Interview with Mr Joseph Simone About Which Steps The US Could Take in regard to IPR in China

IP Dragon's Danny Friedmann asked foreign registered lawyer and IPR in China specialist Mr Joseph Simone of Baker & McKenzie in Hong Kong about which course of action the US could take after the decision, WTO DS 362 Report, by the dispute settlement panel on United States’ complaint against “China — Measures affecting the protection and enforcement of intellectual property rights.”

IP Dragon: Could you please give your opinion on the best recommendation the IACC can give to the USTR in regard to their Special 301 Review about China's status: 'Priority Watch List or Priority Foreign Country/Section 306 Monitoring?
Joseph Simone: "I think the issue of thresholds is one which continues to deserve priority attention--along with the other issues mentioned in the 2009 Special 301 report of IACC. So "Priority Foreign Country" seems preferable, but if USTR has no plans to file an appeal or a fresh case in the very near term, then I'd expect them to decide on Priority Watch List and Section 306 Monitoring."

IP Dragon: Why should the US appeal the panel decision?
Joseph Simone: "It's quicker/cheaper than refiling- any refiling would probably require fresh data from industry- USTR wouldn't need more political support from Industry (really) to appeal - they arguably have a fiat already."

IP Dragon: What would a refiling mean?
Joseph Simone: "A refiling would require a lot more preparation work- an appeal would not annoy China so much as a refiling- the WTO Appellate Body has in the past shifted the burden of proof to defendants (here, China) in analogous cases, the latest being the one involving gambling (DS 285)."

IP Dragon: Did the US have enough information to base their claim?
Joseph Simone: "The US should in any case ask China for narrower data under a new article 63 (3) TRIPs request. The last one in 2006 was way to broad. If China comes through with useful data, the US may not need to ask industry for case info.

IP Dragon: What are your hopes in respect to what China should do?
Joseph Simone: "I'm really hoping China will wake up and decide to start a serious governmental/academic and legislative research project to reform all aspects of IP enforcement--including the Criminal Code.

IP Dragon: What is the magnitude of the problem of counterfeits that originate from China in the developing and developed countries?
Joseph Simone: "For example in Tanzania, between 15 and 20 percent of ALL GOODS circulating were found to be fakes from China, according to the Confederation of Tanzania Industries and up to 30 percent of medicines are counterfeit, according to a 2006 report by the World Health Organization. And for example in Japan, as you have seen, almost 82 percent of all counterfeit products originate from China."

More aricles about counterfeit goods in Africa originating from China:
- 'Tanzania: Counterfeit Drugs Put Lives at Risk', allAfrica.com, January 15, 2009, read here.
- Wadhams, Nick, 'Rapid Rise In African Anti-Counterfeiting Efforts Led By Developed Nations' IP-Watch, December 9, 2008, read here.
- Nakaweesi, Dorothy, 'Traders battle counterfeit products from China', Daily Monitor Uganda, October 14, 2008, read here

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How to Sanction Lack of IPR Enforcement in China: Priority Watch List (IILA) or Foreign Country/Section 306 Monitoring Status (IACC)

The International Anti-Counterfeiting Coalition (IACC) is an organisation that represents companies concerned with trademark counterfeiting and copyright piracy. The IACC submitted the following recommendations to the Office of the US Trade Representative (USTR) in their annual Special 301 review of intellectual property protection issues in foreign countries. As in the past years, China and Russia remain the main concern for the IACC. China should be dealt with as a Priority Foreign Country, Section 306 Monitoring, according to IACC.

The International Intellectual Property Alliance (IIPA), an alliance representing U.S. producers of content and materials protected by copyright laws, including computer software (BSA joined IIPA, see here), films, television programs, music, books and journals, has the most problems with China, Russia and Canada. The IIPA submitted these recommendations to USTR. It suggest to the USTR that China stays on the priority watchlist, see here. The IIPA also recommends that Hong Kong SAR deserves 'Special Mention' (which is a warning sign), read here and so does Taiwan, read here.

Priority Foreign Countries: those countries that USTR believes have the most onerous or egregious policies with the greatest adverse impact on U.S. right holders or products. These countries are subject to accelerated investigations and possible sanctions.

Section 306 monitoring: means that the USTR can move directly to the application of trade sanctions against China if monitoring shows a slippage in China's enforcement of bilateral intellectual property rights agreements. The USTR is granted this authority under Section 306 of the U.S. Trade Act of 1974.

Priority Watch List: those countries which do not to provide adequate IP protection and enforcement or market access for U.S. persons relying on intellectual property protection.

Special Mention: These countries have made progress in improving their level of intellectual property protection but USTR believes they still need to be monitored. USTR also included countries in which problems with intellectual property protection were beginning to become more serious.

I will elaborate on these recommendations, later.

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