Undertake a study of the trade war between China and the United States over intellectual property rights. After years of trying to get China to protect American IPRs, an agreement was reached between the two countries in 1992. Reports of copyright and trademark violations continued, and in June 1994, an investigation was initiated under Special 301. China was identified as a priority country in July 1994 (59 FR 35558). A determination was made to take action against China on February 7, 1995 (60 FR 7230). The nation’s press covered the story daily, describing how it would cost U.S. consumers billions of dollars a year. China embarked on its own public relations campaign, with U.S. television showing bulldozers crushing thousands of bootlegged and counterfeit CDs Ona Street in China. A month later, on March 7, 1995, the USTR announced that China had agreed to take the needed action to protect IPRs of U.S. film, recording, and software companies. As reflected in the text of the chapter, however, the United States continues to take the view that China is engaged in massive IPR piracy. In April 2007, the United States initiated two WTO proceedings.
a. What is the annual cost of Chinese IPR violations to U.S. companies? How have IPR violations affected the decision of American companies to do business there? What has been the response of private firms to these violations, and how have they tried to control them?
b. What positive actions has China taken to correct the problem? What new laws have been passed for the protection of IPRs, and how are they enforced?
c. Consider specifically the problems of U.S. software companies in China. Can you find any information about Microsoft’s position on doing business in China? What has been their strategy for tapping into the potentially huge Chinese market, while ensuring that their copyrights on software remain protected? If the Chinese government views IPR violations as a legitimate way to make a profit, would bringing the government in as a joint venture partner be one way to get the Chinese to see the need for IPR protection?