CHINA - MEASURES AFFECTING THE PROTECTION AND ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS
Document: Request for the Establishment of a Panel by the United States
Date: 21 August 2007
Document codes: WT/DS362/7
Complainant: U.S.
Respondent: China
Third parties: Argentina, Australia, Brazil, Canada, EU, India, Japan, South Korea, Mexico, Taiwan, Thailand, Turkey
Dispute stage: Panel
Agreements cited: Art. 61, 41.1, 46, 59, 9.1, 14, 3.1  Intellectual Property (TRIPS)

CHINA - MEASURES AFFECTING THE PROTECTION AND ENFORCEMENT
OF INTELLECTUAL PROPERTY RIGHTS

Request for the Establishment of a Panel by the United States

 The following communication, dated 13 August 2007, from the delegation of the
United States to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of
the DSU.

 On 10 April 2007, the United States requested consultations with the Government of the
People's Republic of China pursuant to Articles 1 and 4 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes ("DSU") and Article 64 of the Agreement on Trade-
Related Aspects of Intellectual Property Rights ("TR IPS Agreement") (to the extent that Article 64
corresponds to Article XXII of the General Agreemen t on Tariffs and Trade 1994) with respect to
certain measures pertaining to the protection and enforcement of intellectual property rights in China.
1
The United States held consultations with China on 7-8 June 2007. Those consultations provided
some helpful clarifications but unfortunately did not resolve the dispute.
I. Thresholds for criminal procedures and penalties
 The United States considers that China has not provided for criminal procedures and penalties
to be applied in cases of willful trademark counterfeiting or copyright piracy on a commercial scale
that fail to meet certain thresholds. China h as established these thresholds through the following
measures:
(1) the Criminal Law of the People's Republic of China (adopted at the Second Session of the
Fifth National People's Congress on 1 July 1979 a nd revised at the Fifth Session of the Eighth
National People's Congress on 14 March 1997) ("Cr iminal Law"), in particular Articles 213,
214, 215, 217, 218, and 220;
(2) the Interpretation by the Supreme People's C ourt and the Supreme People's Procuratorate on
Several Issues of Concrete Application of Law in Handling Criminal Cases of Infringing
Intellectual Property (adopted at the 1331
st Session of the Judicial Committee of the Supreme
People's Court on 2 November 2004 and the 28 th Session of the Tenth Procuratorial
Committee of the Supreme People's Procurator ate on 11 November 2004 and to be effective
as of 22 December 2004) ("the December 2004 Judicial Interpretation"); and
(3) the Interpretation by the Supreme People's C ourt and the Supreme People's Procuratorate on
Several Issues of Concrete Application of Law in Handling Criminal Cases of Infringing

1 WT/DS362/1.

Intellectual Property (II) (adopted on 4 April 2007, at the 1422
nd Session of the Judicial
Committee of the Supreme People's Court and the 75 th Session of the Tenth Procuratorial
Committee of the Supreme People's Procuratorate, and to be effective on 5 April 2007) ("the
April 2007 Judicial Interpretation");
as well as any amendments, related measures,
2 or implementing measures.

Articles 213, 214, and 215 of the Criminal Law describe certain acts of trademark
counterfeiting that may be subject to criminal pr ocedures and penalties. However, under Article 213,
criminal procedures and penalties are available only "if the circumstances are serious" or "if the
circumstances are especi ally serious." Under Article 214, criminal procedures and penalties are
available only "if the amount of sales [of commoditi es bearing counterfeit registered trademarks] is
relatively large" or "if the amount of sales is huge ." Under Article 215, criminal procedures and
penalties are available only "if the circumstances ar e serious" or "if the circumstances are especially
serious."

Articles 217 and 218 of the Criminal Law describe certain acts of copyright piracy that may
be subject to criminal procedures and penalties. However, under Article 217, criminal procedures and
penalties are available only "if the amount of illegal ga ins is relatively large, or if there are other
serious circumstances" or "if the amount of illegal gains is huge or if there are other especially serious
circumstances." Under Article 218, criminal pr ocedures and penalties are available only "if the
amount of illegal gains is huge."

Article 220 of the Criminal Law provides for the availability of procedures and penalties
when the crimes described in Articles 213 through 219 are committed by a "unit," as opposed to by
natural persons.

The Criminal Law does not contain definitions for the thresholds "serious," "especially
serious," "relatively large," and "huge" as used in the above-referenced articles. However, the
December 2004 Judicial Interpretation and the Ap ril 2007 Judicial Interpretation do contain such
definitions, which use thresholds that are stated as minimum "illegal business volumes" (stated in
terms of minimum values of products produced, stor ed, transported or sold), minimum "illegal gains",
or minimum numbers of "illegal copies".

Acts of trademark counterfeiting and copyright piracy that fail to meet the statutory and
judicial interpretation thresholds described above thus are not subject to Articles 213, 214, 215, 217,
218, and 220 of the Criminal Law.

Consequently, it appears that, as a result of the thresholds described above, there are cases of
willful trademark counterfeiting and copyright pir acy on a commercial scale in which China has not
provided for criminal procedures and penalties to be a pplied. It also appears that, as a result of the
thresholds described above, there are cases of willf ul trademark counterfeiting and copyright piracy
on a commercial scale for which the remedies of im prisonment and/or monetary fine sufficient to
provide a deterrent are not available in China. Furthermore, it appears that, as a result of the
thresholds described above, China fa ils to ensure that enforcement pr ocedures as specified in Part III
of the TRIPS Agreement are available under its law so as to permit effective action against any act of
willful trademark counterfeiting or copyright piracy on a commercial scale.

2 Such other related measures include the Explanation on Certain Questions Related to the Concrete
Application of Law in Hearing Cases of Crimes of Illegal Publication, Fa Se (1998) No. 30 (adopted by the
Adjudication Committee of the Supreme People's Court at its 1032nd meeting on 11 December 1998, effective as
of 23 December 1998) and the Prosecu tion Guidelines for Criminal Case s Jointly Issued by the Supreme
People's Procuratorate and the Ministry of Public Safety (18 April 2001).

China's measures thus appear to be inconsiste nt with China's obligations under Articles 61
and 41.1 of the TRIPS Agreement.

II. Disposal of goods confiscated by Customs Authorities that infringe Intellectual Property
Rights
The United States considers that China's meas ures for disposing of confiscated goods that
infringe intellectual property rights appear to be inconsistent with Chin a's obligations under the
TRIPS Agreement. In this regard, the measures at issue are:

(1) the Regulations of the People's Republic of China for Customs Protection of Intellectual
Property Rights (adopted at the 30
th Ordinary Meeting of the State Council on
26 November 2003, published by the State Council on 2 December 2003, and effective from
1 March 2004) ("Customs IPR Regulations"), in particular Chapter 4 thereof;

(2) the Implementing Measures of Customs of the People's Republic of China for the Regulations
of the People's Republic of China on Custom s Protection of Intellectual Property Rights
(adopted at an Administration Affairs Meeting of the General Administration of Customs on
22 April 2004, issued by the General Administration of Customs with Order No. 114 on
25 May 2004, and effective from 1 July 2004) ("Customs IPR Implementing Measures"), in
particular Chapter 5 thereof; and

(3) General Administration of Customs Announcement No. 16 (2 April 2007);

as well as any amendments, related measures,
3 or implementing measures.

Article 27 of the Customs IPR Regulations a nd Article 30 of the Customs IPR Implementing
Measures set forth a hierarchy of requirements for the disposal of goods that infringe intellectual
property rights and that are confiscated by Chinese customs authorities. Under that hierarchy, the
Chinese customs authorities are required to give prior ity to disposal options that allow such goods to
enter the channels of commerc e (for instance, through auctioning the goods after removing their
infringing features). Only if the infringing features cannot be removed must the goods be destroyed.

The release of infringing goods into the channe ls of commerce under the circumstances set
forth in the measures at issue appears not to constit ute destruction or disposal of infringing goods in
accordance with the principles set out in Article 46 of the TRIPS Agreement. Consequently, the
requirement in the measures at issue that Chinese customs authorities release infringing goods into the
channels of commerce under the circumstances set forth in those measures appears to mean that
Chinese customs authorities lack the authority to or der destruction or disposal of infringing goods in
accordance with the principles set out in Article 46 of the TRIPS Agreement. The measures at issue
therefore appear to be inconsistent with China's obligations under Article 59 of the TRIPS Agreement.

III. Denial of copyright and related rights protection and enforcement to works that have
not been authorized for publication or distribution within China
The United States considers that China appears to be acting inconsistently with its obligations
under the TRIPS Agreement by denying the protection of its Copyright Law to creative works of
authorship (and, to the extent Article 4 of the Copyright Law applies to them, sound recordings and

3 Such other related measures include the Law of the People's Republic of China on Administrative
Penalty (adopted at the Fourth Session of the Eighth National People's Congress on 17 March 1996,
promulgated by Order No. 63 of the President of the People's Republic of China on 17 March 1996, and
effective as of 1 October 1996) and in particular Article 53 thereof.

performances) that have not been authorized for, or are otherwise prohibited from, publication or
distribution within China. In this regard, the measures at issue are:

(1) the Copyright Law,
4 in particular Article 4;

(2) the Criminal Law; the Regulations on the Administration of Publishing Industry; the
Regulations on the Administration of Broadcasti ng; the Regulations on the Administration of
Audiovisual Products; the Regulations on the Ad ministration of Films; and the Regulations
on the Administration of Telecommunication;5

(3) the Regulations on Administration of the Films Industry6;

(4) the Administrative Regulations on Audiovisual Products
7;

(5) the Administrative Regulation on Publishing
8;

(6) the Administrative Regulations on Electronic Publications9;

(7) the Measures for the Administration of Import of Audio and Video Products
10;

(8) the Procedures for Examination and Approval for Publishing Finished Electronic Publication
Items Licensed by a Foreign Copyright Owner
11;

(9) the Procedures for Examination and Approva l of Importation of Finished Electronic
Publication Items by Electronic Publication Importation Entities
12;

(10) the Procedures for Recording of Imported Publications13;

4 Adopted at the 15th Session of the Standing Committee of the Seventh National People's Congress on
7 September 1990, and amended according to the Decision on the Revision of the Copyright Law of the People's
Republic of China, adopted at the 24th Session of the Standing Committee of the Ninth National People's
Congress on 27 October 2001. See Main Dedicated Intellectual Property Laws and Regulations Notified under
Article 63.2 of the Agreement: China, IP/N/1/CHN/C/1, circulated 8 July 2002.
5 As noted by China in reply to a question in Review of Legislation: China, IP/Q/CHN/1, circulated 10
December 2002, section V.A.3.
6 State Council Order No. 342, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
7 State Council Order No. 341, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
8 State Council Order No. 343, adopted at the 50th executive meeting of the State Council on
12 December 2001, promulgated on 25 December 2001.
9 Order No. 11 of the General Administration of Press and Publication (30 December 1997).
10 Decree No. 23 of the Ministry of Culture and the General Administration of Customs
(17 April 2002).
11 General Administration of Press and Publication (27 December 2005) (Basis of Establishment:
Decision on Establishing Administrative Licensing for Items Necessary to be Maintained for Administrative
Examination and Approval by the State Council [State Council Order No. 412]).
12 General Administration of Press and Publication (27 December 2005) (Basis of Establishment:
Decision on Establishing Administrative Licensing for Items Necessary to be Maintained for Administrative
Examination and Approval by the State Council [State Council Order No. 412]).
13 General Administration of Press and Publication (27 December 2005) (Basis of Establishment:
Article 45 of the Administration Regulations on Publication [State Council Order No. 343]).

(11) the Interim Regulations on Internet Culture Administration14; and

(12) the Several Opinions on the Development and Regulation of Network Music
15;

as well as any amendments, related measures, or implementing measures.

Article 5(1) of the Berne Convention for the Protection of Literary and Artistic Works (1971)
(the "Berne Convention") provides that foreign aut hors of protected works shall enjoy all the rights
granted to domestic authors, as well as all the rights specially granted by the Berne Convention.
16
Moreover, these rights may not be made subject to any formality (Berne Convention Article 5(2)).
Article 9.1 of the TRIPS Agreement requires all WTO Members, inter alia, to comply with Articles 1
through 21 of the Berne Convention.17

China's Copyright Law provides the legal basis for copyright protection within China of the
works of Chinese and foreign authors, and it provides an array of rights to such authors (e.g ., rights of
reproduction, translation, and adaptation). In add ition, the Copyright Law provides specific statutory
protections to performers, producers of sound record ings, and broadcasting or ganizations. However,
the first sentence of Article 4 of the Copyright Law provides as follows: "Works the publication or
distribution of which is prohibited by law shall not be protected by this Law." Therefore, authors of
works whose publication or distribution in China is prohibited (such as those works whose publication
or distribution has not been authorized in China 18) appear not to enjoy the protection specially granted
by the Berne Convention in respect of those works (and, it appears, may never enjoy such protection
if the work is not authorized, or is not authorized for distribution or publication in the form as
submitted for review). By causing this denial of co pyright protection, Article 4 of the Copyright Law
appears to be inconsistent with China's obligations under Article 9.1 of the TRIPS Agreement. In
addition, the copyright rights of authors of work s whose publication or distribution is required to
undergo pre-publication or pre-distribution review appear to be subject to the formality of successful
conclusion of such review. By subjecting copyrigh t protection to this formality, Article 4 of the
Copyright Law appears to be inconsistent with China's obligations under Article 9.1 of the TRIPS
Agreement.

In addition, Article 14 of the TRIPS Agre ement requires China to give performers, inter alia,
the possibility of preventing certain acts, and to give producers of phonograms (sound recordings) the
right to authorize or prohibit the direct or indirect reproduction of their sound recordings (collectively,
the "related rights"). To the extent that Article 4 of the Copyright Law also denies protection of
related rights with respect to performances (or their fixations) or sound recordings, the publication or
distribution of which has not been authorized or is otherwise prohibited in China, Article 4 of the
Copyright Law appears to be inconsistent with China's obligations under Article 14 of the TRIPS
Agreement.

Furthermore, it appears that the measures at issue establish different pre-distribution and
pre-authorization review processes for Chinese nationa ls' works, performances (or their fixations) and

14 Promulgated in Order No. 27 of the Ministry of Culture (10 May 2003), amended by Order No. 32 of
the Ministry of Culture (1 July 2004).
15 Ministry of Culture (20 November 2006).
16 The rights specially granted by the Berne Convention include, inter alia, the right of reproduction
(Berne Convention Article 9(1)), the right of adaptation (Berne Convention Article 12), and the right of
translation (Berne Convention Article 8).
17 However, WTO Members do not have rights or obligations under the TRIPS Agreement in respect of
the rights conferred under Article 6bis of the Berne Convention or of the rights derived therefrom.
18 See, e.g., the Regulations on Administration of the Films Industry, articles 24 and 42, and the
Administrative Regulations on Electronic Publications, articles 58-59 and 72.

sound recordings than for foreign nationals' wo rks, performances (or their fixations) and sound
recordings.
19 These different processes, taken together with Article 4 of the Copyright Law, appear to
result in earlier and otherwise more favorable pr otection and enforcement of copyright rights for
Chinese authors' works than for foreign authors' works. Further, to the extent Article 4 applies with
respect to related rights, these different processes, ta ken together with Article 4 of the Copyright Law,
appear to result in earlier and otherwise more favor able protection and enforcement of related rights
for Chinese performers' performan ces (or their fixations) and Chinese producers' sound recordings
than for foreign performers' performances (or their fixations) and foreign producers' sound recordings.
The measures at issue therefore appear to be incons istent with China's obligations under Article 3.1 of
the TRIPS Agreement, which provides that, subjec t to certain exceptions and qualifications, each
Member shall accord to the nationals of other Members treatment no less favorable than that it
accords to its own nationals with regard to the pr otection of intellectual property. Additionally,
because Article 4 of the Copyright Law, in conjunction with the nationality-dependent
pre-authorization and pre-distribu tion review processes established by the other measures at issue,
causes foreign authors of works whose publication or distribution has not been authorized or is
otherwise prohibited not to enjoy the rights grante d to Chinese authors, the measures at issue appear
to be inconsistent with China's obligations under Ar ticle 9.1 of the TRIPS Agreement (with respect at
least to China's obligations under that article of the TRIPS Agreement to comply with Articles 5(1)
and 5(2) of the Berne Convention).

In addition, Article 4 of China's Copyright La w, both independently and in conjunction with
the other measures at issue, appears to make it impo ssible to enforce copyrights (and, to the extent
covered by Article 4, related rights) with respect to works, performances or sound recordings whose
publication or distribution in China has not been aut horized or is otherwise prohibited. It therefore
appears that, as a result of the measures at issue, Ch ina fails to ensure that enforcement procedures as
specified in Part III of the TRIPS Agreement are available under its law so as to permit effective
action against infringements (including expediti ous remedies to prevent infringement) of those
copyrights and related rights in such circumstanc es, and that China does not provide for criminal
procedures and penalties to be applied in certain cases of copyright piracy. The measures at issue thus
appear to be inconsistent with China's ob ligations under Articles 41.1 and 61 of the TRIPS
Agreement.

Accordingly, the United States respectfully request s, pursuant to Article 6 of the DSU, that
the Dispute Settlement Body establish a panel to ex amine these matters, with the standard terms of
reference as set out in Article 7.1 of the DSU.

Administrative Regulations on Electronic Publications, articles 28, 33, and 58-59.