WORLD TRADE
ORGANIZATIONIP/C/31
10 December 2003
(03-6546)
Council for Trade-Related Aspects
of Intellectual Property Rights
TRANSITIONAL REVIEW UNDER SECTION 18 OF THE PROTOCOL ON THE
ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA
Report to the General Council by the Chair
1. At its meeting of 18 November 2003, the Council undertook the second annual transitional
review of the implementation by China of its WTO commitments pursuant to Section 18 of the
Protocol on the Accession of the People's Republic of China (WT/L/432), and agreed that the Chair,
acting on his own responsibility, would prepare a brief, factual report on the review to the General
Council.
2. Written comments and questions in connection with the review were submitted in advance of
the meeting by Japan, Chinese Taipei, the European Communities and the United States.  These
submissions were circulated in document s IP/C/W/410, 411, 413 and 414, respectively.
3. In a communication, dated 17 November 2003, China provided information as specified in
Annex 1A to the Protocol.  This submission  was circulated as document IP/C/W/415, dated
18 November 2003.
4. An annex to this document contains the relevant part of the minutes of the Council's
November meeting1 that reflects the statements made under the review.
_______________
                                                     
1 To be circulated as IP/C/M/42.IP/C/31
Page 2
ANNEX
Item C of the minutes of the Council's meeting of 18 November 2003
to be circulated as IP/C/M/422
C. TRANSITIONAL REVIEW UNDER SECTION 18 OF THE PROTOCOL ON THE ACCESSION OF THE
PEOPLE 'S REPUBLIC OF CHINA
1. The Chairman recalled that paragraph 18 of China's Protocol on Accession required the
TRIPS Council to review the implementation by China of the TRIPS Agreement each year for eight
years and report the results of such review prom ptly to the General Council.  The TRIPS Council had
taken up the first review under paragraph 18 at its meeting in September 2002 in combination with its
normal review of China's TRIPS implementing legislation.  The report on the first transitional reviewhad been forwarded to the General Council in  document IP/C/26.  He further recalled that
paragraph 18 required China to provide relevant information, including information specified in
Annex 1A, to the TRIPS Council in advance of th e review.  He informed the Council that the
information submitted by China to it as required under Annex 1A of the Protocol of Accession, dated
17 November 2003, had been circulated in document IP/C/W/415.  Questions and/or comments inconnection with the transitional review had been submitted by Japan, Chinese Taipei, the European
Communities and the United States, which had been circulated in documents IP/W/410, 411, 413 and
414 respectively.  
2. The representative of China said that, prior to  the Council's meeting, China had submitted to
the TRIPS Council the information required by Annex 1A to the Protocol on Accession.  In order to
ensure a better understanding of the status of protection of intellectual property rights (IPRs) in China,
her delegation had also made available to the meeting a White Paper on "Intellectual Property
Protection in 2002 in China".  This paper presented a detailed and updated account of the
developments with regard to the IPRs in China, covering patents, trademarks, copyright, new plant
varieties, etc.  A considerable part of the report was devoted to the efforts and achievements in regardto the enforcement of IPR legislation by the relevant  government authorities.  She said that these two
documents provided Members with a comprehensive and objective picture on the implementation of
TRIPS-related commitments by China, and also served as a useful source of information to address
some of their concerns.
3. She said that a large volume of questions had been posed to China in the context of the
transitional review mechanism (TRM).  While wishing to ensure that the questions would be dealt
with in the most responsible and serious manner, she pointed out that the communications from some
Members had reached her delegation only very recently, leaving China with little time for necessary
preparation.  She said that China attached great importance to IP protection and the TRM in the
TRIPS Council.  A strong team had been put to gether with officials and experts from various
departments, including the Ministry of Commer ce, State Administration of Industry and Commerce,
National Copyright Administration, State Intellectual Property Office, and the Legal Affairs Office ofthe State Council.  She said that their presence was intended to improve the quality of information
exchange with Members.
4. Turning to the comments made and questions posed to China, a second representative of
China said that his delegation was grateful that some Members had commented on the IP protection
regime in China.  He found this to be constructive.  It was the belief of the Chinese Government thatenhancing IPR protection was a long -term course of action with strategic significance.  Since the
beginning of the 1980s, China had gradually establis hed an excellent IPR legislation and enforcement
                                                     
2 The paragraph numbering of this excerpt will not correspond with that of the minutes of the TRIPS
Council meeting but has been included for the convenience of users.IP/C/31
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mechanism.  In China's Criminal Law, there were specific provisions on IPR crimes.  China had also
set up special IPR courts to hear cases involving IPR infringements.  China had modified its laws and
regulations in relation to IPRs, making them compatible with international conventions, including the
TRIPS Agreement.  He said that the Chinese Go vernment would fulfil its commitment to further
improve its IPR system, fully implement various IPR laws, upgrade IPR protection with adequate
measures to keep pace with international standards, and create a sound legal environment for the
introduction of foreign advanced technologies, funds and management skills.  At the same time, the
Chinese Government would also implement effective IPR policies and strategies, reinforcing its
efforts to boost technological innovation with IP R protection, strengthening IPR administration and
guiding all economic entities to enhance their competency in management, applications and protection
of IPRs as well as the ability to meet international competition, and consequently improve the
technological and comprehensive forces of China.  The Chinese Government would, as always,pursue IP protection policy and effectively safeguard the legitimate interests of both Chinese and
foreign right owners.  China was willing to further cooperate and communicate with other Members
on the basis of equality and mutual benefits.
5. As to the principle of transparency and notification obligations, he said that China respected
this principle and, since its accession, had fully implemented its obligations in the light of the TRIPSAgreement and its accession commitments.  Pursuant to Article 63.2 of the TRIPS Agreement, China
had notified ten main dedicated laws relating to the IPRs in full text and a series of laws and
regulations in summary, including the Criminal Law, the Anti-Unfair Competition Law, and the Civil
Procedure Law.  Following the TRIPS Council's decision of 21 November 1995, China had also
provided information on its enforcement regime in a notification of its responses to the Checklist of
Issues on Enforcement.  He said that China's IPR laws and regulations were characterized by their
broad coverage and great quantity.  A large volume of judicial interpretations and sub-national
legislation had added to the complexity.  The notification to the WTO and the provision of requested
information entailed huge tasks, not the least of which was translation.  As a developing Member,
however, China would redouble its efforts to furthe r improve the notification process while requesting
the necessary assistance on translation according to Article 2.5 of the Agreement between the World
Intellectual Property Organization and the World Trade Organization.  As a major arm in IP
enforcement, the judiciary departments in China were  also subjected to the principle of transparency,
which was evidenced by the public soliciting of comments for judiciary interpretations.  The Supreme
People's Court would further broaden the scope of  commenting in the course of interpretation.
Meanwhile, all the TRIPS-related laws, regulations, and other regulatory documents would be
published through the Chinese Foreign Trade and Economic Cooperation Gazette as well as thebulletins and the websites of the relevant government departments.  Members could also access the
enquiry point set up by the Chinese Government for interesting information.
6. Regarding the recent reorganization of the Chinese responsibilities for intellectual property
matters, he said that there were no changes to the responsibilities of China's IP agencies.  The Bureau
of Economic Crime Investigation under the Ministry of Public Security was responsible for theinvestigation of IP crimes.  The Division of Economic Crime under the Supreme Procuratorate was
responsible for the prosecution of IPR crimes.  Nu mber 2 Criminal Tribunal of the Supreme People's
Court was in charge of IPR criminal cases.  As to standards for IPR crimes, he said that  two laws
applied at the central and local levels, that is, the Interpretation on Specific Application of Law on
Several Questions of Trial for Illegal Publication Criminal Cases by the Supreme People's Court andthe Regulations on Standards for Initiating Cases In Economic Crimes by the Supreme People's
Procruratorate and the Ministry of Public Security.
7. With respect to the consistency of China's administrative actions with Articles 41 through 49
of the TRIPS Agreement, he said that administrative responsibility must be imposed in accordance
with the Administrative Penalty Law or the special provisions of the separate law.  Someadministrative remedies, such as an order requiring the suspension of infringing acts, were similar toIP/C/31
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civil remedies in form, but they were different in nature.  In  cases where the form of administrative
remedies seemed to be similar to civil remedies, Articles 41 through 48 of the TRIPS Agreement
should be applied to administrative remedies.  Some civil remedies provided for in Articles 41
through 48, such as an order requiring the payment of damages to right holders, could not apply to
administrative cases in China, since neither the Administrative Penalty Law nor the separate lawgranted such a power to administrative authorities.
8. The provisions on administrative enforcement in the Chinese trademark system complied with
Article 49 of the TRIPS Agreement.  The procedures were fair and equitable, including the rules on
the presentation of evidence and decisions on the merits of the case in writing, etc.  He then said that
the form, legal basis and nature of administrative remedies were different from those of criminal
remedies.  Therefore, the Chinese administrative remedies could not be covered by Article 61 of the
TRIPS Agreement.  Nevertheless, China's criminal legal system met the requirements of Article 61.
9. The representative of China said that the revision of the Chinese Civil Law was an important
task for legislators.  The ninth National Congress had enacted and revised a draft code.  Due to the
rapid social and economic development in China, it was necessary to regulate and rewrite some
contents of that draft.  China needed to do further research and investigation on this matter.
10. China had made every effort to enhance its administrative transparency.  This included two
main aspects.  First, the legislators had enacted the Legislation Law, the Regulations on the Drafting
Procedure of Administrative Regulations, and th e Regulations on the Drafting Procedure of Rules,
which standardized the operating procedure of administrative power.  Second, the Administrative
Permission Law would be enforced in 2004.  The Law further regulated the boundary, conditions and
procedure of administrative permission.  It provided that only laws, regulations and local regulationscould establish administrative permission and local laws could establish interim administrative
permission.  However, the departmental rule of the State Council could not establish administrative
permissions.  Thanks to these laws and regulations, administrative transparency had been increasing
remarkably and the efficiency of administration would be further promoted.
11. In regard to the relationship between laws, regula tions and rules, he said that, according to the
Legislation Law, the Regulations on the Drafting Procedure of Administrative Regulations and the
Regulations on the Drafting Procedure of Rules, the efficacy of laws and regulations was prior to that
of local legislation and departmental rules, and the efficacy of local regulations was prior to local
administrative rules.  While local regulations confli cted with the regulations of the State Council, the
National Congress had the authority to review th em.  When local rules conflicted with the
departmental rules of the State Council, the St ate Council would be responsible for the review.
12. Regarding patent pendency he said that, in 2002, the State Intellectual Property Office
(SIPO) had received 252,631 patent applications, including inventions, utility models and industrial
designs, an increase of 49,048 over the previous year.  The growth rate was 24.1 per cent.  951
international applications had been filed and 697 requests had been made for the international
preliminary examination.  738 requests for the international preliminary examination had been
completed. 
13. To date, the State Food and Drug Administra tion (SFDA) had not found any application for
drug registration which used undisclosed information.  In regard to data exclusivity provided by the
SFDA, he referred to the relevant regulations.  Pursuant to Article 35.2 of the Rules on
Implementation of Drug Law, the SFDA would not render a marketing approval pursuant to an
application by taking advantage of other applicants' undisclosed information.  Pursuant to Article 14of the Measures on Regulation of Drug Registration, when putting forward an application for drug
registration, the applicant should ensure that all data submitted were obtained independently. 
Pursuant to Article 21 of the Measures on Regulation of Drug Registration, when putting forward anIP/C/31
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application for drug registration with foreign data being introduced, the applicant should provide the
verification of the legal origin of data.  Pursuant to Article 22 of the Measures on Regulation of Drug
Registration, the SFDA was entitled to require applicants to repeat the test in order to ensure that the
relevant data had been obtained independently.  Pursuant to Article 52, during the period of new drug
approval, the technical requirements upon a new drug would not be lowered because the drug of thesame class had received a marketing approval abroad, that is to say, the situation of documentation
dependence did not exist.  He further said that, pursuant to Article 35.2 of the Rules on
Implementation of Drug Law, the SFDA would not render marketing approval to an application
taking advantage of other applicants' undisclo sed information.  The SFDA had the obligation to
protect the undisclosed test data obtained independently and other relevant data submitted by the
applicant.  Those illegally disclosing undisclosed data would be punished.  The SFDA would accept a
relevant application in accordance with Article 35.3 of the Rules on Implementation of Drug Lawunder the condition that measures had been taken, as the public interest required, to protect the data
against unfair commercial use.  He said that, besides Article 120 of the Civil Procedure Law and
Article 48 of the Provisions Regarding Evidence in Civil Litigations, the other provisions of the Civil
Procedural Law and other laws, such as the Law on Lawyers and the Law for Promotion of Science
provided protection for confidential information during civil litigation.
14. Referring to paragraph 256 of the Report of the Working Party on the Accession of China,
stating that China's IPR laws provided that any foreigner would be treated in accordance with any
agreement concluded between the foreign country a nd China, or in accordance with any international
treaty to which both countries were party, or on the basis of the principle of reciprocity, he said that
China would observe the TRIPS Agreement, paragraph 256 of the Report of the Working Group onthe Accession of China, and the terms in the international treaties or conventions China had signed
and/or joined in.
15. With respect to trademarks, he said that Chin a had been protecting foreign well-know marks
in the light of international conventions.  In line with the Provisions on the Determination and
Protection of Well-Known Marks, which had come into force on 1 June 2003, the municipal leveladministrative authorities for industry and commerce should, within 15 working days from the date of
the acceptance of the request of the interested party, report and send all the documents to the
provincial administrative authorities for industry and commerce, if the case satisfied the requirements
under Article 13 of the Trademark Law.  The provin cial authorities should, within 15 working days
from the date of acceptance of the request of the interested party, report and send all the documents to
the Trademark Office (TMO).  The TMO should make  its determination within six months from the
date of the receipt of the relevant documents.  Although it had received some domestic and foreignrequests for the determination of well-known marks, the TMO had not yet determined well-know
trademarks under the new provisions.
16. Turning to the legal differences between the terms "well-known marks", "famous marks",
"provincial famous marks", and "famous brands", he said that well-known trademark referred to a
mark that was widely known to the relevant sectors of the public and enjoyed a relatively highreputation in China.  Relevant sectors of the public should include consumers of the type of goods
and/or services to which the mark applied, operators who manufactured the said goods and/or
provided the said services, and sellers and other persons involved in the channels of distribution of the
type of goods or services to which the mark applied.  The Chinese term "Zhuming shangbiao"
(famous trademarks) referred to marks which were determined by the administrative authorities forindustry and commerce at the provincial, municipal,  or autonomous region level, based upon the local
legislations, local government regulations or other administrative provisions, having a relatively high
reputation and a greater influence within the specific jurisdiction.  A provincial famous mark was the
same as "Zhuming shangbiao".  The Chinese term "You Ping Ming Pai" (famous brands) was not a
legal term in the field of trademarks.  The TMO never used this term.  In addition, the TMO had usedIP/C/31
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to have a list of marks for enhanced protection, which had been based upon the frequency and scope
of trademark infringement  However, this practice had been abolished.
17. With respect to the determination of famous trademarks, he said that the provincial or
municipal authorities had the authority to make such decisions, and were not required to report to the
TMO.  Therefore, the TMO had no such information. 
18. In regard to the protection of three dimensional marks and colour marks, he said that by the
end of October 2003, the TMO had received 1398 three-dimensional mark applications, among which
343 had been approved for registration.  For some technical reasons, the TMO had no statistics on
colour marks.  In addition, smell and sound marks were non-registrable under the Trademark Law.
19. With respect to the application of the transliteration or translation of others' marks, he said
that transliteration or translation was one of the standards to determine the identity or similarity. 
Thus, such applications could be refused during the trademark examination.  Moreover, interestedparties could file the request to the trademark review and arbitration bureau through the opposition or
dispute procedure.
20. Article 15 of the Trademark Law provided that where the agent or representative of the
owner of a mark applied for the registration in hi s own name without the owner's authorization and
the owner opposed the registration, the application should be refused and the use should be prohibited.This problem could be solved through the opposition or dispute procedure.  The interested party could
file an application with the TMO or the Trademark Review and Arbitration Bureau (TRAB).  He
noted that, by the end of September 2003, the number of pending cases in the TRAB was 31,924.  The
number of pending opposition cases at the TMO was 16,386.  The pending new applications for
registration at the TMO were 380,000.
21. With respect to the assignment or licensing of trademarks, he said that no government
approval of the terms of a licence or assignment was required.  However, a trademark licence must be
reported to the TMO for the record, regardless of whether the trademark owners were Chinese or
foreign.  The recording was not required for an assignment contract.  As for the effect of the recording
of a licence contract, although there was no express provision in the Trademark Law, the judicialinterpretation provided that, where the trademark licence contract was not recorded at the TMO, it
should not affect its effect, unless otherwise agreed between the interested parties, but an unrecorded
licence contract should not resist a third party with good faith.  In addition, the Trademark Law
provided that the assignment of a registered trademark should be published after it was approved.  The
assignee should enjoy the exclusive right to use the mark from the date of the publication.
22. Turning to geographical indications, he said that, to date, the TMO had received 260 GI
applications for the registration of certificate marks, 100 of which had been approved.  The registrantof a certificate mark could file a complaint with the local authorities for industry and commerce or
might file a law suit at the People's Court requesting to stop the infringement.
23. With respect to the exceptions to GI protec tion provided for in Article 24 of the TRIPS
Agreement, he said that every country might encounter the problem of earlier registered trademarks
and the GIs.  Article 16 of the Trademark Law was substantially in compliance with the exceptionsprovided for in the TRIPS Agreement.  He said that China had acceded to the WTO on
11 December 2001 and the latest amendment of the Trademark Law had come into force on
1 December 2001.  Those marks which had obtained registration in good faith would continue to be
valid under Article 16 of the Trademark Law, which referred to marks registered before this date
rather than after it.IP/C/31
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24. The State General Administration for Quality Supervision, Inspection and Quarantine
(AQSIQ), in accordance with the Regulation for the Protection of Products with Geographical
Indications, carried out the protection of GIs.  If a trademark or certificate mark already existed, the
AQSIQ would still provide GI prot ection from different respects and functions according to the
Regulations and the related stipulations in the TRIPS Agreement.  The following action had beentaken against the infringement of GIs:  the AQSIQ  was the authorized government agency with two
major functions, namely comprehensive administration and law enforcement.  The agencies of the
AQSIQ executed random checks and law enforcement against the infringements of GIs and
trademarks in accordance with the Law on Product Quality, the Law on Entry and Exit of
Commodities Inspection, Standardization Law of the People's Republic of China, and other relevant
laws and regulations.
25. Turning to the protection of copyright, the representative of China said that a series of
activities had been organized to study and prove the necessity and feasibility of the provisions that
might be introduced in the regulations on the protection of the right to communication through
information networks in respect of specific c opyright matters.  For example, in October 2002, the
State Council had sent a high level delegation to Europe to investigate copyright systems in the digital
network environment.  In November 2002, the Na tional Copyright Administration of China (NCAC)
organized a delegation to visit WIPO and exchange views with the organization in respect of China's
accession to the two new treaties.  In July 2003, the NCAC had held a forum on the Internet Treaties
and copyright protection in digital network environment and listened to the opinions from legal and
network circles.  In November 2003, the NCAC would invite WIPO experts to China to give touring
lectures on the two new treaties.  The competent authorities had also carried out various other relevantactivities.  With regard to the legislation on copyright protection of digital networks, he said that there
was still much work to be done by the competent authorities in a thorough and careful manner,
including the investigation and study of the legislative experiences of other Members.
26. Regarding the protection of temporary copies, he said that such term was used neither in the
Berne Convention nor in the TRIPS Agreement.  In regard to re-publication of materials in Chinese
textbooks, he said that, to date, the NCAC had not yet obtained any information in this respect from
foreign right owners or domestic publishers.
27. In regard to the reasonable royalty to be provided for under Article 10 of the Regulations for
Protecting Software, he said that so far no copyright administrative department had dealt with such a
case, and there had been no news reported concerning the relevant judicial decision.  In addition, he
said that under Article 30 of the Regulations, the "holder of copies of a piece of software" was defined
as the end user of software who had performed the reasonable duty for care and had obtained a copyof software in good faith.  Accordingly, it could not be inconsistent with Article 13 of the TRIPS
Agreement.  If the holder of the copy of software used an infringing copy, the person was obliged to
prove that he or she never knew nor had reasonable grounds to know that such a copy was an
infringing one.
28. With respect to the use of software for the purpose of study and research provided for in
Article 17 of the Regulations, he said that Article 17 contained the same principles as adopted in
Article 22 of the Copyright Law concerning fair use.  According to Article 21 of the revised
Implementing Regulations of the Copyright Law, fair use should not conflict with the normal
exploitation of the work and should not unreasonably prejudice the legitimate interests of the right
holder.  Consequently, Article 17 of the Regulations should be deemed as consistent with Article 13of the TRIPS Agreement.
29. In accordance with Article 47 of the Copyright Law, copyright administrative departments
had been authorized to take action against an Internet Service Provider (ISP) who was illegally
making the content available to the public or downloading it.IP/C/31
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30. In China, if an infringement took place on the Internet, the infringer, whether an individual
or a legal entity, should bear the corresponding legal liabilities pursuant to the Copyright Law.  He
added that the NCAC had not issued any direc tive regarding the proper use of the Internet in
universities, government offices or state-owned corporations.
31. Regarding the prosecution of hackers, he said that, in February of 2002, the copyright
administrative department of Zhejiang province had dealt with a case concerning "the US Chemistry
Digest Disc Publication" pirated by means of illegal decoding.  Two suspects had decoded a lawful
copy of the disc, made reproductions and then sold them on the Internet by sending batches of mails.
The copyright administrative department had ordered the decoder and the two suspects to cease the
infringing acts and confiscated their unlawful income.  In addition, the competent department had
confiscated the equipment and tools mainly used to make infringing copies, destroyed the infringing
copies and imposed a forfeit on the two suspects.  Regarding the removal or alteration of electronicrights' management information, he said that this issue was not covered by the TRIPS Agreement but
by the WCT.  Nevertheless, the issue was under consideration in China.
32. In respect of the Copyright Law, the Regulations neither decreased nor increased the burden
of proof on the right holder.  On the other hand, the revised Copyright Law increased the burden of
proof on the party against which an action was brought by adopting Article 43.2 of the TRIPS
Agreement.  The Regulations reflected the legislative purpose of the Copyright Law.  According to
Article 3.2 of the Regulations, administrative procedures could be initiated not only on the basis of
complaints from right holders but also with the removal of cases by other relevant departments,
reports from other persons finding out infringements, or initiative investigation by administrative
departments.  In accordance with the Regulations, the NCAC had to investigate the case with a greatinfluence in the country, which was determined at the NCAC's discretion.  In general, an infringement
should be dealt with by the local administrative department of the place where the infringement was
committed.
33. With respect to the negative prescription of administrative penalty, he said that Article 9 of
the Regulations was consistent with Article 29 of the Administrative Penalty Law of China,i.e., where an illegal act was not discovered within two years of its commission, administrative
penalties should no longer be imposed, except if otherwise prescribed by the law.  The period of time
prescribed should be counted from the date the illegal act was committed.  If the act was of a
continual or continuous nature, it should be counted from the date the act terminated.  The
prescription of administrative penalty was different from that of a civil action in that the latter was
calculated from the date on which the injured party knew or had the reasonable grounds to know that
his rights were infringed while the former was calculated from the date on which the illegal act tookplace or stopped.
34. Regarding the identification of holders of copyrigh t, he said that the copy of a work with a
complainant's name on it might be deemed as a proof of the right holder's identification.  A copyright
registration was not necessarily required for complainants to apply to administrative procedures.  The
expression of "parties' names" included not only the name of the right holder but also that of acomplaining party.  Otherwise, an administrative de partment could hardly investigate a case or render
specific administrative penalties without having obtained sufficient information concerning the
complaining party, or without having known th e exact complaining party.  An administrative
department might not accept an application for administrative procedures if it was not in charge.
35. He said that the expression "person who has a burden of proof" as mentioned in Article 16
of the Regulations referred to the complaining party but not the right holder.  The expression "parties"
in the same Article referred to both the right holder  and the complaining party.  Whether an illegal act
was slight or not was determined by the administrative department according to the concrete
circumstances of each case.IP/C/31
Page 9
36. Regarding the auction or re-selling of facilities used for making infringed goods, he said that
the person who bought such facilities must observe the law.  Moreover, such facilities could be
bought only by factories in lawful operation and with the requisite qualifications.
37. With regard to the trial term, he said that Chinese courts would strictly follow the
Regulations on Civil Procedure Law and judicial interpretation.  According to Article 147 of the CivilProcedure Law, the parties who could not accept a judgement or decision might lodge an appeal.
According to Article 178 of the Civil Procedure Law,  the parties could apply for another trial to the
same court or the superior court for those cases which had been effective.  Besides, the court or the
procuratorate could start supervising procedures.
38. The representative of China said that commerci al exporting belonged to selling. According
to the provisions of Chinese laws and judicial interpretations, this intellectual infringement crime of
counterfeiting goods export might lead to more serious punishment in manners, methods or results,and the culprit could be punished under more serious accusations.  Therefore, some of these
intellectual infringement crimes were punished pursuant to the conviction standards for "smuggling"
or the conviction standards for "carrying out illegal business activities" in the same law.  Second, any
of the actions which infringed upon copyright or circumvented the copyright technological protection
measure for the purpose of producing, reproducing, distributing and selling, would be directlyconvicted for the crime of infringing upon copyright.  Those who offered help for the above-
mentioned actions would be convicted for complicity.  If trafficking technological protection actions
infringed the monopolization, franchising or restrictive dealing, the culprit would be directly
convicted for the crime of selling infringing reproductions.  If simultaneously infringing the
copyright, the culprit would be co-convicted for the crime of infringing upon copyright.  If for thepurpose of reaping profits or where the amount of illegal gains was huge, which accorded with the
judicial stipulation, together with other serious circ umstances, a criminal conviction would also result.
Layout-designs and utility and design patents were protected by China's Patent Law and the relevant
regulations.  Forging others' patents with serious circumstances would be convicted of the crime of
forging others' patents according to Article 216 of the Criminal Law.
39. He said that the statistics of privately initiated criminal cases accepted by the Chinese courts
from January to September of 2003 were the following:  one on copyright, one on commercial secrets,
two on selling infringing reproductions, 18 on producing and selling counterfeit products.
40. Apart from those noted in document IP/C/W/374, there were two main regulations
concerning the circumstances in which investigations should be initiated by the procuratorate or by
individuals:  the Interpretation Regarding Practical Questions Concerning the Judicial Application in
Hearing the Illegal Publication Criminal Cases by the Supreme People's Court, and the InterpretationRegarding Practical Questions Concerning the Judicial Application in Hearing Producing, Selling
Counterfeit Goods Criminal Cases by the  Su preme People's Court and the Supreme People's
Procuratorate.  At this stage, the Supreme People's Court had been carrying out investigation and
research concerning the responsibility and scientificity of the Standards for Initiating Criminal Cases.
China would stipulate the interpretation with the feasibility or submit the relevant law-makingsuggestions in the near future.  Regarding the step s which were being taken to facilitate the referral
from administrative agencies, he referred to the Provisions on the Transfer of Susceptible Criminal
Cases by the Administration Organs for Law Enforcement.
41. With respect to the guidelines for penal ties to be provided for wilful trademark
counterfeiting or copyright piracy on a commercial scale, he said that Chapter 3 of the ChineseCriminal Law, revised in 1997, criminalized the destruction of the socialist market economic order.
Section 7 of Chapter 3 was set to target the infringement of IPRs and listed seven crimes in detail,
covering trademarks, patents, copyright and confidential information.  In addition, on
17 December 1998, the Supreme Court's Interpretation on the Practical Problems on Application ofIP/C/31
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Laws Against Illegal Publications clarified the standards of penalty regarding copyright offences,
including the penalty against a crime of illegal business operation.  Moreover, the Regulations of the
Standards for Litigating Cases in Economic Crimes, which was promulgated by the Supreme People's
Procuratorate and the Ministry of Public Security on 18 April 2001, set the standards of prosecution in
IPR offences except copyright crimes.  He said that Section 7 of Chapter 3 of the Criminal Law andthese two above-mentioned Interpretations constituted the most fundamental basis for the protection
of IPRs in terms of the criminal law.  In addition, he said that Section 1 of Chapter 3 of the Criminal
Law, which criminalized the production and distribution of counterfeiting products, and the Supreme
Court's and the Supreme People's Procuratorate's Interpretation of Practical Problems Concerning
Criminal Cases of Production and Distribution of Counterfeiting Products were applicable to some of
the IPR infringement cases, mainly trademark offences.  Relevant regulations could also be found in
Articles 54 and 59 of the Trademar k Law, Article 58 of the Patent Law, Article 47 of the Copyright
Law, Article 24 of the Software Regulations, Article 40 of the New Species of Plant Regulations, and
Article 21 of the Anti-Unfair Competition Laws.  Those infringing offences, once proved criminal,
would be brought to justice by the Criminal Law.
42. Regarding the interpretation of the notion "identi cal trademarks", he said that Article 5 of
the Advice on the Practical Problems Concerning Administrative Enforcement Regarding Trademark,which had been promulgated by the State Administration for Industry and Commerce, provided that
"identical trademark means the characters, pictures and patterns or the combinations of the characters
and pictures on two trademarks are identical or have no visual difference by comparison".  Article 9
of the Supreme Court's Interpretation on Practical Questions Concerning Applicable Laws Governing
Civil Disputes on Trademarks, which had been pr omulgated on 12 October, 2001, stated that "an
identical trademark defined in Item 1 of Article 52 of the Trademark Law means, by comparison, the
trademark being accused of infringement generally has no visual difference from the registered
trademark of the plaintiff".  Article 10 of this Interpretation also defined the principle on judgement of
identical or similar trademarks as "(1) set the attention of the relevant public as the standard;
(2) comparison should be made not only to trademarks as a whole, but also to the major parts ofthem".  The process should only be undertaken when the compared objects were separated and
isolated.  Therefore, he inferred that identical trademarks in legal terms made a difference to what
"identical" meant in daily language.
43. "Goods of the same class" meant goods that were completely identical, or of the same
category and class, or with the same name, that share basically the same nature and function.  "Goods
of the same class" had bigger extension than "identical goods".  The practical judgement of "goods of
the same class" was usually subject to comprehensive assessment by the judge based upon the generalknowledge of the public of certain products and the classification of goods by the international
classification list of goods and services, with the trademark registration.  He clarified that the
classification list was not the only benchmark for judgement, but an important standard for reference.
To sum up, one of the important criteria to tell whether two products were of the same class was
whether they shared the same product name, though they might have different practical functions. However, those goods with different names could also  be defined as goods of the same class as long
as they bore the same practical function or scope.
44. He reiterated that "identical trademark" was different from what "identical" meant in daily
language.  China's standard for judgement was whether marks had no visual difference.  According to
this understanding, this standard generally conformed to the principle of being "not distinguished inessential aspects".  He recalled that, as he had already stated, commercial import and export actions
constituted a "sale" in real terms.  However, under these circumstances, a party involved could be
criminally liable for smuggling or illegal operations.
45. With respect to the criminalization of copyright piracy which was not for the purposes of
profit, he said that although some infringing acts did not constitute acts of crime according toIP/C/31
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Articles 217 and 218 of the Criminal Law, that did not mean that they were not criminal acts.  They
could constitute the crime of intentional property damaging or the crime of construction impediment.
China had noticed that some foreign countries, in cluding the United States, the United Kingdom, and
Japan, did not specify the aim of making profits as a subjective element for copyright crimes.  China
was taking this factor into consideration and weighing up the possibility of integrating it into its legalsystem.  Regarding whether China had undertaken criminal, administrative or civil prosecutions
against individuals or entities who used the Internet to obtain access to computer systems, he said that
though the acts per se  did not constitute the copyright crimes defined by Articles 216 and 217 of the
Criminal Law, their following acts usually did.
46. In regard to the financial threshold for criminal prosecution, he said that the financial
threshold was a major element, but by no means the complete element in IP-related crimes.  The
record of the administrative penalty for counterfeiting and piracy and serious consequences could allbe regarded as factors in crime determination.  On the other hand, financial threshold was a generic
term which might refer to sales volume, value of g oods, illegal profits or damages to the right owner.
It could also exist in various forms like money or commodities, as they could be transferred in money
terms.  As to the so-called illegal business amounts, he said that on the one hand, the illegal business
amounts could be determined using other evidence, such as written documents from the purchaser,witness, testimony, and assessment on goods.  On the other hand, in cases where the illegal business
amount could not be verified, the constitution of crime could be determined through other factors.
47. With respect to counting the value of infringi ng imports, he said that the Customs would
follow the Customs Law, the Customs Regulation for Protection of Intellectual Property Rights and
other administrative regulations.  The Customs had cooperation with traditional authorities, includingpublic security, according to the Regulation on Transfer of Suspected Criminal Cases by the
Administrative Agencies, and other laws or regulations.
48. China was considering the revision of the Customs Regulation for the Protection of
Intellectual Property Rights according to the TRIPS Agreement and to China's promises upon its
accession to the WTO.  He also said that the customs had the administrative authority over the importor export of pirated goods over the Internet.  The customs and other IPR agencies would make a
decision on  infringement according to the Customs Regulation for Protection of Intellectual Property
Rights, the Patent Law, the Trademark Law, and the Copyright Law.
49. Regarding the number of criminal cases of intellectual property rights infringement, he said
that there had been 301 persons and 128 cases in 1998, 379 persons and 248 cases in 2000, and 702
persons and 408 cases in 2002.  A total of 1,273 criminal cases relating to intellectual property rights
had been closed within the five years, and 2,104 persons had been sentenced.  At present, the SupremePeople's Court was drafting the judicial interpretation on the application of law in criminal cases of
intellectual property rights' infringement, which would include the criteria for conviction and
imposing penalties.  The interpretation would be adopted and published by the Supreme People's
Court after strict examination.
50. The cost of confiscation and disposal of counterfeiting goods undertaken by the Customs
shall be borne by right holders.  According to Arti cles 14 and 15, and other relevant provisions of the
Regulation on the Customs Protection of Intellectual Property Rights, the applicant who requested the
Customs to detain suspected infringing goods should provide a bond to the Customs.  After a relevant
administrative determination, judicial judgement or adjudication came into effect, the Customs should
refund the remainder of the bond, from which the cost of storage, custody, and disposal of the goodsas well as the compensation fees to the interested parties for the loss induced by the inappropriate
application had been deducted.IP/C/31
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51. The Chinese Government had always been engaged in fighting against "localism".  The
State Council's Provisions on Prohibiting Regional Blockage in Market Economic Activities,
published on 21 April, 2001, showed the positive attitude of China against localism in the field of
intellectual property rights.  China protected right holders in strict accordance with the laws and
administrative regulations on the protection of intellectual property rights which were in completeconformity with the WTO TRIPS Agreement.  China was now making every effort to implement the
obligations of the TRIPS Agreement.
52. With respect to measures against piracy of soft ware, he said that the guiding ideology of the
Activity Plan for Fighting against Pirated Software, which was published in June 2003, was to
resolutely crack down on various piracy and infringing acts in respect of software and to promote the
development of the Chinese software industry.  The working objective was to establish a fair and
orderly software market and to realize the fundamental improvement in the social environment ofsoftware copyright protection.  The Activity Plan was a provisional measure, while the crackdown on
various piracy acts was a long-term and standing ta sk.  At present, a crack-down on software piracy
was included in this Plan in the light of the current situation of China, and it was possible for this Plan
to include anti-piracy work in other respects later.
53. Article 47 of the revised Copyright Law had added a provision on legal liability for
infringing the right of communication through an information network.  The principles of illegal
application were the same as the liabilities for various infringing acts, whether on-line or off-line,
including ISP liability.  Although the issue concerning ISP liability was not within the framework of
the TRIPS Agreement, China was making an active and serious study of the issue.  Other countries'
relevant legislation, in particular that of the United States and the European Communities, hadaroused general concerns in China.
54. Regarding the regulations of the export of counterfeit and pirated goods, he said that in the
year 2002, the Chinese customs had seized a total of 573 cases worthy of RMB 95.62 million,
including four worth RMB 230,000 and 569 cases worth RMB 95.39 million.
55. Regarding the relationship between civil, crim inal and administrative enforcement, he said
that theoretically an administrative punishment did not preclude the subsequent criminal enforcement
for the same act.  According to the Provisions on the Removal of Suspected Crime Cases by
Administrative Enforcement Agencies of 2001, which had been enacted by the State Council, cases of
suspected crime of violating the Copyright Law should be removed to judicial authorities.
Consequently, it was infrequent that a criminal enforcement came after an administrative punishment.
56. He further said that, in 2003, the NCAC had launched three special actions.  In February, the
NCAC had launched the Special Action for Striking Piracy during the World Intellectual PropertyLeader's Meeting.  According to incomplete fi gures, the copyright administrative departments in
Beijing, Shanghai, Tianjing, Chongqing, and the provinces of Liaoning, Jilin, Hainan, Guangdong,
Fujian, Zhejiang, Anhui, Jiangxi, Jiangsu, Yunnan,  Guizhou, Gansu, Shanxi and Inner Mongolia had
checked 2,588 markets, 30 schools, and 77 enterprises, imposed administrative punishments on 1,430
infringing or pirating entities, imposed a forfeit of RMB 1,339.5 thousand, suppressed 816 shops, andremoved five cases to judicial authorities, and investigated one underground compact disc press.  In
July, the NCAC combined with the General Administration for Press and Publication, Ministry of
Education, and the National Anti-Piracy and the Pornography Working Committee, had launched the
2003 Autumn Special Action for Striking Pirated Textbooks and Assistant Teaching Materials.  This
action was still under way at present.  In August, the NCAC had launched the 2003 Special Action forStriking Pirated Software.  On the first day of th is action, 250,000 infringing copies alone of software
had been confiscated in Beijing, Shanghai, and the provinces of Sichuan and Guangdong.  The local
agencies of industrial and commercial administratio n would also step up the efforts in clamping down
on trademark infringements.  Furthermore, he said that local administrative authorities for industryIP/C/31
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and commerce conducted routine monitoring and investigation to discourage counterfeit markets.  If
any counterfeit goods were found in the market, they would strictly enforce the relevant laws and
regulations.  He added that the relevant IPR agencies undertook enforcement actions every year at the
Canton Trade Fair.
57. The representative of Japan recalled that, at the first transitional review in 2002, his
delegation had raised questions about five issues, namely further improvement of enforcement
including judicial procedures, patent examinati on procedures, protection of well-known trademarks,
licensing regulations on patents and know-how, and the system requiring foreign patent applicants
to use representative offices designated as those for foreign applicants.  He expressed his
appreciation of the efforts by the Chinese Government to improve the situation, for example by
increasing the number of representative offices designated as those for foreign applicants and
amending the system pertaining to protection of well-known trademarks.  However, given thecurrent situation and problems, such as the damage caused by counterfeiting and piracy and delays
in granting patents, he expected China to make further efforts.  In this regard, of particular
importance were further improvements in enforcement including the active implementation of
criminal prosecution, amendments of the guidelines for criminal prosecution and elimination of
delays in granting patents.
58. With respect to the issue of further improvemen ts of enforcement, he said that the Chinese
Government's enforcement was inadequate in view of Part II of the Protocol and Articles 41 and 61.
A recent Japanese survey had shown that the majority of Japanese companies investing in China were
still suffering damage from counterfeiting in China.  Improvement of enforcement was of greatest
importance for the protection of intellectual property rights in China.  He requested that enforcementbe improved, in particular, in respect to the following three aspects:  (i)  Criminal procedures: in his
view, criminal prosecution was the most effective way to deal with violators.  According to the
survey, approximately 10% of the Japanese companies that had been harmed by counterfeiting had
been subject to repeated violations of their rights since December 2002.  However, the conviction
rate was extremely low.  Therefore, he hoped that China would actively pursue criminalprosecutions and apply stronger punishments to boost the deterrent effect.  The present standard for
prosecuting criminal cases included a threshold of a certain level of sale proceeds from counterfeit
goods.  Changes to this standard would be needed.  (ii) Administrative procedures: he expressed his
hope that China would take stronger administrative measures, including imposing stiffer fines and
increasing the number of seizures, to ensure an  active and smooth administrative control of the
problem.  (iii) Localism: he appreciated China's reply that it would make aggressive efforts to correct
the localism.  He hoped to see the introduction and actual implementation of measures in this area.Some Japanese companies that had requested the seizure of counterfeit goods indicated that they had
come across cases of localism where authorities had refused to seize goods because they had been
produced by a major local company.  He called on the central government to strengthen the
surveillance of local authorities in order to eliminate localism.
59. Regarding patent examination processes, he said that the average pendency of the
examination of Japanese patent applications was 36.8 months and that measures had been taken,
including an increase in the number of examiners.  Some Japanese companies had expressed their
satisfaction at these measures to ameliorate delays in granting patents.  However, as regards one
patent application, examination had not yet begun after 65 months.  Some Japanese companies had
reported that the problem of examination delays had not yet been resolved, particularly in the area ofadvanced technology such as liquid-screen displays, PCs and IC cards.  As a result of such delays,
licence agreements could not be concluded for investment in China and it was not possible to obtain
compensation for damages caused by counterfeit goods.  In the light of Article 62.2 of the TRIPS
Agreement and the need for improved transparency, he asked China to consider the following two
matters:  first, enhancing transparency by regularly disclosing data on the pendency of patentIP/C/31
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examination, thereby promoting mutual understanding  between the countries concerned;  and second,
accelerating patent examination.
60. In regard to the protection of well-known trademarks, he welcomed the increased clarity
resulting from the rules relating to the approval and protection of famous trademarks.  He hoped that
the protection of foreign well-known trademarks would be strengthened without discrimination on thebasis of nationality and that approval procedures would be simplified.  He also hoped that China
would disclose information on the status of domes tic and foreign approvals following the enactment
of the new ordinances that had been effective since June 2003.
61. As to licensing regulations on patents and know-how, he expressed his appreciation of
certain improvements in this area, both in regard to the Export and Import Administrative Ordinance
and the legal system.  However, he was concerned that the disparity between domestic contract law
and the licensing regulations would raise issues relating to national treatment.  In addition, someJapanese companies had reported there had been cases where the information on the abolishment of
some laws and regulations at the time of China's accession to the WTO had not been sufficiently
transmitted to regional authorities.  Therefore, he wished that China would ensure proper enforcement
by regional authorities of laws and regulations reflecting the relevant revisions.
62. The representative of Chinese Taipei thanked the delegation of China for its comprehensive
statement.  As regards Article 2.1 of the TRIPS Agreement, he recalled that a communication that
China had provided in the context of the transitio nal review in 2002 (IP/C/W/382) read as follows:
"In order to perfect the provisions on right of priority, the amended Trademark Law added new
provision relating to right of priority and further stipulates right of priority for goods on an
international exhibition".  Furthermore, he reques ted China to provide information on how China had
ensured in the course of the past years that the provisions on the right of priority were enforced.  Then
he requested China to notify to the WTO in due course the "Regulations on the Recognition and
Determination of Well-Known Trademarks", which had been adopted in June 2003.
63. The representative of the European Comm unities thanked China for its comprehensive
statement.  He said that document IP/C/W/413 which his delegation had submitted was self-
explanatory.   He said that China's implementation of its commitment to abide by the TRIPS
Agreement had resulted in significant changes in  China's intellectual property protection.  Its
legislative framework for the protection of intellectual property was in line with international
standards, in particular the TRIPS Agreement.  Over the past years, China had been progressively
more sensitive as regards the need for reform and enforcement against counterfeiting and piracy.  The
Chinese police and prosecutors were more willing to accept complaints from foreign right holders.
Despite these positive developments, he said that the European Communities remained concernedabout the high level of counterfeiting and piracy in China.  Therefore, the European Communities
encouraged China to make additional efforts to curb counterfeiting and piracy.  The European
Communities was committed to working with the Chinese Government to create a win-win situation.
64. The European Communities welcomed the recently launched EC-China Structured Dialogue
on Intellectual Property which had been signed at the EC-China Summit between the EC Trade
Commissioner Lamy and Vice Minister of China's Ministry of Commerce Wei Jianguo.  He expected
this Dialogue to contribute to a better understanding of intellectual property systems in China and the
European Communities.   It would also be convenient to address China's intellectual property
enforcement challenge.  In conclusion, he said that the European Communities was looking forward
to increasing its cooperation with China at the bilateral level, which would provide a convenientframework to further address the concerns raised in its submission.
65. The representative of the United States said that China had taken substantial steps to reform
its intellectual property law and enforcement procedures.  Although he appreciated the hard work ofIP/C/31
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Chinese intellectual property agencies, he did not believe that China's enforcement effort had yet
adequately deterred the widespread counterfeiting and piracy in China.  Therefore, he urged China to
take necessary measures to correct the situation on an urgent basis.  He also pledged to work
cooperatively with China on a bilateral basis towards this end.  Finally, he appreciated the efforts
China had made in providing the Council with the detailed replies to many of the questions posed bythe United States.  He also appreciated that, given the time constraints, China might not have had an
opportunity to prepare answers to all questions.  He would follow up with China to obtain responses
to the other questions.
66. The representative of Korea extended its appreciation to China for its detailed and
comprehensive oral and written presentations as well as the written responses to Members' questions.
He wished to know the efforts China had made regarding the establishment of legal framework for
intellectual property protection and  implementation of the TRIPS Agreement.  He believed that theChinese Government, as a responsible Member would continue its efforts and participate in the
TRIPS Council's work in a constructive manner.  Un derlining the importance of enforcement, he said
that enforcement could not pick up overnight.  His delegation looked forward to China's further
consistent effort and progress in bringing its legal texts into reality.
67. The representative of Pakistan thanked China for its comprehensive presentation.  He
commended China's performance in terms of the enactment of new rules and regulations, adequate
review mechanism, enforcement, customs' protection and criminal prosecution.  His delegation looked
forward to working with China on all of these matters.
68. The representative of China thanked Members for their positive comments on the efforts
and achievements China had made in implementing its TRIPS commitments.  She said that China had
implemented an administrative and judicial coordination mechanism with respect to intellectual
property protection.  During recent years, China had been one of the nations that had attracted most
foreign investment in the world, which had a close connection with China's effective intellectual
property protection.  She hoped that Members could be relieved from their concerns relating to
China's intellectual property protection, and further learn about China's law and enforcement.  Shesaid that intellectual property right holders from all Members would be protected pursuant to China's
law.  Counterfeiting and infringement were subjec t to serious investigation and punishment in China.
69. Turning to the preparation of the TRIPS C ouncil's report to the General Council, the
Chairman suggested that, given that the TRIPS Council would not have another meeting before the
General Council's next meeting scheduled for 15 and 16 December 2003, the TRIPS Council agreethat that he, acting on his own responsibility, prepare a brief and factual report to the General Council.
The content of the cover page to the report would be similar to that submitted by the TRIPS Councilin 2002, and the part of the minutes of the meeting reflecting the discussions held under this agenda
item would be attached.
70. The Council took note of the statements made and agreed
 to proceed with the preparation of
the report as suggested.
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