IPR, PRC, USA, WTO, ETC…

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Yes, it is back to the thorny issue of intellectual property rights (IPR) in China. The latest salvo from the US Trade Representative (USTR) includes a threat of action in the World Trade Organisation (WTO) unless the Chinese authorities “dramatically reduce” IPR abuses.

The report notes:

    “Companies such as Microsoft, the world’s biggest software maker, and Cisco Systems Inc. say they’re losing $250 billion a year and the main culprit is China. About 90% of software used in China is pirated, according to researcher IDC and the Business Software Alliance, a trade group funded by Microsoft.” It went on to note that “Chinese companies also copy products from Procter & Gamble Co. shampoo to Pfizer Inc. drugs” and that “representatives of US movie, publishing, software and recording industries said in a filing to the US trade office on Feb. 13 that illegal reproduction of their goods in China accounted for a loss of $2.4 billion last year.”

These abuses are obviously wrong, but it would also be wrong to ignore the fact that famous Chinese brands are also taking a beating – such as Maotai, the very alcoholic, banqueting favorite. The figures also have to be taken with a pinch of salt, as it is not realistic to assume, in a market where a small increase in the cost of a beer leads drinkers to switch brands, that buyers of fake software (at US$1 per disc) would buy the official product costing hundreds of dollars.

Ever the optimist, there may be a bright(ish) side for the afflicted companies. Without the fakes, would Microsoft be the market leader ahead of a local pretender like Chinese Star? Would Hollywood celebrities and Disney characters get famous in China? Maybe they would, but the quantifiable losses are most likely less than claimed.

On a more serious note, the issue of IPR protection is important to economic development – and to health and safety in many cases – and should be properly regulated. However, while enforcement remains difficult (and is more focused on cases involving public health, as in the recent fake baby milk powder case, companies need to develop effective strategies for pre-emptive protection. As they say, “an ounce of prevention is worth a…whole plane load of US Trade Representatives”.

In response to these on-going concerns, China has announced an IPR protection plan for 2006, under the National Protecting IPR Working Group. The plan is reported to cover trademarks, copyrights, patents, and the import and export sectors, and includes the drafting, stipulating and revising of 17 laws and regulations. However, wories about enforcement will remain, especially in areas outside the major cities.

A final note. Is it not just in China where IPR abuses can be seen. In the last few months this blogger has seen fake luxury goods and DVDs openly on sale in London’s Oxford Street, New York’s Broadway and, no surprise here…in Beijing’s Silk Alley (no, that recent court victory has not had much impact!).

China Business Services provides access to a range of risk management, IP protection, and legal services in China. Please contact us for details

See related news:

    US likely to drag China to WTO over IPR violations
    Financial Express – Bombay,India
    MARCH 3: The US may file a complaint with the World Trade Organisation against China unless authorities ‘dramatically reduce’ violations of intellectual …
    http://www.financialexpress.com/fe_full_story.php?content_id=119439

    China works out plan to further protect IPR in 2006
    China Daily – China
    … In accordance with the plan, China will draft, stipulate and revise 17 laws and regulations concerning trademarks, copyrights, patents and customs in 2006. …
    http://www.chinadaily.com.cn/english/doc/2006-03/09/content_528783.htm

2 Responses to “IPR, PRC, USA, WTO, ETC…”

  1. Archive » Viagra’s IPR Battle Just Keeps on Going| China Business Blog Says:

    […] ao, during his US trip, that IP rights would bet better protection. (See a recent IPR post here). It also follows moves by China to strengthen its “innovative economy” with the promot […]

  2. Jeremy Gordon Says:

    Author : Tim Whelan (IP: 192.169.41.33 , palo4.pacific.net.sg) E-mail : blog@customerdevelopmentcenter.com
    URI : http://cdccustomerservice.blogspot.com
    Whois : http://ws.arin.net/cgi-bin/whois.pl?queryinput=192.169.41.33
    Comment:
    WELL JUST FOR THE RECORD YOUR DOWN PLAY OF THE LOSSES AND POLITICS OF cHINA IS A LITTLE HARD TO SWALLOW. tHE LOSSES ARE ALWAYS UNDERSTATED SOME FIGURE THE NUMBERS ARE AT LEAST DOUBLED NOT TO MENTION THE THE BLACK MARKET OF LEGAL GOODS THAT WENT OUT THE BACK DOORS OF FACTORIES AS OVER RUNS AND INTO THE MARKET PLACE AT HALF THE PRICE. cHINA HAS NO INTENTION OF ADDRESSING THE ISSUE SINCE THIS ILLEGAL TRADE IS WHAT POWERS CLOSE TO 1/3 OF THE GNP.

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