WORLD TRADE  
ORGANIZATION  IP/C/43 
21 November 2006 
 (06-5600) 
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 and 26 October 2006, the C ouncil undertook the fifth annual transitional 
review of the implementation by China of its WTO commitments pursuant to Section 18 of the Protocol on the Accession of the People's Republic of China (WT/L/432), and ag reed that the Chair, 
acting on his own responsibility, would prepare 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 Japan, the Europ ean Communities, and the United States.  These submissions were 
circulated in documents IP/C/W/479, 481 and 482, respectively. 
3. In a communication dated 20 October 2006, China provided information as specified in 
Annex 1A to the Protocol.  This submis sion was circulated as document IP/C/W/483. 
4. The annex to this report contains the relevant  part of the minutes of the Council's October 
meeting
1 that reflects the statements made under the review. 
_______________ 
 
                                                      
1 To be circulated as IP/C/M/52. IP/C/43 
Page 2  
 
  ANNEX 
ITEM C OF THE MINUTES OF THE COUN CIL'S MEETING OF 25-26 OCTOBER 2006  
TO BE CIRCULATED AS IP/C/M/52
2 
C. TRANSITIONAL REVIEW UNDER SECTION 18 OF THE PROTOCOL ON THE ACCESSION OF THE 
PEOPLE 'S REPUBLIC OF CHINA  
5. 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 23 October 2006, had been 
circulated as document IP/C/W/483. Questions an d comments in connection with the transitional 
review had been submitted by the European Comm unities, Japan and the United States (documents 
IP/C/W/481, 479 and 482, respectively).  
6. The representative of China,  briefing the Council on China's progress in the implementation 
of its TRIPS-related commitments since the last tran sitional review, said that as regards legislation, a 
number of new regulations and judici al interpretations relating to IPRs  had been issued or were being 
drafted.  Among these were the Interim Regulation concerning Intensified Interlinking and 
Coordination in the Combat against C opyright Infringing Criminal Offences  which had been brought 
into effect on 13 January 2006, the Measures on Protecting the IPR of Exhibition  which had been 
brought into effect on 1 March 2006, and the Regulations on the Protection of the Right of 
Communication through Information Network  which had entered into force on 1 July 2006.  By the 
end of 2005, the process for obtaining public comments through the Internet for four further draft judicial interpretations had been completed.  These were:  one on Civil Dispute Concerning Unfair 
Competition , one on Infringement Disputes Regarding New Plant Varieties , one on Conflicts of 
Intellectual Property Rights , and the last one on Dispute of MTV Copyright .  More information was 
contained in the document submitted pursuant to Annex 1A. 
7. Regarding enforcement, he said that China had already stated previous ly that it regarded a 
good system of enforcement and transparency as essen tial to bring into full play its excellently 
constructed legal system of IPR protection.  In  this regard, the national working group for IPR 
protection that had been set up in 2005 and comprised  all relevant judicial and administrative agencies 
had taken new important steps this year to strengthen law enforcement.  At the heart of this effort was 
the creation of service centres all over China in orde r to facilitate the reception of complaints on IPR 
infringement.  So far, the Ministry of Commerce had set up 50 such centres in large- and medium-sized cities across China and these centres were functioni ng well.  In order to bring a complaint or to 
report an IPR infringement case to China's enforcemen t agencies, one could simply dial 12312 or log 
on to the website www.ipr.gov.cn
 and a quick response would be assured.  Another important step 
was the issuance of the Circular on the Transfer of Suspectable Criminal Offences by Administrative 
Organs for Law Enforcement  and the subsequent release of three further Circulars by the Ministry of 
Public Security in conjunction with other competent authorities, concerning accelerated transfer of IPR infringement cases by customs authorities fro m administrative to criminal enforcement. 
8. With regard to transparency, he said that in March 2006 the Supreme People's Court had set 
up a website through which judicial decisions on IPR infringement cases were accessible to the 
general public free of charge.  The Supreme Peopl e's Court and local high courts had begun to 
                                                     
 
2 The paragraph numbering of this excerpt will not  correspond with that of the minutes of the 
TRIPS Council meeting but has been included for the convenience of users.  IP/C/43 
 Page 3 
 
 
  establish a spokesman system, through which impor tant IPR issues were publicized regularly.  
Comprehensive up-to-date information on the protecti on of IPRs in China was also available from the 
website www.ipr.gov.cn .  One very important development in China's protection of IPRs in the year 
2006 was the adoption of the National Action Programme on the Protection of IPR (2006-2007) , 
which specified guidelines, objectives, priorities and the main measures regarding the strengthening 
of IPR protection in China.  China's Action Plan on IPR Protection (2006) , which had been adopted at 
the same time, promoted the protection of IPRs  through the improvement of legislation and 
enforcement, institutional development, educa tion and training, international exchange, and 
cooperation.  The protection of intellectual property rights was also regarded as an important strategy 
to transform China into a nation with strong innovative capabilities.   
9. He said that it was clear that  China had made tremendous effo rts to promote better protection 
of IPRs in line with its economic development leve l and had made remarkable achievements, namely 
that five years after joining the WTO, China' s IPR system was fully consistent with the 
TRIPS Agreement and China had fully implemented its accession commitments.  When talking about 
IPR issues in the WTO, it had to be kept in mi nd that firstly, one was talking about trade-related 
aspects of IPRs, and secondly, that the objective of the TRIPS Agreement was to promote the 
development of trade and technology transfer through  appropriate rules on protection and use of IPRs.  
10. Before responding to the specific issues and questions raised by Members, he said his 
delegation would want to make a number of comment s.  Firstly, his delegation had made available 
several documents for this meeting.  One was the document containing the information requested in 
Annex 1A, which had been circulated as documen t IP/C/W/483 and which provided information on 
the development of legislation and enforcement,  as well as some detailed statistics and data on 
enforcement.  Furthermore, the following room doc uments had been made available for Members:  
the White Paper on China's Intellectual Property Rights Protection for 2005 , China's Action Plan for 
the Protection of Intellectual Property Rights for 2006 , and a book of approximately 200 pages on 
how to protect intellectual property rights in China. 
11. Secondly, he said that his delegation had summa rized Members' questions and divided them 
into six parts which would be addressed by the answer s, namely Part 1 on general issues;  Part 2 on 
copyright;  Part 3 on trademarks and geographical indications;  Part 4 on patents;  Part 5 on 
enforcement;  and Part 6 on other issues.   
12. Thirdly, he pointed out that, although the tim e available to translate the questions into 
Chinese, obtain answers from the numerous competen t authorities in China and translate the replies 
back into English was very short, his delegati on was still making every effort to answer as many 
questions as possible.  However, if a delegation fe lt that an issue had not been sufficiently addressed, 
this could be dealt with after the TRM meeting, but would not merit an extension of the TRM process.   
13. Fourthly, he said that Members, in their qu estions, had requested very detailed figures 
concerning China's enforcement data, organized, for example, by subject matter, by country, by 
different authorities or even by different local cour ts or local administrative agencies.  The document 
provided pursuant to Annex 1A had basically provided  this information, but further accessible sources 
for detailed information would be indicated in answers to specific questions.  As the time in 
TRIPS Council meetings was very limited, no-one c ould expect to resolve all issues under the TRM 
process in just one meeting.   
14. He said that the importance the Chinese G overnment attached to the TRM process was 
reflected in the size of the delegation at the pr esent meeting, which included members from the WTO 
mission based in Geneva;  from the Supreme People' s Court;  from the copyright bureaux;  from the 
Legislative Affairs Office of the State Council, an d also from the State Intellectual Property Offices 
and Trademark Offices, as well as representatives from the Ministry of Commerce. IP/C/43 
Page 4  
 
  15. In responding to the specific questions by Memb ers, the representative of China turned to his 
delegation's answers concerning general issues (Part 1) .  He said that with regard to the drafting of 
new or revised judicial interpreta tions, new laws, regulations or judi cial interpretations relating to 
IPRs since the last review, his delegation had alre ady mentioned the preparation of the four draft 
judicial interpretations on Civil Disputes concerning Unfair Competition , on Infringement Disputes 
regarding New Plant Varieties , on Conflicts of Intellectual Property Rights , and on Dispute of MTV 
Copyright , which were in preparation.  Furthermore, th e following regulations had come into effect 
since the last review:  Interim Regulation concerning Intensified Interlinking and Coordination in the 
Combat against Copyright Infringing Criminal Offences,  Measures on Protecting the IPR of 
Exhibition , and the Regulations on the Protection of the Right of Communication through Information 
Network .  The document submitted pursuant to Anne x 1A provided more information on these 
instruments. 
16. Regarding the number of administrative cases in the areas of trademarks, copyright and IP-
related customs matters undertaken on an ex officio basis and on the basis of right holders' complaints, he informed the Council that the i ndustry and commerce administrative authorities had 
investigated and dealt with 39,107 trademark infringement cases in 2005 and 15,493 cases during the 
first six months of 2006.  In 2005, China cu stoms had dealt with 1,210 IPR infringement cases 
involving the import or export of goods.  No separat e statistics were available on the number of cases 
dealt with on the basis of right holders' complaints.  
17. No data was yet available on the number and percentage of cases referred from administrative 
enforcement to criminal enforcement under the revi sed transfer mechanisms that had been developed 
by the Supreme People's Court, Supreme People's Proc uratorate, Ministry of Public Security (MPS), 
and General Administration of Customs.  
18. He confirmed that the treatme nt of trademark infringement under the current Trademark Law 
would also be applicable to the unauthorized use of  copyright and trademarks on the Internet and the 
provision of counterfeit/pirated products on Internet  sites in the .cn domain.  Right holders could 
complain to the local Industry and Commerce Admi nistrations as well as directly bring a case to the 
court.  The Regulations on the Protection of the Right of Communication through Information 
Network , which had come into effect on 1 July 2006, would further contribute to the regulation of the 
spread of works on the Internet, to  the enhancement of the copyright protection on the Internet, and to 
further development of the internet industry. 
19. The representative then turned to his delegation's answers concerning copyright (Part 2) .  
With respect to the availability of statistical da ta on prosecutions under Article 225 of the Criminal 
Law on "illegal business operations" that involved copy right infringement, he said that China did not 
distinguish cases involving copyright infringement from illegal business operations.  With regard to 
the results of the "Number 2 Sunshine Action to Im prove the Operation of A udio and Video Markets" 
and the "100-day Anti-Piracy Activity" campaign, he said that no data was available yet as these 
actions had only been staged very recently. 
20. Regarding Article 43 of the C opyright Law of China on fees charged for broadcasting of 
copyrighted works, a separate regulation was being drafted by competent authorities of the 
State Council, but there was no timetable as to when the regulation would be issued. 
21. Regarding the effectiveness of enforcement in the case of infringements of multiple 
intellectual property rights, he said that the State Office of Intellectual Property Protection, the 
Ministry of Public Security and the Ministry of Supervision had jointly issued the Provisions on the 
Transfer of Suspectable Criminal Cases by Admi nistrative Organs for Law Enforcement in 2006, in 
order to enhance the coordination and coopera tion among law enforcement bodies in cracking down 
on IPR criminal offences.  IP/C/43 
 Page 5 
 
 
  22. The representative then turned to his delegation's answers concerning trademarks and 
geographical indications (Part 3) .  With regard to the information required for a trademark 
application and the classification system used by the China Trademark Office, he said that if the name 
of a product or service was identical to the name of  a product or service in the Nice Agreement on the 
International Classification of Goods and Services for the Purpose of Registration of Marks (8
th edition), then the applicant was not required to  provide additional information.  Otherwise, 
the applicant was required to provide a descripti on of the product or service which would then be 
classified according to the Nice Classification.   
23. He said that the China Trademark Bureau  was adopting only the Nice International 
Classification System, not two different systems.  The groups referred to as "sub-groups" were groups 
of similar goods or services on the basis of the Nice Agreement.  Goods  included in the same similar 
group were regarded as similar goods.  Therefore, th e similar group was the reference standard for the 
purpose of establishing whether there was confusion be tween a trademark applied for and a registered 
trademark or a prior application.  More information on this question was provided at 
www.ctmo.gov.cn .  With regard to the specific cases of a glove and a scarf mentioned in Members' 
questions, he said that the glove fell under th e similar group of 2510 and the scarf fell under the 
similar group of 2511.  
24. Regarding a minimum amount of damages stipulat ed for trademark infringement, he said that 
neither the Implementing Regulations on trad emark law before 2002 nor the Implementing 
Regulations on trademark law revised in 2002 co ntained any provisions on minimum amounts of 
damages.   
25. With regard to the issue of local Administrations of Industry and Commerce (AICs) 
publishing their decisions, he said that local AICs published the penalties for major infringement 
cases and the transfer of cases to public security bodi es, in order to improve transparency and deliver 
a strong message against counterfeiting.  
26. Concerning data on the rate of affirmance or reversal of appeals from the Trademark Review 
and Adjudication Board (TRAB) to the Beijing High Court of final decisions regarding trademark 
validity, he said that, in 2005, a total of 128 a ppeal cases had been decided, of which 105 had been 
maintained and 23 had been withdrawn.  No data was yet available for the first six months of 2006. 
27. With regard to the grounds on which the Chin ese Trademark Office could refuse protection of 
a geographical indication and the independent qualif ication documentation required in an application 
for GI protection, he said that the registration of a GI needed to pass the material review governed by 
Articles 10, 11, 12, 28 and 29 of the Trademark Law. 
28. With regard to China's measures and proce dures for designating so-called "famous brands" 
and "famous trademarks”, he said that the proce dures for designating both these items were basically 
the same.  More information could also be found in his delegation's answer to that question during last 
year's review.  
29. On the issue of counterfeiting in retail markets, he said that the Administrations of Industry 
and Commerce (AICs) encouraged the inclusion of  anti-counterfeiting provisions in lease contracts 
between market operators and market sponsors.  U nder the provisions of the trademark law, the AICs 
were able to investigate and deal with action infri nging exclusive rights to registered trademarks, both 
on an ex officio basis and in response to a complaint or report.  
30. Concerning the length of the time period currently necessary for the review of trademark 
applications, he said that the number of applicati ons had been increasing at an annual rate of 100,000 
in recent years.  The current time span from the subm ission of an application to the first action by the IP/C/43 
Page 6  
 
  trademark administration office was approximately 24 months, or more in cases of disagreement or 
dispute.  China was taking proactive measures to tr y to shorten the time length of the registration 
cycle. 
31. On the issue of opposition without substantive reasons, he said that any opposition document 
had to be accompanied by clear claims and fact ual evidence. China would consider the issue of 
"vicious opposition" during the future  revision of the trademark law.   
32. With regard to the treatment of foreign and domestic applications for well-known trademarks, 
he said that there was no discrimination at all. 
33. The representative then turned to his delegation's answers concerning patents (Part 4) . With 
regard to the question on the future revision of the Patent Law, he said his delegation regarded this 
question as being outside the scope of the transitional review mechanism. 
34. Regarding the issue of linkage between pate nt approval and drug approval processes, he 
reported that the ongoing study by the State Food and Drug Administration was not yet completed. 
35. Regarding approval procedures for patent or t echnology transfer, he said that the main 
provisions relating to this issue were in the Re gulation on the Administration of Technology Import 
and Export.  According to that Regulation, patent ap plications for transfer that involved a restricted 
technology were prohibited from being transferred, while technology that fell within the free category 
only had to go through an export approval procedure.  This procedure was already quite simplified.  
36. Regarding the protection of test data fo r pharmaceutical products, Article 35 of the 
Implementation Regulations of the Pharmaceu tical Administration Law provided that the non-
disclosure test data or other data required for an application on distribution permission using new 
chemical components would be protected.  The Measures on Pharmaceutical Registration 
Administration provided further that, during the six years since the State Food and Drug Administration had approved a pharmaceutical pr oduct containing new chemical components, other 
applicants could not use the exclusive data and materials of the original applicant without the 
permission of the original applicant.  
37. On the question of additional protection for products that are subject to marketing 
authorization, he said that Article 42 of China's Patent Law concerning the time-period for patent 
protection was already consistent with the TRI PS Agreement and China had no plans to grant any 
additional protection at present.   
38. He clarified that "business talks" at exhibitions  about products that exploit a design for which 
a patent right had been granted did not constitute a "sale" under Article 11 of China's Patent Law.  
39. The representative then turned to his delegation's answers concerning enforcement (Part 5) .  
With regard to the procedures for the destruc tion of goods and materials used in producing 
counterfeit, pirated and other infringing goods, he said that according to Article 53 of the 
Trademark Law the objects to be detained or confi scated were the infringing products and instruments 
specially used for the manufacturing of infringing products and did not include  products and materials 
not involved in infringing activities.  All infringi ng goods that had been confiscated were being 
destroyed and not put up for auction.  In 2005, the AICs had seized and destroyed more than 18,400 pieces of infringing goods, amounting to 7000 metric tonnes. 
40. Regarding the procedures for obtaining a preliminary injunction, especially procedures to 
"establish" a case before the request for a preliminar y injunction was considered , he said that the right 
holders or interested parties who required the c ourt to place the case on the docket had to submit a  IP/C/43 
 Page 7 
 
 
  written application to the court that had jurisdiction ov er the case.  The court then had to decide within 
48 hours whether the application met the relevant  requirements, in which case its execution would 
begin immediately.  The court had to inform th e person against whom the application was made 
within five days.  Parties not satisfied with the c ourt's verdict could apply for review within ten days 
of issuance, but execution or implementation would not be stopped during such a review.  Regarding 
statistical data on preliminary injunction request s and evidence preservation order requests, and the 
rate of their grant of denial, he said that si nce the inception of the three major laws until 
October 2005, local courts across the country had accepted 301 preliminary injunction cases and had 
closed 299, of which 177 had been sustained and 24 had been withdrawn.  
41. Concerning the results of the 50 new IPR Serv ice Centres established as part of the 2006 IPR 
Action Plan, he said that, by September 2006, the 50 centres had accepted about 15,600 reports, 
complaints and enquiries, among which had been 198 reports;  15,000 enquiries, and 307 complaints.  
Many of the 500 cases reported had gone through to judicial procedures, but no specific data was 
available on how many had trigge red criminal proceedings.   
42. He said that the combat against text book pira cy on university campuses was already part of 
the 100-day anti-piracy activity.  
43. Regarding the question of which other localities,  apart from Beijing, had initiated "trademark 
authorization systems", he said that to his knowle dge these were in Zhejiang Province and in some 
parts of Guangdong Province.   
44. Regarding the question of legalization of power s of attorneys and documentary evidence, his 
delegation believed that the current procedures we re normal procedures to ensure the legality of 
important documents. 
45. He said that the question regarding the differe nce in criminal prosecution between individual 
and unit crime had already been answered dur ing the April trade policy review process. 
46. With regard to criminal thresholds for the prosecution of manufacturi ng and/or supply of 
dangerous counterfeit goods, he said that China ha d no plans to abolish the criminal threshold. 
47. On the question of the participation by right holders in enforcement, he said that under 
Chinese laws, right holders were granted the right to complain to the IPR administrative agencies, 
provide evidence, participate in hearings, and request administrative review proceedings. They 
therefore enjoyed a high level of participation in IPR enforcement activities.  
48. He said that statistics concerning administ rative penalties in 2005 were contained in the 
document provided pursuant to Annex 1A. 
49. Regarding the proportion of IPR infringement case s in the criminal cases, in respect of the 
crime of production, sale of counterfeit and inferi or products and illegal business operations, he said 
that this data could not be singled ou t under the current statistical method. 
50. Regarding data on trademark infringements in al coholic beverages, he said that no separate 
statistics for alcoholic beverage trademark infringement were available. 
51. With respect to the understanding that, in Chin a, criminal penalties were not imposed on an 
infringement by "similar" trademarks, he said th at this understanding was incorrect and referred 
Members to Article 8 of the Interpretation of th e Supreme People’s Court and the Supreme People’s 
Procuratorate Concerning Some Issues on the Speci fic Application of Law for Handling Criminal 
Cases of Infringement upon Intellectual Property Rights.  IP/C/43 
Page 8  
 
  52. He confirmed that administrative as well as cr iminal penalties were imposed on services mark 
infringement and said that the same law applie d to goods trademarks and services marks.  
53. He confirmed that, in trademark infringement, heavier administrative penalties were imposed 
on repeat offenders. 
54. With respect to the development of clearer or up-to-date judicial interpretations regarding the 
calculation of illegal business operation and unit crim e, stated in the "2006 Action Plan for the 
Protection of IPR", he said that this was subject to fu rther study in light of results of the application of 
relevant judicial interpretations.   
55. With regard to whether China was planning to reduce the burden of right holders in customs 
actions against alleged infringement, he said that the implementation measures of the Regulations of 
the General Customs Administration on Customs Protec tion of IPRs had already helped alleviate this 
burden in that they obliged all customs offices to conclude an investigati on within 30 working days 
from the date of detaining the goods.  This shor tened case-handling time at the customs offices and 
consequently reduced storage time and costs.  Furthe rmore, right holders did not bear storage costs of 
confiscated goods beyond three months from the date  of confiscation.  Regarding data on the number 
of customs seizures, he said that the number of c ases investigated and dealt with by customs was 700 
in 2003, 1,000 in 2004, and 1,100 in 2005.  This data was not broken down by country.    
56. With respect to measures to enhance the protectio n of IPRs at the local level, he said that 
some provinces had promulgated local administrative regulations to strengthen IPR protection, encourage innovation and counter IPR infringement  activities.  A regional cooperative mechanism 
had been established amongst some provinces and citi es, for example the inter-provincial agreement 
for administrative protection of patents among six provinces and cities, including Beijing, Shanghai and Guangzhou.   The Action Programme for IPR Protection 2006-2007 by the State Council 
specifically required local governments of all levels to include IPR protection as an important agenda 
in their work and to incorporate it in thei r respective overall socio-economic development 
programmes.  The Action Programme also included a training programme for local officials and 
managerial personnel at the enterprise level.  
57. The representative then turned to his delegation's answers concerning other issues (Part 6) .  
Regarding the issue of the protection of trade name s in the revision of the "Law to Counter Unfair 
Competition", he said that the relevant authorities in China were looking into the issue of conflict 
between trade names and trademarks.  As the la w was still in the process of being revised, his 
delegation was not in a position to prejudge the results.   
58. Concerning the licensing regulations contained in the Regulations on the Administration of 
Import and Export Technology, he said that the pr ovision "where the exploitation of a technology 
given by a transferee in accordan ce with the terms of the contract infringes upon the legitimate right 
and interests of others, the transferor shall be he ld liable" was compulsory, not discretional.  China 
had no plans to revise the provision on liability of third parties' infringement.   
59. The representative of Japan
 thanked China for its comprehensive responses.  He said that 
question 26 of his delegation's document, regard ing the statement by Prime Minister Wen on the 
lowering of prosecution thresholds, had not been dir ectly addressed and he requested China to address 
this question.  His delegation had continuously raised  the issue of "further improvement of criminal 
enforcement" at the TRMs from 2002 to 2005.  He  appreciated that the Chinese Government had 
recognized the importance of IPR protection and had made considerable efforts to improve 
enforcement including, for example, the new j udicial interpretation in December 2004 and "The 
China Action Plan on the Protection of Intellectual Property Rights" which stated that "clearer or  IP/C/43 
 Page 9 
 
 
  more advanced interpretations will be presented on the problem recognized through treatment of 
concrete cases" based on an assessment of the situa tion after the new interpretation had been enacted. 
60. Despite these efforts, however, a survey cond ucted by the Japanese Government in 2006 had 
illustrated Japanese industry's concerns that the actual administrative sanctions applied to IPR 
infringement in China were still insufficient and that enforcement by Chinese governmental 
authorities was not satisfactory.  About 30% of Japanese companies that ha d used the remedial 
procedures in China had continued to suffer repeated  infringement.  Therefore, his delegation had to 
conclude that IPR enforcement in China was in sufficient to deter further infringements, which 
continued to cause serious damage to the Japanese i ndustry.  He emphasized that it was important to 
improve the deterrent effect by strengthening admi nistrative punishment and criminal prosecution, 
and improving sanctions against repeat offenders.  Japan was looking forward to China enhancing IPR 
protection and taking further steps to provide effec tive enforcement against any act of infringement of 
IPRs, including through the lowering of the criminal thresholds for prosecuting IPR-related offences. 
61. The representative of the United States  said that his delegation appreciated China's efforts to 
improve its IPR enforcement and protection environm ent, and had welcomed that China's leadership 
at the highest levels, including President Hu, Prem ier Wen, and Vice Premier Wu Yi, had continued 
to publicly recognize the importance of IPR protect ion and enforcement over the past year.  China 
also deserved credit for a number of concrete, pos itive developments:  China had conducted several 
special enforcement campaigns, such as the "Mountain Eagle" campaign.  It had issued a 2006 Action 
Plan on IPR Protection, which among other things ca lled for "special crackdown efforts" with respect 
to various IPR infringement problems.  It had adopted revised rules governing transfer of 
administrative and customs cases to criminal author ities. Although these rules were not a complete 
solution and did not address the problem of thres holds, they were nonetheless a welcome step.  
Authorities in a few parts of China, notably Shangha i, appeared to show greater willingness to take 
ex officio  enforcement action on behalf of US right holder s.  And, notably, authorities in some parts 
of China had started to take enforcem ent actions against Internet piracy. 
62. Unfortunately, however, the IPR situation in Ch ina remained critical.  Infringement levels 
remained unacceptably high and continued to aff ect products, brands and technologies from a wide 
range of industries, including films, music and sound recordings, pu blishing, business and 
entertainment software, pharmaceuticals, chemical s, information technology, apparel, athletic 
footwear, textile fabrics and floor coverings, cons umer goods, electrical equipment, automotive parts 
and industrial products, among many others.  China' s share of infringing go ods seized at the US 
border in 2005 had been more than ten times greate r than that of any other US trading partner. 
63. He said that the key problems were well known and had been repeated many times in this 
forum:  China suffered from chronic over-relianc e on toothless administrative enforcement and 
underutilization of criminal remedies. Its ow n 2004 data showed that it channelled more 
than 99 per cent of copyright and trademark cases in to its administrative systems, rather than its 
criminal system.  China's high thresholds for criminal liability, i.e. the minimum values or volumes 
required to initiate criminal prosecu tion, continued to be a major reas on for the lack of an effective 
criminal deterrent.  Right holders had pointed to a number of other deficiencies that highlighted the 
need for reform of criminal IPR laws. For inst ance, Article 217 of the Criminal Law provided for 
prosecution of the unauthorized "reproducing and dist ributing" of certain copyrighted works. Thus, it 
appeared that unauthorized reproduction was subj ect to prosecution only when accompanied by 
unauthorized distribution, and vice versa.  Enforcemen t efforts, particularly at the local level, were 
hampered by poor coordination, local protectionism  and corruption, high thresholds for initiating 
investigations and prosecuting criminal cases, lack  of training, and inadequate and non-transparent 
processes.  In the copyright area,  trade in pirated optical discs continued to thrive, and China 
continued to maintain market access restrictions th at artificially limited the availability of foreign 
content and thus led consumers to the black market. IP/C/43 
Page 10  
 
  64. His delegation also remained concerned about various aspects of China's 2004 customs 
regulations and implementing rules.  One exampl e was that these rules established a hierarchy of 
requirements for the disposal of infringing goods that had been confiscated by Chinese customs authorities, following the removal of their infringing features.  This hierarchy required such goods to re-enter channels of commerce unless the right owner paid for these goods. 
65. He said that many Members, including the US , had worked hard to address these concerns 
through a constructive bilateral dialogue with Chin a, which had often yielded positive results. One 
example was the bilateral discussions on the issue of  software infringement in 2006 that had led to 
China's decision to require computers to be pre-inst alled with licensed operating system software.  His 
delegation believed such bilateral di scussions to be indispensable to a healthy trade relationship, and 
intended to continue these on a wide range of IPR issues.  At the same time, the multilateral WTO 
forum and its tools, such as the TRM and the tran sparency provisions under Article 63.3 of the 
TRIPS Agreement, were equally indispensable to  a healthy international trade environment.  
66. Unfortunately, China had shown a disappointing relu ctance to use these tool s to clarify issues 
and explore possible solutions.  While the United St ates appreciated China's responses today, it also 
noted that once again this year, as in the past, not  all questions had been fully answered.  These 
unanswered questions fell in three categories:  Th e questions to which no answers had been provided 
at all included question 5, paragraphs (b), (c ) and (d);  question 19, paragraphs (b) and 
(c);  question 22 paragraph (b);  question 23;  and question 28.  Ques tions that China had regarded as 
lying outside the scope of this Council included ques tions 24, 25 and 26 concerning the Patent Law.  
It was his delegation's view that, as this review was a transparency exercise, taking a broad rather than 
a narrow perspective would help to avoid the use of other mechanisms to resolve disputes in the 
future.  The third category of unanswered questions in cluded questions 2, 4, 11, 15, 16, 17 and 27, and 
concerned various requests for data, which China ha d said were not yet available.  His delegation 
would appreciate receiving that data once they were available. 
67. He noted China's response that no new or revised  judicial interpretations were contemplated 
regarding the possibility of lowering thresholds fo r criminal liability.  The United States and other 
Members had repeatedly raised serious concerns  about these thresholds in the past, and would 
continue to explore every possible avenue for resolv ing this issue.  He also expressed his delegation's 
disappointment that China had not provided substan tive responses to the ques tions posed a year ago 
by the United States and other Members under the pr ovisions of Article 63.3, and thereby had not 
seized the opportunity to enhance mutual understandi ng and work towards concrete solutions.  He 
said that the TRM process and transparency request s under Article 63.3 were valuable tools, as they 
could help Members solve particular problems wit hout resorting to other mechanisms, such as the 
WTO dispute settlement process, and he urged China to  take fuller advantage of such opportunities in 
the future. 
68. The problem of IPR infringement in China w as multifaceted and complex and required broad 
engagement and cooperation.  Addressing these c oncerns might require bilateral discussions, 
multilateral tools like today's TRM, or the use of other avenues, and his de legation hoped to engage 
fully and constructively with China in all these efforts.  
69. The representative of the European Communities
 thanked China for its responses to the 
questions posed by the European Communities in doc ument IP/C/W/481.  As it was not clear whether 
China had addressed the issue of legalization of  powers of attorneys and documentary evidence 
referred to in paragraphs 13 a nd 14 of the EC communication, he said that his delegation would 
appreciate it if China could explain how it intended to solve this issue.  He also enquired whether the 
information on service centres, judicial decisions and spokesman system, provided on the numerous 
websites mentioned in China's presentation, was available in languages other than Chinese.    IP/C/43 
 Page 11 
 
 
  70. He said that, while his delegation noted with  satisfaction China's progress so far and the 
ongoing initiatives to tackle the remaining problems, his delegation remained concerned by the high 
level of counterfeiting and piracy and urged China to  actively pursue its efforts towards an effective 
IP enforcement system.  His delegation's continuing commitment to bilateral efforts to improve the 
situation was illustrated by the establishment of the joint IP Working Group under the EC-China 
Structured Dialogue on Intellectual Property, whic h would hold its third meeting in November 2006 
in Beijing.  He expressed his hope that this Di alogue, which had the purpose of solving IP problems 
that European companies were facing in China,  would lead to concrete and tangible results. 
71. The representative of Canada  thanked China for its responses to Members' questions and the 
documents it had provided, giving details of some  of the measures and legislation that had been 
implemented by China.  Canada and China were e ngaged in continuous bilateral exchanges of best 
practices and other experiences by their respective in tellectual property agencies and IP experts.  In 
the course of this exchange, Canada was welcoming a Chinese delegation from the Yunnan 
Intellectual Property Office in the same week a nd, as part of the Canada-China WTO Capacity 
Building Project, a study tour the following month of senior officials from the provincial offices of the 
Chinese Ministry of Commerce. 
72. Canada followed China's work on its legal frame work for the protection and enforcement of 
IPRs with great interest and, while recognizing progr ess in relation to trademark protection in the last 
couple years, remained concerned by some of the key issues with respect to  enforcement.  These 
concerns were confirmed in a recent survey of  Canadian businesses, industry groups, right holders 
and other interested stakeholders, which had been conducted in order to identify the countries where 
stakeholders were encountering problems with enforcement and how these problems were affecting 
them commercially.  Almost two thirds of the subm issions had raised concer ns with China, covering 
equally the infringement of patents, trademarks, copyr ight, and industrial designs in products ranging 
from building materials, circuit breakers, electrical devices and electronics to batteries, toys, apparel, 
luxury goods, Inuit themed gift items, and works of art.  Disconcertingly, almost all of the 
submissions that had raised concerns with Chin a noted that they had not initiated enforcement 
procedures in China, citing a variety of reasons including the difficulty of pursuing remedies, the 
unlikelihood of a satisfactory result, extensive bur eaucracy, the absence of effective sanctions, high 
costs with slim chances of success, and difficulti es in gaining support and action from the Chinese 
authorities.  In addition, increasing concerns about co pyright enforcement in China had been raised by 
a number of Canadian groups, including recording artis ts, film companies and video game developers.   
73. In this respect, Canada was particularly inter ested in the indications by China's Premier that 
China would improve mechanisms for IPR protecti on and strengthen law enforcement, and shared 
other Members' concerns regarding the thresholds for criminal prosecution that had been established 
by China's Supreme People's Court in 2004.  Canada was further interested to hear that one of the 
activities of the State Working Group on IPR Protection established in August 2004 was to conduct 
public awareness and education campaigns.  Canada w ould be interested in any further examples of 
recent IP public awareness campaigns that China coul d provide.  Canada also shared the interest of 
other Members who had raised detailed questions , and was looking forward to continuing this 
dialogue. 
74. The representative of Switzerland  thanked China for its responses and efforts in the context of 
the TRM.  He said that Switzerland shared the c oncerns of other delegations that deficiencies 
remained in the field of intellectual property and pa rticularly with regard to civil, administrative and 
criminal enforcement.  His delegation was committed to continuing and intens ifying the dialogue with 
China, not only in this multilateral forum where his delegation had last year submitted requests to 
China under Article 63.3, but also bilaterally, and hoped for a positive response from China in this 
regard.    IP/C/43 
Page 12  
 
  75. In responding to Members' comments, the representative of China
 said that some of the 
unanswered questions would require detailed studies and breakdowns of data.  He confirmed that the 
websites mentioned in his presentation were also ava ilable in English.  His delegation had taken note 
of the other issues mentioned and would study them further in its capital.  As Members had 
mentioned, the bilateral channel of communication was a very effective tool to deal with concerns not 
only of other Members but also China's concerns.  Regarding the Members who had raised the issue 
of transparency under Article 63.3, he said that China had already clearly expressed its position that it 
had no obligation to provide specific information under this provision.  However, China would 
discuss this issue with interested Members through bilateral channels. 
76. The Chairman  thanked China for all the information it had provided, as well as other 
Members for their contributions.  Turning to the Council's reporting obligation to the 
General Council, he suggested that the Council follow the same procedure as in the past years, namely 
that the Chairman, acting on his own responsibility, would again prepare a factual report.  The content 
of the cover page to the report would be similar to that of the report submitted by the Council in 2005 
and the part of the minutes reflecting the discussions  held under this agenda item would be attached. 
77. The Council took note  of the statements made and agreed  to proceed as suggested by the 
Chair. 
__________