WORLD TRADE  
ORGANIZATION  IP/C/39 
21 November 2005 
 (05-5483) 
Council for Trade-Related Aspects 
of Intellectual Property Rights  
 
 
 
TRANSITIONAL REVIEW UNDER 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 25, 26 and 28 October 2005, the Council undertook the fourth annual 
transitional review of the implementation by Chin a of its WTO commitments pursuant to Section 18 
of the Protocol on the Accession of the People's Re public of China (WT/L/432), and agreed that the 
Chair, acting on his own responsibility, would prepar e 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 the European Communities, Japan and the United States.  These submissions were 
circulated in documents IP/C/W/450, 45 1, 453 and 453/Add.1, respectively. 
3. In a communication, dated 24 October 2005, China provided information as specified in 
Annex 1A to the Protocol.  This submis sion was circulated as document IP/C/W/460. 
4. An annex to this document contai ns the relevant part of the mi nutes of the Council's October 
meeting
1 that reflects the statements made under the review. 
_______________ 
 
                                                      
1 To be circulated as IP/C/M/49. IP/C/39 
Page 2  
 
 ANNEX 
ITEM C OF THE MINUTES OF THE COUN CIL'S MEETING OF 25-26 OCTOBER 2005  
TO BE CIRCULATED AS IP/C/M/49
2 
 
C. TRANSITIONAL REVIEW UNDER SECTION 18 OF THE PROTOCOL ON THE ACCESSION OF THE 
PEOPLE 'S REPUBLIC OF CHINA  
1. The Chairman  recalled that paragraph 18 of Chin a's Protocol on Accession required the 
TRIPS Council to review the implementation by Ch ina 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 
paragraph 18 required China to pr ovide relevant information, in cluding 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 24 October 2005, had been 
circulated as an advance copy of document IP/C /W/460.  In addition, the Chinese delegation had 
made available as a room document a "White Pape r" entitled "New Progress in China's Protection of 
Intellectual Property Rights".  Questions and comment s in connection with the transitional review had 
been submitted by the European Communities, Japan and the United  States (documents IP/C/W/450, 
451, 453 and 453/Add.1, respectively). 
2. The representative of China , briefing the Council on China's implementation of the TRIPS 
Agreement and the relevant commitments since its last review, said that China had taken only two 
decades to establish an advanced intellectual prope rty legislation framework, administrative network 
and enforcement mechanism, including the ratificatio n of major international treaties and conventions 
for IPR protection.  On average, this had take n developed economies over one hundred years to build 
up.  Without the consistent efforts of the Chinese Government, it would have been impossible to fulfil 
this mighty task in such an efficient and effective way.  China was fully awar e that transparency and 
enforcement were essential to put the functions of a well-built IP legal system into full play.  The 
Chinese Government had set up a national level IPR protection working group consisting of all 
judicial and administrative enforcement authorities involved in IPR protection.  With concrete results 
achieved since August 2005, a one-year-long special  campaign across the country for strengthened 
IPR protection had been further extended by the State Council to the end of this year. 
3. Recognizing the legitimate concerns and the e normous interest of foreign governments and 
companies in China's IPR protection, the Chinese Government had built a new mechanism for regular 
communication and consultation with foreign-invested  enterprises and trade associations, as well as 
with the governments of the Members concerned.  He said that China had always attached great 
importance to the protection of intellectual prope rty rights and had fulfilled its international 
commitments in a serious and positive manner.  IPR protection was not a passive response to fulfil China's accession commitments, but  resulted from an intrinsic need to foster a sound environment for 
trade, investment and research and development (R&D ) in China, which would help to keep the rapid 
economic development of China more  sustainable.  China spared no effort in establishing a strong and 
effective IPR protection system which was in the interest of both China and other WTO Members.  However, given the long journey to go before Ch ina could have a highly advanced IP protection 
system, as mentioned in the beginning of the stat ement, China hoped that Members would view the 
IPR situation of China from a more developmental a nd realistic perspective a nd continue their support 
and assistance during the process of improvement. 
                                                     
 
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/39 
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 4. He said that, prior to the meeting, China had prepared a document containing the information 
requested by Annex 1A of China's Accession Protocol (IP/C/W/460), and also the 2005 White Paper 
on the New Progress in China's Protection of Intellectual Property Rights , which had been made 
available as a room document.  He hoped that these  documents would put together a complete picture 
for Members to better understand the measures a nd achievements of China on IPR protection. 
5. Turning to the responses to the written questions  received from some Members, he said that 
there were three important cross-cutting issues regard ing these questions.  First, for all the statistical 
data falling within China's WTO obligations, he requested Members to refer to the information 
provided under Annex lA prior to this meeting.  There was, however, some information that China 
was unable to provide or would not provide due to legitimate reasons.  He said that he would be 
happy to seek ideas from some of the Members after the meeting to learn how they compiled in their 
own countries some of the data, that they had asked from China. 
6. Secondly, he reminded Members that questions should merely focus on the review of China's 
implementation of its WTO obligations during the p ast year, rather than seek a preview of China's 
performance in the years to come.  He said that  his delegation was unable to respond to questions 
purely speculating on future events under this mechanism. 
7. Thirdly, he said that during the past four year s of this review, his delegation had found an 
increasing number of questions not relevant to TRI PS from some Members.  This had made the list of 
questions longer, but less relevant to the TRIPS Agreement or China's accession commitments.  He 
requested these Members to re-assess the nature of those questions and to find a more appropriate 
forum for their discussion, e.g. bilateral c onsultations or the ongoing DDA negotiations. 
8. Turning to answering relevant questions in de tail, he said that the blame laid on China by 
some Members for being one of the top produ cers and exporters of counterfeit and infringing 
automotive parts was groundless.  Notwithstanding, China's national IP protection working group had received some complaints about automotive part s counterfeiting and other infringements in some 
local areas, and had held a meeting in Septem ber 2005 to tackle the issue by requiring local 
governments to crack down on those illegal activities. 
9. He encouraged Members to log onto official we bsites of the local governments to obtain local 
IPR "White Papers" and action plans on intellectual property or obtain them fr om the foreign affairs 
office or department of the local government. 
10. Regarding administrative procedures that impo sed requirements such as consularization/ 
notarization of evidence from a foreign country,  which was not necessarily on foreigners but on 
foreign evidence, China believed that those require ments were fair and reas onable, and consistent 
with WTO principles and the TRIPS Agreement. 
11. In response to the request put to China by one Member to share the IP protection and 
enforcement provisions under discussion in its ongoing FTA or bilateral negotiations, he said that his 
delegation saw no legitimate reason or right behind th is request.  His delegation would like to request 
that Member to share the provisions under discussi on in the Member's own ongoing bilateral or FTA 
negotiations after the meeting if possible. 
12. In response to the question on the steps Chin a was considering in order to accelerate the 
involvement of foreign associations in China' s IPR environment, to encourage Chinese-foreign 
associations and to expand the scope of operations of  foreign associations in Ch ina, he said that this 
was a question irrelevant to TRIPS and the transitional review. IP/C/39 
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 13. Pursuant to the terms of its WTO accession, China had made great efforts to revise its 
legislative regime for all substantive IPRs, whic h had been and should be fully recognized by 
Members.  However, he reminded Members that not  all laws and regulations in China had to be 
revised and urged them to be more patient.  When deemed necessary, further amendment of laws and 
regulations would take place in China, but that may not be done as abruptly as some Members had 
expected.  Regarding the protection of copyright in  certain fields, such as information networks, 
which was not covered by TRIPS ye t, he asked Members to refer to  the relevant provisions in the 
Copyright Law promulgated in 2001. 
14. He said that the information regarding the Ch inese National IPR Strategy could be found at 
www.nipso.cn
. 
15. Regarding the questions on private investiga tive firms, he referred Members to China's 
response at the last TRM, as China's position had not changed since then. 
16. As to whether freight forwarders, distributors a nd landlords could also be subject to criminal 
liability in IPR cases, he said that that this depe nded on whether their activities constituted elements 
of a crime committed under the relevant  laws and regulations.  This r esponse also pertained to similar 
questions on the percentage of IPR infringemen t cases transferred to criminal enforcement. 
17. He said that the percentage of IPR infringemen t cases transferred to criminal enforcement had 
nothing to do with cost-recovery limitations e ither.  However, some copyright infringements 
transferred to criminal procedures were defined as illegal operation crimes instead of 
IPR infringements, which certainly affected the stat istical results, as some Members had mentioned in 
their written questions. 
18. Regarding the request form one Member for Ch ina's administrative agencies to publish all 
administrative decisions, China had already expressed the view during the last TRM that this was not 
a legitimate request under the TRIPS Agreement or  under China's other commitments, and China had 
no obligation to do so.  He also confirmed that China's administrative agencies were providing written 
decisions with explanations for their enforcement decision and that  their practice had improved during 
past years. 
19. He confirmed that the General Administrati on of Customs was jointly working with the 
Ministry of Public Security to draft guidelines on criminal cases, arising from Customs seizure of 
infringing products in international trade.  Setting standards for arrest was not the mandate of the 
Ministry of Public Security as one Member had put it, but the responsibility of the National People's Congress as well as the responsibility of the Supreme Court and the Supreme Procuratorate. 
20. Regarding the question No. 21 from the USA, he said that China had no new information to 
provide since the last review. 
21. Regarding the relationship between "identical " and "similar" trademarks, as defined in 
Chinese laws, he said that this relationship was the same as interpreted in the TRIPS Agreement.  
Regarding administrative penalties imposed in cases where registered trademarks were used on 
"similar goods", he confirmed that the understanding of the Member c oncerned was correct.  He also 
confirmed that not only administrative penalti es were applicable in cases of service marks 
infringement. 
22. He said that, in view of the difference in natu re between administrative and criminal liability, 
the judicial interpretation promulgated in December  2004 did not stipulate a relationship between the 
number of administrative violations and criminal liability.  The offender would only be prosecuted 
under criminal liability when the degree of violation reached the statutory standard for criminality.   IP/C/39 
 Page 5 
 
 
 Since a well-known mark was a type of register ed mark with a higher commercial value, its 
infringement would cross the line of criminality more  easily.  In this connection, setting no specific 
provision for well-known marks would not hamper its protection by the criminal code.  According to 
the judicial interpretation promulgated in Dece mber 2004, the three-times standard was an elevated 
one compared to the relevant provisions  for illegal publications, rather than a more relaxed one as 
some Members had alleged in their questions.  The mention of "illegal income" in the judicial 
interpretation was a follow-up provision of the crim inal code, which China had no plans to amend. 
23. For all the technical questions regarding the cal culation of the value of counterfeit or pirated 
goods, he referred Members to the judicial interpreta tion issued jointly by the People's Supreme Court 
and the People's Supreme Procuratorate in De cember 2004.  He said that the Chinese National 
People's Congress had no plans to amend the Criminal Code or other IP laws at this moment, although 
in-depth research and study in  this field would continue. 
24. Regarding elementary, high school and "State Plan" textbooks, he said that Article 23 of 
China's Copyright Law also applied to foreign right holders and that China had so far not received any 
complaints from any right holders. 
25. Regarding China's implementation of Article 10.2 of the TRIPS Agreement, he referred 
Members to Article 14 of China's Copyright Law.  Regarding censorship standards and procedures, 
content review processes and the import and distribut ion regulations of audiovisual products, he asked 
Members to convey these TRIPS non-relevant concerns  to the competent committees or councils in 
the WTO, for example the Committee on Market Access. 
26. Regarding the legal requirements on upper threshol ds of statutory damages or the duration of 
prescription of administrative punishment stipulated by the Chinese law, he said that China believed 
that these were not inconsistent with the TRIPS Ag reement.  The laws concerned had been made and 
promulgated in the context of the situation in Chin a and China had no plan to change them at this 
moment. 
27. He said that fines for penalties for the infringement  of copyright were decided by the judicial 
authorities, based upon the facts of the case, whic h was consistent with principles of the TRIPS 
Agreement. 
28. Regarding protecting the legitimate owners of trademarks against unauthorized third-party 
applications, he referred Members to Articles 13,  14, 30, 31 and 41 of the Trademark Law. 
29. He said that as of the end of 2004, it had take n, on average, 20 months from the date of a 
trademark application to the date of a decision made by the examiner. 
30. He said that in 2004, 153 well-known trademarks had been recognized by:  (a) administrative 
proceedings at the CTO;  (b) the Trademark Review and Adjudication Board (TRAB);  or (c) any other administrative agency, 28 of which were fore ign trademarks.  In 2005, 79 such marks had been 
recognized, among which five were forei gn well-known trademarks under the CTO. 
31. Regarding brands that were the subject of anti-piracy efforts in each city, he asked Members 
to log on to the official websites of the cities concerned, such as www.baic.gov.cn in Beijing and 
www.sgs.gov.cn in Shanghai.  In order to place their brands on the anti-piracy lists, companies could 
submit their applications to the relevant local au thorities, such as those in Shanghai or Beijing. 
32. Regarding the potential legal responsibility of the landlord in certain cases, he referred 
Members to Article 50.2 of the implementing regula tions of the Trademark Law.  China's Trademark 
Law provisions on the infringement of trademarks were  also applicable to operators of wholesale and IP/C/39 
Page 6  
 
 retail markets nationwide.  As regarded notices on an ti-piracy efforts issued in Beijing and Shanghai, 
he said that no other cities in China had pl ans to issue similar notices at this moment. 
33. He said that, in conformity with China's acc ession commitments, the relevant rules of the 
State Administration of Industry and Commerce of China and the Administration for Quality 
Supervision, Inspection and Quarantine (AQSIQ) prov ided protection for GIs.  The amendment of the 
Trademark Law in 2001, as agreed to in the accessi on report, contained a specific provision on the 
protection of GIs. 
34. Regarding the detailed procedures of applicati on for the recognition of a well-known mark, he 
referred Members to the www.ctmo.gov.cn, as we ll as to the provisions on the recognition and 
protection of the well-known trademarks. 
35. He confirmed that China was not drafting and had no plan to draft a "highly well-known 
marks" pamphlet. 
36. Regarding allegedly design-infringing goods displa yed at an exhibition, he said that, although 
such an act of display would not immediately be de emed as a violation of Article 11 of the Chinese 
Patent Law, the act of making, prior to the act of di splay, could be considered a violation of the design 
right, i.e. a violation of Article 11. 
37. He confirmed that Article 12 of the Chinese Patent Law conferred on the patentee the right to 
grant licences, regardless of whether the pa tentee was a foreign or a Chinese company. 
38. He confirmed that the Standing Committee of the National People's Congress had no plans to 
amend legislation to provide add itional protection for products, the marketing of which required an 
authorization. 
39. Regarding novelty, he said that the current Chinese laws and regulations regarding the 
novelty requirement were consistent with the TR IPS Agreement and China had no plans to amend 
them. 
40. Regarding the powers of administrations, he sai d that the copyright, trademark and patent 
laws all had specific provisions in this regard.  In an effort to provide adequate remedies for 
IPR holders and to provide significant deterrents to violators, the different administrations executed 
their powers in compliance with the laws governing them.  According to the Chinese Patent Law, the 
patent administrative authorities did not have the power to impose sanctions such as confiscation or 
fining the patent infringer.  Pursuant to Article 53 of the Trademark Law, once the Administration for 
Industry and Commerce had determined that the f act of infringement had been established, it was 
obliged to order the infringer to immediately cease the infringing activity and to confiscate and 
destroy the goods involved, the tools used to ma nufacture these goods and counterfeit representations 
of registered trademarks and could also impose a fine.  These provisions were in complete compliance with the TRIPS Agreement.  In actual enforcement, administrations at all levels penalized the acts of 
trademark infringement by strictly following the law.  This was a significant deterrent to the 
infringers.  There was no provision on confiscati ng illegal income and revoking commercial licences 
in the trademark law or its implementing regulations. 
41. Regarding undisclosed information, he said th at Article 51 of the Administrative Rules on 
Drug Registration provided that, while the new drug  was being examined, the technical requirements 
for it would not be lowered because it had alread y been on sale in overseas markets.  SFDA, the 
Chinese Food and Drug Agency, had established a stringent confidentiality preserving system to prevent information submitted by the applicant from being disclosed.  Reviewers had to register when 
consulting any document and access for each reviewer w as restricted to documents within his/her job  IP/C/39 
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 duty.  So far no leakage of submitted informati on by the staff of SFDA had been found and no 
complaint in this regard had been received from any a pplicant.  He invited drug patent owners to log 
on to SFDA's website ( www.sfda.gov.cn ) to check whether the drug had been applied for by other 
parties.  The regular SFDA procedure on patent disputes was that a patent owner would submit a 
request to the SFDA.  SFDA would then notify other applicants asking them to explain within 40 days 
whether they had infringed that patent, ot herwise their application would be refused. 
42. Regarding the cancellation of trade names simila r to well-known trademarks, he said that at 
present, the Implementation Rules of Trademark Law, the Regulations on Registration of Enterprise Names and the Regulations on Affirmation and Protection of Well-known Trademarks could be 
applied to this matter. 
43. He said that such laws as Counter Unfair Competition Law and Product Quality Law could 
be applied to the protection of i ndications of source.  As to the amendment of the Counter Unfair 
Competition Law, he said this process had started in 1997 and had been added to the legislation plan 
by the Standing Committee of the People's Congress in 2003.  The National Administration of Industry and Commerce was responsible for drafti ng the amendment which was currently in the 
public consultation process. 
44. The representative of Japan
 thanked the Chinese delegation for its comprehensive responses 
and said that he was encouraged by China's commi tment to improve the protection of intellectual 
property rights as a national policy priority.  During the transitional reviews from 2002 to 2004, Japan had raised questions regarding,  among others,  the improvement of enforcement in judicial 
procedures, the protection of well-known marks and the improvement of patent examination 
procedures.  Regarding the improvement of enfo rcement procedures, his delegation appreciated 
China's considerable efforts to improve enforcem ent by issuing new judicial interpretations and 
conducting a nationwide campaign to strengthen the pr otection of intellectual property rights.  In 
terms of the protection of well-known marks, Japan appreciated the implementation of the "Provisions 
on the Determination and Protection of Well-known Marks" in 2003, as well as the publication of lists 
of well-known marks and the recognition of some Japanese company names as well-known marks in 
China.  With regard to patent examination proce dures, it was appreciated that the State Intellectual 
Property Office (SIPO) had been making efforts to improve the procedures.  However, despite these 
efforts by the Chinese authorities, the level of protection remained unsatisfactory. 
45. A recent survey conducted by the Japanese G overnment had shown that significant problems 
continued to exist in intellectual property protecti on and enforcement in China.  The survey, entitled 
"Field Survey for Infringement of Intellectual Prop erty Rights in China", published on 23 June and 
available from the METI's website , www.meti.go.jp, indicated that Japanese industry regarded the 
application of administrative sanctions agains t IPR infringement and the way in which Chinese 
governmental authorities addressed the cases as insuffici ently effective and that, as a result, repeated 
infringement was rampant.  At least a half of th e Japanese companies which had made use of remedial 
procedures in China had experienced  repeated infringement.  Theref ore, IPR enforcement in China 
was insufficient to deter further infringements, and IPR infringement in China continually caused 
serious damage to the industry of Japan and that of other countries, including that of China itself. 
46. He underlined the importance of enhancing the criminal prosecution of IPR infringements, 
especially of repeat offenders, as his delegation had emphasized in document IP/C/W/451, and said 
that his delegation was looking forward to a signifi cant improvement of IPR enforcement by China, 
including effective additional measures to address any act of infringement. 
 IP/C/39 
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 47. The representative of the European Communities
, while thanking China for its update on its 
efforts to improve IP protection in China, said that the statement had not been as detailed and 
comprehensive as he had hoped and that some of th e questions his delegation had asked in document 
IP/C/W/450 had not been answered. 
48. While his delegation took note with satisfa ction of the progress made in Chinese 
IP enforcement, it remained concerned by the high  level of counterfeiting in China.  He urged China 
to actively pursue its efforts towards a fully e ffective IP enforcement system and said that his 
delegation was committed to continue to work bila terally with the Chinese authorities to improve the 
situation.  In this respect, he informed the TRIPS Council that the first meeting of the EU-China joint 
IP working group, that had been held the prev ious week in Beijing, had proved useful and 
encouraging and that it was important that c ontinued progress was made in that framework. 
49. The representative of the United States  thanked China for the answ ers to Members' questions 
and said that her delegation found the TRM mechanis m to be a useful addition to other multilateral 
and bilateral forums for discussing IPRs, including the concerns of China, the United States and other 
countries. 
50. Her delegation appreciated China's efforts to improve its IPR enforcement and protection 
environment, including the growth of China's Trad emark Office and Patent Office and the increasing 
docket of the Chinese courts and enforcement agenci es, the credit for which belonged to a large part 
to Vice Premier Wu Yi and her staff.  However,  although China had committed itself to address a 
number of problems in its IPR regime and to  significantly reduce IPR infringement levels, 
IPR infringement in China remained rampant and deterrent processes were necessary to bring this 
problem under control.  The magnitude of IPR infringement in China was harming the interests of 
right holders in China and around the world.  In th is respect, her delegation had welcomed China's 
President Hu Jintao's statement on 13 September 2005 that "China will continue to step up its efforts 
to protect intellectual properties.  And we will certa inly enhance our effort in fighting all kinds of 
violations in this regard". 
51. She said that IPR protection had also become critical to the community of China's own right 
holders, as could be seen in the areas of tradem arks, plant varieties a nd design and utility model 
patents where Chinese applications dominated.  In  other areas, such as invention patents, domestic 
applications were increasingly likely to dominate in the near future. 
52. Her delegation welcomed China's commitment to  accede to the WIPO Internet treaties, 
which, in view of over 100,000,000 Internet u sers and rapid broadband deployment in China, was 
important to all copyright owners, including Ch inese writers, composers, publishers, recording 
studios, movie makers and software developers .  The United States welcomed the increased 
transparency of the National Copyright Administration in this drafting process and hoped that accession would proceed smoothly. 
53. The United States also welcomed the State Intellectual Property Protection Office's and other 
agencies' efforts to improve provisions for the tran sfer of cases from the non-deterrent administrative 
process to criminal prosecution, as currently such  transfers constituted onl y a tiny percentage of 
overall administrative cases, and the efforts to clarif y the possibility that exporters could face criminal 
liability. 
54. Unfortunately, however, the situation was dete riorating in certain areas such as squatting on 
foreign trademarks and designs, where whole indus trial designs were now being been imitated under 
the cover of design patents which were not examined , and for which there were no deterrent remedies 
against squatting.  In addition, the Internet and trade shows increasingly provided vehicles for widespread imitation and infringement, including ex port of counterfeit and pirated goods in physical  IP/C/39 
 Page 9 
 
 
 form or through uploading movies, software, books, and music.  As China had become a factory to the 
world, Chinese counterfeit products were found throughout the world and across every conceivable sector, whether or not the holder of the rights in these products had a factory or presence in China. 
55. At last year's TRIPS Council, her delegation ha d noted several continuing problems in China's 
enforcement environment, including: local protec tionism, institutional deficiencies, over-reliance on 
weak administrative remedies, and concerns about the compatibility of China's criminal enforcement 
system with TRIPS requirements.  Although some steps had been taken, such as the Ministry of 
Public Security's Mountain Eagle campaign regard ing criminal enforcement of trademarks, more 
remained to be done. 
56. Although the Chinese Government's on-going e fforts had had some positive results, there 
were indications that the system remained non-dete rrent.  For example, while China was the second 
largest market for computers in the worl d, its software market was only the 25
th largest.  Sales of 
legitimate movies and music were also artificially low due to a high piracy level.  Seizures of Chinese 
origin goods by foreign customs authorities remain ed high – over 60 per cent of all seizures in the 
United States alone – and widespread retail sales of counterfeit and pirate d goods could be witnessed 
in any major Chinese city.  These retail sales had been effectively decriminalized by the 
December 2004 Judicial Interpretati on, and relegated to this ineffective administrative system.  Her 
delegation continued to be concer ned about the apparent lack of criminal remedies available for 
certain offences, especially in the critical area of  copyright protection, where basic structures of a 
deterrent criminal remedy were not in place.  He r delegation also believed that there should be a 
criminal remedy against exports of counterfeit goods. 
57. The criminal IPR system was especially importa nt to right holders with limited resources, 
such as SMEs, because they may not otherwise have an understanding of China's IPR system;  lacked the capacity to post people in China to handle the local administrative and civil systems; and were 
confronted with large scale commercial counterfeiting and piracy affecting their traditional markets. 
58. She noted that the basic underpinning of TRIPS was rule of law and that criminal procedures 
required decisions in writing, based on evidence, with a right to counsel, applied by independent 
judges trained in law, with a right of appeal, according to a clear process, based on proportionate 
sentencing standards, and other supporting legal structures.  A non-deterrent administrative system 
could not achieve these purposes and could easily beco me self-serving and prejudicial against foreign 
rights, particularly when local laws required di scriminatory treatment in favour of domestic right 
holders. 
59. In this year's TRM, her delegation had pointed  to specific local statutes that provided 
enhanced enforcement or allocation of resources for local companies and had also inquired about 
other mechanisms that could be described as promot ing interests of Chinese right holders or potential 
right holders over those of other Members.  In th is regard, she noted her delegation's concern that 
much of China's enforcement efforts appeared to be directed in favor of China's own companies.  For 
example, according to the data for 2004, over 98 per cent of China's administrative copyright cases 
had been on behalf of Chinese right holders, wh ile approximately only 10 per cent of all 
administrative trademark cases had been undertaken on behalf of foreigners. 
60. While China's responses to these questions were appreciated, her delegati on noted that not all 
questions had been fully answered and no responses had been received to the questions regarding GIs 
and famous brands, as well as to most of the questi ons posed with regard to copyright.  Her delegation 
was looking forward to hearing further answers from the Chinese delegation in this multilateral forum 
as well as in their bilateral discussions. IP/C/39 
Page 10  
 
 61. The representative of Canada
 thanked China for the information provided and said that his 
delegation acknowledged China's ongoing efforts in d esigning and passing legislation and regulations 
to deal with IP rights and enforcement.  He info rmed the Council that last week Canada had hosted a 
Chinese delegation from the National Copyright Admi nistration and other departments for a study 
visit to review copyright legislation and enforcemen t issues, which had allowed a useful exchange of 
information between officials engaged in policy, legal, administrative and enforcement activities. 
62. In addition to the well-known economic conse quences, his delegation had increasing concerns 
over the public health and safety aspects of count erfeits and fakes and therefore urged China to 
continue to place a priority on improving IP enfo rcement.  His delegation was looking forward to 
continuing to work with China on this and other IP issues. 
63. The representative of China  thanked Members that had ma de reasonable and sound comments 
on China's IPR protection.  With regard to tho se Members that had made critical comments, he 
expressed his hope that a careful study of his speech  could bring about a be tter and more realistic 
understanding of the challenges and difficulties th e Chinese Government was facing in dealing with 
IP protection.  He said that it was unfortunate th at there were few reasonable and rational in-depth 
explorations of the reasons for IP infringement problems, which were a prevailing phenomenon across 
the world and the reasons for which, in his view, would ultimately be found to be economic. 
64. He noted that IPR infringement activities in China were increasingly being organized by 
foreign investors or criminals who sought to prof it from these illegal activitie s.  One of these cases, 
that had been concluded earlier this year in Shan ghai, concerned an American citizen who had set up 
a 3-Dollar DVD website (registered in Russia) and had conducted his illegal piracy activity in China. 
This American citizen had now been punished in accordance with th e well-designed Chinese 
IPR laws and regulations. 
65. He urged those Members who had submitted questi ons to study the responses in detail and to 
read the "White Paper" his delegation had submitte d.  His Government had been breaking its back 
fighting against domestic IP infringement and, instead of pointing the finger at the Chinese 
Government, Members should offer their help and sup port in this fight.  He expressed his hope that, if 
Members would take a more developmental persp ective on the Chinese IPR situation, they would 
stand shoulder to shoulder with the Chinese Gove rnment to fight against this phenomenon of 
IPR infringement, not only in China but across the world. 
66. Turning to the Council's reporting obligation to the General Council, the Chairman  suggested 
that the Council follow the same procedure as the pr evious year, namely that the Chairman, acting on 
his own responsibility, would prepare a brief, factua l report.  The content of the cover page to the 
report would be similar to that of the report s ubmitted by the Council in 2004 and the part of the 
minutes reflecting the discussions held under this agenda item would be attached. 
67. The Council took note  of the statements made and agreed  to proceed as suggested by the 
Chair. 
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