Significant Concerns Remain on China’s IP Protection, Enforcement, Says USTR

The report cited the persistence in China of “notorious physical and online markets selling IPR infringing goods.” China reportedly sanctioned 14 websites for providing illegal downloads, requiring them to remove links to offending files, the report said. But “illegal downloads account for an estimated 99 percent of all music downloads in China, and piracy of copyrighted material over the Internet thus continues to be a major problem,” the report said. Chinese users are increasingly using streaming media to watch foreign shows and movies, it said. The U.S. has asked China to “focus on these streaming sites, and to prevent illegal transmission and rebroadcast of motion pictures and television and sports programming,” it said.

Chinese counterfeiting in products includes cellphones, computer and computer equipment and software, the USTR said. Of particular concern is the warning by the Semiconductor Industry Association about counterfeit semiconductors “entering the supply chain,” it said. The USTR cited industry reports about warehouses in Russia storing pirated CDs and DVDs “remaining on several government-controlled military industrial sites.” That leaves Russian enforcement agencies and rights holders with “limited opportunities to conduct successful raids against such warehouses,” the report said. The U.S. said it wants Russia to take extra steps to improve IPR protection, “especially with respect to piracy over the Internet."

The U.S. will review Canada’s listing if the country enacts “long-awaited copyright legislation,” the report said, urging Canada to also strengthen its border enforcement efforts. In Ukraine, while steps to curb unauthorized video camcording of motion pictures have been taken, the unauthorized recording of the audio portion of motion pictures “continues to be a serious problem,” the USTR said. The other countries on the priority watch list are Algeria, Argentina, Chile, Indonesia, Israel, Pakistan, Thailand and Venezuela. The USTR put 26 other countries on the “watch list” and Paraguay on the monitoring list.

While the report “reminds us of the challenges the U.S. creative industries confront in overseas markets, it is notable that Spain, which was removed from the 301 list this year, as well as some other countries, are taking steps to protect and promote their creative industries,” the MPAA said. “Strong copyright protection and enforcement are vital to our industry’s ability to create U.S. jobs, grow our own economy, and expand U.S. exports,” said MPAA President Chris Dodd. By seeking “concrete solutions to piracy and barriers to market entry” in the offending countries, the report “signals strongly” the U.S. “commitment to protect one of our nation’s most valuable assets,” said Steven Metalitz, counsel to the International Intellectual Property Alliance.

The “legal and enforcement deficiencies” the USTR identified by which countries allow illegal services to operate has had “devastating consequences” in nations like Russia and China where services like vKontakte in Russia and Xunlei’s Gougou and Sohu’s Sogou in China “effectively prevent the development of healthy competition in the provision of online music services,” the RIAA said. Each of these services deliberately gains market share by providing access to copyrighted works without any form of licensing, said Vice President Neil Turkewitz.

The U.S. Chamber of Commerce hopes the USTR will work with the offending countries like Brazil, Canada, China, India, Mexico, Russia, Turkey and Ukraine to “design specific action plans that lead to the country’s removal from the list,” said Mark Elliot, executive vice president of the Chamber’s Global Intellectual Property Center. “We also encourage Congress to work with USTR and pass legislation requiring action plans for countries that include clear benchmarks to measure their performance and clear consequences for countries that fail to take action.”