WORLD TRADE  
ORGANIZATION  IP/C/W/430 
16 November 2004 
 
 (04-4938) 
Council for Trade-Related Aspects 
of Intellectual Property Rights Original:   English 
 
 
 
TRANSITIONAL REVIEW MECHANISM OF CHINA 
 
Communication from Japan  
 
 
 By means of a communication from the delegation of Japan, dated 4 November 2004, the Secretariat has received the following questions that Japan has posed to China in the context of the 
transitional review mechanism under Secti on 18 of its Protocol on Accession. 
 
 
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Japan welcomes that, in the third year af ter accession, implementation by China of its 
commitments on the TRIPS Council has progressed and entered into a cruising phase.  In a 
transitional period of evolving regulations, the impor tance of regulatory transparency, predictability, 
stability and consistency is paramount;  the valu e of market access commitments and efforts to 
implement them could be easily clouded out by a s hortness of such elements either in regulations 
themselves or in their application.  The transiti onal review mechanism could be useful for making 
those transitional efforts more efficient and producti ve, and it is a pleasure for Japan to contribute to 
this process. 
In this context, China is further invited to ta ke necessary steps to ensure regular and effective 
application of public comments procedures, well- in-advance publication of laws and regulations, 
avoidance of abrupt regulatory change, clear demarcation of departmental responsibilities, improvement in inter-departmental and central- provincial coordination and consistency, etc. 
In accordance with Paragraph 18 of the Protocol  on the Accession of the People's Republic of 
China, which states that "China shall provide releva nt information to each subsidiary body in advance 
of the review" and in the spirit of cooperation to render the TRM process most efficient and effective, Japan requests China to provide in advance of th e TRIPS Council responses and relevant information 
to the following questions and comments. 
A. COPYRIGHTS 
Removal or alteration of electronic rights management information 
1. In relation to the Article 47(7) of the Chinese Copyright Law, removal or alteration of any 
electronic rights management information without authority is deemed to be infringement of 
copyright or related rights.  We insist that it also  should be provided as infringement of copyright or 
related rights to distribute, import for distribution,  broadcast or communicate to the public works or 
copies of works with the knowledge that electroni c rights management information has been removed 
or altered without authority.  According to China' s answer to the last question, the above was under 
consideration.  Please inform us of the progress of discussion. IP/C/W/430 
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 Interpretation of "infringing public interest" 
2. Regarding the administrative punishment proce dure against infringing public interest, please 
tell us whether the evidence which the right holder submits for proving the fact that an illegal behaviour has infringed public interest in order to initiate the administrative punishment procedure is 
the same as that stipulated by Article 12 of th e Implementation of Copyright Law on Administrative 
Punishment.  It is very unclear when a right holder can make use of administrative punishment 
procedure since the criteria established by the copyri ght office is different fr om the decision of the 
court.  It would be necessary to establish the complementary interpretation concerning what kind of act is regarded as "infringing public interest".  Please provide us with comments of the Chinese 
Government on this point.  Please also tell us whet her the Chinese Government plans to consider such 
an interpretation. 
Payment of royalties for copyrights 
3. Articles 42 to 45 of the Copyright Law regulate obligations to pay royalties for copyright use 
on broadcasting.  However, royalties have not been paid to right holders since the State Council has yet to regulate criteria on royalties.  At the meeti ng of the Mission of Government and private sector 
of Japan and China in May this  year, the Chinese Government stated that this matter was under 
consideration.  Please provide us the schedule and specific details. 
Duration of prescription 
4. In relation to Article 9 of the Regulation for Copyright Administrative Punishment, the 
duration of prescription is two years since the crim inal act occurred.  Considering that the public 
administration cannot impose the infringement unfound for more than two years, we consider that the 
duration is too short.  Especially, in a case wher e administrative procedures are initiated by reports 
from right holders, we consider that two years of prescription is not long enough.  Please provide us 
with China's comment. 
B. TRADEMARKS 
Protection of well-known marks 
5. In the case where foreign enterprises in Chin a do not enjoy the same protection for their 
well-known marks as that enjoyed by  domestic enterprises in China, we are concerned about an issue 
of consistency with the provisions of national treat ment under the TRIPS Agreement in terms of this 
situation.  We would like China to present a deta iled description of the number of applications, 
approvals, and rejections, for well-known marks of domestic enterprises and foreign enterprises 
respectively, in order to illustrate the implementa tion status of the "Provisions on the Determination 
and Protection of Well-Known Marks", which has newly taken effect in June 2003. 
6. With regard to the determination pro cess for well-known marks, while examples of 
documentary evidence verifying that a mark is well-known are stipulated in the above-mentioned 
provisions, we see many cases in which applications are rejected because it is impossible to prove the 
mark to be well-known due to lack of suppo rting documentation, in actual instances of 
implementation.  Disclosing of documents used in approved applications would be desirable from the 
perspective of improving transparency as well as th e predictability of specific documents required for 
an application.  Are there any plans for measures to address this issue?  If so, please inform us of 
those plans in detail.  IP/C/W/430 
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 C. PATENTS 
Disclosure of information on the pendency of patent examinations 
7. At a past TRIPS Council review of legislati on, China reported on the average pendency for 
examinations of patent applications from Japanese  corporations, as well as on efforts to accelerate 
examinations, such as increasing the number of examin ers.  However, we are concerned that there has 
been no improvement in examination delays in some technical fields.  Please provide us with the most 
recent data illustrating the degree of improvement in the pendency of examinations in each technical 
field.  In addition, periodical release of ex amination pendency data could help to prevent 
misunderstandings in the Japanese business sector rega rding examination delays in China.  We would 
like to hear China's views on this matter. 
Protection of plant varieties 
8. Please inform us if there is any specifi c plan to accede to the UPOV 1991 Act? 
9. Regarding Plant Variety Right, please inform us if  there is any plan to expand the number of 
genera and species to be protected under plant variet y protection law in China.  If there is any plan, 
please inform us of the details. 
D.  INDUSTRIAL DESIGNS/PATENTS 
Prevention of misappropriated applications 
10. There have been reports from Japanese comp anies concerning instances that occurred in 
China of misappropriated applications  and registrations that have b een usurped by a person or body 
other than the inventor of a pate nt invented overseas or the designer of a design created overseas. We 
would like to know what efforts China will be making in  the future to improve this situation and avoid 
such occurrences.  
E. UNDISCLOSED INFORMATION 
Protection of Undisclosed Information  
11. We are concerned about cases of continuing u se of know-how which could not be prohibited 
after termination of contracts although the old regulations actually had been replaced by the 
"Regulations on Administration of Technology In troduction Contracts".  It raises problems of 
protection of trade secrets.  Please inform us of efforts to improve operations in this area.  
F.  ENFORCEMENT 
Judicial efforts: active pursuit of criminal prosecutions, strengthening of sanctions 
through changing of crimi nal prosecution standards 
12. Compared to the actual number of infringements of intellectual property rights that take place 
in China, the number of cases that lead to criminal prosecutions is extremely small.  There is also 
concern that deliberate and commercial-scale inte llectual property infringements are not being 
effectively prosecuted.  Please inform us of the nu mber of criminal prosecutions related to patent 
rights, trademark rights, industrial design rights and copyrights respectively to show the status of prosecution of intellectual property rights infringements in China. IP/C/W/430 
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 13. According to the reply from Ch ina at the TRIPS Council review  of legislation to date, 
deliberations are being advanced on changing the standards for crim inal prosecutions by the end of 
2004.  We would like to know the direction in wh ich such changes are being made.  For example, 
minimum sales of goods currently exist as a criterion for prosecution.  How much of the criteria is China reviewing to lower?  In addition, it would be  desirable to actively execute criminal prosecutions 
for deterring the recurrence of infringements.  Is  China reviewing the criteria in which criminal 
prosecutions should be prosecuted to  persons with a record of falsely representing other's registered 
trademarks on more than two occasions in the past?  If so, please inform us of the detail. 
Cost burden on right holders for infrin ging products stopped at the border 
14. As part of the procedure to suspend goods that  are suspected to infringe intellectual property 
rights at customs in China, right holders have f unds drawn from their deposits for the costs required 
for the suspension of goods, even when infringement  has been recognized. We would like China to 
inform us of the operation of this procedure.  We  consider related provision in regulation of China 
needs to be improved so as to ensure that "unnecess ary costs" are not imposed on the right holder, as 
stipulated in Article 41.2 of the TRIPS Agreemen t, and we would like to know what improvements 
China is planning.  
Thorough disposal of infringing goods stopped at the border 
15. In Article 27 of the Regulations on the Custom s Protection of Intellectual Property of the 
Customs General Administration, which has been enforced  in March of this year, it is stipulated that it 
is possible to auction products if their rights-infri nging characteristics are removed.  We would like 
China to inform us of the operation of this regulati on.  We would like to know  whether there is further 
revision of the regulation in order to endeavour to thoroughly dispose goods infringing intellectual 
property rights. 
Elimination of "localism" 
16. One of the problems concerning the control of intellectual property rights infringements in 
China is the "localism" that enc ourages a soft approach to the manufacture of counterfeit or pirated 
goods by local firms.  This attitude among local aut horities is an obstacle to the swift and appropriate 
exercise of intellectual property rights in China and it is a major concern for us.  At the TRIPS 
Council review of legislation to date, China provi ded a response concerning its efforts.  We would 
like China to inform us what specific plans it  has to eliminate "localism" in the future. 
G.  OTHERS 
Improvements to licensing regulations 
17. The provision of Article 24 of the Technology Export and Import Administrative Ordinance 
states, "If the recipient party in a technology import contract uses the technology provided by the supplier according to the agreement in the contract, and such use results in the infringement of other 
legal rights or interests, then the supplier assu mes responsibility," which encompasses the possibility 
that foreign licensor could be legally liable to thir d parties.  The provision of Article 25 of the same 
Ordinance states, "the licensor must ensure that  the technology provided is complete, correct, 
effective and able to fulfil the agreed technological  goal," which encompasses the possibility that the 
licensing rights of the technology holder could be excessi vely limited.  Accordingly, it is expected to 
improve these provisions to reflect Article 28.2 of the TRIPS Agreement, which recognizes the rights  
  IP/C/W/430 
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 of patent holders in concluding licence agreemen ts, and we would like to know whether China has 
any specific plans to make such improvements. 
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