WT/DS542/8  
 
19 October 2018  
(18-6653) Page: 1/3 
  Original: English  
 
CHINA – CERTAIN MEASURES CON CERNING THE PROTECTI ON 
OF INTELLECTUAL PROPER TY RIGHTS  
REQUEST FOR THE ESTA BLISHMENT OF A PANEL  BY THE UNITED STATE S 
The following communication, dated 18 October 2018 , from the delegation of the United States  to 
the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.  
 
_______________  
 
 
On March 23, 2018, the United States requested consultations with the Government of the People 's 
Republic of China ( "China ") pursuant to Articles 1 and 4 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU") and Article 64 of the  Agreement on Trade -
Related Aspects of Intellectual Property Rights  ("TRIPS Agreement ") (to the extent that Articl e 64 
corresponds to Article XXII of the General Agreement on Tariffs and Trade 1994 ), with respect to 
certain Chinese measures pertaining to the protection of intellectual property rights.  The United 
States held consultations with China on July 18, 2018.  Those consultations unfortunately did not 
resolve the dispute.    
China denies foreign patent holders the ability to enforce their patent rights against a Chinese joint -
venture party after a technology transfer contract ends.  China also imposes mandatory  adverse 
contract terms that discriminate against and are less favorable for imported foreign technology.  
Therefore, China deprives foreign intellectual property rights holders of the ability to protect their 
intellectual property rights in China as well as freely negotiate market -based terms in licensing and 
other technology -related contracts.  
The legal instruments through which China imposes these measures include the following, operating 
separately or collectively : 
• Foreign Trade Law of the People's Repu blic of China  (adopted at the Eighth Session of the 
Standing Committee of the Seventh National People's Congress on May 12, 1994, effective 
July 1, 1994, in Executive Order No. 22, amended by the Eighth Session of the Standing 
Committee of the Tenth Nation al People's Congress on April 6, 2004, effective July 1, 2004 , 
in Executive Order No. 15, further amended November 7, 2016, in Executive Order No. 57 ) 
• Regulations of the People's Republic of China on the Administration of the Import and Export 
of Technolog ies (Order of the State Council No. 331, issued December 10, 2001, effective 
January 1, 2002, amended January 8, 2011, in Order of the State Council No. 588)  
• Law of the People's Republic of China on Chinese -Foreign Equity Joint Ventures (adopted at 
the Sec ond Session of the Fifth National People's Congress on July 1, 1979, effective July 8, 
1979, in Order No. 7 of the Chairman of the Standing Committee, amended April 4, 1990, 
in Executive Order No. 27, further amended March 15, 2001, in Executive Order No. 48, and 
September 3, 2016, in Executive Order No. 51)  
• Regulations for the Implementation of the Law of the People's Republic of China on Chinese -
Foreign Equity Joint Ventures (State Council, Guo Fa [1983] No. 148, issued September 20, 
1983, effective Septe mber 20, 1983, amended January 15, 1986, in Guo Fa [1986] No. 6, 
further amended December 21, 1987, in Guo Fa [1987] No. 110, July 22, 2001, in Order of WT/DS542/8  
 
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  the State Council No. 311, January 8, 2011, in Order of the State Council No. 588, and 
February 19, 201 4, in Order of the State Council No. 648)  
• Contract Law of the People's Republic of China  (adopted at the Second Session of the Ninth 
National People's Congress on March 15, 1999, effective October 1, 1999 , in Executive Order 
No. 15 , as further informed by the Interpretation of the Supreme People's Court on Several 
Issues Concerning the Application of Law in the Trying of Cases of Disputes over Technology 
Contracts  (Supreme People's Court, issued December 16, 2004, effective January 1, 2005))  
as well as any amendments, or successor, replacement, or implementing measures . 
The Regulations of the People 's Republic of China on the Administration of the Import and Export of 
Technologies , operating separately or together with other listed instruments,  appear to be  
inconsistent with Article 3.1 (National Treatment) of the TRIPS Agreement, solely or in conjunction 
with Article 28.2 of the TRIPS Agreement, because:  
• Article 24 of the Regulations  accords  less favorable treatment to foreign intellectual 
property rights h olders as compared to Chinese intellectual property rights holders.  
For example, Article 24 requires that licensors to imported technology contracts 
indemnify licensees for all liabilities for infringement resulting from the use of the 
transferred technol ogy. 
• Article 27 of the Regulations accords less favorable treatment to foreign intellectual 
property rights holders as compared to Chinese intellectual property rights holders.  
For example, Article 27 requires that any improvements in imported technology 
belong to the party making the impr ovement.  
• Article 29 of the Regulations accords less favorable treatment to foreign intellectual 
property rights holders as compared to Chinese intellectual property rights holders.  
For example, Article 29(3) prohibits an imported technology license contr act from 
restricting a Chinese party from improving the technology or from using the 
improved technology .1  
The Regulations for the Implementation of the Law of the People 's Republic of China on Chinese -
Foreign Equity Joint Ventures , operating separately o r together with other listed instruments,  appear 
to be inconsistent with Article 3.1 (National Treatment) of the TRIPS Agreement, solely or in 
conjunction with Article 28.1(a), (b) or Article 28.2 of the TRIPS Agreement, because:  
• Article 43 of the Regulati ons accords less favorable treatment to foreign intellectual 
property rights holders as compared to Chinese intellectual property rights holders.  
For example, Article 43(4) provides a Chinese joint -venture party the right to 
continue to use technology tra nsferred under a technology transfer contract after 
the expiration of the contract . 
The Regulations for the Implementation of the Law of the People 's Republic of China on Chinese -
Foreign Equity Joint Ventures , operating separately or together with other li sted instruments,  appear 
to be inconsistent with Article 28.1(a), (b) of the TRIPS Agreement because:  
• Article 43 of the Regulations denies foreign patent holders their exclusive rights, 
including to prevent third parties not having the foreign patent holde r's consent 
from acts listed in Article 28.1(a), (b) of the TRIPS Agreement.2  For example, 
                                                
1 To the extent China asserts that intellectual property rights holders in China, like foreign intellectual 
property rights holders, are prohibited from restricting through a technology license contract a Chinese party 
from improving the technology or from using the improved technology, the United States considers that China 
denies intellectual property rights holders in China their exclusive rights through the application of Articles 329 
and 354 of the Contract Law of the People’s Republic of China , operati ng separately or collectively with other 
legal instruments, inconsistently with Article 28.1(a), (b) of the TRIPS Agreement.  
2 See TRIPS Agreement Article 28.1(a), (b): “A patent shall confer on its owner the following exclusive 
rights: (a) where the subj ect matter of a patent is a product, to prevent third parties not having the owner’s 
consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that 
product; (b) where the subject matter of a patent is a process, t o prevent third parties not having the owner’s WT/DS542/8  
 
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  Article 43(4) provides a Chinese joint -venture party the right to continue to use 
technology transferred under a technology transfer contract after the expiration of 
the contract.  
Therefore, the United States respectfully requests, pursuant to Article 6 of the DSU, that the Dispute 
Settlement Body establish a panel to examine this matter, with standard terms of reference as set 
out in Article 7.1 of the DSU.   
 
____ ______  
                                                
consent from the act of using the process, and from the acts of: using, offering for sale, selling, or importing 
for these purposes at least the product obtained directly by that process.”