WT/DS362/R
Page 1
Organization
WT/DS362/R
26January 2009
(09-0240)
Original: English
china – measures affecting the protection and enforcement of intellectual property rights
Report of the Panel
WT/DS362/R
Page 1
TABLE OF CONTENTS
Page
I.INTRODUCTION......
II.FACTUAL ASPECTS......
A.Measures at Issue......
1.Thresholds for criminal procedures and penalties......
2.Disposal of goods confiscated by customs authorities that infringe intellectual property rights
3.Denial of copyright and related rights protection and enforcement to works that have not been authorized for publication or distribution within China
B.Procedural History......
1.Translations......
2.Request for factual information from the International Bureau of WIPO......
III.PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS......
A.United States......
B.China......
IV.ARGUMENTS OF THE PARTIES......
V.ARGUMENTS OF THE THIRD PARTIES......
VI.INTERIM REVIEW......
1.Copyright Law......
2.Customs measures......
3.Criminal thresholds......
VII.findings......
A.Copyright Law......
1.Description of the measure at issue......
2.Claim under Article 2(6) of the Berne Convention (1971), as incorporated by Article 9.1 of the TRIPS Agreement
3.Claim under Article 5(1) of the Berne Convention (1971), as incorporated by Article 9.1 of the TRIPS Agreement
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
(i)Construction of the measure at issue......
(ii)Criteria for prohibited works......
(iii)Procedure for determination that a work is prohibited for the purposes of Article 4(1)......
(iv)Article 5(1) of the Berne Convention (1971), as incorporated by Article 9.1 of the TRIPS Agreement
(v)Article 17 of the Berne Convention (1971) as incorporated by Article 9.1 of the TRIPS Agreement
(vi)Procedural issue......
4.Claim under Article 5(2) of the Berne Convention (1971), as incorporated by Article 9.1 of the TRIPS Agreement
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
5.Submission regarding Article 14 of the TRIPS Agreement......
(a)Description of relevant provisions of the Copyright Law......
(b)Main arguments of the parties......
(c)Main arguments of third parties......
(d)Consideration by the Panel......
6.Claim under Article 41.1 of the TRIPS Agreement......
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
7.Claims under Article 61 of the TRIPS Agreement......
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
8.National treatment claims......
(a)List of relevant measures at issue......
(b)Arguments of the parties......
(c)Consideration by the Panel......
9.Conclusions with respect to the Copyright Law......
B.Customs Measures......
1.Description of the measures at issue......
2.Claim under Article 59 of the TRIPS Agreement......
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
(i)Introduction......
(ii)Border measures......
(iii)"infringing goods"......
(iv)"shall have the authority"......
(v)"the principles set out in Article 46"......
(vi)"outside the channels of commerce in such a manner as to avoid any harm caused to the right holder"
(vii)Donation to social welfare bodies......
(viii)Sale to the right holder......
(ix)Auction and authority to order the destruction of infringing goods......
(x)Auction and "simple removal of the trademark unlawfully affixed"......
3.Conclusions with respect to the Customs measures......
C.Criminal Thresholds......
1.Description of the measures at issue......
(a)Introduction......
(b)Trademark provisions......
(i)Use of a counterfeit trademark......
(ii)Selling counterfeit trademark commodities......
(iii)Forgery of trademarks and sale of forged trademarks......
(c)Copyright provisions......
(i)Criminal copyright infringement......
(ii)Selling copyright-infringing reproductions......
(d)Crimes of infringing intellectual property rights committed by a unit......
2.Construction of the measures at issue......
(a)Introduction......
(b)Normative effect of the Judicial Interpretations......
(c)Thresholds under the Criminal Law in general......
(d)Thresholds for conviction or aggravation......
(e)General provisions on inchoate crimes......
(f)General provisions on joint crimes......
(g)Specific features of the thresholds for crimes of infringing intellectual property rights......
(i)Profit-making purpose......
(ii)Alternative thresholds......
(iii)Cumulative calculation over time......
(iv)Calculation of illegal business operation volume – goods......
(v)Calculation of illegal business operation volume – price......
(vi)Number of goods and prices......
(vii)Residual thresholds......
(viii)Administrative enforcement......
(h)Conclusion regarding construction of the measures at issue......
3.Claim under the first sentence of Article 61 of the TRIPS Agreement......
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
(i)Nature of the claim......
(ii)Procedural issues......
(iii)Nature of the obligation......
(iv)Scope of the obligation......
(v)"on a commercial scale"......
(vi)Subsequent practice......
(vii)Supplementary means of interpretation......
(viii)Article 41.5 of the TRIPS Agreement......
(ix)Conformity of the measures at issue with respect to the level of the thresholds......
(x)Other indicia – physical evidence......
(xi)Other indicia – impact on the commercial marketplace......
(xii)Miscellaneous factors......
(xiii)Conclusion with respect to the claim under the first sentence of Article 61......
4.Claim under the second sentence of Article 61 of the TRIPS Agreement......
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
5.Claim under Article 41.1 of the TRIPS Agreement......
(a)Main arguments of the parties......
(b)Main arguments of third parties......
(c)Consideration by the Panel......
6.Conclusions with respect to the criminal thresholds......
VIII.cONCLUSIONS AND RECOMMENDATION......
LIST OF ANNEXES
ANNEX A
SUBMISSIONS OF THE UNITED STATES
CONTENTS / PAGEA-1 / Executive Summary of the first written submission of the United States / A-2
A-2 / Executive Summary of the oral statement of the United States at the first substantive meeting / A-14
A-3 / Closing oral statement of the United States at the first substantive meeting / A-19
A-4 / Executive Summary of the rebuttal submission of the United States / A-22
A-5 / Executive Summary of the oral statement of the United States at the second substantive meeting / A-35
A-6 / Executive Summary of the closing oral statement of the United States at the second substantive meeting / A-40
ANNEX B
SUBMISSIONS OF CHINA
CONTENTS / PAGEB-1 / Executive Summary of the first written submission of China / B-2
B-2 / Executive Summary of the oral statement of China at the first substantive meeting / B-16
B-3 / Closing oral statement of China at the first substantive meeting / B-21
B-4 / Executive Summary of the rebuttal submission of China / B-23
B-5 / Executive Summary of the oral statement of China at the second substantive meeting / B-39
B-6 / Closing oral statement of China at the second substantive meeting / B-44
ANNEX C
ARGUMENTS OF THE THIRD PARTIES
CONTENTS / PAGEC-1 / Executive Summary of the third party submission by Argentina / C-2
C-2 / Executive Summary of the third party submission by Australia / C-7
C-3 / Oral statement by Australia / C-12
C-4 / Executive Summary of the third party submission by Brazil / C-13
C-5 / Oral statement by Brazil / C-18
C-6 / Executive Summary of the third party submission by Canada / C-20
C-7 / Oral statement by Canada / C-24
C-8 / Executive Summary of the third party submission by the European Communities / C-27
C-9 / Executive Summary of the oral statement by the European Communities / C-30
C-10 / Executive Summary of the third party submission by Japan / C-33
C-11 / Executive Summary of the oral statement by Japan / C-37
C-12 / Executive Summary of the third party submission by Korea / C-42
C-13 / Oral statement by Korea / C-45
C-14 / Third party submission by Mexico / C-47
C-15 / Oral statement by Mexico / C-50
C-16 / Executive Summary of the third party submission by Chinese Taipei / C-53
C-17 / Oral statement by Chinese Taipei / C-57
C-18 / Oral statement by Thailand / C-60
Annex D
Miscellaneous
CONTENTS / PAGED-1 / Request for the Establishment of the Panel by the United States / D-2
D-2 / Letter dated 21 April 2008 from the Panel to the International Bureau of WIPO / D-8
D-3 / Reply from the International Bureau of WIPO dated 6June2008 / D-9
TABLE OF WTO CASES CITED IN THIS REPORT
Short Title / Full Case Title and CitationAustralia – Automotive LeatherII / Panel Report, Australia – Subsidies Provided to Producers and Exporters of Automotive Leather, WT/DS126/R, adopted 16June 1999, DSR1999:III, 951
Brazil – Retreaded Tyres / Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007
Brazil – Retreaded Tyres / Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body Report, WT/DS332/AB/R
Canada – Pharmaceutical Patents / Panel Report, Canada – Patent Protection of Pharmaceutical Products, WT/DS114/R, adopted 7April 2000, DSR2000:V, 2289
EC – The ACP-EC Partnership Agreement II / Award of the Arbitrator, European Communities – The ACP-EC Partnership Agreement – Second Recourse to Arbitration Pursuant to the Decision of 14November 2001, WT/L/625, 27October 2005, DSR 2005:XXIII, 11703
EC – Bed Linen / Appellate Body Report, European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/AB/R, adopted 12March 2001, DSR2001:V, 2049
EC – Chicken Cuts / Appellate Body Report, EuropeanCommunities – Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27September 2005, DSR 2005:XIX, 9157
EC – Computer Equipment / Appellate Body Report, European Communities – Customs Classification of Certain Computer Equipment, WT/DS62/AB/R, WT/DS67/AB/R, WT/DS68/AB/R, adopted 22June 1998, DSR1998:V, 1851
EC – Trademarks and Geographical Indications (Australia) / Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by Australia, WT/DS290/R, adopted 20April 2005, DSR 2005:X, 4603
EC – Trademarks and Geographical Indications (US) / Panel Report, European Communities – Protection of Trademarks and Geographical Indications for Agricultural Products and Foodstuffs, Complaint by the United States, WT/DS174/R, adopted 20April 2005, DSR 2005:VIII, 3499
India – Patents (US) / Appellate Body Report, India – Patent Protection for Pharmaceutical and Agricultural Chemical Products, WT/DS50/AB/R, adopted 16January 1998, DSR1998:I, 9
Japan – Alcoholic Beverages II / Appellate BodyReport, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 1November 1996, DSR1996:I, 97
US – Corrosion-Resistant Steel Sunset Review / Appellate Body Report, United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, WT/DS244/AB/R, adopted 9January 2004, DSR2004:I, 3
US – Gambling / Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20April 2005, DSR 2005:XII, 5663
US – Gasoline / Panel Report, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/R, adopted 20May 1996, as modified by Appellate Body Report, WT/DS2/AB/R, DSR1996:I, 29
US – Gasoline / Appellate BodyReport, United States – Standards for Reformulated and Conventional Gasoline, WT/DS2/AB/R, adopted 20May 1996, DSR1996:I, 3
US – Oil Country Tubular Goods Sunset Reviews / Appellate Body Report, United States – Sunset Reviews of Anti-Dumping Measures on Oil Country Tubular Goods from Argentina, WT/DS268/AB/R, adopted 17December 2004, DSR 2004:VII, 3257
US – Section 110(5) Copyright Act / Panel Report, United States – Section 110(5) of the US Copyright Act, WT/DS160/R, adopted 27July 2000, DSR2000:VIII, 3769
US – Section 211 Appropriations Act / Panel Report, United States – Section 211 Omnibus Appropriations Act of 1998, WT/DS176/R, adopted 1February 2002, as modified by Appellate Body Report, WT/DS176/AB/R, DSR2002:II, 683
US – Section 211 Appropriations Act / Appellate Body Report, United States – Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R, adopted 1February 2002, DSR2002:II, 589
US – Superfund / GATT Panel Report, United States – Taxes on Petroleum and Certain Imported Substances, L/6175, adopted 17June1987, BISD34S/136
US – Section 301 Trade Act / Panel Report, United States – Sections 301-310 of the Trade Act of 1974, WT/DS152/R, adopted 27January 2000, DSR2000:II, 815
US – Tobacco / GATT Panel Report, United States Measures Affecting the Importation, Internal Sale and Use of Tobacco, DS44/R, adopted 4October1994, BISD41S/131
US – Wool Shirts and Blouses / Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R, adopted 23May 1997,DSR1997:I, 323
US – Zeroing (Japan) / Appellate Body Report, United States – Measures Relating to Zeroing and Sunset Reviews, WT/DS322/AB/R, adopted 23 January 2007
TABLE OF ABBREVIATIONS USED IN THIS REPORT
DSBDispute Settlement Body
DSUDispute Settlement Understanding
ECEuropean Communities
MATMutually Agreed Translation
TRIPSAgreement on Trade-Related Aspects of Intellectual Property Rights
WIPOWorld Intellectual Property Organization
WTOWorld Trade Organization
WT/DS362/R
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I.INTRODUCTION
1.1On 10 April 2007, the United States requested consultations with the Government of the People's Republic of China pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU") and Article 64 of the Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement") (to the extent that Article 64 corresponds to ArticleXXII of the General Agreement on Tariffs and Trade 1994) with respect to certain measures pertaining to the protection and enforcement of intellectual property rights in China.[1] Consultations were held on 7-8 June 2007 but did not lead to a resolution of the dispute.
1.2On 13 August 2007, the United Statesrequested the Dispute Settlement Body ("DSB") to establisha panel pursuant to Article6 of the DSU, with standard terms of reference.[2] At its meeting on 25 September2007, the DSB established a Panel, pursuant to the request of the United States in document WT/DS362/7, in accordance with Article6 of the DSU (WT/DSB/M/239).
1.3The Panel's terms of reference are the following:
"To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS362/7, the matter referred to the DSB by the United States in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements."
1.4On 3December2007, the United States requested the Director-General to determine the composition of the Panel pursuant to paragraph 7 of Article 8 of the DSU.
1.5On 13December2007, the Director-General accordingly composed the Panel as follows:
Chairperson:Mr. Adrian Macey
Members:Mr. Marino Porzio
Mr. Sivakant Tiwari
1.6Argentina, Australia, Brazil, Canada, the European Communities, India, Japan, Korea, Mexico, Chinese Taipei, Thailand and Turkey reserved their rights to participate in the Panel proceedings as third parties.
1.7The Panel met with the parties on 14-16 April 2008 and on 18-19 June 2008. It met with the third parties on 15 April 2008.
1.8The Panel submitted its interim report to the parties on 9 October 2008. The Panel submitted its final report to the parties on 13 November 2008.
II.FACTUAL ASPECTS
A.Measures at Issue
2.1The measures at issue in this dispute are identified in the United States' request for establishment of a panel as follows:
1.Thresholds for criminal procedures and penalties
2.2The United States claims that China has not provided for criminal procedures and penalties to be applied in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale that fail to meet certain thresholds. China has established these thresholds through the following measures:
(a)the Criminal Law of the People's Republic of China (adopted at the Second Session of the Fifth National People's Congress on 1 July 1979 and revised at the Fifth Session of the Eighth National People's Congress on 14 March 1997), in particular Articles 213, 214, 215, 217, 218, and 220;
(b)the Interpretation by the Supreme People's Court and the Supreme People's Procuratorate on Several Issues of Concrete Application of Law in Handling Criminal Cases of Infringing Intellectual Property (adopted at the 1331st Session of the Judicial Committee of the Supreme People's Court on 2 November 2004 and the 28th Session of the Tenth Procuratorial Committee of the Supreme People's Procuratorate on 11November 2004 and to be effective as of 22 December 2004); and
(c)the Interpretation by the Supreme People's Court and the Supreme People's Procuratorate on Several Issues of Concrete Application of Law in Handling Criminal Cases of Infringing Intellectual Property (II) (adopted on 4 April 2007, at the 1422nd Session of the Judicial Committee of the Supreme People's Court and the 75th Session of the Tenth Procuratorial Committee of the Supreme People's Procuratorate, and to be effective on 5 April 2007);
as well as any amendments, related measures, or implementing measures.
2.Disposal of goods confiscated by customs authorities that infringe intellectual property rights
2.3The United States claims that China's measures for disposing of confiscated goods that infringe intellectual property rights are inconsistent with China's obligations under the TRIPS Agreement. In this regard, the measures at issue are:
(a)the Regulations of the People's Republic of China for Customs Protection of Intellectual Property Rights (adopted at the 30th Ordinary Meeting of the State Council on 26November2003, published by the State Council on 2 December 2003, and effective from 1March2004), in particular Chapter 4 thereof;
(b)the Implementing Measures of Customs of the People's Republic of China for the Regulations of the People's Republic of China on Customs Protection of Intellectual Property Rights (adopted at an Administration Affairs Meeting of the General Administration of Customs on 22 April 2004, issued by the General Administration of Customs with Order No. 114 on 25May2004, and effective from 1 July 2004), in particular Chapter 5 thereof; and
(c)General Administration of Customs Announcement No. 16 (2 April 2007);
as well as any amendments, related measures, or implementing measures.
3.Denial of copyright and related rights protection and enforcement to works that have not been authorized for publication or distribution within China
2.4The United States claims that China is acting inconsistently with its obligations under the TRIPS Agreement by denying the protection of its Copyright Law to creative works of authorship (and, to the extent Article 4 of the Copyright Law applies to them, sound recordings and performances) that have not been authorized for, or are otherwise prohibited from, publication or distribution within China. In this regard, the measures at issue are:
(a)the Copyright Lawof the People's Republic of China (adopted at the 15th Session of the Standing Committee of the Seventh National People's Congress on 7 September 1990, and amended according to the Decision on the Revision of the Copyright Law of the People's Republic of China, adopted at the 24th Session of the Standing Committee of the Ninth National People's Congress on 27 October 2001), in particular Article 4;[3]
as well as any amendments, related measures, or implementing measures.
B.Procedural History
1.Translations
2.5Paragraph 10 of the Working Procedures adopted by the Panel on 10 January 2008provided that where the original language of exhibits or text quoted in a submission was not an official WTO language, the submitting party shall submit the original language version of that at the same time.
2.6In view of certain differences between the parties' respective translations of certain measures the Panel, at its first substantive meeting, suggested that the parties submit mutually agreed translations of these measures. In communications dated 11 and 14 June 2008, the parties submitted mutually agreed translations ("MATs") of the following measures:
(MAT-1)Criminal Law (Articles 213, 214, 215, 217, 218 and 220)
(MAT-2)2007 Judicial Interpretation (Articles 1 through 7)
(MAT-3)2004 Judicial Interpretation (Articles 1 through 17)
(MAT-4)1998 Judicial Interpretation (Article 17 paragraph 2)
(MAT-5)Prosecution Standards on Economic Crimes (Articles 8, 16, 23, 38, 39 and 70)
(MAT-6)Regulations on Customs Protection of Intellectual Property Rights (Article 27)
(MAT-7)Customs IPR Implementing Measures (Article 30)
(MAT-8)Customs Announcement No. 16/2007
(MAT-9)Measures on the Administration of Property Confiscated by Customs (Articles 1, 2, 3, 17 and 18)
(MAT-10)Law on Donations for Public Welfare
(MAT-11)Copyright Law (Articles 2 and 4)
(MAT-12)Regulations on the Administration of Films (Articles 2, 24, 25, 27, 28, 29, 31, 42 and 55)
(MAT-13)Regulations on the Administration of Audiovisual Products (Articles 2, 4, 28 and 36)