WT/DS542/1  
IP/D/38  
 
26 March 2018  
(18-1799) Page: 1/2 
  Original: English  
 
CHINA – CERTAIN MEASURES CON CERNING THE PROTECTI ON 
OF INTELLECTUAL PROPERTY RIGHTS  
REQUEST FOR CONSULTA TIONS BY THE UNITED STATES  
The following communication, dated 23 March 2018 , from the delegation of the United States  to 
the delegation of China  and to the Chairperson of the Dispute Settlement Body, is circulated in 
accordance with Article  4.4 of the DSU.  
 
_______________  
 
 
My authorities have instructed me to request 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 
Article 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 . 
China denies foreign patent holders the ability to enforce their pa tent 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 for eign 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 im poses these measures include the following, 
operating separately or collectively : 
 Foreign Trade Law of the People 's Republic of China  (adopted at the Eighth Session 
of the Standing Committee of the Seventh National People 's Congress on May 12, 
1994, effect ive July 1, 1994, in Executive Order No. 22, amended by the Eighth 
Session of the Standing Committee of the Tenth National 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 Technologies (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 Second 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 Stan ding 
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 o n 
Chinese -Foreign Equity Joint Ventures (State Council, Guo Fa [1983] No. 148, issued 
September 20, 1983, effective September 20, 1983, amended January 15, 1986, in 
Guo Fa [1986] No. 6, further amended December 21, 1987, in Guo Fa [1987] WT/DS542/1 • IP/D/38  
 
- 2 - 
 
  No. 110, July 22, 2001, in Order of the State Council No. 311, January 8, 2011, in 
Order of the State Council No. 588, and February 19, 2014, 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 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 (National Treatment) of the TRIPS Agreement, solely or in conjunctio n 
with Article 28.2 of the TRIPS Agreement, because:  
 Article 24 of the Regulations  accords  less favorable treatment to foreign intellectual 
property rights holders as compared to Chinese intellectual property rights holders.  
For example, Article 24 requir es that licensors to imported technology contracts 
indemnify licensees for all liabilities for infringement resulting from the use of the 
transferred technology.  
 
 Article 27 of the Regulations accords less favorable treatment to foreign intellectual 
proper ty 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 improvement.  
 
 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 contract from 
restricting a Chinese party from improving the techno logy or from using the 
improved technology .  
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 listed instruments,  
appear to be inconsistent with Article 3 (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 Regulations accords less favorable treatment to foreign intellect ual 
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 transferred 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 listed 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 holder 's consent from 
acts listed in Article 28.1(a), (b) of t he TRIPS Agreement.1 For example, 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.  
We look forward to receiving your reply to  the present request and to scheduling a mutually 
convenient date for consultations.  
__________  
                                                
1 See TRIPS Agreement Article 28.1(a), (b): "A patent shall confer on its owner the following exclusive 
rights: (a) where the subject 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 subjec t matter of a patent is a process, to prevent third parties not having the owner 's 
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. "