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4 Dartmouth L.J. 30 (2006)
Effective Enforcement of Intellectual Property Rights in China: A Real Possibility

handle is hein.journals/dcujl4 and id is 30 raw text is: EFFECTIVE ENFORCEMENT OF INTELLECTUAL PROPERTY SRIGHTS IN CHINA: A REAL POSSIBILITY *By Samantha E. Wu Samantha is a Junior at Dartmouth and a Senior Editor on the Journal. She is an Asian Studies and Government major. This winter, she is pursuing an internship at the Ontario legislature with Member of Provincial Parliament Jim Brownell. I. Introduction Respect for intellectual property rights (IPR) is low in China. Counterfeit goods abound throughout the country and the market for them flourishes. Beijing's Silk Alley, a former tourist hotspot that is now closed down, was a reservoir of fake Louis Vuitton purses and Polo shirts that annually yield- ed tens of millions of U.S dollars in sales. In 2002, the International Federation of the Phonographic Industry found that more than 90% of all music CDs sold in China were pirat- ed copies, costing the business $530 million in sales.' Additionally, in 2005, the U.S. Trade Representative's (USTR) office, the government agency responsible for developing America's trade policy, released a report detailing how infringement of all forms of IP in China occurred at a rate of 90% or higher, one of the highest in the world.2 In 1998, there were over $16 billion worth of counterfeit goods in the Chinese market.' The counterfeit industry supports numerous local economies. The town of Yiwu in Zhejiang province ben- efits from the expenditures of over 200,000 people who visit the town's 33,000 stores to buy counterfeit goods.4 Although China's IP laws are comprehensive and the government has ensured that its legislation abides by the established interna- tional standards, broad and effective enforcement of IPR in the country has been unsuccessful thus far. While the loss of profits has generated great concern amongst businesses and economists and has instigated sever- al conflicts between the Chinese and American governments, the prevalent attitude toward IPR among domestic and for- eign consumers has remained disinterested and impious.5 Even American trade officials are not immune to this men- tality, which has made their efforts to enforce IPR in China disingenuous. For instance, in 1998, U.S. Customs discov- ered that Charlene Barshefsy, a former USTR, had bought forty counterfeit Beanie Babies from the Silk Alley.6 Violations of IPR are committed by every actor in the busi- ness transaction, from the manufacturer who infringes copy- right by producing a pirated DVD to the vendor at a local stall who sells the DVD, and finally to the consumer who knowingly breaks IPR laws by buying the product. IPR trans- gressions are widespread, easily accomplished, and rarely punished. In Part I and Part III of this paper, I address the his- tory of the development of IPR enforcement and the current motivations behind IPR violations to explain the irreverence of the Chinese toward IPR enforcement. China, under pressure from foreign companies and the U.S. government, has built a complex enforcement apparatus within a span of two short decades. Foreign groups have had an impact on almost every aspect of the apparatus, from the drafting of legislation to the development of enforcement agencies. The USTR and foreign businesses used a variety of methods to ensure protection for their IPR. As I explain later in this paper, the American government threatened over- whelming sanctions against China multiple times, engaged in continual dialogue with the Chinese to emphasize the impor- tance of enforcement, resorted to international bodies to arbi- trate for strengthened IPR protection in China, and pushed the Chinese to sign an assortment of bilateral and interna- tional IPR treaties. Foreign businesses urged the formation of IPR courts in China, lobbied their governments to pressure China, and submitted research reports arguing for effective IPR enforcement to the Chinese government. Businesses that own trademarks took the responsibility of IPR enforcement upon themselves by directly working with and, even, financ- ing the IPR enforcement operations of Chinese agencies and local governments. Foreign governments and businesses have left an indelible mark on the development of China's IPR enforcement system. In Part II, I explore the tactics for- eign businesses and the American government employed to shape China's IPR enforcement system. Part II will also investigate how enforcement has evolved as a result of these foreign influences. Today, the government can discipline IPR infringers through the civil and criminal courts, administrative agen- cies, and customs. Despite this sophisticated infrastructure, there are still a range of problems that weaken IPR enforce- ment, such as local protectionism, decentralized bureaucra- cies, confusion resulting from ambiguous or conflicting leg- islation, and corruption within administrative agencies and government leadership. None of these institutionalized prob- lems is easily resolved. Part III of this paper surveys these weaknesses. Part IV and Part V offer alternative routes for enforcement through IPR courts and solutions to the enforce- ment system's problems. A genuine sustained effort by the Chinese government to ameliorate hindrances to IPR enforcement will create a widespread norm within the coun- try to develop respect for IPR and make effective IPR enforcement a real possibility. A. The Importance of Enforcing IPR Not surprisingly, the U.S. and other developed countries, whose companies own the majority of copyright, trademarks, and patents, want a strong universal system of enforcement of IPRs to ensure profit return.' They also argue that such a THE DARTMOUTH LAW JOURNAL

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