US-China IP Dispute

The WTO recently released its panel report on the US-China dispute over intellectual property rights. The panel found in the US’s favour on certain issues, with China winning out on others. Regardless of one’s views of the merits and politics of the dispute, it serves to highlight the difficult challenges faced in pursuing global intellectual property rights policies.

This dispute focused on three issues. Do China’s copyright laws give protection to all literary and artistic works? Do China’s laws give sufficient authority to customs to order the destruction or disposal of infringing goods? And whether China’s criminal thresholds are flawed/too high so as to allow infringement on a commercial scale to occur without criminal remedies.

On this first issue, whether China’s copyright laws protect all literary and artistic works, the US won its biggest victory. Here, the US took issue with a provision of Chinese law denying copyright in works that fail to satisfy a Chinese content review process. While its international obligations do not prevent China from exercising censorship control, the panel found that this is no reason to eliminate copyright entirely in such censored works. As a result, the panel issued a recommendation that China bring these laws into conformity with TRIPS.

The second issue, whether China’s laws give sufficient authority to customs to order the destruction or disposal of infringing goods, gave the US a small win but was mostly decided in favour of China. The panel found that provisions allowing for the donation of infringing goods to social welfare bodies (like the Red Cross), sale of goods to the rights holder, and auction of goods still left sufficient authority with customs to order their destruction or disposal. However, the panel did find that the auction of goods after simply removing infringing trademarks in unexceptional circumstances was inconsistent with the TRIPS agreement.

Finally, the issue of whether China’s criminal thresholds are flawed/too high so as to allow infringement on a commercial scale to occur without criminal remedies brought about much debate concerning the meaning of “commercial scale”. In the end however, the panel found that the US failed to adduce sufficient evidence against the Chinese laws.

IP rights have long had an international dimension through various treaties and agreements. However, as the international flow of both physical and digital goods continues to increase, it is easy to see how IP policies implemented at only the national level become less effective. Therefore, there is increased pressure to find and apply global solutions on questions of IP policy. However, this drive for global norms can easily wind up at odds with individual state sovereignty. It is an understatement, of course, to say that this clash is not unique to the realm of intellectual property rights.   

Of note, Canada, along with Argentina, Brazil, the European Communities, Japan, Korea, Mexico, Chinese Taipei, and Thailand, participated in the proceedings as a third party. Interestingly, the Canadian submissions were referred to about 15 times in the panel’s report. This roughly matched the number of references to the submissions of the European Communities and far exceeded those of the other participants (ranging from about 1-7 references each). A sign of Canada’s clout or simply that we had more to say?