Washington launched the dispute in 2007 out of frustration at rip-offs of films, branded goods and other trademarked property openly available in Chinese cities.
The WTO ruling would force China and other nations to effectively protect IP rights.
The United States persuaded the dispute settlement panel that China violated WTO rules by barring copyright protection for movies, music and books that have not been approved by state censors for legitimate sale.
The U.S. recording industry welcomed the ruling. Neil Turkewitz, Executive Vice President, International Relations, Recording Industry Association of America (RIAA) offered the following statement:
"We are very pleased that the WTO has ruled in favor of the United States on essential parts of this case. Importantly, the WTO held that TRIPS obligations must be understood in context, and that the requirement under existing trade agreements to provide effective enforcement means nations can?t simply go through the motions, but that results matter. We hope that today?s decision leads China and other WTO members to enhance their protection of intellectual property."
The Motion Picture Association of America, Inc. Chairman and CEO Dan Glickman made the following statement.
"We are thankful to the U.S. officials for their hard work and dedication to this case and are gratified by today?s decision by the WTO. This decision is welcome news for creators as it reinforces the importance of protecting their innovative products. We are pleased that the WTO agreed with the United States that all works must have copyright protection. China restricts access to many legitimate titles, but that doesn?t stop the pirated distribution of virtually all U.S. films in China. The WTO has affirmed that these titles rightly deserve copyright protection."
"Intellectual property theft in China is a serious problem, and our industry is committed to using all available tools to address it. While we recognize that the Chinese government has made efforts to tackle piracy since the filing of the WTO action, much more needs to be done. As such, we will continue to work jointly with the Chinese to resolve these problems. And, we look forward to working alongside the Obama administration on this and other international intellectual property issues," Glickman added.
The panel also said it was "impermissible" for China to allow public auction of counterfeit goods seized by Chinese customs authorities, with only the requirement that the fake brand or trademark be removed from the good.
However, the United States failed to persuade the WTO panel on one main point of its case: that Chinese copyright pirates and counterfeiters have no fear of criminal prosecution because the government's threshold for bringing a case is too high.
"..We are disappointed that the WTO did not accept the strength of the U.S. argument that China?s thresholds for taking criminal action do not deter rampant piracy, which is evident. Yet, we are pleased that the panel did not say China?s thresholds meet international standards," MPAA's Dan Glickman added.
Both the United States and China can appeal the panel ruling.
WPO's complete findings can be read here