WORLD TRADE  
ORGANIZATION  WT/DS362/1 
IP/D/26 
G/L/819 
16 April 2007 
 (07-1498) 
 Original:   English 
  
 
CHINA – MEASURES AFFECTING THE PROTECTION AND 
ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS 
 
Request for Consultations by the United States
 
 
 
 The following communication, dated 10 April 2007, from the delegation of the United States to the delegation of China and to the Chairman 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 measures pertaining to the protection and enforcement of intellectual property rights in China.  
I. Thresholds for criminal procedures and penalties  
 
The first matter on which the United States request s consultations concerns the thresholds that 
must be met in order for certain acts of trademark counterfeiting and copyright piracy to be subject to criminal procedures and penalties.  In th is regard, the measures at issue include: 
 
(1) the Criminal Law of the People's Republic of China (adopted at the Second Session of the 
Fifth National People's Congress on 1 July 1979 a nd revised at the Fifth Session of the Eighth 
National People's Congress on 14 March 1997) ("Cr iminal Law"), in particular Articles 213, 
214, 215, 217, 218, and 220; and 
 (2) measures by the courts and procuratorate that apply throughout China, including the 
Interpretation by the Supreme People's Court and the Supreme People's Procuratorate on 
Several Issues of Concrete Application of Law in Handling Criminal Cases of Infringing 
Intellectual Property (adopted at the 1331
st Session of the Judicial Committee of the Supreme 
People's Court on 2 November 2004 and the 28th Session of the Tenth Procuratorial 
Committee of the Supreme People's Procurator ate on 11 November 2004 and to be effective 
as of 22 December 2004) ("th e December 2004 Judicial In terpretation"), and the 
Interpretation by the Supreme People's Court and the Supreme People's Procuratorate on 
Several Issues of Concrete Application of Law in Handling Criminal Cases of Infringing 
Intellectual Property (II) (adopted on 4 April 2007, at the 1422nd Session of the Judicial 
Committee of the Supreme People's Court and the 75th Session of the Tenth Procuratorial 
Committee of the Supreme People's Procuratorate, and to be effective on 5 April 2007) ("the 
April 2007 Judicial Interpretation"); WT/DS362/1 
IP/D/26 G/L/819 
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as well as any amendments, related measures,
1 or implementing measures. 
 
 Articles 213, 214, and 215 of the Criminal  Law describe certain acts of trademark 
counterfeiting that may be subject to criminal pr ocedures and penalties.  However, under Article 213, 
criminal procedures and penalties are available only "if the circumstances are serious" or "if the circumstances are especia lly serious".  Under Article 214, cr iminal procedures and penalties are 
available only "if the amount of sales [of commoditi es bearing counterfeit registered trademarks] is 
relatively large" or "if the amount of sales is huge ".  Under Article 215, criminal procedures and 
penalties are available only "if the circumstances ar e serious" or "if the circumstances are especially 
serious".   Articles 217 and 218 of the Crimin al Law describe certain acts of copyright piracy that may 
be subject to criminal procedures and penalties.  However, under Article 217, criminal procedures and 
penalties are available only "if the amount of illegal ga ins is relatively large, or if there are other 
serious circumstances" or "if the amount of illegal gains is huge or if there are other especially serious circumstances".  Under Article 218, criminal pr ocedures and penalties are available only "if the 
amount of illegal gains is huge".  
 Article 220 of the Criminal Law provides fo r the availability of procedures and penalties 
when the crimes described in Articles 213 through 219 are committed by a "unit", as opposed to by 
natural persons.     The Criminal Law itself does not define the term s "serious", "especially serious", "relatively 
large", and "huge" as used in the above-referenced ar ticles.  Instead, these te rms are defined in the 
December 2004 Judicial Interpretation and the Apri l 2007 Judicial Interpretation by reference to 
"illegal business volume" (stated in terms of the value of products produced, stored, transported and 
sold), "illegal gains" (stated in terms of  profit), or number of "illegal copies". 
  Additionally, where the thresholds are de fined in terms of "illegal business volume", 
Article 12 of the December 2004 Judicial Interpreta tion provides that value ordinarily is calculated 
according to "the prices at which such products are actually sold" or "the labeled prices or the actual 
prices found to be sold at after investigation".  In other words, it is the price of the infringing goods as 
opposed to the price of the corresponding legitimat e goods that determines "illegal business volume".  
The lower the actual or labeled prices of infringin g goods, the more of them an infringer can sell or 
offer for sale without reaching the thresholds in th e Criminal Law that are defined by reference to 
"illegal business volume".   The United States understands that acts of trademark counterfeiting and copyright piracy 
occurring on a commercial scale in Chin a that fail to meet the thresholds are not subject to criminal 
procedures and penalties in China.  The lack of  criminal procedures and penalties for commercial 
scale counterfeiting and piracy in China as a result of the thresholds appears to be inconsistent with 
China's obligations under Articles 41.1 and 61 of the TRIPS Agreement.  
                                                     
 
1 Such other related measures include but are not limited to the Explanation on Certain Questions 
Related to the Concrete Application of Law in Hearing Cases of Crimes of Illegal Publication Fa Se (1998) 
No. 30 (adopted by the Adjudication Committee of the Supreme People's Court at its 1032nd meeting on 
11 December 1998, effective as of 23 December 1998)  and the Prosecution Guidelines for Criminal Cases 
Jointly Issued by the Supreme People 's Procuratorate and the Ministry of Public Safety (18 April 2001).  WT/DS362/1 
 IP/D/26 
 G/L/819 
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  II. Disposal of goods confiscated by Customs authorities that infringe intellectual property 
rights  
  The second matter on which the United States requests consultations concerns goods that 
infringe intellectual property rights that are confi scated by Chinese customs authorities, in particular 
the disposal of such goods following removal of their infringing features.   In this regard, the measures at issue include: 
 
(1) the Regulations of the People's Republic of  China for Customs Protection of Intellectual 
Property Rights (adopted at the 30
th Ordinary Meeting of the State Council on 26 November 
2003, published by the State Council on 2 Decem ber 2003, and effective from 1 March 2004) 
("Customs IPR Regulations"), in particular Chapter 4 thereof; and 
 
(2) the Implementing Measures of Customs of the People's Republic of China for the Regulations 
of the People's Republic of China on Custom s Protection of Intellectual Property Rights 
(adopted at an Administration Affairs Meeting of the General Administration of Customs on 22 April 2004, issued by the General Administration of Customs with Order No. 114 on 25 May 2004, and effective from 1 July 2004) ("Customs IPR Implementing Measures"), in 
particular Chapter 5 thereof; 
 as well as any amendments, related measures,
2 or implementing measures. 
  Specifically, the United States understands that  Article 27 of the Customs IPR Regulations 
and Article 30 of the Customs IPR Implementing Measures set forth a hierarchy of requirements for 
the disposal of goods that infringe intellectual pr operty rights and that are confiscated by Chinese 
customs authorities.  Under that hierarchy, the cust oms authorities often appear to be required to give 
priority to disposal options that would allow such goods to enter the channels of commerce (for 
instance, through auctioning the goods after removing their infringing features).  Only if the infringing features cannot be removed must the goods be destroyed.  The requirement that infringing 
goods be released into the channels of commerce unde r the circumstances set forth in the measures at 
issue appears to be inconsistent with China' s obligations under Articles 46 and 59 of the TRIPS 
Agreement.  
III. Denial of copyright and related rights protection and enforcement to works that have 
not been authorized for publication or distribution within China  
 
 The third matter on which the United States reque sts consultations concerns the denial of 
copyright and related rights protection and enfo rcement to creative works of authorship, sound 
recordings, and performances that have not been au thorized for publication or distribution within 
China.  For example, it appears that works that are required to undergo censorship review (or other 
forms of pre-publication or pre-distribution review) before entering the Chinese market are not 
protected by copyright before the review is comp lete and publication and distribution within China 
has been authorized.  
                                                     
 
2 Such other related measures include but are not limited to the Law of the People's Republic of China 
on Administrative Penalty (adopted at the Fourth Session of the Eighth National People's Congress on 17 March 1996, promulgated by Order No. 63 of the President of the People's Republic of China on 17 March 1996, and 
effective as of 1 October 1996) and in particular Article 53 thereof. WT/DS362/1 
IP/D/26 G/L/819 
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   In this regard, the measures at issue include: 
 (1) the Copyright Law,
3 in particular Article 4; 
 
(2) the Criminal Law, the Regulations on the Administration of Publishing Industry, the 
Regulations on the Administration of Broadcas ting, the Regulations on the Administration of 
Audiovisual Products, the Regulations on the Ad ministration of films, and the Regulations on 
the Administration of Telecommunication;4  
 
(3) the Administrative Regulations on Audiovisual Products5; 
 (4) the Administrative Regulation on Publishing
6; 
 
(5) the Administrative Regulations on Electronic Publications7; 
 (6) the Measures for the Administration of Import of Audio and Video Products
8; 
 (7) the Procedures for Examination and Approval for Publishing Finished Electronic Publication 
Items Licensed by a Foreign Copyright Owner
9; 
 
(8) the Procedures for Examination and Appr oval of Importation of Finished Electronic 
Publication Items by Electronic Publication Importation Entities10; 
 (9) the Procedures for Recording of Imported Publications
11; 
 
(10) the Interim Regulations on Internet Culture Administration12; and 
 (11) the Several Opinions on the Develo pment and Regulation of Network Music
13; 
                                                      
3 Adopted at the 15th Session of the Standing Committee of the Seventh National People's Congress on 
7 September 1990, and amended according to the Decision on the Revision of the Copyright Law of the People's Republic of China, adopted at the 24th Session of the Standing Committee of the Ninth National People's 
Congress on 27 October 2001.  See Main Dedicated Intellectual Property Laws and Regulations Notified under 
Article 63.2 of the Agreement: China , IP/N/1/CHN/C/1, circulated 8 July 2002. 
4 As noted by China in reply to a question in Review of Legislation: China , IP/Q/CHN/1, circulated 
10 December 2002, section V.A.3. 
5 State Council Order No. 341, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
6 State Council Order No. 343, adopted at the 50th executive meeting of the State Council on 
12 December 2001, promulgate d on 25 December 2001. 
7 Order No. 11 of  the General Administration of Pre ss and Publication (30 December 1997). 
8 Decree No. 23 of the Ministry of Culture and the General Administration of Customs (17 April 2002). 
9 General Administration of Pre ss and Publication (27 December 20 05) (Basis of Establishment:  
Decision on Establishing Administrative Licensing for Items Necessary to be Maintained for Administrative 
Examination and Approval by the State Council [State Council Order No. 412]). 
10 General Administration of Press and Publication (27 December 2005) (Basis of Establishment:  
Decision on Establishing Administrative Licensing for Items Necessary to be Maintained for Administrative 
Examination and Approval by the State Council [State Council Order No. 412]). 
11 General Administration of Press and Publication (27 December 2005) (Basis of Establishment: 
Article 45 of the Administration Regulations on Publication [State Council Order No. 343]). 
12 Promulgated in Order No. 27 of the Ministry of Cu lture (10 May 2003), amended by Order No. 32 of 
the Ministry of Culture (1 July 2004). 
13 Ministry of Culture (20 November 2006).  WT/DS362/1 
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as well as any amendments, related measures, or implementing measures.    
 Article 5(1) of the Berne Convention for the Protection of Literary and Artistic Works (1971)  
(the "Berne Convention") requires that foreign authors of protected works shall enjoy all the rights granted to domestic authors, as well as all the rights specially granted by the Berne Convention.
14  
These rights may not be made subject to any form ality (Berne Convention Article 5(2)).  TRIPS 
Agreement Article 9.1 requires all WTO Members, inter alia , to comply with Articles 1 through 21 of 
the Berne Convention.15 
  China's Copyright Law provides the legal basis for copyright protection within China of the works of Chinese and foreign authors, and it provides an array of rights to such authors ( e.g., rights of 
reproduction, translation, and adaptation).  In add ition, the Copyright Law provides specific statutory 
protections to performers, producers of sound record ings, and broadcasting or ganizations.  However, 
the first sentence of Article 4 of the Copyright Law provides as follows:  "Works the publication or 
distribution of which is prohibited by law shall not be  protected by this Law".  Therefore, authors of 
works whose publication or distribution has not been authorized (and whose publication or distribution is therefore prohibited) appear not to enjoy the minimum standards of protection specially 
granted by the Berne Convention in respect of t hose works (and may never enjoy such protection if 
the work is not authorized, or is not authorized fo r distribution or publication in the form as submitted 
for review).  In addition, the rights of authors of works whose publication or distribution is required to 
undergo pre-publication or pre-distribution review appear to be subject to the formality of successful conclusion of such review.  The foregoing appears to  be inconsistent with China's obligations under 
TRIPS Agreement Article 9.1. 
 
 In addition, Article 14 of the TRIPS Agre ement requires China to give performers, inter alia , 
the possibility of preventing certain acts, and to  give producers of phonograms (sound recordings) the 
right to authorize or prohibit the direct or indirect  reproduction of their sound r ecordings (collectively, 
the "related rights").  To the ex tent that the Copyright Law also denies protection of these rights to 
performers and producers of sound recordings during the period of any pre-publication or 
pre-distribution prohibition, the Copyright Law appear s to be inconsistent with China's obligations 
under Article 14 of the TRIPS Agreement.   Furthermore, it appears that the measures at  issue provide different pre-distribution and 
pre-authorization review processes for Chinese nationa ls' works, performances (or their fixations) and 
sound recordings than for foreign nationals' wo rks, performances (or their fixations) and sound 
recordings.  To the extent that these different process es, taken together with Article 4 of the Copyright 
Law, result in earlier or otherwise more favourable protection or enforcement of copyright or related 
rights for Chinese authors' works,  Chinese performers' performances (or their fixations) and Chinese 
producers' sound recordings than for foreign aut hors' works, foreign performers' performances (or 
their fixations) and foreign producers' sound reco rdings, the measures at issue appear to be 
inconsistent with China's obligatio ns under TRIPS Agreement Article 3.1.   Additionally, to the extent 
that Article 4 of the Copyright Law, independe ntly or in conjunction with the different pre-
authorization or pre-distribution processes in the ot her measures at issue, causes foreign authors of 
works whose publication or distribution has not been authorized not to enjoy the rights granted to 
                                                     
 
14 The minimum standards of copyright protection fo r literary and artistic works specially granted by 
the Berne Convention include, inter alia , the right of reproduction (Berne Co nvention Article 9(1)), the right of 
adaptation (Berne Convention Article 12), and the ri ght of translation (Berne Convention Article 8). 
15 However, WTO Members do not have rights or oblig ations under the TRIPS Ag reement in respect of 
the rights conferred under Article 6 bis of the Berne Convention or of the rights derived therefrom. WT/DS362/1 
IP/D/26 G/L/819 
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  Chinese authors, the measures at issue appear to be inconsistent with China' s obligations under TRIPS 
Agreement Article 9.1 (with respect at least to Chin a's obligations to comply with Articles 5(1) and 
5(2) of the Berne Convention). 
 
 In addition, to the extent that Article 4 of  China's Copyright Law, independently or in 
conjunction with the other measures at issue, make s it impossible for rightsholders to enforce their 
copyrights or related rights with respect to works,  performances or sound recordings that have not 
been authorized for publication or distribution, Ch ina fails to make enforcement procedures available 
so as to permit effective action against infringement s of those copyrights and related rights.  This 
appears to be inconsistent with China's ob ligations under TRIPS Ag reement Article 41.1. 
 
IV. Unavailability of criminal procedures and pe nalties for a person who engages in either 
unauthorized reproduction or unauthorized distribution of copyrighted works  
 
 The fourth matter on which the United States requests consultations concerns the scope of 
coverage of criminal procedures and penalties for unauthorized reproduction or unauthorized 
distribution of copyrighted works.  In particular, it appears that unauthorized reproduction of copyrighted works by itself – that is, unauthorized reproduction that is not accompanied by unauthorized distribution – may not be subject to criminal procedures and penalties.  Likewise, it 
appears that unauthorized distribution of copyri ghted works by itself – that is, unauthorized 
distribution that is not accompanied by unauthorized reproduction – may not be not subject to criminal procedures and penalties.   In this regard, the measures at issue include the Criminal Law, in particular Article 217, as 
well as any amendments, related measures, or implementing measures. 
  Article 217 establishes the availability of crimin al procedures and penalties for certain acts of 
copyright piracy, including "reproducing and distributing [ fuzhifaxing ] a written work, musical work, 
motion picture, television programme or other visu al works, computer software or other works 
without permission of the copyright owner" and "reproducing and distributing an audio or video 
recording produced by another pers on without permission of the producer".
16   
  To the extent that wilful copyright piracy on a commercial scale that consists of unauthorized 
reproduction – but not unauthorized distribution – of copyrighted works, and vice versa , may not be 
subject to criminal procedures and penalties under the law of China, this would appear to be 
inconsistent with China's oblig ations under Articles 41.1 and 61 of the TRIPS Agreement.   
 
The United States notes that Article 2 of the April 2007 Judicial Interpretation addresses the 
phrase "reproducing and distributing" [ fuzhifaxing ], and we look forward to discussing this matter 
with China during our consultations.  
* * * * * 
  We  look forward to receiving your reply to th e present request and to fixing a mutually 
convenient date for consultations.  
__________ 
                                                     
 
16 Article 218 of the Criminal Law refers to so meone who "sells" infringing works.  However, it 
appears that this reference to "sell[ing]" in Article 2 18 is different from the reference to "distributing" in 
Article 217.