WORLD TRADE  
ORGANIZATION  IP/C/W/479 
5 October 2006 
 
 (06-4777) 
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 29 September 2006, the Secretariat has received the following contribution in  the context of the transitional review mechanism 
under Section 18 of China's Protocol on Accession.  
_______________ 
 
Japan welcomes that, in the fifth year afte r 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. GENERAL ISSUES 
1. Please provide names, summaries and dates of enactment or publication of laws, regulations 
and administrative rulings pertaining to the subject-m atter of the TRIPS Agreement that were enacted 
or published after November 2005. 
II. COPYRIGHTS 
2. Concerning Article 43 of the Copyright Law of China, Japan has requested China to establish 
the regulations by the National Council since China' s accession to the WTO, but as of today it has not 
yet been done.  Please provide us with a detailed schedule for its establishment. 
3. When multiple intellectual property rights,  such as copyright and trademarks, are 
simultaneously infringed as in the case of character goods, right holders have to request administrative 
punishment against such infringement from each rele vant authority, unless numerical thresholds (the 
illegal income etc.) have reached the criteria for criminal prosecution.  However, the lack of 
collaboration between authorities as well as the dispar ity in their responses to requests result in an 
ineffective enforcement.  To solve this problem, Jap an suggests that public security authorities be able 
to take measures directly against every infringeme nt activity by lowering or abolishing criminal 
thresholds, as well as by strengthening the collabora tion between relevant authorities.  We would like 
to hear China's opinion on the matter. IP/C/W/479 
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  III. TRADEMARKS 
A. P
ROTECTION OF WELL-KNOWN MARKS  
4. We understand that there are four channels to apply for the recognition of a well-known mark:  
(a) the opposition process at the Chinese Trademark Office (CTMO);  (b) the cancellation process at 
the Trademark Review and Adjudication Board (TRAB);  (c) the process of trademark administration 
(i.e., enforcement) at the administrative authorities for industry and commerce;  and (d) a trial by the 
people's court.  It is our understanding that th e number of well-known marks recognized through each 
above-mentioned channel is disclosed.  Please provide us with statistics on the number of applications 
and rejections of well-known marks for foreign entities (including separate statistics for Japanese 
entities if available) and Chinese entities through each  above-mentioned channel for each year since 
the amendment of the Regulations for the Implem entation of the Trademark Law in September 2002. 
5. 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, it seems that the number of recognized well-known marks of foreign entities is very small 
compared to that of Chinese entities, considering th e status of enforcement in China (the total number 
of trademark infringement cases was 49,412 in 2005, and 6,770 cases among them were related to 
trademarks of foreign entities).  Please explain the reasons for this. 
B. D
ISCLOSURE OF INFORMATION ON THE PENDENCY OF TRADEMARK EXAMINATIONS  
6. As the number of trademark applications in China has been rapidly increasing, it is assumed 
that the length of time it takes from the filing of a pplications to the final decisions regarding the 
examination and opposition process at the CTMO, a nd the appeal examination process at the TRAB 
should be increasing accordingly.  Please provide us with the average length of time it takes from the 
filing of applications to the first (initial) office  action and to the final decision for each process;  
examination and opposition process at the CTMO a nd appeal examination process at the TRAB 
respectively.  Additionally, please describe the e fforts which China is making for accelerating the 
examination process and reducing the length of time required for the examination. 
IV. INDUSTRIAL DESIGNS 
A. DISPLAY OF INFRINGING GOODS IN EXHIBITIONS  
7. Article 11 of the Chinese Patent Law stipulates, "After the grant of the patent right for a 
design, no entity or individual may, without the authorization of the patentee, exploit the design, that is, make, sell or import the product incorporating its  or his/her patented design, for production or 
business purposes."  Please clarify whether business talks about products that exploit a design for 
which a patent right has been granted at exhibitions  fall under the term "sell" mentioned in Article 11. 
V. ENFORCEMENT 
A. S
TATISTICS ON ADMINISTRATIVE PENALTIES  
8. Please provide statistics on administrative penalties for each year since China's accession to 
the WTO, including (a) the number of administrative penalties requested by righ t holders;  and (b) the 
number of administrative penalties imposed, sorted by administrative bodies, types of IPR 
infringement, provinces, and types of penalties imposed.    IP/C/W/479 
 Page 3 
 
 
  B. STATISTICS ON CRIMINAL PENALTIES  
9. 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 administrative bodies to the public security as 
deserving of criminal prosecution, 
(b) The number of cases that the public security sent to the people's procuratorate and, 
among them, the number of cases transferred by administrative bodies to the public security,  
(c) The number of cases that the people's proc uratorate prosecuted through the people's 
courts, 
(d) The number of cases that the right-holder himself prosecuted through the people's 
courts. 
10. With respect to the statistics on the number of  cases which are criminalized based on the new 
thresholds defined by the "Interpretation by th e Supreme People's Court and the Supreme People's 
Procuratorate on Several Issues of Concrete Appli cation of Laws in Handling Criminal Cases of 
Infringing Intellectual Property" enacted in D ecember 2004 ("new interpretation"), but not 
criminalized based on old thresholds defined by "Provisions of the Supreme People's Procuratorate 
and the Ministry of Public Security Regardi ng Prosecution Standards for Cases involving Economic 
Crimes" issued on April 2001 ("old guidelines"), pl ease provide statistics subdivided into each Article 
(Article 213–219 of Chinese Criminal Law) and furt her subdivided into categories as follows:  cases 
transferred by administrative bodies, cases that the public security sent to the people's procuratorate, 
and, among them, cases transferred by administ rative bodies to the public security, cases where 
criminal penalties were actually imposed (subdivided by the types of  penalties).  Although we have 
received the reply that China does not have such st atistics at the Trade Policy Review this year, we 
would appreciate if you would provide such statisti cs, if China has prepared them after the Trade 
Policy Review. 
11. Please provide statistics on IPR infringement cases to which Articles 140 - 149 or 225 of the 
Chinese Criminal Law are applied (the number of  such cases and the number of cases which do not 
satisfy the threshold defined by the new interpretation among the aforesaid cases)  
C. R
EQUEST FOR SUPPLY OF INFORMATION  
12. Japan requested China to provide specific judici al decisions and administrative rulings of IPR 
enforcement pursuant to Article 63.3 of the TRIPS Agreement.  However, although the deadline for 
China has passed, China has yet to provide any information as of yet.  Please provide this information 
as soon as possible.   
D. STATISTICS ON ALCOHOLIC BEVERAGE TRADEMARKS  
13. There are increasing concerns that products of trademark infringing Japanese Sake, whose 
trademarks are registered in Japan, and some of whic h are also registered in China, are currently sold 
or manufactured in China.  Please provide the num ber of trademark infringement cases for alcoholic 
beverages in China for the past three years, with detailed information on the applicable laws or 
regulations on the category (administrative/civil/cri minal) they fall under, and on the countries of 
origin of the product that has been infringed. IP/C/W/479 
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  E. C
RIMINAL LAW 
14. We understand that criminal penalties are not  imposed for infringement by "similar" 
trademarks in China.  Please clarify China's pos ition on this matter in light of Article 61 of the 
TRIPS Agreement. 
15. We understand that not only administrative penalties but also criminal penalties can be 
imposed in cases of service mark infringements.  Please clarify whether our understanding is correct.  
Please also clarify which laws and regulations are applicable in such cases.   
16. We understand that the provision on recidivists sti pulated in Article 65 of the Criminal Law is 
also applied to repeat IPR offenders.  Please explai n how "heavier punishment" is defined (i.e., for the 
severity of the penalty in relation to first-time offe nders).  Please also provide the number of cases of 
IPR repeat offenders to which Artic le 65 of the Criminal Law applies, and information on actual cases 
where a heavier punishment was imposed.   
F. JUDICIAL INTERPRETATION  
17. The following questions concern "Interpreta tion by the Supreme People's Court and the 
Supreme People's Procuratorate on Several Issues of Concrete Application of Laws in Handling 
Criminal Cases of Infringing Intellectual Property" en acted in December 2004 ("new interpretation").   
18. Please clarify the reason for the deletion of the "three strike" provision that referred to "not 
reaching these thresholds, but infringing IPR after havi ng been subjected to the administrative penalty 
twice before having a negative impact" in Article s 61.4 and 63.3 of "Provisions of the Supreme 
People's Procuratorate and the Ministry of Public Security Regarding Prosecution Standards for Cases 
involving Economic Crimes" issued in April 2001 ("ol d guidelines").  On this matter at the Trade 
Policy Review this year we received the explan ation that "Once a doer has been liable to the 
administrative penalty, the doer shall not be held liab le to criminal penalty.  Otherwise, it will be 
against the principle 'no one is to be punished twi ce for the same crime."'  However, we understand 
that the cases in which the above-mentioned provisi on, as outlined in the old guidelines, are applied 
are not cases where administrative penalties have  already been imposed, but new cases where no 
penalties have yet been imposed.  Therefore, no one is punished twice fo r the same infringement 
under these provisions.  The fact that administrative penalties had been imposed on the said persons/units in the past is merely taken into account when deciding on the criminal penalties that 
should be imposed for the new cases.  It is thought that  this is consistent with the concept of a system 
in which heavier criminal penalties are imposed on repeat offenders, taking account of previous 
criminal records, one which is adopted in China by  Article 65 of the Chinese Criminal Law, defining 
"heavier punishment" for repeat offenders.  Cons idering these facts, we do not think that the 
explanation on this matter given by China at the Trade Policy Review is reasonable.  Therefore, further explanation of the reasons for the deletion of  the "three strike" provision in the old guidelines 
is kindly requested.   
19. With respect to administrative penalties, please clarify whether heavier administrative 
penalties are imposed on IPR repeat offenders, in cons ideration of the fact that they were repeat 
offenders.  If there is no such practice in China, please provide us with the reason why China does not 
adopt this practice.   
20. We think that it is reasonable that heavier administrative penalties (or heavier criminal 
penalties in the cases where criminal penalties shoul d be imposed under the ne w interpretation) be 
imposed on repeat IPR offenders even  if such a system as the three strike rule defined in Articles 61.4 
and 63.3 of the old guideline is deleted.  We be lieve that there is no rational reason to adopt a  IP/C/W/479 
 Page 5 
 
 
  different practice in administrative penalties for repe at offenders from one in  criminal penalties for 
repeat offenders provided in Article 65 of Chinese Criminal law.   
21. The "2006 China Action Plan on the Protection of Intellectual Property Rights" states "clearer 
or more advanced interpretations will be presente d on the problem recognized through treatment of 
concrete cases, especially on calculation of ille gal business volume, unit crime, repeat false 
presentation of trademarks," based on the research on the status after the new interpretation has been 
enacted.  Please provide us with information on the current status on this matter.   
22. With respect to criminal cases concerning crim inal units, "Interpretation by the Supreme 
People's Court on Several Issues of Concrete App lication of Laws in Handling Criminal Cases by 
Unit" enacted in June 1999 ("1999 interpretation") defines the specific cases which are not punished 
as criminal cases by units (Article 2) and which are punished as criminal cases by individuals, as 
regulated in Chinese criminal law (Article 3).  On the other hand, the new interpretation defined 
different prosecution standards for unit criminal case s and individual criminal cases.  If there are IPR 
infringement cases to which Article 2 or 3 of the 1999 interpretation is applied, please provide us with 
information on those cases including the sta ndards for applying these Articles.   
23. There are some cases where the prosecution sta ndards for units in the new interpretation is 
higher than those in the old guide lines, and these prosecution standards seem to be inconsistent with  
the terms of commitment under China's Protocol of  Accession.  Although answers from China at the 
Trade Policy Review this year are useful on this matter, further detailed explanations on the following 
prosecution standards are kindly requested.   
− The threshold amount of illegal gains for both units and individuals regarding crimes of 
selling illegally-made registered trademarks; 
 
− the threshold number of items sold for units  regarding crimes of selling illegally-made 
registered trademarks; 
 
− the threshold amount of illegal gains and ec onomic loss for units regarding crimes of 
counterfeited patents;  and 
 
− the threshold amount of economic loss for units regarding crimes of infringing on trade 
secrets. 
 24. Please provide us with information on actual c ases where the provisions on "serious nature" 
(e.g., in Article 1.1.3) or "especially serious nature " (e.g., in Article 1.2.3) in the new interpretation 
has been applied for actual prosecution, if any. 
25. With respect to the thresholds in the new in terpretation, please provide us with China's 
opinion, concerning Article 61 of the TRIPS Agreement, which stipulates that Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting 
or copyright piracy on a commercial scale.  Please also provide us with the grounds which justify the 
current thresholds amount.   
26. At the interview to European media in Septem ber, etc., it is said that Premier Wen Jiabao 
stated clearly that China will lower the threshold for prosecuting IPR-related offences.  We would like 
to know whether this means that China will amend the new interpretation.  If so, please tell us when 
and how the interpretation will be amended. IP/C/W/479 
Page 6  
 
  G. B
ORDER MEASURES  
27. It has been explained that storage fees or dis posal costs deducted from the deposit of the right 
holders can be compensated through repayment fro m the violator under Chinese laws.  However, 
Japanese industry has voiced its concern that in rea lity it is very difficult to seek compensation from 
the violator for such a fee or cost, because the violat or often disappears.  Also, the costs of civil action 
seeking compensation usually exceed the storage fee, disposal cost, and other costs.  We understand 
that the Chinese Customs realizes that the practice of  asking right holders to pay for the storage fee or 
disposal cost impedes IPR protection, and that the Chinese Customs has made some efforts to alleviate the cost burden on right holders.  Please describe any plans to minimize the cost burden on 
right holders in consideration of the above-mentioned situation in China.   
28. Please provide us with the number of cases of confiscation by the Chinese Customs, and the 
volumes of goods confiscated, for the last three years, including (a) transfer to a public welfare utility, 
(b) transfer to IPR owners in return for adequa te compensation, (c) auction of goods after removing 
the infringing characteristics, and (d) destruction, as stipulated in the Regulation of People's Republic 
of China on Customs Protection of Intellectual Prope rty Rights.  Additionally, please clarify whether 
China thinks "transfer to a public welfare utility " is included in "exceptional circumstances" in 
Article 59 of the TRIPS Agreement, and provide the grounds which justify such interpretation, if that 
is the case.   
29. Please provide us with Chinese Customs seizure statistics for the last three years, including 
the nature of IPR, countries of export (import seizure ), and countries of destination (export seizure).   
H. L
OCALISM  
30. Please describe any efforts made or planned to promote IPR protection in provincial and local 
areas, and to educate provincial and local authorities in China.   
VI. OTHERS 
A. PROTECTION OF TRADE NAMES  
31. We understand that China is planning the revisi on of the Law to Counter Unfair Competition 
and the said revised law will cover cases where trade names which incorporate other's trademarks or 
trade names are, without the true owner's authoriza tion, registered in China or other countries/regions 
and used in China.  Please explain what kind of penalties (e.g., the suspension of illegal action, the 
forfeiture of illegal gains and in fringing products, the cancellation of business approval) will be 
implemented for effective deterrent in the re vised law against the above-mentioned cases.   
32. With respect to cases where applications for registration of trade names which incorporate 
other's trademarks or trade names without the true  owner's authorization are filed in China, please 
provide information on the requirements for such cases to constitute unfair competition defined in the 
new law under revision.  In other words, please clarify whether it will be necessary for another's 
trademarks or trade names to be known to the pub lic in China for such action for filing to constitute 
unfair competition as defined in the new law, or wh ether it is sufficient that these be known to the 
public in a country other than China. 
33. Additionally, please clarify whether true owne rs of trademarks or trade names can seek 
cancellation of registration of the above-mentioned trade names under the new law, just as in cases 
where well-known trade marks are infringed. 
  IP/C/W/479 
 Page 7 
 
 
  B. PROTECTION OF INDICATIONS OF SOURCE  
34. With regard to cases where the indications of source are not shown on the products at the 
manufacturing stage and where labels with false indi cations of source are attached to the products at 
later sales stage or the preparation for sales stag e, please indicate the extent of relationship which 
must be proved between manufacturers and those who are engaged in the sale or the preparation for 
the sale of the products, for manufacturer s to be also imposed penalties.   
35. Additionally, please indicate the types of false indications of source which cause 
misunderstanding/confusion that are recognized.  Please also inform us of the kinds of enforcements 
that are given for each type of false indications of source. 
C. LICENSING REGULATIONS  
36. Japanese industry has concerns th at Chinese authorities at the provincial and local level often 
examine the contents of technology import/export c ontracts when applications for registration are 
made under Article 17 of the Regulation on the Admi nistration of Import and Export Technology.  
We would like to receive confirma tion that authorities will not examine the contents of contracts, 
especially royalty rates and extension of contr acts, with regard to free import/export technology. 
37. Please clarify whether the provision "Where th e 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" under Ar ticle 24 of the Regulation on the Administration of 
Import and Export Technology is imperative or discre tional.  In other words, please confirm whether 
the liability of the transferor can be waived by agreement between the parties concerned, as allowed 
by Article 353 of the Contract Law.   
38. In terms of the aforementioned provision on "liability for third party's infringement" 
stipulated in Article 24 of the Regulation on th e Administration of Import and Export Technology, 
China explained that the laws on transfer of tec hnology in many countries had similar provisions, and 
that such provisions conformed to international u sage.  However, we understand that many countries 
have already abolished such "liab ility for third party's infringement" provisions.  Please inform us of 
any plans to revise the provision in light of this international trend.   
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