Fordham International Intellectual Property Conference, Panel: United States v. China in the WTO
– Not a verbatim transcription —
Overview of the WTO action.
[Prof. Wang Qian]
Three major issues in case, but only focused on one.
Who is the beneficiary if Art. 4 abolished?
Correct reading of Art. 4 — concerns only the content, not the procedure of entry to China.
ex. Shrek 2, the content was lawful, so it could get protection in China.
Argument that the only beneficiary is the authors of the illegal content. If abolished, then the authors of illegal content can get protection! But, China still has a right to content review. Can still prohibit.
In any way, the authors of illegal content will not choose to enforce their rights in China.
Ex. sex photos. In reality, the author will not confess his identity and sue on his rights even if photos infringed. Since sex photos prohibited by law, the author cannot commercially exploit. Cannot make a lawful profit, so impossible to suffer any economic injury! Even if author wins, cannot get damages, only injunction.
Author will probably not choose to sue in civil court. If the author chooses to report the infringement to the government, then the government foots bill.
[Prof. Peter K. Yu] Some misconception about whether China can really do everything even if they wante dto.
Ex. Olympic Games. Even if olypic games were so important, couldn’t stop piracy.
Political will. There is a tough time collecting taxes. If central gov’t cant get that, think about the other issues!
“Intellectual Property is always at the top — of the second list”… Do we really have the political will to make IP protection at the top of the priority list?
Sad that Hugh Laddie is not here today … He always talked about the issues, talking about how depressing this panel was. that it will be an issue every single year.
About the WTO case, always said that it has to be a “slam dunk” case. But wonder: why not use some of the stronger arguments by the US?
Some discussion of going from channel enforcement to general enforcement.
Some disagreement on how to proceed.
Penal law and criminal law is one of the most developed areas of China law — so why try to challenge on that ground?
The problem with China is that there are too many laws! Too many interpretations.
Benefits for US: content review process. they will find info they would not have; Info on how WTO will handle similar cases; shows US willingness to bring case — sends signal to dev. countries.
For China: brings certainty over negotiations. the issue is about how much time they have to reform system. In China there are more people who want to use WTO — so help them play the game better.
If US prevailed on all three claims, what would be the result? It would not have caused higher IP protection in China.
[Eric Smith] (Greenberg Traurig assisted the US gov’t on this case).
If you look literally at the language of Art. 4, it says “prohibited by law” — from the US point of view, it eliminated the biggest concern, that it prohibited the distribution because of the content.
And in the implementation phase, now China must alter the copyright law — this is about 5 years out from now.
The thresholds issue was central to the case. Doesn’t think the US lost on this issue. they only lost on one small point — that not all commercial scale piracy was covered. It was important because the panel said if any commercial scale piracy under the thresholds, it must go.
If US had introduced those facts, where could it have one?
The panel decided that provisions in Art. 61 were mandatory. There was always a debate on this issue.
China did not contest that their administrative law could also cover criminal… But the panel did not rule on that proposition.
Panel said not requiring particular kinds of legislation. Art. 41(5).
Most important, no requirement for specific allocations between general enforcement and IP enforcement.
Panel said this provision deals with prosecution of crimes in China.
[Stanford McCoy] This case was never intended to be the sole solution to piracy and counterfeiting. It was only to address certain points.
Must fit it into the ongoing dialog with China.
Even though the US didn’t get all that they wanted in the case, can engage with China bilaterally to reach agreement.
[Justin Hughes] Disagree with Eric on one point. everyone expected it to be a split decision. Surprised that it was almost more in favor of the US. It was actually good they didn’t introduce the evidence …
As a legal realist, the baby needed to be split.
The US position was that there are absolutely cases where you meet definition of “commercial scale” while falling under the 500 unit threshold. If the evidence was introduced, it would have met the test.
[Hughes] Just because country is on record in a WTO case stating what the law is, does it really help that much?
[Smith] If Chinese try to go back on the interpretation — denying copyright protection to content awaiting review, then they would be open to another action …
[Wang] As long as the content are not unlawful, they are protected by the Chinese government. Not the truth that the US doesn’t know the true meaning of Art. 4.
The threshold question, the outcome is very local in scale, differs depending on situation.
[Audience Question] What support does US have for a claim?
[Stanford McCoy] Not here to comment on the issue of content control by China govt’. It is not about getting rid of the content review process, only making it conform with WTO rules. The US will be prepared to accept solution if it conforms.
Hopefully have a good dialog between governments.
[Eric Smith] If you take definition and examples panel gives about “commercial scale” — if evidence had been presented, and the data was there, then there was a good chance that US could have met the test.
Panel said “you must cover all piracy on a commercial scale”.
there will be some infringement on the scale that is below threshold that meets the test.
[Audience Question] Howard Knomf:
Hugh Laddie pointed out that you don’t have to go to China for counterfeit goods … what is being done to stop piracy in Midtown Manhattan?
[Eric Smith] You can never stop it completely, but you can take steps to control.
[McCoy] J. Rakoff said in an earlier panel “the problem isn’t the guy on the street corner, a bigger problem is in China”. So the US can stop the flow of goods into the country.
Talk to anyone and they will say that the threholds basically gave a safe harbor to piracy. Now this is a good step to address that problem.
[Peter Yu] What is the piracy rate for the US?
[Smith] for software 22% in US, 80% in China. In Italy it is higher, maybe 40%.
[Peter Yu] So a country that has implemented the IP system for 40-50 years still has high infringement! Would you be happy if China reduced it to 40%?