# Presentation: 055527

## Protecting and Enforcing Your Intellectual Property in China 

**Protecting and Enforcing Your Intellectual Property ****in China **

**Susan Anthony**
**Attorney-Advisor**
**Office of International Relations**
**U.S. Patent and Trademark Office**

## Why Care?

**This is not only a problem for U.S. companies doing business in China.**
**Chinese counterfeiters and pirates export to U.S. market.**
**Counterfeiters and pirates market at trade shows.**
**Counterfeiters and pirates may sell to your customers and suppliers.**

**Notes:**
If you’re not doing business or going to expand into the Chinese market, why should you worry about protecting your intellectual property in China?  The problem is that China’s intellectual property hazards do not end at its borders.

For example, let me tell you about a US manufacturer of marine gauges.  This company became concerned when a customer reported problems with one of its gauges that it had purchased through a South American distributor.  The company discovered that a Chinese counterfeiter had sold gauges to its supplier that were identical in appearance to the legitimate gauges but were functionally inferior.  The complaining customer was located in China—a market where the US manufacturer had never done business.

Chinese counterfeiters also come to trade shows in the US and around the world.  A US carpet designer and manufacturer discovered that a Chinese infringer had copied its catalog and was taking orders for its designs at a trade show in Las Vegas.

Finally, you may believe that your products won’t be effected because you don’t make Louis Vuitton handbags or Nike shoes.  However, it is not only high-end luxury goods that are being counterfeited in China.  Functional goods like batteries, adhesives, automobile parts are being counterfeited, and may end up in your supply chain.

## Scope of the Problem

**Chinese counterfeiting and piracy affect you:**
**In the United States.**
**China is the largest single source of seizures of infringing products by U.S. Customs.**
**In Third Countries.**
**China is a leading source of seizures in the European Union, Japan and in many developing country markets, such as in South America, Southeast Asia, Africa and the Middle East.**

**Notes:**
Counterfeiting and piracy of trademarked and copyrighted goods remains rampant in China. 

Estimates are that the market value of counterfeit goods in China is between $19 and $24 billion dollars (stats from IACC).  Not only US companies are being ‘ripped off.’  You might be surprised to know that this problem has also directly impacted China’s domestic market as well. 80% of counterfeits sold in China are of domestic brands.  

And the problem doesn’t remain in China. Chinese sourced products are found all over the globe.  

For example: China is the world’s largest producer of toys. In one case counterfeit toys left South China through Hong Kong, were shipped to Guatemala and then to US market through Los Angeles. 

Another very big problem are counterfeit drugs.  In China lost sales due to counterfeit pharmaceuticals are estimated in excess of $800 million, representing a loss of 10-15% of annual revenue.

US Customs statistics for FY ’04, seizures from China accounted for 68% of all goods confiscated representing a 47% increase from FY ’03.  Statistics from major US trading partners such as Japan and the EU are similar as to percentage of seized goods coming from China; more than 60% for both.

## Scope of the Problem

**Problem is Widespread.**
**Counterfeiting (20% or more revenue lost of some products).**
**Piracy (90% + of movies, motion pictures, software).**

**Notes:**
Counterfeiting in China is considered to be the most serious counterfeiting problem in world history.  Today, China is termed "the undisputed capital of counterfeiting.“
China has the highest software piracy rate in the world at 92% with losses to industry in 2003 at $3.823 billion. 
Piracy levels (reflecting the percentage of product sold in a market that is illegal) at 90 to 96% in 2003 for all copyright industries in China.  
Estimated losses due to piracy of copyrighted materials (excluding entertainment software) were over $2.584 billion in 2003 in China.  
In 2003, China accounted for 66% or over $62 million of the $94 million of all counterfeit and infringing goods seized by the US Customs Service at ports of entry into the United States.  No other country accounted for more than 3% of counterfeit products. 

## Catalyst for Change: WTO

**China joined the WTO on December 11, 2001.**
**China agreed to implement the Agreement on the Trade Related Aspects of Intellectual Property (TRIPs) Agreement.**
**Does China provide “adequate and effective” intellectual property protection?**

**Notes:**
China joined the WTO on December 11, 2001.  This was the culmination of fifteen years of negotiations.  As a part of this process, China agreed to implement the Agreement on the Trade Related Aspects of Intellectual Property, or the TRIPs Agreement.  TRIPs provides minimum standards for intellectual property protection and enforcement. 

The TRIPs agreement, which came out of the Uruguay round negotiations, is an attempt to narrow the gaps in the way in which IP rights are protected and enforced around the world and to bring them under common international rules. It also provides a dispute settlement mechanism to resolve disputes should they arise.

TRIPs requires that all countries provide “adequate” protection for IP and establishes minimum standards (based largely on existing international agreements).  The Agreement covers seven IP rights: copyright, trademark, geographical indications, industrial designs, patents, layout designs of integrated circuits, undisclosed information and trade secrets. TRIPs also requires that all WTO members provide measures to allow for “effective” enforcement of these IP rights – and here, TRIPs is most important because it marks the first time that an international intellectual property agreement had an enforcement component.

The buzzwords that you should remember here are “adequate and effective.”  When we look to see whether a country complies with the TRIPs Agreement, we make a determination as to the adequacy and effectiveness of their substantive IP laws and practical enforcement system. 

## Good news
China has amended its IP laws substantially.
The TRIPs Agreement keeps China accountable.
Other WTO Members can use TRIPs as leverage with China. 
Bad news
Cutting edge legal issues require further legislation.
Enforcement of IP laws is weak.

**China has amended its IP laws substantially.**
**The TRIPs Agreement keeps China accountable.**
**Other WTO Members can use TRIPs as leverage with China. **
**Bad news**
**Cutting edge legal issues require further legislation.**
**Enforcement of IP laws is weak.**

**Catalyst for Change: WTO**

**Notes:**
How has China done in implementing its TRIPs commitments?  Assessment is mixed.

The good news is that in the three years since its WTO accession, China has substantially revised its IP laws.  Generally speaking, the laws on China’s books are TRIPs-compliant.  There are certain “cutting edge” areas that may require further legislation.  We continue to work with China on the issues such as online piracy, well-known marks, and data exclusivity; where additional legislation or regulation may be needed.

The bad news is that the foreign industry faces huge challenges in enforcing their rights in China.  I’ll talk a bit later about what the US Government is doing to hold China to the commitments it made as a part of WTO accession.  

Right now, I’d like to talk a bit about the decisions that US companies need to make before doing business in China.

## Do you plan to market in China?
Do you plan to serve other foreign markets?
Do you plan to manufacture in China? 
Do you plan to purchase supplies in China?
Do you attend large international trade shows?

**Do you plan to serve other foreign markets?**
**Do you plan to manufacture in China? **
**Do you plan to purchase supplies in China?**
**Do you attend large international trade shows?**

**Business Considerations**

**Notes:**
Let me describe briefly how some of these issues may affect your business. If you plan to market, and I’ll get into this later, it’s important that you secure you IP right there since most of these rights are territorial, meaning that they are good only within the territory in which you’ve registered the right. That being said, and as I mentioned earlier on, it’s possible that even if you don’t market in China, you could have IP problems nevertheless. 

For example, if you plan to manufacture your product in China, you must consider, among other things, the possibility of your manufacturer making counterfeit products after hours in the Chinese factory.

If you plan to purchase supplies in China, you may have to be concerned with the suppliers providing you with counterfeit products.

If  you attend large international trade shows either in China or elsewhere, you may have to deal with counterfeiters who knock off the products that you’ve exhibited at these trade shows. 

## How important is intellectual property to your business model?
Can your goods or services be copied or imitated?

**Can your goods or services be copied or imitated?**

**Business Considerations**

**Notes:**
Again, some more business considerations: ask your manager or your lawyer, how important is IP to your business model? What rights have you secured in the U.S., because those are similar to what you should secure in other countries as well.

## REMEMBER:
IP rights are usually territorial.
Use the 3 R’s:
Registration
Recordation
Remedies

**IP rights are usually territorial.**
**Use the 3 R’s:**
**Registration**
**Recordation**
**Remedies**

**Protecting Your IP in China**

## Register 
Record 
Remedies

**Record **
**Remedies**

**Protecting Your IP in China**

**Notes:**
Remember that each of the three R’s is territorial . . .

To help you enforce your rights in China, we recommend that you register these rights and record them, without which you may not have any remedies in case of infringement.

## Patents
Must file patent applications with State IP Office (SIPO).
Rights are territorial.
China is “first to file” country.
Must use registered patent agent.

**Must file patent applications with State IP Office (SIPO).**
**Rights are territorial.**
**China is “first to file” country.**
**Must use registered patent agent.**

**Protecting Your IP: Registration**

**Notes:**
Let’s go to patents. The patent office in China is called the State Intellectual Property Office (SIPO). 

SIPO has offices in all major cities in the provinces, but the main one is in Beijing, and that is the one that will examine your patent applications. 

Patent rights are territorial which means you must file in China in order to get protection there. 

China is a first to file country which means that the first inventor to file will get the patent rights. In the U.S., we are first to invent country which means whoever invents first will get the patent right. Most countries are like china. 

## Trademarks
Must file trademark applications with the Chinese Trademark Office (CTO), which is part of the State Administration for Industry and Commerce (SAIC).
CTO provides administrative enforcement of trademarks throughout China.
Tips for protecting your trademark
Do a trademark search.
Have the trademark registered in Chinese and English.
Secure other rights such as domain names, if necessary.

**Must file trademark applications with the Chinese Trademark Office (CTO), which is part of the State Administration for Industry and Commerce (SAIC).**
**CTO provides administrative enforcement of trademarks throughout China.**
**Tips for protecting your trademark**
**Do a trademark search.**
**Have the trademark registered in Chinese and English.**
**Secure other rights such as domain names, if necessary.**

**Protecting Your IP: Registration**

**Notes:**
Next, onto trademarks. 

A couple of tips for protecting your mark in China: do a TM search to make sure that no one else has registered your mark. Register your mark in Chinese and English – when doing it in Chinese, you need to use characters in that sound like your mark. Secure domain name protection if necessary.

One problem with regard to trademarks in China is the issue of well-known marks, and whether foreign marks are receiving protection as well-known marks in China.  The SAIC had previously amended the trademark law to include provisions to protect well-known marks.

Then in 2003, the SAIC issued regulations which were intended to broaden protection for marks deemed to be well known in China. According to the regulations, if a mark is recognized as being well known, the regulation would provide protection against other parties seeking to use or register identical marks in connection with dissimilar goods or services or in registered company names. Trademark owners may oppose an application or seek to cancel a registration by seeking recognition of well-known status through submission of relevant evidence for each new dispute that arises.

There’s also been a bit of controversy as to whether China maintained an official list of well-known marks for which special treatment would apply. Chinese officials have denied, although we’ve heard from industry that no US company’s well known mark has been on the list. At any rate, the practice of maintaining a list was supposed to have been abolished by the 2003 regulations. Our concern that notwithstanding this provision, other agencies and local authorities may still be maintaining such a list.

We, USG, have spoken with officials about the new regulations. The Chinese Trademark Office has told us that foreign marks should now be able to enjoy well-known status in China. They also tell us again that they do not maintain a list of well-known marks. However, we’ve seen no decisions from the CTO recognizing a foreign mark as well-known so bottom line  it’s still unclear to us how these provisions will work. 

Finally, there is an issue concerning a trademark database.  We know that industry has been concerned about the lack of a publicly accessible, searchable, online database for searching trademarks in China.  We’ve been actively trying to encourage the Chinese to provide for a transparent database of trademarks to facilitate trademark prosecution, and also, on the enforcement side, to reduce incidence of counterfeiting. In this way, manufacturers in China can readily determine if a trademark is registered and is being used by someone other than the party for whom they are manufacturing. 

## Copyright protection is available for all works at the point that the work is in any tangible form.
There may still be reasons to register.  
As a U.S. copyright owner, you must register in order to be able to bring suit in federal court for infringement.
Registration puts others on notice.
A U.S. registration may help to provide evidence in Chinese court.

**There may still be reasons to register.  **
**As a U.S. copyright owner, you must register in order to be able to bring suit in federal court for infringement.**
**Registration puts others on notice.**
**A U.S. registration may help to provide evidence in Chinese court.**

**Protecting Your IP: Registration**

**Notes:**
Onto China’s copyright situation. The principal agency in China with regard to copyright protection and enforcement is the National Copyright Administration of China (NCAC) (which operates under the State Press and Publications Administration). The other ministry involved in copyright enforcement issues is the Ministry of Culture which handles distribution and market access issues for movies, music and books, and also issued its own rules regarding enforcement of copyrighted works over the Internet.

You do not need to register your copyright since the law says that you get protection for it when it’s fixed into a tangible form, such as a CD, DVD, book, etc. But there are some good reasons to register, which I’ve outlined here. 

Another agency with enforcement capabilities is the State General Administration of the PRC for Quality Supervision and Inspection and Quarantine (AQSIQ) which has the authority to confiscate equipment used for making counterfeit and pirated products and other evidence of infringement. 

China has made many legal improvements in the copyright enforcement area but many problems remain. China amended its copyright laws in late 2001. The new amendments help to strengthen available enforcement measures – for example, in the case of administrative enforcement, authorities can now confiscate and destroy pirated products and the equipment used to produce them, as well as impose fines. The plaintiff copyright holder can also seek a preliminary injunction.  

One major problem is with criminal enforcement.  Again, as in the trademark area, high thresholds translate to difficulties convincing Chinese authorities to prosecute commercial piracy cases under the copyright provisions of the criminal law. Another problem: lack of referrals from administrative enforcement to criminal prosecutors.  

 Next, a word about enforcement of copyrighted works on the internet: China has the world’s second highest number of internet users. But it has not yet acceded to the WIPO internet treaties, the WIPO copyright treaty, (WCT), and the WIPO Performers and Phonograms Treaty (WPPT).  We’ve been urging them to sign onto these treaties at every opportunity possible.   

 Finally, there is the issue of market access which poses a very serious problem for the copyright industry. For the audio and audio visual industries, film industry, market access barriers severely limit the number of theatrical films that can be imported under revenue sharing terms.  Videogames, for example, must be approved by the government before import and when permission is granted, they are already pirated. 

## Protecting Your IP: Recordation

**You can record your registered trademarks and copyrights with the U.S. Customs and Border Protection (CBP)****.**
**Note: This procedure is not available for patents.**
**This information is recorded (for a fee) and entered into an electronic database accessible by CBP officers across the country.  CBP uses the information to actively monitor shipments and prevent the importation or exportation of infringing goods.**
**A similar process exists for Chinese Customs.**

**Notes:**
Next, recording your rights with Customs. You can record your registered TM and CR with US Customs, which is now in the Department of Homeland Security. This procedure is not available for patented products. 

It is recommended that you also record your registered rights with Chinese Customs.  It is highly recommended to have a local in-country agent designated for your point of contact with Chinese Customs as the timeframe for responding to suspect seizure is only 3-5 business days.

## Do you need assistance contacting any U.S. Embassies who may be able to help you find experienced intellectual property attorneys in your country of interest?
Embassies maintain lawyer lists – as do some trade associations.

**Embassies maintain lawyer lists – as do some trade associations.**

**Protecting Your IP: Remedies**

**Notes:**
Let me add here that you ought to also consult with our colleagues at the Foreign Commercial Service, which is a part of our “mother” agency, the Department of Commerce.

## Embassy and Consulate Activities

**Ambassador’s IPR Roundtable**
**Consulate IPR events**
**Guangdong IPR Roundtable**
**Commercial complaint assistance**
**China IPR toolkit**
**Embassy IPR action plan**
**IPR, Customs and Legal Attaches**
**Container Security Initiative**

**Notes:**
These events make up a large part of the calendar for the Embassy and Consulates in China.  We have been told that the Ambassador’s Roundtable will be held in the latter part of this year; maybe early in December.

## Embassy and Consulate Activities

**Embassy and Consulate Activities**

**Notes:**
This is the IPR toolkit web page contained on the US Embassy Web site.

## Handling Commercial Complaints

**Handling Commercial Complaints**

**Complaints to Commerce, State, U.S. Export Assistance Council and Embassy**
**Collect information**
**Assemble a team**
**Consult technical experts **
**Determine possible actions**

**Notes:**
Department of Commerce has created a Trade Facilitation Office in Beijing to handle commercial and trade related problems.  

DOC has also formed a Case Referral Mechanism whereby cases that represent systemic problems with the Chinese system can be vetted inter-agency and then formally referred to a direct Point of Contact within the Chinese Ministry of Commerce.  Follow up is then requested in a 30-60 day period from the Chinese authorities.  

## Foreign Commercial Service

**Foreign Commercial Service**

**Notes:**
Foreign Commercial Service web page.

## Trade Compliance Center

**Notes:**
Trade Compliance Center web complaint form.

## What We Can Do
Help companies navigate through China’s legal system.
Provide list of attorneys and/or consulting firms.
Monitor and inquire about case status.

**Help companies navigate through China’s legal system.**
**Provide list of attorneys and/or consulting firms.**
**Monitor and inquire about case status.**

**What We Can’t Do**
**Provide legal advice.**
**Advocate on behalf of a company where the company has not pursued legal action.**
**Try to influence the result of a case under adjudication. **

**USG Help for IPR Rights Holders**

## USG IPR Contacts

**U.S. Department of State**
**Beijing: Mark Cohen (****CohenMA@state.gov****) (seconded from USPTO) and Adam Ross (****Rossad@State.Gov****)**
**U.S. Department of Commerce**
**Beijing: Foreign Commercial Service – Cameron Werker**
**Beijing: Market Access and Compliance**
**Beijing: Trade Facilitation Office**
**Washington: Office of China Economic Area – Joshua Wu, Ellen Szymanski and Janene Marasciullo.**
**Washington: Sector-Specific Offices**

## USG IPR Contacts

**U.S. Patent and Trademark Office**
**Susan.Anthony@USPTO.Gov – Trademark**
**Jennifer.Ness@USPTO.Gov – Copyright**
**Elaine.Wu@USPTO.Gov – Patent**
**Karen.Hauda@USPTO.Gov – Biotech**
**Timothy.Browning@USPTO.Gov – Enforcement**

**Notes:**
PTO China team.

## Section 337 Remedy

**If infringing products are being imported into the United States, and the company holds a registered patent, trademark or copyright for the product, you should consider filing a Section 337 complaint with the U.S. International Trade Commission to bar infringing products from entering the United States.**

**Notes:**
Generally, this is a 6-12 month process whereby the ITC will issue a ruling and instruct US Customs to bar the import of the infringing product.  The infringing goods are not seized, but simply not allowed entry into the US.

## “Three Track” Chinese enforcement system
Administrative enforcement (by far the majority of all cases)
Patent, TM, copyright, trade secret, plant varieties, etc.
Customs
Civil enforcement
Criminal (least common)

**Administrative enforcement (by far the majority of all cases)**
**Patent, TM, copyright, trade secret, plant varieties, etc.**
**Customs**
**Civil enforcement**
**Criminal (least common)**

**Using Remedies in China**

**Notes:**
What remedies are available to you in China? China’s basic enforcement structure consists of 3 tracks:  administrative enforcement, civil enforcement and criminal enforcement. 

## Advantages
Inexpensive
Fast
Local
Expert agency
Nearly every IP right has an administrative agency
Don’t need a lawyer
May be able to obtain an injunction
Administrative agency may have other enforcement capabilities

**Inexpensive**
**Fast**
**Local**
**Expert agency**
**Nearly every IP right has an administrative agency**
**Don’t need a lawyer**
**May be able to obtain an injunction**
**Administrative agency may have other enforcement capabilities**

**Administrative Enforcement**

**Notes:**
First, I’ll talk about Administrative enforcement, which is by far the most common and frequently used form of enforcement of IP rights.  One important point to make here: each IP right in China has an administrative agency associated with it that can issue fines, etc. This means that there are lots of agencies involved in IP enforcement, some overlapping, and the lack of coordination among them is a concern.  

The main enforcement agency in China is the State Administration for Industry and Commerce (AIC). It is one of the largest agencies in China with some 600,000 employees at the national and local level. It includes the Chinese Trademark Office, the Trademark Review and Adjudication Board, and the Fair Trade Bureau (deals with unfair competition, trade secret matters, trade dress infringements, etc., a company licensing function and enforcement authority over these laws.) 

An infringed party may seek redress at the AIC by filing a complaint with the local AIC  The AIC can enter premises and seize goods, order infringing goods to be stopped, impose fines, destroy goods, etc.  It is used most frequently because it is readily available and quick.   

I’ve listed several of the advantages of the administrative enforcement:  inexpensive, relatively quick, and depending on the IP right, you can generally seek an injunction to stop infringing goods. 

## Disadvantages
“Local Protectionism”
Penalties usually non-deterrent
Non-transparent
Difficult to transfer to criminal prosecution
Limited geographic jurisdiction
Can’t reach international criminal activity
Damages for injured party not likely available

**“****Local Protectionism”**
**Penalties usually non-deterrent**
**Non-transparent**
**Difficult to transfer to criminal prosecution**
**Limited geographic jurisdiction**
**Can’t reach international criminal activity**
**Damages for injured party not likely available**

**Administrative Enforcement**

**Notes:**
There are problems however. It can be a burdensome approach that does not result in permanent relief. Most importantly, damages are not available so repeat offenders are common. Fines are too low so there’s no deterrence and local protectionism remains a problem, and there’s also lack of transparency in the system, particularly at local levels.  Local protectionism is a real problem in China.

## Advantages
Specialized judiciary that may be trained in IPR
Availability of damages and injunctive remedies
Rights of appeal
Nationwide jurisdiction

**Specialized judiciary that may be trained in IPR**
**Availability of damages and injunctive remedies**
**Rights of appeal**
**Nationwide jurisdiction**

**Civil Enforcement**

**Notes:**
Civil enforcement offers some added advantages over the administrative enforcement route. This route can be taken as an alternative to administrative action, or it maybe undertaken simultaneously with or subsequent to the administrative action. There are advantages to this approach: most significantly, a civil judgment provides for nation wide enforcement. Damages are also available, and the rights to appeal are available also. 

China has specialized IP courts – called the 3rd civil division for civil infringement cases. Within the current Chinese judicial system,  IP matters are sent to one of three different tribunals.  The administrative tribunal of the Beijing intermediate People’s Court handles appeals of administrative IP decisions, including decisions of the patent office of China, the State Intellectual Property Office (SIPO), and decisions of the Chinese Trademark Office on trademark matters, and Chinese customs decision on border protection of IP. A criminal tribunal handles criminal IP matters;  civil IP tribunals handle infringement and validity issues. 

## Disadvantages
High cost
Low damage awards
Lack of independence of judiciary in many jurisdictions
Great difficulty in collecting damages, if awarded
www.chinaiprlaw.com: A Chinese judge’s Web site

**High cost**
**Low damage awards**
**Lack of independence of judiciary in many jurisdictions**
**Great difficulty in collecting damages, if awarded**
**www.chinaiprlaw.com****: A Chinese judge’s Web site**

**Civil Enforcement**

**Notes:**
Disadvantages include that too often, damage awards are low, costs of litigation are high, and in many jurisdictions, the judiciary is not completely independent. 

I’ve included the website a particularly good source of information for current judicial interpretations, etc. It is the website of Judge Jiang Zhipei, a judge in the Supreme People’s Court who is chief of the IP panel.

Note:  China’s judicial system is modeled principally on a civil law system although with many independent Chinese characteristics. The judiciary is an independent branch of government along with the procuratorate (equivalent to our attorney general). Chinese judges cannot make case law. Recent changes to the law mandate that judges are legally trained. Judges are frequently locally paid and too beholden to local protectionist interests.

Judge Jiang Zhipei is the Chief Judge of the IP panel of the Supreme People’s court. The IPR court is a civil court only. 

## Advantages
Can be brought by police/prosecutors or injured party
Deterrent damages possible (fine and imprisonment)
Possibility of civil damages in addition to criminal punishment
Potentially lower cost than civil litigation
Criminal measures for willful trademark counterfeiting and copyright piracy on a commercial scale are WTO obligations

**Can be brought by police/prosecutors or injured party**
**Deterrent damages possible (fine and imprisonment)**
**Possibility of civil damages in addition to criminal punishment**
**Potentially lower cost than civil litigation**
**Criminal measures for willful trademark counterfeiting and copyright piracy on a commercial scale are WTO obligations**

**Criminal Enforcement**

**Notes:**
Criminal enforcement is available as well. Ideally, this would be the most effective form of enforcement. Cases can be brought by prosecutors or injured parties, deterrent penalties are available, including jail time. 

## Disadvantages
Evidentiary standards have been lowered with the new judicial interpretation, but resource issues may still make these cases difficult to pursue
Not all IPR infringements are criminalized
Difficulties may exist in having administrative cases referred to criminal prosecution

**Evidentiary standards have been lowered with the new judicial interpretation, but resource issues may still make these cases difficult to pursue**
**Not all IPR infringements are criminalized**
**Difficulties may exist in having administrative cases referred to criminal prosecution**

**Criminal Enforcement**

**Notes:**
Unfortunately, not enough criminal cases are being brought, and there is pretty general wide spread consensus that the legal thresholds to trigger criminal enforcement need to be lowered. Also – there are problems in determining what administrative cases can be referred to criminal prosecution because the regulations are not too clear. Other problems include the fact that not all IP infringements are criminalized so for some of them, criminal enforcement is simply not available. 

Let me give you some enforcement statistics that give you an idea of how the enforcement system has been used. We’ve heard that  there were 41,163 trademark law violation cases in 2004.   Infringers were ordered to pay the rights owners average damages of RMB 8,500 or $780 and there were 96 cases transferred to criminal procedures or .2% of all cases.  Cases involving foreign right holders numbered more than 5,500. 

As for copyright cases, in 2004 copyright administrative authorities accepted 9,691 cases in total, involving 163 foreign right holders and 102 cases were transferred to criminal procedures. 

## Advantages
Available for import and export
Stops goods in transit
Inexpensive
Stops the harm caused by export of counterfeit goods

**Available for import and export**
**Stops goods in transit**
**Inexpensive**
**Stops the harm caused by export of counterfeit goods**

**Customs Enforcement**

**Notes:**
Next, a word about Customs enforcement.  The customs agency in China is called the General Administration of Customs, which has an IP office. I’ve listed some of the advantages of using customs enforcement in China. It is inexpensive; the GAC will stop infringing goods from being imported or exported. 

## Disadvantages
Most useful when you know the port the goods are being exported from
Storage charges and other expenses can be high
Customs can only inspect a limited percentage of goods exported

**Most useful when you know the port the goods are being exported from**
**Storage charges and other expenses can be high**
**Customs can only inspect a limited percentage of goods exported**

**Customs Enforcement**

**Notes:**
But there are also disadvantages, which I’ve listed here. China’s State Council recently issued new regulations entering into effect on March 1, 2004 that we hope will help with some of the problems including lowering storage costs, which at one point, were high enough that they would deter IP owners from recording their rights with Chinese customs.  These new regulations also provide for the possibility of transfer to criminal prosecution, although we’ve not heard of any cases of transfer. We are waiting for implementing regulations to see how these rules will work. 

A major problem, however: in recent years, US Customs statistics have shown that the amount of seizures of counterfeit and pirated goods from China have increased, and in fact, since 1998, it’s been the leading supplier of seized goods by US customs for every year except one. 

China has been controlling this export of infringing products by providing for administrative penalties.  However, we are concerned that these new regulations approved by the State Council will remove customs IP penalties from the export or import of counterfeit and pirated goods, which would be a big step backwards in our mind. 

## Ongoing WTO monitoring
Multilateral work at WIPO
Regional work in bodies such as ASEAN, APEC
Bilateral work
JCCT
Continuation of USTR bilateral meetings
Extensive IP training
Domestic efforts

**Multilateral work at WIPO**
**Regional work in bodies such as ASEAN, APEC**
**Bilateral work**
**JCCT**
**Continuation of USTR bilateral meetings**
**Extensive IP training**
**Domestic efforts**

**U.S. Government Efforts**

**Notes:**
WIPO: World Intellectual Property Organization
ASEAN: Association of Southeast Asian Nationa
APEC: Asia Pacific Economic Cooperation [forum]
JCCT: Joint Commission on Commerce and Trade 

## USTR’s Special 301 Report
China’s status: Section 306 monitoring/OCR
U.S. Embassy-Beijing
National trade estimate
China Mission IPR Action Plan
Ambassador’s IPR Roundtable
USTR Annual Report on China’s WTO Compliance
September hearings
Questions posed at TRIPS Council/other fora (see WTO Web site)

**China’s status: Section 306 monitoring/OCR**
**U.S. Embassy-Beijing**
**National trade estimate**
**China Mission IPR Action Plan**
**Ambassador’s IPR Roundtable**
**USTR Annual Report on China’s WTO Compliance**
**September hearings**
**Questions posed at TRIPS Council/other fora (see WTO Web site)**

**USG Reports on IGR in China**

**Notes:**
USTR:  Special 301 requires USTR to identify foreign countries that deny adequate and effective protection of intellectual property rights or fair and equitable market access for U.S. citizens that rely on IP protection.  

USTR is required to decide which, if any, of those countries should be designated Priority Foreign Countries,  countries that: 
Have the most onerous and egregious acts, policies and practices which have the greatest adverse impact on the relevant U.S. products; and
Are not engaged in good faith negotiations or making significant progress in negotiations to address these problems

## China Mission IPR Focus in 2005

**Improved IPR enforcement**
**Criminal enforcement: JI implementation**
**Administrative enforcement: Case transfer**
**Export controls (general bonding)**
**Improved market access for IPR products**

## China Mission IPR Focus in 2005

**Macro strategies: Action/Strategic plans**
**Patents (design patents; biotechnology)**
**Trademarks (TM Examination Manual)**
**Copyrights (WIPO Internet Treaties; NCAC Administrative Regulations on ISP Liability)**
**Working with industry**
**Special 301, benchmarking, WTO**

## APEC
ASEAN
The Trilateral Offices
World Customs Organization

**ASEAN**
**The Trilateral Offices**
**World Customs Organization**

**Other Multilateral Bodies**

**Notes:**
The US is not alone in raising concern about China’s intellectual property problems.  Indeed, this topic is  high priority for every related international organization.   

## USPTO has a strong relationship with:
The State Intellectual Property Office (SIPO) of China on Patent issues
The State Administration for Industry and Commerce (SAIC) and the China Trademark Office (CTO) on issues relating to trademarks, domain names, and geographical indications.
The National Copyright Administration (NCA) on copyright and related rights, including Internet issues

**The State Intellectual Property Office (SIPO) of China on Patent issues**
**The State Administration for Industry and Commerce (SAIC) and the China Trademark Office (CTO) on issues relating to trademarks, domain names, and geographical indications.**
**The National Copyright Administration (NCA) on copyright and related rights, including Internet issues**

**Office-to-Office Activities**

**Notes:**
In 2004, Under Secretary and Director Jon Dudas led two trips to China for consultations with senior officials at China's patent and trademark and other intellectual property agencies.  Our delegations also met with U.S. companies facing intellectual property issues in China.  

During these visits, we urged China to ratify and implement the World Intellectual Property Organization (WIPO) treaties in the near terms, provide draft criminal judicial interpretations to the United States for review and facilitate enforcement against end user software piracy by declaring that it harms the public interest.

We also discussed technical cooperation issues with our Chinese patent and trademark counterparts. We have pledged to work with our sister agencies in China on issues such as protection for industrial designs and pharmaceutical test data, new trademark examination guidelines and providing assistance on well-known mark examination in China.

## Long bilateral relationship between U.S. and China
Several bilateral agreements including IP issues dating back to the early 1990s
Regular bilateral consultations since WTO accession between U.S. and China
U.S.-China Joint Commission on Commerce and Trade IPR Working Group

**Several bilateral agreements including IP issues dating back to the early 1990s**
**Regular bilateral consultations since WTO accession between U.S. and China**
**U.S.-China Joint Commission on Commerce and Trade IPR Working Group**

**U.S.-China Bilateral Work**

**Notes:**
In an effort to address these problems in China, the U.S. and China recently created a “working group on IPR” that resulted from the April 2004 session of U.S.-China Joint Commission on Commerce and Trade.  Through the JCCT and other avenues, the U.S. hopes to continue to work closely with China to improve the situation for U.S. rights holders.  During the April 2004 session of the JCCT, China presented an action plan designed to address the piracy and counterfeiting problems faced by U.S. companies.  Under the plan, China committed to:  (a) significantly reduce IPR infringement levels; (b) issue judicial interpretation for criminal enforcement of IPR cases by end of year; (c) conduct nation-wide enforcement campaigns; (d) ratify and implement the WIPO Internet Treaties as soon as possible, and (e) agree to establish an IPR working group under the JCCT.  

In line with the JCCT mandate, the working group will seek to ensure that China significantly reduces IPR infringement to levels consistent with standards required by World Trade Organization rules.  The IPR working group will provide on-going and in depth cooperation and consultations among the judicial, prosecutorial, and law enforcement authorities on both sides on laws, regulations, and practices related to the criminal prosecution of IPR violators, among other areas of cooperation.  The USG side of the working group will consist of DOC/PTO, USTR, DOJ, Department of State, and U.S. Customs officials.  

## USPTO has conducted many training programs for Chinese officials.
In China
In the U.S.
In the region
By videoconference
On both substantive issues and enforcement

**In China**
**In the U.S.**
**In the region**
**By videoconference**
**On both substantive issues and enforcement**

**Training**

**Notes:**
The USPTO, in cooperation with other U.S. agencies and the U.S. business community, has conducted many training programs for Chinese officials and businesses over the past several years, in Washington, DC, in China, via digital video conference and through other formats.  We have conducted four IPR joint enforcement seminars with Chinese counterparts in China since 2001.  These seminars have educated hundreds of Chinese IP officials on TRIPs requirements and the importance of IP protection.  In the past year alone, the USPTO has conducted criminal IPR enforcement seminars in Beijing, Shanghai and Guangzhou, and will continue to hold capacity building programs in China to strengthen IPR enforcement.

In addition to these efforts specifically directed towards China, the USPTO has been very active this year in other ways in an effort to address the problems of rights holders. Beginning in January 2004, the USPTO has been organizing, and conducting extensive and comprehensive training workshops, seminars and conferences, often in cooperation with the Departments of Commerce, State and Justice, or regional non-governmental organizations, on intellectual property protection and enforcement in nearly all regions of the world including the Middle East, Southeast Asia, Africa, Europe, the Caribbean and Central and South America.

## USPTO has a comprehensive and experienced China IPR team, including:
TM expert
Copyright expert
Patent expert
Enforcement expert
USPTO recently appointed an IP attaché to the U.S. Embassy in Beijing.

**TM expert**
**Copyright expert**
**Patent expert**
**Enforcement expert**
**USPTO recently appointed an IP attaché to the U.S. Embassy in Beijing.**

**USPTO China IP Expertise**

**Notes:**
In September 2004, a USPTO attorney-advisor was appointed as intellectual property attaché to the U.S. Embassy in Beijing.  Mark Cohen is fluent in Mandarin and has many years of experience in working on China IP issues.  Mark will work with government officials to improve Chinese intellectual property laws, regulations and enforcement procedures.  This is the first time that the USPTO has placed an official overseas for the purpose of improving intellectual property protection in a specific country. The assignment fulfills a recommendation in the Department of Commerce report, “Manufacturing in America,” to place a USPTO official in China to provide in-country support to curb intellectual property crime and strengthen enforcement.

## Mark Cohen will work with government officials to improve Chinese intellectual property laws, regulations and enforcement procedures.

**USPTO China IP Expertise**

**Notes:**
In September 2004, a USPTO attorney-advisor was appointed as intellectual property attaché to the U.S. Embassy in Beijing.  Mark Cohen is fluent in Mandarin and has many years of experience in working on China IP issues.  Mark will work with government officials to improve Chinese intellectual property laws, regulations and enforcement procedures.  This is the first time that the USPTO has placed an official overseas for the purpose of improving intellectual property protection in a specific country. The assignment fulfills a recommendation in the Department of Commerce report, “Manufacturing in America,” to place a USPTO official in China to provide in-country support to curb intellectual property crime and strengthen enforcement.

## Established in 1999
USPTO Director co-chairs
May develop a new role in combating piracy and counterfeiting in China

**USPTO Director co-chairs**
**May develop a new role in combating piracy and counterfeiting in China**

**NIPLECC**

**Notes:**
To better help coordinate the IP enforcement efforts of the USPTO and other government agencies, the National Intellectual Property Law Enforcement Coordination Council (NIPLECC) was established in 1999 to function as an interagency group responsible for coordinating the US' domestic and international intellectual property enforcement activities.  NIPLECC includes as one of its co-chairs, the Director of the USPTO. Other members include the Department of Justice, the Department of State, the United States Trade Representative, the U.S. Customs Service, and the Department of Commerce.  USPTO has played an important role in working with these government agencies to define NIPLECC's mission and to identify challenging IP enforcement issues, including combating internet infringement, that NIPLECC could partner with industry and rights holders to address.  

## Rightsholders can call 1 (866) 999-HALT
Multi-agency effort involving:
Department of Commerce
Department of Justice
Department of Homeland Security
Multifaceted effort using each agency’s resources to best tackle the problem

**Multi-agency effort involving:**
**Department of Commerce**
**Department of Justice**
**Department of Homeland Security**
**Multifaceted effort using each agency’s resources to best tackle the problem**

**STOP Initiative**

**Notes:**
Another IPR enforcement initiative is the Strategy Targeting Organized Piracy (STOP), recently established to provide for a coordinated attack to stem the global trade in counterfeit merchandise and pirated music and movies.  As part if STOP, a hotline is being provided that gives a one-stop-shop for businesses to protect their intellectual property at home and abroad.  The hotline gives businesses the information they need to leverage the resources of the United States Government to lock down and enforce their trademarks, patents and copyrights overseas.  Other STOP initiative elements that are underway include 
-developing a comprehensive web-based guide for American innovators and businesses on how to safeguard their ideas and innovations
-challenging industry leaders to develop voluntary guidelines/corporate compliance programs to ensure that their supply chains are free of trade in fakes;
-facilitating a process for U.S. companies to record intellectual property rights with U.S. Customs and Border Protection; and
-establishing a Global Intellectual Property Training Center as a central location and focal point for the coordination of U.S. intellectual property rights enforcement training.

## Would you like to speak to U.S. Government experts that can help you devise a strategy to fight back?  
The company may be directed to the Commerce IPR hotline where Commerce experts can suggest strategies to evaluate IPR problems encountered abroad.  
Companies can contact the Commerce Department at: 1-866-999-HALT (4258).

**The company may be directed to the Commerce IPR hotline where Commerce experts can suggest strategies to evaluate IPR problems encountered abroad.  **
**Companies can contact the Commerce Department at: 1-866-999-HALT (4258).**

**STOP Hotline**

## susan.anthony@uspto.gov

THANK YOU

**susan.anthony@uspto.gov**
**THANK YOU**

**Protecting and Enforcing Your Intellectual Property ****in China **

**Notes:**
We are optimistic about the results of all of our efforts.  I am hopeful that with your continued support and partnership—as well as the efforts of other WTO Member countries, we will be able to achieve concrete results in China.  We look forward to seeing a substantial drop in the  piracy and counterfeiting rates in China.   We hope that businesses will be able to enter the Chinese market confident that they will be afforded the IP protection they need.

Thank you very much.