China: World Trade Organization: 2009 China Decisions Break Important Ground

Copyright 2009, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on International Trade & Investment–China Focus, December 2009

In 2009, two World Trade Organization (WTO) Panels issued decisions in cases to which China was a party. Both cases were initiated by the U.S. in April 2007. The first relates to Chinese measures relating to the protection and enforcement of copyrights in China, which the U.S. alleged violate intellectual property rights under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The second involves measures relating to the importation and distribution of films, Audiovisual Home Entertainment products (AVHE products), sound recordings and publications. The U.S. alleged that these measures violated Chinese commitments under the General Agreement on Tariffs and Trade (GATT), the General Agreement on Tariffs in Services (GATS), and China's Accession Protocol. This article provides a brief overview of both cases.


In the first case, Measures Affecting the Protection and Enforcement of Intellectual Property Rights, the U.S. challenged several aspects of China's intellectual property laws. The U.S. led a three-pronged attack, alleging that aspects of Chinese copyright law, customs law and criminal law violate obligations under TRIPS. The impugned copyright measures involve laws that protect rights only in those works that are authorized for publication or distribution by the Chinese government. In some cases, works are subject to a content review prior to authorization, which review is to protect the Chinese public from offensive material. In its January 2009 decision, the Panel found that this part of China's copyright law was inconsistent with certain of China's obligations. Specifically, Article 5(1) of the Berne Convention (1971), which is incorporated by Article 9.1 of TRIPS, requires the provision of rights to authors in countries other than the country of origin, and that these rights should be equal to those in the country of origin (in addition to any rights required elsewhere in the Berne Convention). The Panel held that Chinese copyright law did not protect the rights of foreign copyright holders in this way. Additionally, the Panel found that these measures constitute a violation of Article 41.1 of TRIPS, which requires parties to make enforcement mechanisms available for breaches of intellectual property rights under TRIPS.

The U.S. challenged Chinese customs measures as violating Article 59 of TRIPS, which requires parties to give authorities the power to destroy or dispose of infringing goods. The U.S. challenged measures respecting the auctioning by Chinese authorities of infringing goods seized at the border after the infringing trade-mark is removed from the item. The Panel held that Article 59 is not applicable to those measures related to goods destined for export. However, the Panel held that the Chinese measures were inconsistent with Article 59 insofar as simply removing an infringing trademark is not generally sufficient to then lawfully releasing the goods into the stream of commerce.

The U.S. also alleged that Article 61 of TRIPS, which requires parties to provide criminal sanctions for all commercial-scale copyright piracy and willful trademark counterfeiting, was breached in that the criminal offences in Chinese law for violations on a commercial scale were insufficient to satisfy China's obligations under TRIPS. The Panel rejected this argument stating that the U.S. had not met its burden on this point. In the course of this decision, the Panel did give guidance on how to determine whether a criminal threshold is appropriate in the circumstances. Thresholds cannot be set so high as to be divorced from commercial reality. Moreover, to determine what constitutes a "commercial scale", one must consider the product being sold and the market it is being sold in. Technological advances and the evolution of marketing practices must also be considered.


A WTO Panel issued a second decision involving China in August 2009. In the case of Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, the U.S. alleged that various Chinese restrictions on the importation and distribution of U.S. films, AVHE products, sound recordings and publications violate provisions of the GATT, GATS, and the Accession Protocol. The Panel found that China had indeed breached some of its obligations under these provisions. Restrictions on the distribution of publications, AVHE products and music were held to violate Arts. XVI and XVII of GATS, which require treatment no less favourable than that accorded to domestic suppliers, unless otherwise set out in the GATS Schedule. Moreover, restrictions on the distribution of foreign publications were found to violate the national treatment requirements under GATT. Finally, China was found to have breached parts of the Accession Protocol to which it agreed when joining the WTO in its prohibitions on the rights of foreign companies to import films, AVHE products, publications and sound recordings.

The Panel did not accept all of the claims by the U.S. In particular, the U.S. had argued that China violated national (i.e., non-discrimination) treatment obligations under GATT in that only two companies distribute U.S. films in China, whereas domestic films are distributed by numerous companies. The Panel recognized that there was no explicit requirement in Chinese law that foreign filmmakers use only two distribution companies. The Panel suggested that foreign companies could use other existing distributors, or apply to create new ones. The U.S. also argued that this same provision of the GATT was violated by measures which allegedly discriminated against foreign suppliers in relation to the digital distribution of sound recordings, such as distribution over the Internet. The panel held that the U.S. had not shown that the products were "like products". Specifically, the Panel ruled that insufficient evidence had been led to show that music distributed over the Internet was a "like product" to the imported hard copies.

China had argued a defence under Art. XX of the GATT, which allows for measures that would otherwise offend GATT requirements where the measure is necessary for the protection of public morals, among other things. The Panel did not accept this argument, finding that the measures were not "necessary". Interestingly, the Panel refused to rule on whether this defence was available for breaches of the Accession Protocol, or was limited to breaches of GATT. Both China and the U.S. have appealed this decision. The Appellate Panel's report is expected at the end of December 2009.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
13 Dec 2017, Seminar, Toronto, Canada

Class actions across Canada continue to grow in volume and complexity, triggering significant policy and financial implications for businesses in Canada. With the Law Commission of Ontario’s recent announcement that it is reactivating its comprehensive review of class actions in Ontario, we may see important law reform on the horizon to evolve with the changing landscape.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions