US vs. China: IPRs

Despite the fact that the Western press is reporting a win for the US in its IPRs dispute with China (see here and here), in reality this seems to be a win for China. Michael Geist (Ottawa) provides excellent initial analysis on his website (click here) showing why China was actually the big winner is this dispute.

Geist summarizes the three key issues in the dispute as follows:

1. Does China's copyright law provide appropriate protection for all works in compliance with international copyright law (Berne Convention as incorporated by TRIPS)?

2. Do China's border measures, which allow customs officials to donate, auction, or sell to the rights holder confiscated goods, violate TRIPS?

3. Does China's IP enforcement system, which sets a minimum threshold for criminal prosecution, violate TRIPS?

The panel backed the US on the first measure, thus the cause for celebration at the USTR. Of course, the USTR is ‘disappointed’ that the panel ruled against its claims for points two and three.

While I found China's arguments concerning issue 2 to be plausible, I really didn’t think that China’s arguments on point three were strong enough to win on the issue. Moreover, it seems that any numerical threshold (China's threshold is set at 500 copies) is arbitrary. Why would 499 copies not be commercial scale but 500 is commercial scale? To me, this seemed to be very difficult to defend. It also would seem to allow an individual to rent premises and set up shop selling pirated copies of music/DVDs and counterfeit TMs but avoid criminal prosecution as long as only 499 copies of each item are copied and sold. A case-by-case analysis following certain pre-set factors seems like a fairer, and more sensible way to determine commercial scale.

I'm certain this isn't the last time we will hear about this dispute...