US Renews Tough Talk on Chinese Piracy

The United States is considering taking legal action against China for continued violations of intellectual property rights (IPR), as well as the use of subsidies in a broad array of manufactured goods. The U.S. may pursue its case to the World Trade Organization (WTO) — an action it has previously threatened over the past year.

China is one of the largest markets for the U.S. technology and entertainment world, with IPR violations amassing billions of lost dollars for the U.S. software, music, and publishing industries. The International Intellectual Property Alliance (IIPA) actively tracks piracy around the world and estimates that the business software industry has lost more than US$1.9 billion in revenue in 2006.

“The rampant infringement of intellectual property rights that persists in China, in spite of efforts by central government officials to move against illegal practices, not only robs U.S. businesses of billions of dollars a year in legitimate sales, it also weakens China’s development of its own knowledge-based industries,” Deputy U.S. Trade Representative Karan K. Bhatia told the U.S. House Ways and Means Subcommittee on Trade Thursday.

The Office of the U.S. Trade Representative (USTR) will continue to negotiate with China directly, “but if it becomes clear that negotiations will not be successful, then we will proceed with a WTO dispute settlement,” Bhatia said.

High-Level Support, Low-Level Problems

The highest levels of the Chinese government have expressed interest and commitment to cracking down on IPR violations, but enforcement at the local level has been minimal. “China continues to insist that use of unauthorized software in a commercial business environment is not a crime,” according to an IIPA 2007 report on China, that recommends that the country must prosecute piracy before meaningful change can occur.

Despite inconsistent antipiracy action in China, IDC reported last year that PC software piracy rates have been on the decline — down from 92 percent in 2003 to 90 percent in 2004 and 86 percent in 2005.

Steps in the Right Direction?

In 2006, the Chinese government mandated that PC manufacturers supplying China only ship PCs with licensed operating systems, which has been widely seen as a positive move, though concrete results haven’t been reported.

“Overall, China has consistently failed to meet the challenge of serious widespread piracy in the country,” Michael Schlesinger, an attorney for the IIPA, told the E-Commerce Times.