WORLD TRADE  
ORGANIZATION  IP/C/47 
7 December 2007 
 (07-5449) 
Council for Trade-Related Aspects 
of Intellectual Property Rights  
 
 
 
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 23 and 24 October 2007, the Council undertook the sixth 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 ag reed 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, the United States and the European Communities.  These submissions were 
circulated in documents IP/C/W/498, IP/C/W/502 and IP/C/W/503. 
3. In a communication dated 18 October 2007, China provided information as specified in 
Annex 1A to the Protocol.  This submis sion was circulated as document IP/C/W/505. 
4. The annex to this report contains the relevant  part of the minutes of the Council's October 
meeting
1 that reflects the statements made under the review. 
_______________ 
 
                                                      
1 To be circulated as IP/C/M/55. IP/C/47 
Page 2  
 
  ANNEX 
 
Item C of the minutes of the Council's meeting of 23 – 24 October 2007
 
to be circulated as IP/C/M/552  
 
C. TRANSITIONAL REVIEW UNDER SECTION 18 OF THE PROTOCOL ON THE ACCESSION OF THE 
PEOPLE 'S REPUBLIC OF CHINA  
1. The Chairman  recalled that section 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 promptly to  the General Council.  He further recalled that 
section 18 required China to provide relevant info rmation, 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 pursuant to the requirement, dated 18 October 2007, had been 
circulated as document IP/C/W/505. In addition, the Chinese delegation had made available two room 
documents entitled Report on China's Intellectual Property Rights Protection in 2006  and China's 
Action Plan on IPR Protection 2007 .  Questions and comments in connection with the transitional 
review had been submitted by Japan, the United States and the European Communities (documents 
IP/C/W/498, 502 and 503, respectively).  
2. The representative of China  said that it was his delegation's understanding of past practice in 
transitional reviews that Members that had posed questions to China, or had submitted comments, 
would always take the floor first to introduce their submissions.  China would then take the floor to 
give its responses, both to the general comments and to the technical questions, and that this would 
conclude the transitional review.  
3. The representative of the United States  said that the practice of TRMs had varied from 
committee to committee, but that in this Council China had always taken the floor first to introduce its 
submission, had provided its responses to the written questions and Members had intervened 
afterwards.  However, it was his delegation's view that substance was more important than procedure 
in this case and the United States were therefore prep ared to proceed in either order at this time. 
4. The representative of Brazil  said that, although his delegation was not part of the dialogue 
that usually took place under this item, it was nonethel ess a Member of the Counc il.  He believed that 
this was not a tribunal and that procedures in the Counc il had to be fair and equitable.  The obligations 
of China, as his delegation understood them, were  to respond to questions and he was therefore 
interested in hearing the introduction of the questions  first, as this was the natural order of things. 
5. The representative of the European Communities  said that his delegation had submitted seven 
pages of questions, 36 paragraphs, and that to read  them out would be wasting time.  His delegation 
would therefore prefer for China to respond to the questions that had already been put in writing and 
then possibly to additional questions that Member s may raise on the basis of  these responses.  This 
process did not have the character of a tribunal.  His delegation was simply applying the agreement 
and posing its questions, and expected a proper response. 
6. The representative of China  said that, as his delegation had pointed out repeatedly in the past, 
it was the logic of the review that China respond or ally to the questions posed.  However, it went 
beyond the commitments of China under Article 18 to provide any written responses or to respond to 
any additional questions posed after its answers, al though China was prepared to listen to any such 
                                                      
2 The paragraph numbering of this excerpt will not co rrespond with that of the minutes of the TRIPS 
Council meeting but has been included for the convenience of users.  IP/C/47 
 Page 3 
 
 
  questions.  In keeping with this logic, he asked th e Chair to proceed as in previous TRMs and invite 
Members that had posed questions to first introduce their submissions. 
7. The representative of Japan  said that, while the practice in this Council had been for China to 
first provide its responses and for Members to then make additional further comments, his delegation, 
like others, liked to focus on substance in a practical manner.  
8. The representative of the United States  thanked the Chinese delegation in advance for its 
attention to the questions raised by the United St ates and other Members.  These questions touched on 
many issues of concern.  The United States had wo rked hard to address these and similar concerns 
through meetings of this Council and through constructive bilatera l dialogue and cooperation with 
China.  Unfortunately, it had not been possible to resolve all of these issues through these mechanisms 
alone.   
9. His delegation recognized that China had made th e protection of intellectual property rights a 
priority and had taken active steps to improve IP R protection and enforcement.  It continued to 
welcome and appreciate the commitment at the highest levels of China’s Government to addressing these issues.  However, the United States was con cerned that several aspects of the Chinese legal 
regime actually hindered IPR protection a nd enforcement and raised WTO concerns.   
10. He noted that the WTO Dispute Settlement Body  had established a panel to look into three 
such concerns under the TRIPS Agreement.  The se related to China’s thresholds for criminal 
copyright and trademark enforcement; customs ru les for destructions of infringing goods; and 
copyright protection for new products that had not yet received Chinese Government approval for 
publication or distribution. 
11. The United States was also concerned about cer tain Chinese measures that affected market 
access for films for theatrical release and audiovis ual home entertainment products such as DVDs and 
video cassettes; for books, periodicals, journals, a nd other publications; and for music.  China’s 
barriers to market access for these co pyright-dependent products created legal obstacles to legitimate 
products reaching the Chinese consumer.  That, in turn , made it easier for copyright pirates to operate 
in China’s market.  It was his delegations view, th erefore, that the protection of intellectual property 
rights and market access for legitimate copyright-depe ndent products were bound together.  He noted 
that the United States had requested establishmen t of a WTO panel to look into these market access 
concerns as well.  
12. As the questions from Members today reflected, th e concerns that were the subject of the two 
pending dispute settlement proceedings represented onl y a part, albeit an important part, of a much 
larger set of concerns about China’s protection and enforcement of intellectual property rights.  It was 
critical that China and its trading partners worked  together to aggressively seek solutions to these 
larger issues. 
13. His delegation saw evidence of unacceptable leve ls of IPR infringement most vividly in the 
numbers of infringing goods seized at US borders.  Mid-year statistics for 2007 showed that China 
was the source of 81 per cent of infringing goods seized at US borders.  China had had a high share of 
seized goods in past years as well, but it was especi ally troubling that the seizure of Chinese goods 
had been increasing, not decreasing, each year si nce China had joined the WTO in 2001.  Exports 
were only part of the problem, however.  US copyri ght industries consistently reported high rates of 
piracy within China, although there had been improve ment in the software sector.  Trade in pirated 
optical discs continued to thrive.  The operation of  large retail and wholesale markets for counterfeit 
and pirated goods had not been dete rred.  Piracy of books and journals was a key concern.  Internet 
piracy was increasing. IP/C/47 
Page 4  
 
  14. Overall, product counterfeiting in China w as widespread, affecting pharmaceuticals, 
electronics, batteries, auto parts, industrial equipment, toys, and many other products.  Many of these counterfeit products, moreover, posed a direct threat to the health and safety of consumers in China, 
the United States and elsewhere around the world.  The underlying causes for these problems, and the 
possible solutions, were too numerous to describe he re.  The US Government had set out its views on 
those issues in detail in various reports availabl e on the website of the Office of the US Trade 
Representative.   
15. Last year at the transitional review before th is Council, his delegation had noted that the 
United States looked forward to continuing to engage  bilaterally with China on a wide range of IPR 
issues.  At the same time, it had pointed out that  the multilateral WTO forum, and the tools provided 
under the WTO agreements, including reviews like th is one, the provision for transparency requests 
under Article 63.3 of the TRIPS Agreement, and th e availability of WTO dispute settlement, were 
equally indispensable to a healthy international tr ade environment.  His delegation continued to be 
disappointed at China’s apparent reluctance to take  full advantage of the capacity of these tools to 
clarify issues and aid in the exploration of possible solutions.   
16. The larger issue before China and its trading partners was how soluti ons would be found and 
mutual understandings be reached regarding the various IPR issues discussed today.  His delegation had observed that China seemed reluct ant to use the transitional reviews before this Council to their 
full advantage.  It had also seen that China was reluctant to respond substantively to requests under 
Article 63.3 of the TRIPS Agreement.  Since the f iling of the two WTO disputes against China, it had 
also noted a reluctance on China’s part to engage in bilateral dialogue.   
17. The United States continued to believe that deeper multilateral and bilateral dialogue and 
cooperation was the path to progress.  The United Stat es would continue to put serious efforts into its 
joint work with China on innovation policy, intell ectual property protection strategies, and the range 
of other important matters in its bilateral ec onomic relationship through the US-China Strategic 
Economic Dialogue, the Joint Commission on Commerce and Trade and other bila teral engagements.  
He hoped that China would fully embrace all of those opportunities and his delegation viewed the 
current WTO disputes as evidence of the need for mo re, not less, bilateral and multilateral cooperation 
on China’s IPR issues. 
18. Moving ahead with that work would of c ourse require a willingness to cooperate on the 
Chinese side.  The United States had seen evidence of  that in some areas, such as recent joint US – 
Chinese law enforcement actions and a memorandum of cooperation in the sphere of IPR border 
enforcement.  His delegation hoped to see deeper co operation in other areas as well, with a view to 
making progress on the important issues that remain to be addressed with regard to China’s IPR 
enforcement regime. 
19. The representative of the Japan
 said that his delegation had raised questions regarding the 
future improvement of criminal enforcement and other issues at all TRMs from 2002-2006.  With 
regard to further improvement of criminal enforcemen t, he noted that a new judicial interpretation in 
April 2007 had abolished the differenc es between criminal threshold fo r units and that for individuals, 
and had substantially lowered the threshold for units. Japan appreciat ed that the Chinese Government 
had recognized the importance of the protection of IPRs and had made efforts to improve 
enforcement.  On the other hand, despite such  efforts, a survey conducted by the Japanese 
Government in March and April 2007 showed that  IPR enforcement in China had still room for 
improvement.  While there had been some strengthe ning measures in IPR enforcement, such as an 
increase in the amount of confiscated illegally acquired income, which he understood was a relatively severe penalty, there continued to be some deficiencies in IPR enforc ement, such as repeat offences, 
more sophisticated modus operandi  of counterfeiters, and insufficient enforcement, especially in local 
areas.  Therefore, his delegation had to conclude that IPR infringement in China continued to be  IP/C/47 
 Page 5 
 
 
  severe for the Japanese industry.  A deterrent ef fect through the strengthening of administrative 
punishment and criminal prosecution and through  the enhancement of measures against the 
sophisticated modus operandi  of counterfeiters and repeat offe nders was essential to improve the 
situation.  Japan was looking forward to China enhancing IPR protection and taking further steps to provide effective enforcement against any act of infringement of IPRs in China.  Regarding the 
specific questions Japan had posed to China, in th e interest of time and efficiency, he referred 
Members to document IP/C/W/498 that Japan had submitted. 
20. The representative of the European Communities
 said that his delegation noted with 
satisfaction certain progress that had been made  on IPRs and certain ongoing positive initiatives that 
had been taken by China to tackle remaining problem s.  However, like other delegations he remained 
concerned by the very high level of counterfeiting and piracy in China. According to EC customs 
statistics of 2006, China remained the main source of counterfeited and pi rated goods, with over 86 
per cent of counterfeit goods seized at the EU border coming from China.  His delegation remained particularly worried by the lack of criminal pro secution.  The sanctions against IPR infringement were 
insufficient and not a deterrent. Civil and administ rative procedures against counterfeiting and piracy 
remained expensive and time-consuming.  The European Communities therefore urged China to 
actively pursue its efforts towards an effec tive IP protection and enforcement system.  
21. In this respect, he recalled that the Eu ropean Communities and China had established a 
structured dialogue on intellectual property and had set up, in that framework, a joint IP Working Group, the fourth session of which had met in Beiji ng on 27-28 September.  He hoped that such a 
cooperative approach with China on IPR issues woul d lead to concrete and tangible results, as these 
were much needed.  Finally, he said that he looked  forward to a comprehensive reply to the questions 
posed in writing in document IP/C/W/503 of 11 Octo ber 2007 and hoped that what appeared to him as 
lack of cooperation of China in this TRM would not ha ve to be interpreted as a lack of respect for the 
questions asked by Members. 
22. The representative of China
 said that his delegation welcomed  this opportunity to elaborate on 
the status of China’s implementation of the TRI PS Agreement and other relevant commitments, and 
on its intensified IPR enforcement efforts since the last review through more effective administrative 
sanctions, as well as to brief the Council on Chin a’s efforts in deepening its international IPR 
cooperation with other Members in recent years.  Ever since adopting the reform and opening up 
policy, particularly in recent years, China had made impressive progress on IPR protection and had 
recently incorporated it into its national strategy.  Furthermore, the Chinese President Mr. HU Jintao 
had reiterated in his report to the 17th CPC C ongress the Party’s determination to "improve 
indigenous innovation, build an innovative count ry… and implement IPR strategies", which would 
serve as a long-term goal for China to pursue firmly in its IPR protection task. 
23. Regarding the legal infrastructure perspective, in  a short period of merely 30 years, China had 
put in place a legal and regulatory IPR framework in corporating laws, regula tions, department rules 
and judicial interpretations.  In order to respond to its own developm ent needs and in order to advance 
its national drive to build an innovative country, Ch ina was constantly studying and formulating new 
IPR-related laws, regulations and rules and ma king improvements of its IPR protection system. 
24. In 2006, the State Council had promulgated the Regulations on the Protection of the Right of 
Communication through Information Network .  The Supreme People's Court (SPC) had issued the 
Decision (No. 2) on Amending the Supreme Peopl e’s Court’s Interpretation on Certain Issues 
Concerning Application of Laws in Dealing W ith Cases Concerning Computer Network Copyright 
Disputes . The Supreme People's Procuratorate (SPP), the Ministry of Public Security, National 
Copyright Office, State Administration for Industry and Commerce (SAIC) and General Administration of Customs had issued four regulations on accelerating civil-to-criminal case transfer.  The Ministry of Commerce (MOFCOM) and others  had introduced specific rules on IPR protection IP/C/47 
Page 6  
 
  related to trade fairs and exhibitions.  The State Intellectual Property Office (SIPO) had issued the 
Guide on Patent Re-examination  and Measures for the Reduction or Postponement of the Payment of 
Patent Fees.   The SPC and SPP had clarified the criteri a for convictions relating to IPR crimes 
involving piracy and illicit sales of audiovisual products.  
25. On 1 April, 2007, the National Working Group for IPR Protection had published the 2007 
Action Plan on IPR Protection , which detailed 276 specific measures in ten areas including legislation 
and enforcement.  Under this Action Plan , China would formulate and revise 14 laws, regulations, 
rules and administrative measures on trademark, co pyright, patent and customs protection as well as 
seven judicial interpretations and guidelines.  In  the first half of 2007, the SPC had issued the 
Opinions on Fully Intensifying IPR Trials to Prov ide Judicial Assurances for Building an Innovative 
Country , the Interpretations on the Application of Laws  in Civil Cases Involving Unfair Competition,  
and the  Rules on the Application of Laws in Disputes Involving Infringement of Right to New Plant 
Varieties . The SPC and SPP had jointly circulated the  Interpretations on Issues Relating to the 
Application of Laws in IPR Criminal Cases II .  The SAIC had promulgated the Measures for the 
Administration of Special Signs of Geographical Indication Products .  The formulation and updating 
of the Trademark Law , Law against Unfair Competition , Patent Law , and Patent Commissioning 
Regulations  was also progressing on schedule. 
26. On the IPR enforcement side, w ithin the framework of international conventions and treaties 
such as the TRIPS Agreement and taking into consid eration its national situation, China had come up 
with an IPR protection model featuring a parallel and concurrent system of administrative and judicial 
protection as well as an enforcement structure that effectively integrated administrative approaches 
with criminal justice, ensuring adequate protecti on for rightholders and ultimate fulfillment of China’s 
international IPR obligations.  In 2006, China had set up IPR Service Centers in 50 large and medium-
sized Chinese cities and had launched the special "12312" service hotlines to facilitate IPR complaints 
and crime reporting.   IPR enforcement agencies had carri ed out seven dedicated crackdown 
campaigns including Operation Sunshine, Opera tion Blue Sky, Mountain Eagle Two and the 
Anti-Piracy 100 Days Campaign, which had resulted in notable achievements.  
27. Regarding the series of figures detailing China’s efforts on enforcement, he referred Members 
to the information his delegation had provided u nder Annex I of Article 18 of China’s Accession 
Protocol.  In response to some Members' interven tions, he emphasized that in 2006, 2,277 criminal 
IPR cases had been settled with a verdict of legal e ffect regarding 3,508 persons, 3,507 of whom had 
been convicted.  This clearly demonstrated China’ s efforts to intensify criminal enforcement.  
28. Some Members had also quoted increased numbers  of seized pirated produc ts at their borders. 
Also in China there had been an increase in the number of seizures of pirated products.  From his 
perspective, these figures only demonstrated that China's efforts on IPR enforcement were more 
intensified, not less. 
29. 
Regarding international IPR cooperation , on 29 December 2006, China had announced its 
decision to join the WIPO Copyright Treaty and WIPO Performances and Phonograms Treaty .  On 
9 June 2007, these two treaties had o fficially taken effect in China.  At present, China was also 
approaching its final procedures for ratifying the Protocol Amending the TRIPS Agreement. 
30.  China had been actively involved in the reform  of international IPR systems and negotiations 
on global IPR issues in international forums su ch as the WTO, WIPO, UPOV, APEC and ASEM, 
while increasing bilateral IPR collaborations with  other Members.  China-US, China-EU, China-
Russia and China-Switzerland IPR working groups had been set up to meet regularly.  IPR exchange 
mechanisms had also been established and consol idated between China and other countries and 
regions, such as Japan, Korea and ASEAN.  In 2007, the first sessions of the China-Russia IPR 
Working Group and the China-Switzerland IPR Working Group, as well as the fourth session of the  IP/C/47 
 Page 7 
 
 
  China-EU IPR Working Group ha d successfully been convened, cementing IPR exchanges and 
cooperation.  China had also held a China-US En forcement Cooperation Joint Liaison Group meeting, 
had signed an MOU on Intensifying IPR Enforcem ent Cooperation between the Chinese and US 
customs services, and had hosted the WIPO Asia-Pacific Symposium on Performers’ Rights in the Digital Network Environment, as well as an inte rnational symposium on ge ographical indications.  
31. In conclusion, despite being a developing country confronted with many difficulties, China 
had never slowed down its pace of IPR protection.  It should be underlined that IPR protection was a 
global issue and not a country-specific one.  As  developed and developing Members shared the 
daunting challenge of improving IPR protection, cooperation should serve as the main vehicle for 
international endeavor in the field of IPR protection.   China was determined to further improve its IPR 
protection and enforcement system through unremitti ng efforts and to collaborate extensively with 
other WTO Members on this issue.  
32. Responding to the technical questions submitted to  China, another representative of China  
said that around 20 of these questions were closely related to the WTO dispute case DS362 or the case on market access of goods and that, therefore, her de legation did not deem it appropriate to provide 
responses to them.  For the sake of clarity and effici ency the other questions had been categorized into 
11 groups. 
33. Responding to question in the first category on General Issues , she said that, regarding 
transparency, Chinese IP legislation was quite open and transparent.  It had been provided that 
between the release and implementation of laws and administrative regulations at least one month had 
to be allowed for public comments.  Before submittin g drafts of laws and regulations for deliberation 
and review, they had to be made public for co mments from all, including experts, scholars and 
practitioners in IP-related fields.  In addition, China also paid great  attention to opinions from IP-
related international organizations , foreign enterprises and individua ls. All suggestions were taken 
seriously and submitted for detailed analysis and classification.  The feedback of some crucial suggestions would be delivered to  the organization or individual th at had made the suggestions for 
further comments. 
34. For example, in 2004 and 2005, the Suprem e People’s Court had made available on the 
Internet the five judicial interpretations, respec tively on technical contracts, unfair competition, new 
plant varieties, right conflicts and legal app lication of MTV copyright, for public comments. 
Revisions had been made according to comments from the public.  In China’s IPR legislation, it was 
rarely the case that more than one agency was involved in drafting legislation at the same time. 
However, if such a case did occur, according to  the Ordinance Concerning the Procedures for the 
Formulation of Administrative Regulations and the Regulations on Procedures of the Rules  
Formulation, all the agencies involved were requi red to solicit public opinions in the process of 
drafting administrative rules and regulations.  In addition, if the draft administrative rules and 
regulations related to responsibilities of more than  one agency, the drafting agency was required to 
fully consult with all the other agencies involved to ensure coordination an d avoid inconsistencies 
among different IP-related agencies. 
35. In the process of the third amendment to the Patent Law, opinions had been solicited widely 
from related government agencies, organizations, en terprises and citizens, and a great number of 
suggestions for amendments were collected.  In a ddition, the Legislative Affairs Office of the State 
Council had held an international seminar on th e Patent Law Amendment on 10-11 October 2007.  
Experts, scholars, representatives from Chinese ente rprises, WIPO and well-known companies in the 
US, EC, Japan, Brazil, India, etc. had held comp rehensive and in-depth discussions on the amendment 
of the draft. IP/C/47 
Page 8  
 
  36. For the amendment to the Trademark Law, th e State Trademark Office had begun to solicit 
social comments by sending letters and holding seminars since April 2006. By the end of 2006, 48 correspondents with 1,012 pieces of suggestions  from 47 organizations, groups and individuals, 
including foreign organizations such as the USPTO , JPO, INTA and AIPLA had been received.  In 
late September 2007, a new round of solicitations fo r opinions from domestic and foreign institutions 
and experts was launched. 
37. Regarding IP protection and enforcement, Chin a had taken many effective measures in recent 
years to push forward IPR protection in a comp rehensive manner and had achieved good results. 
China had further improved its legislation, greatly enhanced its efforts to fight against infringement, 
increased the number of criminal prosecutions and penalties, and had strengt hened public awareness 
for IPR protection.  The Chinese Government had b een exploring ways to establish an effective IPR 
protection system.  However, as China was still  a developing country, it was unrealistic and 
unreasonable to require China to reach the standa rds of developed countries like the European 
Communities within a short period of time.  China hoped that the European Communities could 
continue to support China in its IPR protection e ndeavors, improve mutual understanding and trust, 
and reduce complaints and criticism. 
38. Responding to questions in the second category on Legislation and Judicial 
Interpretations , she first turned to the revised draft of Ch ina’s patent law.  As the revision of the 
Patent Law was still underway, her delegation was unable to predict the final results and could 
therefore not provide further clarification of the provisions at present.  China’s Anti-Monopoly Law  
would come into force on 1 August 2008.  Curren tly, there was no explicit definition of "abuse of 
IPR" in Article 55. 
39. On conflicts between trademarks and trade names, the existing La w to Counter Unfair 
Competition was still under review and in the proc ess of being amended.  In November 2005, the 
Supreme People’s court had formulated the draft text  of the Interpretations on Applicable Legal Issues 
Concerning the Ruling of Civil Cases Involving IP R Conflicts, and had so licited public comments 
through the Internet in December 2005.  The Judici al Interpretation draft covered relevant issues on 
conflicts between trademarks and trade names. He r delegation was currently unable to provide any 
details. 
40. On the issue of royalty criteria for broadcasting and television organizations, according to the 
provisions of Article 43 of the Copyright Law,  the Chinese State Council was working on Measures 
on the Remuneration for Using Audio Products by Radio and Television, a nd related legislation 
procedures were now underway. 
41. According to Article 43 of the Regulations on Copyright Collective Management, when a 
user was able to provide the details of use but refused to do so, or practiced fraud in providing such information, the copyright administration departments of the State Council were required to rectification.  The copyright collective manage ment organization could terminate the Licensing 
Contract. 
42. Regarding the import and export of technology , according to the Regulations on Technology 
Import and Export Administration, the administration of technology imports was divided into categories of technology prohibited from import, tech nology restricted from import and technology of 
free import.  The technologies of free import were managed through contract registration without real 
examination of the contents of the contract.  On the other hand, the competent authorities still needed 
to instruct the enterprises to pr ovide the authentic basic informa tion of the contracts. In actual 
practice, some of the provincial and municipal auth orities could suggest revisions of terms that were 
non-compliant with China’s existing laws and regula tions in the technology import contracts of the  IP/C/47 
 Page 9 
 
 
  enterprises, but the final say still rested with th e enterprises.  The Government had never made 
compulsory requirements on items like royalty rates. 
43. Article 355 of the Contract Law explicitly provi ded that "Where the laws and administrative 
rules and regulations stipulate otherwise on the t echnology import and export contracts, or patent 
contracts or contracts on application for patents,  such provisions shall prevail".  The Regulation 
contained special provisions for the infringement li ability in the technology import contract in the 
form of administrative regulation, without contradict ing the Contract Law.  Article 24 did not conflict 
with Article 28.2 of the TRIPS Agreement. Accordi ng to this Article, "The patentee has the right to 
transfer or transfer through inheritance the patent and establish license contracts". 
44. Article 25 of the Regulation was appropriate a nd currently China had no plan to revise it.  
This Article focused on the technology itself, i.e. under the agreed conditions the technology could 
achieve the agreed technological objective.  If the mish andling of or other failures to meet the agreed 
conditions by the Chinese side led to a failure of  achieving the agreed technological objective, the 
responsibility should be borne by the erring party.  Since this Article was mandatory, whether the 
concerned parties made written commitments or not  to implement the above provision in their 
agreement, its effect could not be affected and the Chinese Government would not reject the 
agreement for such reason. 
45. Responding to questions in the third category concerning Patents , she said that China’s 
patent system had adopted the first-to-file principle,  granting the patent to the first applicant.  If 
parties had disputes over the rights and interests concerning the ownership of the invention and 
creation, they could appeal to the People’s Court according to the relevant provisions of the Patent 
Law.  The revision of the Patent Law was under wa y.  As regarded concrete amendments to the 
provisions, China was soliciting opinions on various asp ects, and was therefore unable to predict the 
final results. Currently, China was not consider ing changing the provisions on the scope of 
patentability of software inventions. 
46. According to Article 12 of China’s Patent La w, any entity or individual exploiting someone 
else's patent had to conclude a written licence cont ract with the patentee for exploitation and pay a fee 
for the exploitation of the patent.  Therefore, if  the licensee did not pay the fee according to the 
contract, the patentee could appeal to the People’s Court. 
47. Regarding the two questions that had been  posed on the protection of confidential 
information, she said that these questions were quite  general, without pointing to a specific law or 
regulation, and that therefore China w as unable to respond to these questions. 
48. Responding to questions in the fourth category, concerning the Protection of Test Data for 
Pharmaceutical Products , she said that medicines should be registered in accordance with the 
Provisions for Drug Registration and that undisclo sed information on clinical trials should be 
protected in line with the above-mentioned provisio ns, excluding information that had already been 
disclosed.  Under the Measures of the Implementa tion of the Pharmaceutical Administration Law, 
China was committed to the protection of undisclosed information rather than to data protection and 
monopoly.  Protection of undisclosed information took effect automatically and no form filing, 
authorization or record was needed.  Its effec tiveness depended on how people who had access to the 
information kept that information undisclosed.  Th erefore, there was no need to provide monopolistic 
data as was required under the relevant laws and regulations of some other WTO Members. 
49. In accordance with the Administrative Licen se Law and the Pharmaceutical Administration 
Law, the State Food and Drug Administration s hould base its approval on the pharmaceutical and 
clinical materials obtained by the applicants them selves, rather than on reference materials already 
disclosed or materials provided by other applicants.  For medicines, whether domestically produced or IP/C/47 
Page 10  
 
  imported, the exact same material requirements a nd review and examination procedures were applied 
and these did not constitute any discrimination at all.  
50. According to the Provisions for Drug Registration, the State Food and Drug Administration 
should make decisions on review and approval based on the material submitted by applicants.  In light 
of the universally applied Bolar exception, patent  disputes arising during the review and approval 
procedures for drug registration were impossi ble to constitute a patent infringement. 
51. Questions in the fifth category concerned Trademarks and Geographical Indications .  On 
trademarks, she said that "famous brands", "re nowned brands" and "export brands" were supporting 
measures initiated to lead and encourage enterpri ses to create famous bra nd products, to enhance 
product quality and managerial level and raise the overall quality level and competitiveness of China. 
In identifying well-known trademarks, the State Trademark Office and the Trademark Review and 
Adjudication Board would treat domestic and fo reign trademark holders equally, without any 
discrimination or preference to Chinese trademar ks.  China’s Trademark Law and Recognition and 
Protection of Well-Known Trademarks Provisions (2 003) explicitly provided for objective standards 
for the recognition procedures of well-known trademar ks.  Detailed provisions were available on the 
website of the State Administration for Industr y and Commerce (SAIC) at http://www.ctmo.gov.cn
.  
In regard to the question of malicious applica tion for foreign well-known trademarks, she referred 
Members to Article14 of the Trademark Law and Ar ticles 3 and 10 of the Recognition and Protection 
of Well-Known Trademarks Provisions.  The renown gained through publicity of the media such as 
the Internet was also one of the elements for c onsideration by the SAIC when recognizing well-known 
trademarks. 
52. Article 31 of Trademark Law protected the "prior  right" of trademarks with certain renown, 
yet short of the well-known trademark standard.  According to the principles of territoriality of 
intellectual property rights, the Trademark Examina tion and Trial Standards restricted trademarks 
subject to "prior use" to  those used in China. 
53. For actions such as malicious application for or exploitation of well-known trademarks or 
influential trademarks already used, but not yet regi stered, the SAIC would take the following actions 
in the stages of examination, opposition and review:  (1) In the stage of exam ination, except for some 
well-known trademarks with high popularity, the SAIC  generally did not take the initiative to render 
protection and tended to settle the problem in the sub sequent opposition and review stages.  (2) In the 
stage of opposition, the right holder could file an  opposition to the Trademark Office of SAIC if he 
thought the trademark which had passed the prelimin ary examination violated Article 13 or 31 of the 
Trademark Law.  The trademark would not be ap proved for registration if the Trademark Office 
confirmed the opposition.  (3) In the stage of review , disputes could be filed if the right holder thought 
the registered trademark violated Articles 13 and 31 of the Trademark Law.  The Trademark Review and Adjudication Board would cancel the registered trademark if the dispute was confirmed. 
54. With regard to similar goods and services, the State Trade Mark Office would look at the 
Similar Goods and Services Diffe rentiation Table compiled by the State Trademark Office based upon 
the International Classification of Goods and Services for the Purposes of the Registration of Marks.  
For example, gloves belonged to Similar Group 25 10 of Category 25 and scarf to the Similar Group 
2511 of Category 25.  According to the Table, goods of these two Similar Groups were not judged as 
similar.  Therefore, when applying for a trademark for "gloves", where there were identical or similar 
registered trademarks or prior applications for " scarves" by someone else, such an application would 
be passed for preliminary review. 
55. With regard to GIs, according to related regula tions, a GI could be protected as a trademark, 
while other forms of protection were not excluded.  In 2001, China had acceded to the WTO.  In its  IP/C/47 
 Page 11 
 
 
  Accession Protocol, China had promised to fully comply with the geographical indication-related 
clauses in the TRIPS Agreement and to provi de effective legal protection for GIs.  
56. Currently, in the practice there were no conflicting GIs at STMO and AQSIQ because they 
had been registered by different registrants.  Ar ticle 6 of the Provisions on the Protection of GI 
Products specified that the protection of GI products followed the principle of voluntary application, 
transparent acceptance, handling and approval.  According to the Trademark Law, Trademark Law 
Implementing Regulations and Procedures for the Registration and Administration of Collective 
Marks and Certification Marks, GIs could be registered as collective marks or certification marks to gain legal protection in China.  Registered geogr aphical indications could enjoy sound and effective 
protection and their owners had no need to register with any other agencies. 
57. When applying for registration of trademarks  in China, according to Article 17 of the 
Trademark Law, foreigners and foreign enterprises should proceed in accordance  with the agreements 
signed between their home countries and China or in ternational treaties of which both are members, 
or the reciprocity principle.  Besides, pursuant to  Article 6 of the Procedures for the Registration and 
Administration of Collective Marks and Certification Marks, when registering their GIs as collective 
marks or certification marks, foreigners or fo reign enterprises should submit proof of the legal 
protection of the GI in their home countries for them as the right holders.  For example, the orange produced in Florida of the United States had successf ully been approved for registration in China.  
58. All the circulars and documents concerning the acceptance and approval of GI products 
protection, as well as the use of specialized indica tions had been made public  and could be found on 
the website of AQSIQ at http://www.aqsiq.gov.cn
. 
59. Regarding counterfeiting at retail and wholesale markets, she said that the three major retail 
markets in Beijing had taken effective measures in IPR protection after signing MOUs with famous 
European brands holders, and had honored their commitments.  However, in the process of implementing the MOUs, IPR agents and landlords  had had some frictions due to different 
understandings of some articles in the contracts,  which was quite normal.  The Chinese government 
authorities had made great efforts to mediate betwee n the parties to settle th e frictions, and to push 
forward the perfection and implementation of the MOUs. At present, the market organizers held a positive and cooperative attitude.  
60. On the issue of including IPR protection into  the lease contracts between the landlords and 
vendors, the Shanghai Industrial and Commercial Administration had amended the Demonstration 
Text on Shanghai Merchandise Tradin g Market Operation Contract th is year, prescribing obligations 
for landlords and vendors on trademark protection.  Now landlords in many key garment and small 
merchandise markets had adopted the new contract model.  To prepare for the 2008 Olympics, the 
Beijing Municipal Government had held a meeti ng in which it had decided to strengthen the 
communication with foreign right holders, improve the precautionary and remedy systems in wholesale and retail markets and the 12312 Complaini ng and Appeal Services Centre Mechanism, 
and phase out counterfeiting in wholesale and retail markets. 
61. On the issue of the Trademark Office backlog,  due to year-on-year increase in China’s 
trademark applications, in 2006 there had been as many as 766,000 cases.  Currently the time span of 
the examination was about 30 months, which was longer than last year.  In view of the longer time 
span of trademark examination, SAIC had further recruited trademark examiners, strengthened management and enhanced the ope ration guarantee for the automated system.  All staff worked 
diligently in every step of the trademark application procedure a nd tried hard to enhance working 
efficiency.  In 2006, altogether 313,000 trademark registration applications had been examined and 
the annual examination quantity of every examiner had been much higher than in other countries. IP/C/47 
Page 12  
 
  62. Responding to questions in the sixth category, concerning Copyright , she said that in 2006, 
the Chinese Copyright Authority had investigated and confiscated pirated overseas textbooks failing 
to pass content review in six universities of Beijing, Shanghai, Guangzhou and Wuhan.  The 
Association of American Publishers and the Associ ation of British Publishers had both expressed their 
gratitude with regard to such acti ons taken by the Chinese Government. 
63. Responding to questions in the seventh category, regarding General Enforcement , she said 
that SAIC and China Customs had regularly published statistical data on infringement cases.  As for 
the concrete information, i.e. the analytical statistic s of all cases that had been requested by the United 
States, her delegation was unable to provide them as this request went comple tely beyond the scope of 
the TRIPS Agreement. 
64. Measures relating to notarization and legalizati on of Powers of Attorney and evidence had 
been adopted and were consistent with Article 242 under the Civil Procedure Law of China.  In 
accordance with Article 49 of the TRIPS Agreement, relevant admi nistrative procedures should adopt 
the same principles as for civil procedures.  Regarding the problem of possibly time-consuming procedures in practice, a call for more coopera tion and communication between China and foreign 
countries (including foreign IPR holders and relate d enforcement institutions) was becoming more 
and more urgent, as well as mutual comprehension on systems of law, enforcement systems and document requirements in order to reduce unn ecessary delays caused by misunderstandings of 
respective systems of law. 
65. As for the implementation of interim injunctio ns, the People’s Court exercised them in an 
active and prudential manner pursuant to laws.  He r delegation was wondering about the source of the 
quote that "less than 2% of all interim injunction a pplications actually submitted to the courts are 
granted". 
66. It had always been the principle and goal of  the Chinese Government and the public security 
bodies to constantly strengthen cooperation with IP R holders in conducting IPR protection.  At the 
same time, it was also the foundatio n of effectively cracking down on IPR crimes.  Once an appeal of 
the IPR holder was accepted and heard, the right holde r participated in the relevant legal procedure.  
The private-prosecuting case in which the right holder a ppealed to courts directly was a major form of 
the right holder's direct participation. 
67. According to the Criminal Law of the PRC, th e Regulation on the Transferring of Suspected 
Crime Cases at Administrative Agencies, and the Ad ministrative Punishment Law, the administrative 
law enforcement agencies should report or transfer th e cases to the public security  agencies if criminal 
responsibilities were involved.  If administrative punis hments such as fines had already been imposed 
before the transfer, such penalties would be cons idered by the People’s Court under the law when 
making determinations.  It was necessary to poi nt out that, according to the Regulation on the 
Transferring of Suspected Crime Cases at Admi nistrative Agencies, the cases transferred were 
"suspected" rather than "affirmed" cases.  Cases that  could not be identified as criminal cases by the 
public security agencies would be transferred to th e relevant administrative agencies for settlement. 
68. Responding to questions in the eighth category, concerning Administrative Enforcement , 
she said that it was widely recognized that th e Chinese Government had spared no efforts in 
strengthening administrative enforcement of IPR pr otection.  According to Article 53 of Trademark 
Law, when handling trademark infringement cases,  the administrative authorities for commerce and 
industry could confiscate and destroy the infringing pr oducts once the violations had been confirmed.  
If the confiscated products were of value, whic h was detachable from the infringing trademark, 
according to Article 53 of Administrative Punishme nt Law, they could  be openly auctioned or 
disposed according to the relevant provisions of th e country.  The proceeds from the auctioning of the 
confiscated illegal property should be handed to the state treasury.  IP/C/47 
 Page 13 
 
 
  69. IP infringement crimes are effectively cracked down upon.  However, a few criminals still 
attempted to evade legal punishment by acting in a more sly and concealed manner.  In this context, 
Chinese public security agencies had formulated strate gies of both "targeted fighting" with a focus on 
chief offenders who were responsible for the infri nging activities and "whole-chain fighting" aimed at 
destroying every link in the criminal network from pr oduction, storage, transportation, sales to export.  
As for the question of "what are the necessary conditions to punish manufacturers, distributors or 
would-be distributors concurrently?", she said that  criminals would be held accountable as long as it 
could be proven that those criminals had common criminal intentions, conducted criminal activities 
jointly and the actions cons tituted criminal offences. 
70. Responding to questions in the ninth category, concerning Civil Enforcement , she said that 
according to the Several Provisions of the Suprem e People's Court on the Evidence for Civil Actions, 
the formality and source of evidence should be in li ne with the laws.  Evid ence collected by private 
investigators and used in civil litigations shoul d be subject to the Civil Procedure Law.  
71. Responding to questions in the ninth category, concerning Customs/Border Enforcement , 
she said that, to reduce the outbound flow of count erfeit goods across China’s borders, China Customs 
had improved enforcement means.  Great importance had been attached to the close combination of 
inspections and examinations on custom declarat ion data, declaration bills of documents, and 
examination work on the spot.  Some advanced ex amining techniques had been widely adopted by 
China Customs, such as X-ray mach ines, which effectively improved their capability and efficiency to 
inspect and confiscate infringing goods.  Special enforcement actions aiming at cracking down on illegal export of infringing goods in the form of frei ght, post or express delivery had been initiated.  
For example, a special IPR protection action named "Dragon Boat Action" was being carried out from 
1 October 2007 to 31 March 2008.  China Customs had also strengthened in ternational enforcement 
cooperation with customs of other countri es with the purpose of protecting IPRs. 
72. Responding to questions in the ninth category, concerning IPR Infringement through the 
Internet , she said that China severely cracked down on co pyright piracy on the Internet pursuant to 
international treaties and domestic laws and regulations.  In 2006, the State Council had promulgated 
the Regulations on the Protection of the Right of Communication through Information Network.  The 
SPC had issued Decision (No. 2) on Amending the Supreme People’s Court’s Interpretation on 
Certain Issues Concerning Application of Laws in Dealing With Cases Concerning Computer Network Copyright Disputes.  On 29 December 2006, China had announced its decision to join the WIPO Copyright Treaty and WIPO Performances a nd Phonograms Treaty.  On 9 June 2007, these 
two treaties had officially taken effect in China.  However, she pointed out that the issue of copyright 
piracy on the Internet went beyond the scope of the TRIPS Agreement and that it was therefore not 
appropriate to discuss this issue in the frame work of the transitional review of China. 
73. The representative of the United States
 thanked China for its detailed responses to the 
questions.  While it was difficult to follow the r esponses as particular countries' questions had not 
been identified, it was his delegation's impression that the following questions posed by the United 
States had not been responded to or further clarific ation was necessary.  Regarding US question 5 on 
the legislative priorities in China 2007 Action Strategy, his delegation had not heard a response on whether China was considering any further new IPR measures that were not mentioned in that Action 
Strategy.  Regarding enforcement issues, particular ly those relating to criminal enforcement, the 
United States had asked in questions 6 and 7 wh ether there were Uniform Guidelines for Public 
Security Bureaus with regard to case initiation standa rds for criminal IP investigations and particular 
pilot projects in effect.  US question 9 had been about whether there were any legislative proposals 
that would enhance the power of Chinese judges to en force judicial orders.  In questions 12 and 13 the 
United States had requested particul ar data about cases in China.  In response to China's comment that 
these requests were beyond the scope of the TRI PS Agreement and the transitional review, he said 
that in his view this type of mechanism could be a useful tool and exercise in transparency and, for it IP/C/47 
Page 14  
 
  to make progress, it should be interpreted broadly ra ther than narrowly. Regarding the questions on 
copyright piracy on the Internet, his delegation ha d the same concern. Regardless of competing views 
of this issue's relevance under the TRIPS Agreemen t, China should have answered US questions 18, 
19, 20 and 21 on copyright piracy on the Internet in the interest of transparency.  Regarding question 22, while appreciating China's responses on past efforts to combat textbook piracy on 
university campuses, there had been no answer to the additional question whether any new 
enforcement efforts were being planned.  Lastly, re garding question 36 regarding data exclusivity, the 
United States had asked about the total number of da ta exclusivity grants provided by SFDA but had 
not received a response.  His delegation was looking forward to further clarifications and responses 
from China in this regard. 
74. The representative of Japan
 thanked China for its detailed responses.  As it had not been 
possible to identify which response was directed at  which question, his delegation would pose further 
questions and make further comments after havi ng examined China's responses in detail.  He 
reiterated his delegation's hope for China to enhance IPR protection and to take further steps to 
provide effective enforcement against any act of infringement of intellectual property in China. 
75. The representative of the European Communities  said that, although his delegation was 
grateful for China's detailed answers, he had not r eceived answers to its questions 8, 9 and 10 relating 
to the third patent law revision in document IP/C/W/ 503.  He disagreed with China's comment that the 
situation regarding the struggle against counterfeiti ng in the Silk Market in Beijing was improving.  
On the contrary, he himself had had occasion to witness the rampant and widespread counterfeiting 
there in person.  This was unfortunate, as the European Communities had tried to improve the 
situation in cooperation with Chinese authorities fo r several years.  The Shanghai situation, by 
contrast, seemed to be much better and therefore wh atever was working in Shanghai should also be 
applied in Beijing.  He expressed the hope of his delegation for China to intensify its efforts in 
struggling against counterfeiting, which was a priority for the European Communities. 
76. The representative of the China  thanked the Members that had demonstrated their interest in 
China's IPR issues by putting forward so many questions and comments.  Although it was fair to say 
that China never liked the Article 18 review whic h imposed WTO-plus obligations on China, China 
never escaped from fulfilling its commitments.  Contra ry to what some Members had said, China was 
always willing to take full advantage of this revi ew mechanism in word an d in spirit and had been 
doing so in the past five years by providing the required information and by responding to the enormous number of questions put forward by Me mbers.  However, it should be emphasized again 
that Article 18 was a provision with a special nature  and a limited function, and that it did not require 
China to provide written responses nor to respond to  any questions that went beyond its commitments 
under the TRIPS Agreement.  Some questions that China had not provided answers to were closely 
linked to the IPR case that was already the subject of a panel process, which would be the more appropriate mechanism to deal w ith those questions.  China's door  was always open for cooperation 
on IPR issues, both bilaterally and multilaterally.  Such additional questions and comments could 
always be dealt with through other more appropriate channels.  With regard to the specific cases put 
forward by some Members, he said that IPR was a global issue instead of a country-specific one.  He 
had visited a shopping centre in central London where he had seen a small vendor selling Louis 
Vuitton bags that had obviously been pirated, but su ch isolated cases did, of course, not diminish the 
efforts by those developed Members regarding their IPR enforcement.  The same applied with regard 
to those isolated cases existing in China. 
77. The representative of th e European Communities
 said that while some counterfeit products 
could be found anywhere in the world, the diffe rence lied in the size and magnitude of the 
counterfeiting, whether it was just one product or a s hop the size of a football field with six floors like 
the Silk Market, which was dedicated almost entirely to the sale of counterfeits.   IP/C/47 
 Page 15 
 
 
  78. The representative of the United States  reiterated his delegation's view that China had not 
taken full advantage of the review mechanism over the years and had shown a reluctance to do so 
from the beginning.  It was his delegation's view that the review was a commitment that had been 
negotiated and agreed by China in its accession agr eement and that China should fully adhere to that 
commitment.  If China would do that, more progress would be made on some of these issues. 
79. The Chairman  thanked China for all the information it had provided, as well as other 
Members for their contributions.  Turning to the Council's reporting obligation to the 
General Council, he suggested that the Council follow the same procedure as in the past years, namely 
that the Chairman, acting on his own responsibility, would again prepare a factual report.  The content 
of the cover page to the report would be similar to that of the report submitted by the Council in 2006 
and the part of the minutes reflecting the discussions  held under this agenda item would be attached. 
80. The Council took note  of the statements made and agreed  to proceed as suggested by the 
Chair. 
__________