Legal News

WTO Ruling a Possible Boon to U.S. Copyright Holders

By Ashby Jones

We haven’t read the World Trade Organization’s big ruling, handed down Wednesday, ordering China to be stop forcing U.S. companies to deal with the Chinese government when they want to distribute their copyrighted works. The ruling is 460 pages (460 pages!?). Maybe, if the action from Hazeltine proves less than entirely compelling this weekend, we’ll digest it and get back it to you. For now, LBers, you’ll have to deal with our shiftlessness and accept our news-coverage roundup.

The dealio: The ruling, according to the WSJ, represents a stinging blow to China — “it’s biggest defeat yet” — in the long-running battle over how American books, movies and music are distributed in China. According to the WSJ, the ruling could help break open the tight controls that have crippled the ability of filmmakers, musicians, videogame designers and other artists to widely market their creations at reasonable prices. Click here for the NYT article;

Either China or the U.S. can appeal the ruling. But for now, the decision stands as a win for the U.S. “The U.S. won on some of its key legal claims,” said Simon Lester, founder of WorldTradeLaw.net LLC, a Washington consulting firm. “What remains to be seen is how China responds, and whether these legal victories can be used to improve sales for U.S. products.”

China, said the judges, had broken a promise it made upon joining the WTO in 2001 to offer relatively open access to foreign mass-produced art. According to WTO rules, member countries can’t discriminate against imported goods.

Film executives say the state-run distributor, China Film Group Corp., had been one of the biggest barriers to making money in the country. It takes a hefty cut of the box office and charges the studios high fees for film prints and other distribution costs. That means the studios only receive a small percentage of a film’s overall box office in China. If other distributors are allowed to operate, they could increase competition — and drive down the cut that distributors take of the box office.

That said, experts cautioned against making too much out of the ruling. China allows only 20 foreign films per year to be shown, a ban that stays in place despite the ruling. And the ruling does little to address the problem of piracy in China.

“In spite of all the restrictions we face, there is no shortage of U.S. filmed entertainment in China,” he said. “Unfortunately, far too much of it is pirated, benefiting neither the legitimate Chinese businesses that are tied to, and profit from, showing U.S. movies nor, of course, the U.S. companies that are playing by the rules.”

Full post as published by Law Blog - WSJ.com on August 13, 2009 (boomark / email).