WORLD TRADE  
ORGANIZATION  IP/C/W/450 
1 September 2005 
 
 (05-3809) 
Council for Trade-Related Aspects 
of Intellectual Property Rights Original:   English 
 
 
 
TRANSITIONAL REVIEW MECHANISM OF CHINA 
 
Communication from the European Communities  
 
 
 By means of a communication from the dele gation of the European Commission, dated 
25 July 2005, the Secretariat has received the follo wing contribution in the context of the transitional 
review mechanism under Section 18 of China's Protocol on Accession.  
 
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  The European Communities (EC) acknowledges the true efforts, as well as important legislative and practical improvements of the Chinese intellectual property (IP) system since the 
1980s, in particular in the context of its accession to the WTO in 2001. 
  Still, a number of EU companies suffer from a vast counterfeiting and piracy activity in China that affects their markets on a large scale.  To be  fully integrated in the world trading system, to 
continue to attract foreign investment and to  become a knowledge-based economy, China has to 
implement all its international obligations, in partic ular the ones related to Intellectual Property Rights 
and their Enforcement.   Building upon the long and fruitful cooperation that the EC and China have on this matter and 
considering the recent evolutions in the IP field in China, the EC would like to take the opportunity of 
the Transitional Review Mechanism 2005 to co mplement its information on the Chinese IP 
framework and ask questions on remaining sources of concern. 
 
I. IP PROTECTION 
1. Patents and undisclosed information 
(a) Licences of patents 
Article 28.2 of the TRIPS Agreement clearly states that the rights conferred by a 
patent include the right to grant licences.   Could China explain how it addresses the 
issue of patent licences and the payment of royalties in the framework of open standards, notably when the technology at stake is detained by a foreign company? 
 
(b) Additional protection for products the marke ting of which requires an authorization 
Does China plan to grant additional protection – in the form of patent restoration or 
supplementary protection certificates – to products that can not be marketed before a specific authorization has been given (such as pharmaceutical products)? IP/C/W/450 
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(c) Protection of confidential data, in particular test data 
(i) There are still reports of problems related to disclosure of confidential 
information and know how.  Could China specify how it addresses these problems in practice? 
(ii) In particular, could China explain how it ensures that test data given in the 
course of applying for marketing approval of new drugs can neither be relied 
on by other companies than the drug originator, nor be disclosed by the Chinese authorities?  In the context of TRM 2004, China underlined that 
Article 72 of the Method on Administration of Registration for Drugs punishes the leakage of unreleased experimental data (paragraph 25 
document IP/C/34).  Could China give  details about penalties incurred and 
examples of cases before the courts based on this provision?  
(iii) Articles 11 and 13 of the Drug Registra tion Regulation provide that market 
approval shall not be granted to a generi c until the patent has expired and that 
a generic drug applicant shall guarantee th at there is no patent infringement.  
Could China explain how these provisions are applied by the administrations 
and courts?  In particular, is the drug initiator who owns the patent informed 
about the application for market appr oval of the generic, how and when? 
2. Trademarks 
(a) Well-known trademarks 
Could China update information about the status of foreign well-known trademarks: 
how many were protected since TRM 2004, both by the State Administration for 
Industry and Commerce (SAIC) and courts? 
(b) Counterfeit products are still easily found in Chinese retail markets.  Does China 
intend to adopt specific measures to discourag e fake goods to be sold at the retail 
level, such as, for instance, more frequ ent and systematic police raids on markets 
where counterfeiting is rampant, confiscation of illegal income, closure of retails or 
even withdrawal of business licences in case of repeat offences? 
(c) How does China intend to allow a direct acce ss to the general public to the trademark 
office Registry? 
3. Designs 
(a) Could China give details on how it protects the imitation of the shape of a product 
and the imitation (not identical reproduction) of  designs?  What is the applicable law 
and how is it implemented in practice, notably in the automobile sector – please cite examples of courts or administrative cases where such imitation was convicted and condemned? 
(b) What protection is available in China for products with short life cycles, such as 
notably fashion products?  Is there any "fast track" for registered designs, allowing 
for quicker registration of such designs, at a lower cost?  IP/C/W/450 
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4. Copyrights and related rights 
(a) Internet related piracy 
The Administrative Measures on the Protection of the Rights to Communication 
through Information Network, drafte d jointly by the National Copyright 
Administration (NCAC) and the Ministry of Information Industries, took effect on 30 
May 2005.  Could China: 
 
(i) Explain the liability of Internet service providers in the context of these 
measures and how it works in practice? 
(ii) Give indications about accession to WIPO treaties: MOFCOM announced in 
a document dated March 2005 that accession to the WIPO Treaties of 1996 
(the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty) was seriously envisaged.  Does the new legislation include provisions in line with such treaties and could China give more information on the 
timeframe for its accession to these treaties?  In particular, does the new 
legislation include provisions on broa dcasting and performance rights of 
performers and producers of phonograms? 
1. If the answer to the previous question is "yes", please give details on the 
scope of these rights.  
2. If the answer is "no", could China indicate when it intends to include 
such a provision in Chinese law? 
(b) Following the adoption of the Regulations on the Collective Management of 
Copyright (that took effect 1 March 2005), could China explain how these rules are implemented in practice, if rights have al ready been collected or when they are 
expected to be collected and by which organizations? 
II. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS 
5. Even though some of the IP protection rules n eed clarification or improvement, as seen in the 
paragraphs above, enforcement of intellectua l property rights in China remains the most 
important source of concerns for EU compani es.  Coordination between different bodies in 
charge of IP enforcement could be enhanced , procedures should be simplified and penalties 
imposed on pirates made more deterrent, so that pirates can not regard them merely as the cost 
of doing business. 
6. Coordination 
The EC notes with satisfaction that there is an growing awareness of the importance of a 
better level of IP enforcement from the Chin ese Government, in order to both develop a 
knowledge based economy and attr act foreign investment.  The Government therefore 
undertook to increase coordination between the num erous bodies in charge of enforcing these 
rights on its territory.  A State IPR Protection Work Team was established under Vice Premier 
Wu Yi's supervision in 2004, in order to handle this matter. 
 
(a) Could China report on the concrete actions taken by this Working Group in 2004 and 
their impact on the ground? IP/C/W/450 
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(b) Could China explain how the different bodies cooperate on cases of infringement?  
For instance, how and how frequently do IP  agencies transfer cases to the police? 
7. Information on infringement cases 
(a) Could China communicate statistical information on: 
(i) the number of IPR infringement cases brought before administrative bodies 
and/or courts (breakdown by administ rative/civil/criminal case and by the 
type of IPR); 
(ii) the number of decisions taken;  and 
(iii) the sanctions passed and executed? 
(b) Decisions on IP cases are currently rarely publ ished, though publication is a valuable 
source of information for right holders a nd has educational merits.  Does the Chinese 
Government intend to make judicial and administrative decisions on IP infringements available to the public through a bulletin and the Internet? 
8. IP Enforcement Staff 
Could China please sum up the situation of different  IP teams in different bodies in charge of 
IP enforcement (Customs, Ministry of Public S ecurity, IP agencies, Courts, etc.):  are they 
specialized in IP, has the staff expanded over the last years, how are they trained?  
9. Procedures 
(a) Does China intend to suppress burdensome re quirements for foreign IP right owners 
willing to put their infringement cases before the courts, such as legalization/notarization of powers of attorn ey and authentification of evidence?  If 
yes, could China please give details on th e timeframe for such a modification? 
(b) Could China explain how recourse to technical  expertise before courts is organized 
and inform about the effectiveness, length and costs of such expertise where it has 
been used? 
10. Deterrence of sanctions 
One of the main complaints received from IP right holders is the l ack of deterrence of 
sanctions against counterfeiting and piracy.  Ce rtain Chinese rules provide a set of deterrent 
sanctions for their infringement, including conf iscation of illegal income to withdrawal of 
business licences.  Could China explain if these punishments are available for all types of IPR infringements and how it could ensure that these sanctions are decided more often by 
enforcement bodies (IP agencies and courts)? 
11. Criminal enforcement 
On 21 December 2004, the Supreme People's Court and Procuratorate adopted Judicial 
Interpretations on several issues of concrete app lication of laws in handling criminal cases of 
infringing intellectual property.  The EC w ould welcome information on the implementation 
of these Interpretations since they took effect:  IP/C/W/450 
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(a) Could China give details on the number of cases that were submitted to criminal 
prosecution in application of these Interpretations? 
(b) Difficulties are reported on the practical use of thresholds provided in these Judicial 
Interpretations, considered t oo high in a number of cases and the calculation of which 
is not based on the price of the le gitimate goods.  Could China explain: 
(i) the reasons why such thresholds are c onsidered necessary to allow criminal 
prosecution; 
(ii) how it ensures a uniform application of these;  and 
(iii) if there is any possibility to prosecute  IPR infringements that may constitute a 
threat for public health or safety regard less of any such thresholds of sales 
volume? 
(c) Could China clarify the situation of natura l and legal persons with respect to these 
Judicial Interpretations: are different thr eshold levels applied for being criminally 
prosecuted, as well as different level of criminal sanctions? 
(d) Could China clarify the criminal rules app licable to repeated offences (prosecution 
and sanctions)? 
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