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U.S. Files Anti-Piracy Complaints Against China

9 Apr, 2007 By: Erik Gruenwedel

Seeking to curtail a Chinese economy built in part on piracy, the United States plans to file separate complaints with the World Trade Organization.

In February, the United States filed a complaint with the WTO alleging China gave illegal subsidies to Chinese exporters while artificially reducing the value of its currency and limiting imports of U.S. products and services, including movies and music.

The complaints, which reportedly will be filed April 10 in Switzerland, allege that China's burgeoning black market has helped put a premium on pirated U.S. DVDs, CDs, software and books aided in part by severe government restrictions on the legitimate sale of Hollywood movies and printed material.

The communist country reportedly allows just 20 foreign films into national theaters annually.

China accrued a record $232.5 billion trade surplus with the United States in 2006, with reports suggesting the deficit ballooned to $20 billion in March.

The Motion Picture Association of America (MPAA) claims the U.S. copyright industries lost an estimated $2.3 billion in revenue to piracy in China in 2005. Nine out of every 10 DVDs sold in China is an illegal copy.

About 500 DVDs of Warner Bros.' The Departed, which allegedly sell for $1 on the streets of Beijing and Shanghai, were put on display by U.S. Trade Representative Susan Schwab during a press conference announcing the actions, according to Bloomberg News.

“Rampant and large-scale piracy and counterfeiting in China have persisted too long,” said Max Baucus, Democratic chairman of the Senate Finance Committee, in a statement. “It's high time the U.S. did more to protect Americans hurt by these offenses.”

The MPAA applauded the move, saying it was hopeful the complaints could help forge a mutually agreeable settlement.

“This is a welcome and logical next step in efforts to spur progress in China,” said MPAA chairman and CEO Dan Glickman. “Fair market access and respect for the intellectual property of other countries are basic conditions of membership in the global community, which China committed to live by when it sought acceptance into the WTO.”

Nintendo of America Inc. said it supported the U.S. actions, citing a statistic that more than 7.7 million counterfeit video games from more than 300 Chinese factories and retailers were seized over the past four years, with just one criminal prosecution.

The computer game company said China is the largest exporter of counterfeit Nintendo product, with many operations keeping stock levels below the criminal thresholds and avoiding the keeping of official sales records.

“Nintendo will continue to work with the U.S. government while aggressively pursuing counterfeit Nintendo products in China,” said Jodi Daugherty, senior director of anti-piracy with Nintendo of America. “We're pleased the U.S. government is pushing China to comply with its trade commitments in an effort to protect the lifeblood of the copyright and trademark industries.”

Taking Notice

Last month, the Associated Press reported that Chinese police and government officials carried out the country's largest confiscation of pirated content when they seized 1.8 million movie DVDs and music CDs in the southern city of Guangzhou.

Police arrested 13 people and detained 30 disc replication machines.

The top government court split in half from 1,000 the number of pirated DVDs and CDs for which violators will be subject to criminal prosecution, increased fines and sentences to up to three years in jail, according to the Xinhua News Agency.

In addition, individuals and companies — not just government prosecutors — can now file formal piracy charges as China attempts to curb the epidemic.

Separately, last week, officials in Singapore began distributing to secondary schools and junior college students 200,000 copies of an MPAA booklet outlining the dangers of illegal peer-to-peer (P2P) file sharing.

The booklet, “Illegal File-Sharing: The Risks Aren't Worth It,” warned readers that file sharing could expose their computers to viruses, worms, Trojan horses, pop-ups and criminal liability.

In 2005, of the $6.1 billion lost by the studios to global piracy, $1.2 billion came from piracy in the Asia Pacific, according to the MPAA.

“Copyright enforcement must be balanced by copyright education, with governments and industry people working together toward mutually agreed objectives that will protect intellectual property, foster creativity, and economic and societal growth,” said Mike Ellis, SVP and regional director for Asia-Pacific with the MPAA.

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