China is faulted in piracy dispute

The World Trade Organization has partly sided with the U.S. in a dispute with China over product piracy, officials said Thursday.

The WTO panel faulted China for not prosecuting pirates who copy fewer CDs and DVDs than others, said one trade diplomat who had reviewed the interim ruling.

The U.S. says the thresholds allow pirates -- who target many products, including designer clothes, medicines and toys -- to tailor their operations to avoid prosecution by reproducing just below the minimum level of 500 infringing copies.

But the panel found that Chinese thresholds for prosecuting piracy do not break WTO rules, a setback for Washington, the official said.

Officials differed in their reading of the panel’s decision on a third issue -- concerning whether seized goods can be reintroduced into the market if the infringing material is removed. A U.S. trade official said Washington won on that count too, favoring it in two of three issues in the case.

The officials spoke on condition of anonymity because of WTO rules.

The U.S. has for years complained that China is a haven for product piracy and counterfeiting and that it is one of the world’s biggest sources of illegally copied goods.

The U.S. brought the case last year after negotiations with China failed to resolve the dispute. Beijing heavily criticized Washington for taking the issue to the WTO’s dispute settlement panel, saying it could damage trade relations between the nations.

The interim ruling can be challenged by both parties, and a final decision may be years away.