WORLD TRADE  
ORGANIZATION  IP/C/W/498 
2 October 2007 
 
 (07-4156) 
Council for Trade-Related Aspects  
of Intellectual Property Rights Original:   English 
 
 
 
TRANSITIONAL REVIEW MECHANISM OF CHINA 
 
Communication from Japan  
 
 
 By means of a communication from the delegation of Japan, dated 1 October 2007, the Secretariat has received the following contribution in  the context of the transitional review mechanism 
under Section 18 of China's Protocol on Accession.  
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  Japan welcomes that, in the sixth year after China's accession, the implementation of its commitments on intellectual property has evolved from th at of simple progress into one that is now in 
its cruising phase.  The transitional review mechanis m has been useful for making China's transitional 
efforts more efficient and productive, and it is a pleasu re for Japan to have contributed to this process. 
  In accordance with Section 18 of the Protocol on the Accession of the People's Republic of China (WT/L/432), which states that "China shall pr ovide relevant information … to each subsidiary 
body in advance of the review" and in the spirit  of cooperation in rendering the TRM process most 
efficient and effective, Japan requests China to provide, prior to the meeting of the Council for 
Trade-Related Aspects of Intellectual Property Right s, the responses and relevant information to the 
following questions and comments.  
I. COPYRIGHTS 
1. Please provide us with the details of the progr ess concerning the drafting of the regulation on 
royalty criteria for broadcasting and television organizations, which Article 43 of the Chinese 
Copyright Law stipulates that the State Council is to establish.  We understand that the Legislative 
Affairs Office of the State Council has been working to establishing the said regulation by the end of this year. 
2. We understand that collective management socie ties in China are not able to efficiently 
distribute royalties to right holders appropriately  because users of copyrighted works often do not 
report their actual usages fully.  To solve this pr oblem, Japan believes that there is a need to ensure 
the full implementation of a user’s obligation to  provide full information about their usages as 
stipulated under Article 27 of the Regulation for Collective Management of Copyright.  Please inform 
us of China’s view on this matter.  Also, if th e Chinese government is planni ng to take any measures 
against this problem, please pr ovide us with their details. IP/C/W/498 
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  II. TRADEMARKS 
A. P
ROTECTION OF WELL-KNOWN MARKS  
3. Concerning the number of well-known marks, which are recognized through a process of 
trademark administration (i.e., enforcement) by the administrative authorities for industry and commerce, we received your answer that there is no discrimination in recognition of well-known 
marks between domestic entities and foreign entiti es.  However, it seems that the number of 
recognized well-known marks of foreign entities is ve ry small compared to that of Chinese entities, 
considering the status of enforcement in China (the total number of trademark infringement cases was 49,412 in 2005, and 6,770 cases among those were related to trademarks of foreign entities).  Please 
let us know whether there are any objective criteri a for the process of recognizing well-known marks 
and, if any, please provide  us with their details. 
4. Concerning the problem of the "inappropriate app lication" for a trademark, Article 31 of the 
Chinese Trademark Law (the "Trademark Law") stipulates that "The application for registration of trademark rights shall not infringe the prior existing rights of others.  Trademarks with a certain 
degree of influence, and one which are in prior u se before an application is made shall not be 
registered inappropriately…"  Accordingly, Article  4.3.1 of the Chinese Criterion for the Examination 
of Trademark Appellations (the "Criterion for the Examination") stipulates that the "prior use" 
criteria, as stipulated in Article 31 of the Trademar k Law, refers to those trademarks that are used 
within mainland China.  However, there have b een cases reported where well-known trademarks of 
foreign entities whose products and services are not ye t available in mainland China, but which have 
become widely known through channels such as the Internet, have inappropriately been registered 
without prior consent of the foreign right-holders th ough applications of malici ous intent.  We believe 
that an application, with malicious intent, for the registration of well-known trademarks of foreign 
entities should be curtailed and prohibited.  We woul d like to request the reasons why the "Criterion 
for the Examination" stipulates that the criteria for "prior use" of a trademark as stipulated in Article 
31 of the Trademark Law be limited to tho se that are used within mainland China. 
B. E
XAMINATION PERIOD OF TRADEMARK  
5. Last year, China has responded in their Transiti onal Review that the current time span (as of 
last year) from the submission of an application to  first action by the trademark administration office 
was approximately 24 months.  In regards, please info rm us of the following three points:  (1) whether 
the 24 month pendency period has further decreased, (2) the length of the current pendency period, 
and (3) the proactive measures taken to decrease the length of the registration cycle (i.e. the pendency 
period) taken by China over the past year. 
III. ENFORCEMENT 
A. STATISTICS ON CRIMINAL PENALTIES  
6. Please provide the following statistics related to criminal cases under Articles 213 - 219 of the 
Chinese Criminal Law for each year since China's accession to the WTO. 
(a) The number of cases transferred by admini strative bodies to public security agencies 
as deserving of criminal prosecution, 
(b) The number of cases that public security agencies sent to the people's procuratorate 
and, among them, the number of cases transferred by administrative bodies to public security agencies,   IP/C/W/498 
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  (c) The number of cases that the people's proc uratorate prosecuted through the people's 
courts, 
(d) The number of cases that the rights holders themselves prosecuted their claims 
through the people's courts. 
B. STATISTICS ON ALCOHOLIC BEVERAGE TRADEMARKS  
7. There is information regarding cases that counte rfeits of Japanese Sake, whose trademarks are 
registered in Japan (and some of which are also re gistered in China) are sold or manufactured in 
China.  Although Japan noted the response of Chin a during its TRM process at the TRIPS Council 
last year that China did not have any particular da ta with regard to cases of trademark infringement of 
alcoholic beverages, Japan would like to request ag ain that China provide the following information. 
(a) The number of cases of the manufacturing/selling of counterfeits of alcoholic 
beverages in China during the past 3 y ears.  (Please break down the cases by the 
applied laws or regulations, by categories of administrative/civil/criminal cases and 
by countries of origin of the product that has been infringed.) 
(b) The laws or regulations which are a pplied, in general, to regulate the 
manufacturing/selling of counterfeits of alcoho lic beverages in China.  If there are 
any laws or regulations specifically applie d to alcoholic beverages or foods, please 
inform us of the fact. 
C. REQUEST FOR INFORMATION  
8. Japan has requested China to provi de specific judicial decisions and administrative rulings of 
IPR enforcement pursuant to Article 63.3 of th e TRIPS Agreement.  Although the deadline for 
responding to the request has passed, China has yet to  provide this information.  Japan would like to 
request that this information be provided. 
D. BORDER MEASURES  
9. With the General Administration of Customs Announcement No.16, the regulation 
concerning the disposal of goods confiscated at the border, as stipulated by the Regulation of People's 
Republic of China on Customs Protection of In tellectual Property Rights and the Implementing 
Measures of Customs of the People’s Republic of  China on Customs Protection of Intellectual 
Property Rights, has been amended.  In regards,  please provide us with the number of cases of 
confiscation and the volumes of goods confiscated by Chinese Customs this year, including (a) transfer to a public welfare utility, (b) transfer to IPR owners in return for adequate compensation, (c) 
auction of goods after removing the infringing character istics, and (d) destruction, as stipulated in the 
Regulation of People's Republic of China on Custom s Protection of Intellectual Property Rights.   
10. Please provide us with statistics for the number of past Chinese Customs seizures, including 
information on the type of the disposal, the nature  of the IPR, the countries of export (for import 
seizures), and the countries of destination (for export seizures).  Additionally, please provide us with 
information on how the disposal of goods has ch anged in actual practice due to the General 
Administration of Customs Announcement  No.16. 
E. D
EALING WITH DEVIOUS CASES  
11. Please provide us information concerning the requi rements that need to be met to punish both 
manufacturers and distributors or those preparing to distribute products in cases where products are IP/C/W/498 
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  manufactured without trademarks and are later attach ed illegal trademarks at the distribution stage or 
at the stage for preparation for distribution by other distributors. 
F. A
DMINISTRATIVE PENALTY AND CRIMINAL PENALTY  
12. According to Article 11 of the Regulation on the Transferring of Suspected Crime Cases at 
Administrative Agencies, it seems that administra tive penalties can be imposed before a case is 
transferred to criminal procedures.  In regards, please inform whether cases are (a) transferred after 
administrative penalties are imposed, or (b) transf erred without any administrative penalties imposed, 
when it is decided that a case in which a crime has been already suspected by  administrative agencies 
should be transferred for criminal procedure.  Please inform us as to which of the two is the general 
practice in principle, and provide us with details of  the relevant laws, regulations or other regulatory 
norms that form the basis for the transferal practice.   If the answer is the latter (b), we would like to 
know whether the case is transferred back to ad ministrative procedures again and administrative 
penalties are imposed thereafter, if the case was not sent to the prosecutors or did not end up being 
prosecuted. 
G. DISPOSAL OF CONFISCATED COUNTERFEIT GOODS  
13. In a written response to the Jiangsu Provincia l AIC with respect to Article 53 of the 
Trademark Law in October 2002, SAIC stated that destruction is one of, but not the only, means to 
dispose of confiscated counterfeit goods.  We have been informed that if the confiscated goods have 
value and if the infringing labels are detachable, disposition by means other than destruction may be 
employed.  In regards to this, please indicate which specific means are employed, other than 
destruction, to dispose goods for such cases.  Pl ease also provide laws, regulations, documents and 
any other information that provide for these methods to be employed. 
IV. OTHERS 
A. THE CONFLICT BETWEEN TRADE NAMES AND TRADEMARKS  
14. We understand that China is planning to re vise the existing Law to Counter Unfair 
Competition and that the said revised law will deal  with cases where trade names which incorporate 
other's trademarks or trade names th at are, without the true owner's authorization, registered in China 
or other countries/regions and used in China.  We have been informed of a small part of this said 
revision through the Judicial Interpretation (the "R elevant parts of Interpretation of the Supreme 
People’s Court Concerning Some Issues on the Speci fic Application of Law for Handling Civil Cases 
of Unfair Competition") issued in January 2007.  Last year we requested information on how China 
deals with the type of problem mentioned above, a nd have received your answer that the problem is 
currently under consideration as a problem of the "c onflict between trademarks and trade names" and 
that the countermeasures are under consideration.  We would like to know of the progress of your review concerning this issue. 
B. L
ICENSING REGULATIONS  
15. Japanese industry has voiced their concern that Chinese authorities at the provincial and local 
level often examine the contents of their technol ogy import/export contracts when applications for 
registration are made under Article 17 of the Regul ation on the Administration of Import and Export 
Technology.  We would like to receive confirmation that authorities will not examine the contents of 
contracts, especially the royalty rates and extensi on of contracts, with regard to free import/export 
technologies.  IP/C/W/498 
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  16. Article 24 of the Regulation on the Administration of Import and Export Technology states 
"Where the exploitation of a technology given by a transferee in accordance with the terms of the 
contract infringes upon the legitimate right and interests of others, the transferor shall be liable".  In 
regards, at the last TRM we have received the response that this provision was compulsory not discretional.  If the provision of this Regulation m eans that liability of the transferor can not be 
waived by agreement between the parties concerne d, as is allowed by Article 353 of the Contract 
Law, then the said Regulation may need to revised so that it is consistent with Article 353 of the 
Contract Law in the light of Article 28.2 of the TRIPS Agreement (right to assign, or transfer by 
succession, the patent and to conclude licensing c ontracts) and the principle of national treatment. 
Please provide us with China’s view on the matter.  Although we have already been informed at the 
last TRM that China had no plan to revise this re gulation, we would like to know whether this 
position has changed in any way. 
17. Article 25 of the Regulation on the Administration of Import and Export Technology states 
"the licensor must ensure that the technology prov ided is complete, correct and effective and may 
fulfil the agreed technological goal."  Please clarify the specific requirements that should be fulfilled 
in order to show the aforementioned provision has su fficiently been met.  Moreover, inform us as to 
whether a written mention ensuring the fulfilment of the above requirement as is prescribed by the 
aforementioned provision must be included in the contracts and whether Chinese authorities will reject contracts for the reason that a mention of it is not included in the contracts.  It may be the case that the Regulation may need to be revised in orde r for it to be consistent with Article 353 of the 
Contract Law in light of Article 28.2 of the TRIPS Agreement (right to assign, or transfer by 
succession, the patent and to conclude licensing cont racts) and the principle of national treatment.  
Please provide us with China’s view on this issue a nd whether there are any plans for a future revision 
of the provision. 
 
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