WORLD TRADE  
ORGANIZATION  IP/C/W/451 
28 September 2005 
 (05-4291) 
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 23 September 2005, 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 fourth year after China's accession, implementation of its 
commitments on intellectual property has evolved from simple progress into a cruising phase.  The 
transitional review mechanism has been useful for making China's transitional efforts more efficient 
and productive, and it is a pleasure for Japa n to have contributed to this process. 
 
In accordance with Section 18 of the Protocol  on the Accession of the People's Republic of 
China, which states that "China shall provide releva nt 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 Rights, the res ponses and relevant information to the following 
questions and comments.  
A. GENERAL ISSUES 
1. Please provide names, summaries and dates of enactment or publication of laws, regulations 
and administrative rulings pertaining to the subject matter of the TRIPS Agreem ent that were enacted 
or published after December 2004. 
B. COPYRIGHT 
2. Japan has requested China to establish the Regulations on Royalty Criteria for Broadcasting 
and Television Organizations, but as of today the Re gulation has not been established.  We request 
China to establish the Regulation immediately and to a pply it retroactively to the date of the original 
implementation of the Copyright Law. 
3. We appreciate that the activities of collec tive management organi zations have been 
standardized through the enforcement of the Regul ation for Collective Management of Copyright.  
We urge China to give further support for establis hment and standardizati on of domestic collective 
management organizations. IP/C/W/451 
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 4. We greatly appreciate that the liability of Internet Service Providers is clarified by the 
establishment of the Regulation for the Administra tive Punishment against Infringement Acts on the 
Internet.  Please clarify the actual procedure of " notice and take down" of this Regulation.  In 
particular, please provide detailed in formation on Articles 8.1 and 8.4. 
5. We believe that for effective intellectual pr operty rights enforcement, it is necessary to 
strengthen civil remedy as well as criminal remedy.  Currently, under para. 2, Article 48 of the 
Copyright Law, the remedy is limited up to Y 500,000 for cases where the actual amount of illegal 
gain cannot be proven.  We request China to abolis h this upper threshold of statutory damages or to 
make the amount more appropriate for recovery of actual damages, as well as to make it easier to 
verify the amount of damages. 
6. In relation to Article 9 of the Regulation for Copyright Administrative Punishment, we asked 
China about the prescription of administrative punishment last year, and received an answer that the prescription is consistent with the Law on Administ rative Punishment.  However, in order to make 
administrative punishments fully eff ective as a deterrent to infringeme nt, we urge China to either 
extend the duration of prescription or change the starting point of prescr iption to the date on which the 
injured party had known or should have known the infringement of its rights. 
7. In order to achieve effective deterrence to infringe ment of copyright, we believe it is requisite 
that the absolute determination to protect intellect ual property rights through criminal punishment be 
made widely known to the public.  In this respect,  please explain why the amount of fine for penalties 
against infringement of copyright is not clearly sti pulated in any of the artic les of the legislations. 
C. TRADEMARKS 
Protection of well-known marks 
8. We understand that there are four kinds of oppor tunities to apply for the recognition of a well-
known mark:  (a) an opposition process at the Chinese Trademark Office (CTMO);  (b) a cancellation 
process at the Trademark Review and Adjudication Board (TRAB);  (c) a process of trademark administration (i.e. enforcement) at the administrative authorities for industry and commerce;  and (d) 
a trial by the people's court.  Please describe each procedure in brief. 
9. Please provide statistics of the above four channels on the numbers of applications, 
recognitions and rejections of well-known marks by fo reign entities (including separate statistics for 
Japanese entities only if availabl e) and Chinese entities for each year after amendment of the 
Regulations for the Implementation of the Trademark Law  in September 2002. 
10. We understand that there are cases where marks are not rec ognized as well-known marks for 
the following reasons:  (a) an applicant only subm its evidence which proves the mark is well-known 
abroad, whereas Chinese laws requi re that evidence be submitted wh ich proves that the mark is 
well-known in China;  and (b) the decision of  opposition or cancellation can be made without 
recognizing the mark is well-known.  Please provide  information on the number of cases and the 
major reasons for marks not being recognized as well-known even when applications were made 
through the above-mentioned routes after September 2002. 
Highly well-known marks 
11. We understand that a pamphlet of "highly well- known marks" is currently being drafted and 
will be planned for publication in China.  Please describe its relationship with well-known marks and 
provide the schedule for publication.  IP/C/W/451 
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 Protection of unregistered well-known marks in foreign countries 
12. There are increasing concerns that trademarks , which are well-known in countries other than 
China and unregistered in China, are improperly file d and/or registered as trademarks by companies in 
China without the genuine owners' permission.  Pl ease explain whether Chinese laws and regulations 
provide opportunities for the authorities to reject such an application or for the genuine owner to 
oppose or request invalidation of the trademark. 
Disclosure of information on the pendency of trademark examinations 
13. We understand that the number of trademark app lications in China exceeded 500,000 in 2004, 
and it is presumed that the pendency of these appli cations will be extended.  Please provide the length 
of time from the filing of applications to the in itiation of examination, final decision regarding 
examination, opposition by the CTMO and appeal examination by the TRAB. 
D. INDUSTRIAL DESIGNS 
Display of infringing goods in exhibitions 
14. 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 patented design, for production or business 
purposes."  Please clarify whether displaying design-in fringing goods in exhibitions is deemed to be a 
violation of the provisions stipulated in Article 11. 
E. INDUSTRIAL DESIGNS/PATENTS 
Novelty 
15. We understand that the Chinese authorities are considering the amendment of laws and 
regulations so that inventions publicly used abroad  are considered as a bar to novelty in order for the 
authentic inventors to show probable grounds of inva lidation of patents or designs which are filed or 
registered by third parties in China.  Please pr ovide the schedule and content of the amendment. 
F. ENFORCEMENT 
Statistics on administrative penalties 
16. Please provide statistics on administrative penalties for each year since China's accession to 
the WTO, including:  (a) the number of administrati ve penalties requested by right holders;  and (b) 
the number of administrative penalties imposed, di vided by administrative bodies, types of IPR 
infringed, provinces and types of penalties imposed. 
Statistics on criminal penalties 
17. 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 submitted by administrative bodies to the procuratorate as 
deserving criminal prosecution; 
(b) The number of cases dealt with by the proc uratorate directly as deserving criminal 
prosecution; IP/C/W/451 
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 (c) The number of cases that the procuratorate actually prosecutes through the courts; 
(d) The number of cases that the right holder himself/herself prosecutes through the 
courts; 
(e) The number of cases where criminal penalti es are imposed (sorted by fines, public 
surveillance, detention and fixed-term imprisonment); 
(f) The number of cases where major penalties ( public surveillance, detention and fixed-
term imprisonment) and additional pe nalties (fines) are imposed together. 
18. Please provide the following statistics for the firs t half of 2005 in addition to the above items. 
(a) The number of cases where the calculation of illegal business volume under the new 
judicial interpretation is applied, including:  (a) the number of cases submitted by 
administrative bodies to the procuratorate as deserving criminal prosecution, (b) the 
number of cases dealt with by the procuratorate directly as deserving criminal prosecution, (c) the number of cases that the procuratorate actually prosecutes through the courts, (d) the number of cases where criminal penalties are imposed and the types of penalties. 
(b) The number of cases where an illegal business volume that would be punishable by 
3-7 years of imprisonment (e.g. more than 250,000 RMB for forging registered trademarks by individuals) applies, includi ng:  (a) the number of cases submitted by 
administrative bodies to the procuratorate as deserving criminal prosecution, (b) the number of cases dealt with by the procuratorate directly as deserving criminal prosecution, (c) the number of cases that the procuratorate actually prosecutes 
through the courts, (d) the number of cases where criminal penalties are imposed and 
the types of penalties. 
 Statistics on alcoholic beverage trademarks 
 
19. There are increasing concerns that products of trademark infringing Japanese Sake, whose 
trademarks are registered in China and Japan, are so ld or manufactured in China.  Please provide the 
number of trademark infringement ca ses for alcoholic beverages in China for the past three years, 
with detailed information on the laws or regulations applied to, on categories of 
administrative/civil/criminal cases and on countries of origin of the product that has been infringed. 
Interpretation of criminal law 
20. Please explain the relationship between an "iden tical" trademark as stipulated in Article 213 
of the Criminal Law and a "similar" trademark as stipulated in Article 52 of the Trademark Law. 
21. Please identify whether only administrative penalti es are imposed (i.e. no criminal penalty is 
imposed) in cases where a registered trademark is  used on "similar goods" (Article 52 of the 
Trademark Law) other than "the same kind of commodities" (Article 213 of the Criminal Law) 
without the trademark owner's permission.   
22. Please identify whether only administrative pe nalties are imposed in cases of service mark 
infringement. 
23. We understand that the provision on recidivists sti pulated in Article 65 of the Criminal Law is 
also applied to repeat IPR offenders.  Please e xplain how "heavier punishment" is defined (i.e. how  IP/C/W/451 
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 many times heavier than penalties for first offenders ).  Please also provide the number of cases of IPR 
repeat offenders to which Article 65 of the Crim inal Law applies, and information on actual cases 
where "the heavier punishment" was imposed.  
 Judicial Interpretation 
 24. The following comments and questions are for the "Interpretation by the Supreme People's 
Court and the Supreme People's Procuratorate on Seve ral Issues of Concrete Application of Laws in 
Handling Criminal Cases of Infringing Intellectual Property" enacted in December 2004 (hereinafter 
referred to "new judicial interpretation"). 
(a) There was a "three strike" provision that referred to "not reaching these thresholds, 
but infringing IPR after having been subjected to the administrative penalty twice 
before having negative impact" in Article  61.4 and 63.3 of the "Provisions of the 
Supreme People's Procuratorate and the Ministry of Public Security Regarding Prosecution Standards for Cases involving Economic Crimes" issued on April 2001 
("old guidelines").  But in the new judicial interpretation, there is no such provision.  
Please explain why the "three strike" provision has been deleted from the new judicial 
interpretation. 
(b) Please identify whether "subjected to the administrative penalty twice before" is 
recognized as having a negative impact when deciding if the violator is to be prosecuted.  If it has a negative impact, please clarify which laws, regulations and interpretations are applied. 
(c) There was a provision that violators of a well-known trademark could be prosecuted 
irrespective of the amount of illegal sales or gains in Article 61.3 and 63.2 of the old 
guidelines.  But in the new judicial interpretation, there is no such provision.  Please explain which provisions are particularly applied for the prosecution of violators of 
well-known trademarks under current la ws, regulations and interpretations. 
(d) Please explain why the prosecution standard fo r enterprises is three times higher than 
that for individuals. 
(e) Please describe any types of crimes other than IPR infringement for which a 
prosecution standard for enterprises that is th ree times higher than that for individuals 
is applied. 
(f) There seems to be some cases where the pr osecution standards fo r enterprises in the 
new judicial interpretation are higher than that in the old guidelines.  Please explain 
why such a change was made in spite of the commitment under China's Protocol of 
Accession. 
(g) Please explain how the provisions on "serious  nature" (e.g. in Article 1.1.3) and 
"especially serious nature" (e.g. in Article 1. 2.3) in the new judicial interpretation are 
interpreted and applied in actual cases.  Please provide information of actual cases 
where such a provision is applied for prosecution, if any. 
(h) We appreciate that a new provision was stipulated in the para 2 of Article 11 that 
"overproduction" is subject to  criminal punishment.  Howeve r, there are concerns that 
such things as the amount of illegal inco me or the number of illegally reproduced 
products still continue to be the criteria for prosecution because it is very difficult for 
right holders to verify them.  Moreover, if the illegal income does not reach the IP/C/W/451 
Page 6  
 
 necessary level, the only thing the right holders  can do is to take the administrative or 
the civil procedure, but it is extremely difficult for them to find the infringers and request compensations for damages on their own.  Please describe any plans to stop using the amount of illegal income etc. as the criteria for prosecution.  
(i) Please explain why the threshold of Article  218 of the Criminal Code applied to 
individuals was not lowered, whereas the threshold in Article 217 was.  Does China 
have any plan to lower it?  Even if right holders find that pirated goods are sold at stalls, they may not be able to prosecute b ecause it is difficult for them to prove that 
the illegal income exceeds Y100,000.  It can be foreseen that a prosecution of a seller 
at a stall may start an investigation that w ill eventually lead to identify the original 
producer of the pirated goods.  Therefore we would like to urge China to lower the 
threshold. 
(j) Please clarify whether this new judicial inte rpretation is applied to related rights. 
(k) We appreciate China's efforts to make infringe ment acts on the Internet be exposed to 
criminal liability under Article 11.  However especially on the Internet, infringement 
acts without any illegal gain, such as fre e file-sharing, may cause more serious 
damage to right holders than infringement acts conducted for profit.  Please clarify 
whether such infringement acts without any ille gal gain would be subject to criminal 
punishment and explain the reason if the answer is no.  
 Border Measures 
 25. It is explained that the storage fee or dispo sal cost deducted from the deposit of right holders 
can be compensated by way of repayment from th e violator under Chinese laws.  However, the 
Japanese industry has concerns that it is very diffi cult to seek compensation from the violator for such 
a fee or cost in reality because the violator of ten disappears, the cost for civil action to seek 
compensation usually exceeds the storage fee or dis posal cost, etc.  We understand that the Chinese 
Customs realizes that the practice of asking right hold ers to pay for the storage fee or disposal cost 
impedes IPR protection and has made some efforts to alleviate the cost burden on right holders.  
Please describe any plans to minimize the cost burden of right holders in consideration of the abovementioned situation in China. 
26. Please provide the number of cases of confiscation by Chinese Customs, and volumes of 
goods confiscated, for the last three years, and pr ovide the number and volume of each confiscation 
resulted in (a) transfer to a public  welfare utility, (b) transfer to IP R owners in return for adequate 
compensation, (c) auction of goods after removing th e  infringing characteristics, and (d) destruction, 
as stipulated in the Regulation of People's Republic  of China on Customs Protection of Intellectual 
Property Rights. 
27. Please provide Chinese Customs seizure statistics for the last three years, separately by nature 
of IPR, countries of export (import seizure), and countries of destination (export seizure). 
Localism 
28. Please describe any efforts made or planned to promote IPR protection in local areas and 
educate local authorities in China. 
  IP/C/W/451 
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 Others 
29. We have heard that there were some cases wher e relevant organizations  rejected to apply 
immediate administrative punishment or asked the victim of copyright infringement to submit 
information on the infringer because of staffing shorta ge.  We would like to urge China to provide for 
appropriate staffing for relevant organizations so that they can react more quickly. 
30. We request China to strengthen the cooperation among relevant organizations when multiple 
intellectual property rights such as copyright, i ndustrial design and trademark are simultaneously 
infringed as in the case of character goods.  We  understand that according to the law, when 
infringement on trademark simultaneously infringes upon copyright, the organization in charge of the 
infringement on trademark is to notify the National Co pyright Administration, but in reality it is not 
implemented in that way.  Therefore, we request China to change the system where, when the right 
holder requests for administrative procedure against infringement on trademark, the notification be made to the National Copyright Administration so th at both types of infringements are appropriately 
taken care of. 
G. OTHERS 
 
 Protection of trade names 
31. Please explain which laws or regulations are a pplied to cancellations, injunctions, claims for 
damages or demands for crackdowns by administra tive bodies in cases where trade names similar to 
internationally well-known marks are registered ab road without the genuine owner's permission and 
in cases where those trade names cause confusion with the registered trademarks of Japanese 
enterprises in China when  used in China.   
 Protection of indications of source 
32. Please describe what laws, regulations or penalti es are available to control unlawful indication 
of sources (i.e. false "Made in Japan" labelling on Chinese products). 
Law to Counter Unfair Competition 
33. In the last TRM at the TRIPS Council, China stat ed that it was considering to start drafting an 
amendment to the Law to Counter Unfair Competitio n.  Please provide the details and current status 
of the amendment. 
Licensing regulations 
 
34. Please explain the relationship between "Bulletin of the IPR Case Meeting by National Courts 
on Several Issues Concerning the Application of the Law in the Trial of Technology Contract 
Disputes" circulated in 2001 (hereinafter "2001 Bulle tin") and "Interpretation of the Supreme People's 
Court on Several Issues Concerning the Application of the Law in the Trial of Technology Contract Disputes" issued in December 2004 (hereinafter "2004 Interpretation").  We understand that there are 
a considerable number of problematic provisions su ch as (a) provisions existing in the 2001 Bulletin, 
but not in the 2004 Interpretation, (b) similar provi sions existing in both the 2001 Bulletin and the 
2004 Interpretation whose relations hip is, however, not clear.  Please describe any efforts planned, 
such as completely abolishing and invalidating th e 2001 Bulletin, to solve such legal opaqueness or 
uncertainty arising from the coexistence of the 2001 Bulletin and the 2004 Interpretation. 
35. Japanese industry has concerns th at Chinese local authorities usually examine the contents of 
technology import/export contracts when applications for registration are made under Article 17 of the IP/C/W/451 
Page 8  
 
 Regulation on the Administration of Import and Export Technology.  Please confirm that the 
authorities will not examine the contents of contr acts with regard to free import/export technology. 
36. 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 mandatory 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 the provision of Article 353 of the Contract Law. 
37. In terms of aforementioned provision of "liabilit y for third party's infringement" stipulated in 
Article 24 of the Regulation on the Administration of Import and Export Technology, China explained 
that the laws on transfer of technology in many countries had similar provisions and such provisions 
are consistent with international practice.  Howe ver, we understand that many countries have already 
abolished such a "liability for third party's infringe ment" provision.  Please clarify whether China has 
any plans to revise this provision in light of the international trend. 
__________