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US trade official urges Beijing to ''forcefully'' punish IPR violators

WASHINGTON, DC - 04/18/05 - "Stronger punishments and more vigorous enforcement" are necessary to stem a growing epidemic of infringement of intellectual property rights (IPR) in China, according to a senior level Department of Commerce official.

"The US has damages of 20 to 24 billion dollars a year from piracy in China, and piracy, we believe, is actually getting worse," said William Lash, assistant secretary of commerce for market access and compliance (left), at a recent news conference in Beijing.

Lash showed reporters several examples of counterfeited goods, including fake playing cards, clothing, golf clubs, and DVDs. 

He said he was able to find knockoffs of brand-name women's purses with tags saying "USA" or "New York," in a licensed store in Hongqiao.

"The breadth of piracy continues to grow, sophistication of piracy continues to grow and the damage of piracy continues to grow," he said, noting that pirated products from China can be found throughout the world.

Lash commended the Chinese government for its efforts at public education to drive home the importance of IPR protection, but said education is not enough.

"Pirates don't need education," he said.  "Pirates need jail time. Pirates don't respect rules. Pirates respect force."   

Lash said Chinese officials had told him that total fines imposed in 2003 for violations of trademarks, copyrights and patents amounted to $30 million only 0.05% of the estimated sales revenue losses of over $60 billion suffered by US, European Union and Japanese companies that year.

"We appreciate the efforts and the spirit of our colleagues and we appreciate the goals of law enforcement, but," he said," We must go after pirates and give them something they will take seriously." 

Chinese officials must determine for themselves what punishments will be effective deterrents and vigorously apply them, Lash said. 

"In order to make effective use of new judicial interpretations allowing greater use of criminal rather than administrative statutes," he said, "China's State Administration for Industry and Commerce (AIC) must use proper valuations of counterfeit goods seized in raids."

The basic doctrine of criminal law around the world "is that the punishment must fit the crime," he said.  "I think ... many of the pirates clearly are not being intimidated.  When you're operating with a license in a store in Hongqiao, clearly you're not afraid of the police." 

Lash said the US would not rule out any options, including World Trade Organization (WTO) dispute-settlement mechanisms, in dealing with IPR violations and other trade issues involving China.
 
Under the safeguard provisions in China's WTO accession agreement, he said, the US has undertaken an investigation of Chinese textile imports in three sectors.

But, he added, "This is a very important bilateral trade relationship.  Both sides have a lot to gain by increased cooperation, increased dialogue, increased trade and commerce."  Lash said the two sides continue to have constructive bilateral discussions, and continue to work on the piracy issue.

"The honest citizens of China have a lot to gain by protecting IPR," he said.  "It creates jobs. Creates innovation. Rewards competition."

Lash noted that piracy "raises safety issues as well as concerns about economic losses.  In products from brake fluid and auto parts to medical devices and pharmaceuticals," adding that "consumers need to know that they are getting the quality they expect."

According to Lash, "It's in China's best interest and their economic future to attract high-tech investment, to let her people develop first-rate brands like they have in telecommunications, and continue to work with the US collaboratively and with their other partners collaboratively." 

In its role as a world leader, Lash said, China must "make sure that pirates are not injuring consumers in the industrialized world as well as in the developing world."

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