As an important cultural heritage in China, traditional handicraft has been increasingly confronted with intellectual property protection disputes and intellectual property protection dilemma. This article discusses the limitations of the theory of "division of thought and expression" applied to the protection of traditional handicrafts based on the dual aesthetic structure of "work" and "art" of traditional handicrafts. From the perspective of the coordination of intellectual property functionality and utilitarianism, this article analyzes the legal measures to solve the traditional handicraft's intellectual property protection dilemma. First, we should reexamine the judging criteria of "originality" and clarify its dualistic aesthetic structure. Second, we should improve the copyright licensing system and clear up the reasonable boundaries of the licensing right of previous works. Third, we should transform copyright administration and judicial trial system, and perfect the mechanism on the centralized use and maintenance of intellectual property of traditional handicrafts.