIPs
The publication of a panel decision on the dispute raised by the United States over China’s alleged failure to comply with a number of requirements in the Agreement on Trade-Related Intellectual Property Rights (TRIPs) has invited new perspectives on the agreement.
The panel at the World Trade Organization (WTO) found equally for both the United States and China. Although the decision received a cool reception from many observers, some perceive a quiet victory for the United States.
One general IP counsel from a major US brand owner told WTR that the United States’ resolve in this matter was significant. “You can pound your fists and tell other countries to comply with TRIPs all you want,” said the source, “but eventually you’ll have to bring a case. The United States did that and showed a willingness to see the case through to a decision. This report strengthens the United States’ hand with respect to forcing other countries to comply with TRIPs.”
Danny Friedmann, a consultant on Chinese IP rights and author of IP Dragon, disagrees. “This does not have an impact on countries that fail to comply with TRIPs,” he said. Interestingly, the United States is the only country that has not complied with TRIPs obligations when the WTO found it in breach of the agreement in a dispute over the cross-border supply of gambling services. At the very least, China will have to re-examine its laws. The report states: “The [Chinese] Copyright Law, specifically the first sentence of Article 4, is inconsistent with China’s obligations under (i) Article 5(1) of the Berne Convention (1971), as incorporated by Article 9.1 of the TRIPs Agreement; and (ii) Article 41.1 of the TRIPs Agreement.” Friedmann says that even if China removed this law, censorship in the country will still create IP infringement. “Only 20 different foreign movies are allowed in China each year,” he comments. “This creates an enormous demand for pirated films.”
That said, with the exception of Article 4 of the Copyright Law and Article 30 of the Measures of the General Administration of Customs, China does largely comply with TRIPs. But in the face of an increasing number of bilateral and regional agreements, TRIPs increasingly appears to lack ambition, demonstrated in the hazy wording of many of its provisions. “'Deterrent' and 'effective enforcement' are especially vague terms,” observes Friedmann.
Both countries still have the opportunity to appeal the panel decision. Friedmann thinks an appeal unlikely because, as he says, “there is no real winner or loser”. Still, it would be uncharacteristic of the United States to settle now, given that the decision identifies a number of unfounded assertions in its arguments and the symbolic nature of the country’s original complaint. But even an appeal brought by the United States may benefit China, as it would provide time with which China could delay the implementation of any recommended changes. So the decision could be tricky for both countries but, as the US corporate counsel told WTR, at least “it moves the problem forward”. The real victor for now, then, may be brand owners.
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