H. Res. 576
In the House of Representatives, U.S.,
July 14, 2004.
Whereas in 2001, the People’s Republic of China agreed to
implement a set of sweeping reforms designed to protect
intellectual property rights;
Whereas since 2001, China initiated a series of measures and
a comprehensive review of its intellectual property rights
laws to bring itself in compliance with international
standards in patent, trademark, copyright, trade secret,
and other intellectual property laws;
Whereas central and local Chinese Government officials con-
tinue to work with their counterparts in the United
States to improve China’s intellectual property rights en-
forcement through regular bilateral discussions, round-
table meetings, and numerous technical assistance pro-
grams;
Whereas China has initiated campaigns to seize illegal and
pirated goods, closed or fined several assembly operations
for illegal production lines, seized millions of illegal
audio-visual products, and expanded training of law en-
forcement officials relating to intellectual property rights
protection;
Whereas although China has made significant improvements
to its framework of law, regulations, rules, and judicial
•HRES 576 EH
interpretations regarding intellectual property rights, its
intellectual property rights enforcement mechanisms still
face major obstacles, which have resulted in continued
widespread piracy and counterfeiting of film, recorded
music, published products, software products, pharma-
ceuticals, chemical products, information technology
products, consumer goods, electrical equipment, auto-
mobiles and automotive parts, industrial products, and
research results throughout China;
Whereas such widespread piracy and counterfeiting in China
harms not only the economic development of China but
also the economic and legal interests of United States
business enterprises that sell their products or services in
China, whether or not these United States business en-
terprises have invested in China or ever will invest in
China;
Whereas United States losses due to the piracy of copy-
righted materials in China is estimated to exceed
$1,800,000,000 annually and counterfeited products to
account for 15 to 20 percent of all products made in
China, approximately 8 percent of the country’s gross na-
tional product;
Whereas the market value of counterfeit goods in China is be-
tween $19,000,000,000 and $24,000,000,000 annually,
causing enormous losses for intellectual property rights
holders worldwide;
Whereas the export of pirated or counterfeit goods from
China to third country markets causes economic losses to
United States and other foreign producers of patented,
trademarked, and copyrighted products competing for
market share in those third country markets;
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Whereas current criminal laws and enforcement mechanisms
for intellectual property rights in China by administrative
authorities, criminal prosecutions, and civil actions for
monetary damages have not effectively addressed wide-
spread counterfeiting and piracy;
Whereas administrative authorities in China rarely forward
an administrative case relating to intellectual property
rights violations to the appropriate criminal justice au-
thorities for criminal investigation and prosecution;
Whereas China currently has high criminal liability thresh-
olds for infringements of intellectual property rights, with
an unreasonable proof-of-sale requirement totaling ap-
proximately $24,100 for business enterprises and $6,030
for individuals (according to current exchange rates) that
makes criminal prosecution against those enterprises or
individuals that violate intellectual property rights ex-
tremely difficult;
Whereas seizures and fines imposed by Chinese authorities
for intellectual property rights violations are perceived by
the violators to be a cost of doing business and such vio-
lators are usually able to resume their operations without
much difficulty;
Whereas China has the second largest number of Internet
users in the world, it still has not acceded to the 1996
World Intellectual Property Organization (WIPO) Inter-
net-related treaties that reflect international norms for
providing copyright protection over the Internet;
Whereas China’s market access barriers for United States
and other foreign cultural products such as movies,
music, and books stops or slows the legal entry of these
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legitimate products into China, in turn increasing the de-
mand for pirated products; and
Whereas United States Trade Representative, Ambassador
Zoellick, and Secretary of Commerce Evans co-chaired an
expanded Joint Commission on Commerce and Trade
Meeting during Chinese Vice Premier Wu Yi’s visit to the
United States in April 2004 that led to the Chinese Gov-
ernment’s commitment to an action plan to address the
piracy and counterfeiting of American ideas and innova-
tions: Now, therefore, be it
Resolved, That the House of Representatives—
(1) commends the Government of the People’s Re-
public of China for the steps it has taken to improve its
legal framework for intellectual property rights protec-
tion and for efforts to bring itself toward compliance
with international standards for intellectual property
rights;
(2) recognizes Chinese Government’s renewed com-
mitment through an action plan presented at the 2004
United States-China Joint Commission on Commerce
and Trade to significantly reduce intellectual property
rights infringement levels by increasing penalties for in-
tellectual property rights violations, cracking down on
violators, improving protection of electronic data, and
launching a national campaign to educate its citizens
about the importance of intellectual property rights pro-
tection;
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(3) further recognizes, despite the steps referred to
in paragraph (1) and paragraph (2), the continued exist-
ence of widespread intellectual property rights violations
in China;
(4) urges the Chinese Government to closely adhere
to its action plan referred to in paragraph (2) in under-
taking a coordinated nationwide intellectual property
rights enforcement campaign, and to further eliminate
the high criminal liability threshold and procedural ob-
stacles that impede the effective use of criminal prosecu-
tion in addressing intellectual property rights violations,
to increase the criminal penalties provided for in its laws
and regulations, and to vigorously pursue counterfeiting
and piracy cases;
(5) encourages the Chinese Government to fully and
comprehensively implement a legal framework and effec-
tive enforcement mechanisms that would protect not only
intellectual property rights held by United States and
foreign business enterprises with or without investments
in China, but also Chinese intellectual property rights
holders, which is crucial to China’s own economic devel-
opment and technological advancement;
(6) urges the Chinese Government to give greater
market access to the foreign producers of legitimate
products such as films and other audio-visual products
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in order to reduce demand for and prevalence of pirated
and counterfeit goods in their absence; and
(7) will continue to monitor closely China’s commit-
ment and adherence to its action plan on intellectual
property protection presented during the 2004 United
States-China Joint Commission on Commerce and
Trade, and work with the Administration to further en-
courage China’s efforts to bring its framework of laws,
regulations, and implementing rules into compliance with
international law and to create and maintain effective in-
tellectual property rights enforcement mechanisms capa-
ble of deterring counterfeiting and piracy activities.
Attest:
Clerk.