Meeting with Mr McCoy

IP Newsletter, March 2007

In this month’s newsletter, we report on a meeting with Stan McCoy, Chief Negotiator for IP Enforcement for the US Trade Representative, on IP enforcement issues in China. We discussed many issues during our hour-long meeting but what impressed me most is the change of approach by the Americans, which cannot take place without Beijing’s consent.

A distinguished US government official visited our office in March. We met with Stanford K McCoy, Chief Negotiator & Deputy Assistant US Trade Representative for Intellectual Property Enforcement and Paul M Stronski, Consul for Economic Affairs to exchange views on IP rights enforcement issues in China.

Mr McCoy had just concluded a visit to China for an enhanced perspective on local procedures and technicalities in their IP rights enforcement process. Meeting with local officials represents a new approach by the US in dealing with Chinese IP rights enforcement issues. It is tacit recognition both by China and the US that unless provincial and local authorities cooperate, the central government cannot edict IP problems away.

Provincial level reviews are unprecedented. Under US law, its Trade Representative must identify countries that deny adequate and effective protection of IP rights. Under this law, commonly called ‘Special 301‘ the United States Trade Representative creates a “Priority Watch List” for countries with significant problems in protecting or enforcing IP rights. China has long been listed first on this list. Mr McCoy told us that of all products seized by the US, 81% were from China, ten times more than any other jurisdiction.

The problem caused the US to initiate monitoring at provincial and local levels. Beijing facilitated Mr McCoy’s special provincial review, which included meetings with officials in factory towns and cities along the coastal provinces. We asked him about reactions of these local officials and he indicated responses ranging from willingness to discuss solutions to complete denial of the existence of any infringement problem. Mr McCoy observed that the key problem remains local protectionism.

Our discussion also included Hong Kong. The Customs and Excise Department is responsible for criminal investigations and prosecutions here. Mr McCoy noted that the department is generally cooperative in investigating and protecting IP rights and that he has heard no complaint against it in this regard.

On promoting IP, the Intellectual Property Department (“IPD“) is responsible for educating the public about IP rights and protection. It conducts public lectures, campaigns and other events promoting respect for IP rights. The day following our meeting, Mr McCoy gave a public lecture at the IPD. He said that he had heard good things about its role in educating citizens on protecting IP rights. Mr Stronski, the Economic Affairs consul, also noted that these public seminars provide useful information for protecting IP rights.

Hong Kong is Asia’s World City in IP matters. International companies operate here knowing that IP rights are generally respected and protected. The mainland has a long way to go before it can provide the same level of comfort to IP right holders. Yet, by all accounts, the central government has made significant improvements recently. As US attention shifts to the provinces, where infringement activities are rampant, local authorities may no longer ignore these issues and must recognise that local protectionism is hindering China’s relationship with its trading partners. As that realisation is confronted, alternative solutions will be found and improvements will follow.