U.S.-China WTO IP Dispute IV – final thoughts

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This is meant to be a wrap-up of my series on the IP case. Check out the other parts of the series for the details on the legal arguments.

A few major themes here:

1. The ruling was not earthshattering.
2. The mainstream press totally bungled the reporting on this case.
3. This turned out to be mostly an exercise in constituent politics and not so much about IP law.

In order to get this done right, I should first throw out my formal opinion of the case. I did this in a bit of detail in the other parts of this series, but to summarize:

Weak Sauce

A. The case had three claims, concerning: 1) copyright; 2) customs; and 3) criminal law.
B. The U.S. won the copyright claim, but the case involved an academic issue that had never even come up before, calling into question what effect, if any, the ruling would have on industry/IP owners.
C. The U.S. won the customs claim, but as the ruling applied to imported products that had been seized and then auctioned (no examples of this ever happening are available), again we have an academic issue and doubtful effects on industry/IP owners.
D. The U.S. lost on the criminal claim, although with better evidence (possible, but very difficult), a future claim might be successful.

Pretty weak stuff, all in all. Those of you that read Part III also know that the Panel rhetorically slapped the U.S. around as well, so even in (partial) victory, the U.S. had a tough time of it.

Was this a landmark case? Hardly. Will U.S. industry reap the benefits here, enjoying a reduction of the U.S.-China trade gap? Laughable. Will this have a positive effect on Chinese production of counterfeit goods and exports to the U.S.? Not even a little bit. Will the U.S. government take credit for a job well done? Absolutely. Will the media accept the spin from the government? Are you kidding me?

Bashing the Media

This is the part I enjoy. I admit that. It is usually pretty easy to point out the media’s shortcomings when it comes to IP issues. Very few writers out there, even some of the lawyer-journalists, understand IP law. They get the terminology, the concepts, and the effects of the decisions wrong more often than not. (And no, I’m not picking on these guys because this is my specialty. I also criticize the press for their econ stuff too.)

Then again, maybe I shouldn’t be so hard on these guys. This was a very technical case that was quite difficult to wade through. Moreover, I assume that each reporter has exactly two lawyers that they call for all legal issues, no matter whether the case happens to fall within that person’s specialty or not. Understandable, if lazy. Would it kill one of these guys to pick up the phone and talk to {gasp!} an actual expert at a respected law firm who happens to know about IP law first-hand? I guess not. Calling people you don’t already know is too scary.

All right, can I back up any of this? Based on my somewhat negative comments above (OK, completely negative comments), let’s see how my point of view of this case compares with that of the mainstream media:

1. US claims victory in WTO complaint on China piracy (the headline is factually correct, I’ll give ’em that)

The United States claimed victory on Monday in a groundbreaking World Trade Organization case against China for failing to protect and enforce copyrights and trademarks on a wide range of goods.

I must have been reading the ruling of a different case than that Reuters reporter. Is that what the case was about?

2. U.S. wins patent dispute against China (headline NOT factually correct)

The United States said Monday that it had won a World Trade Organization dispute with China over patent and copyright protections arising from complaints by makers of movies, music and software that their products were being pirated.

I would love to read a copy of that case, too. Sounds interesting, but very different from the one I read which, for one thing, didn’t involve patents.

3. China vows to help WTO on piracy (headline nonsensical — I don’t recall the WTO having a piracy problem)

China has promised to co-operate in the global fight against counterfeit goods, in response to a highly critical ruling from the World Trade Organization.

In a US-backed case, the WTO ruled on Monday that Beijing ignored piracy of DVDs and its customs policies were lax.

These guys are just making this stuff up. For shame, BBC, you lazy poofs.

Where did all of this poor reporting come from? Well, the USTR certainly saw the bright side of the ruling, although to be fair, its press release (as opposed to many news pieces) did not contain any factual errors.

Not Everyone Got It Wrong (just to be fair)

1. WTO’s China piracy ruling: all bark and no bite

In its efforts to get China to curb piracy, the United States claims that it now has the World Trade Organization on its side. But the proclamation of victory is empty or premature, or both.

The Office of the U.S. Trade Representative said Monday that the WTO had ruled in its favor, judging that in certain respects, China’s policing of pirated goods constitutes a breach of its treaty obligations. But the WTO actually demurred on the segment of the U.S. complaint that contained the most bite: that China does not provide enough criminal sanction against counterfeiters.

Washington has obtained "an important victory," U.S. Trade Representative Peter Allgeier declared.

2. Why the U.S. lost its WTO IP complaint against China (what a coincidence; not from a major news outlet)

The World Trade Organization yesterday released its much-anticipated decision involving a U.S. complaint against China over its protection and enforcement of intellectual property rights. The U.S. quickly proclaimed victory, with newspaper headlines trumpeting the WTO panel’s requirement that China reform elements of its intellectual property laws. For its part, China was conciliatory and offered to work with the international community to resolve the concerns raised by the decision. Reuters notes that the Chinese reaction is far less combative than it has been other issues.

Why the muted response? I suspect that it is because anyone who bothers to work through the 147 page decision will find that the headlines get it wrong.

Well, you get the idea.

It’s the Politics, Stupid

What are the politics here? In the counterfeit goods area, there are some big constituents that make a lot of noise, including the movie guys, the music guys, the software guys, the consumer goods folks, the luxury goods people, and the high-tech geeks. With the exception of the high-tech lobby, all the usual suspects no doubt pushed this case for many years.

Lobbyists have money and access, and they make a lot of noise. Government officials don’t like noise, so to shut them up, they file cases like this once in a while to prove that they are "fighting the good fight." It also shows the Chinese that "we mean business."


But yeah, now whenever the MPA or BSA makes a fuss over the next couple of years, the USTR can point to this decision and say that they tried and (based particularly on the criminal law claim) that they are making progress.

I’m actually a big fan of the USTR, and I’ve talked to some folks that have worked in the China department before. These are really good lawyers from excellent law firms who work very long hours for low pay. One reason there is a high turnover rate in some parts of the government, however, is that it’s government. Those poor guys have a lot of different constituents to keep happy, and don’t forget the underlying political context here: the U.S.-China relationship, complete with currency manipulation charges, trade gaps, North Korea, climate change, toxic toys, fake drugs — need I go on? The USTR needed a win, and they got just enough from this case to claim one, whether it makes sense or not. I guess I don’t blame them for that.