WORLD TRADE
ORGANIZATIONIP/C/W/374/Add.5
6 November 2003
(03-5903)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
REVIEW OF LEGISLATION
Responses from China to questions posed by Japan
Addendum
By means of a communication from the Permanent Mission of the People's Republic of
China, dated 20 October 2003, the Secretariat has received the following responses to follow-up
questions posed by Japan in document IP/C/W/362/Add.4.
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JAPAN
A. COPYRIGHT
Ad response to question 3:
Concerning Article 39.3 of the Copyright Law, please explain with concrete examples
how copyright holders should express their intent ion (like "notice on CD jacket"), in case they
do not want to permit any exploitation of their works.
Article 31 of the amended Regulation for the Implementation of the Copyright Law of China
provides "where a copyright owner declares in accordance with the third paragraph of Article 39 ofthe Copyright Law that no making of sound recordings of his work is permitted, he shall make such a
declaration when his work is legally recorded".  According to this article, if copyright owners of
musical works do not want to permit any exploitation of their works under the statutory licence
provisions for making sound recordings, they should announce at the first completion of the
recording.  The Copyright Law does not limit how to announce, "notice on CD jacket" is only one of
announcing forms.  The protection standard of the article mentioned above theoretically is higher than
the minimum protection standard required by the Article 13 of Berne Convention.
Ad response to question 4:
The answer clearly states that the State Council will issue Regulations on the royalty
criteria.  Please specify when it will certainly be made public, and also, please describe the
detailed system in terms of royalty distributi on from broadcasting organizations to individual
right holders.  How royalty goes from broadcasting organizations to individual right holders?
Is there any intermediary institution involved between  them?  If it is the case, please provide us
with a detailed description of such institution.IP/C/W/374/Add.5
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The Legal Office of the State Council has listed Regulations on Royalty Criteria for
Broadcasting and Television Organizations in its 2003 plan for legislation.
Ad response to question 5 :
More than one year has already passed since China became a Member of the WTO.
Even though there is a clear commitment by the Chinese Government, there seems to be little
progress on the issue of "criminal procedures threshold".  Please let us know what relevant
authorities (the Supreme People's Procurement and the Ministry of Public Security) have done
in this past year with respect to this issue.  Also please provide the specific date by which the
Chinese Government can execute its commitment.
China has carried out its commitment in this regard by sending a recommendation from the
former Ministry of Foreign Trade and Economic Cooperation to the relevant authorities.  The latter,
including the Supreme People's Court, the Supreme People's Procurement and the Ministry of PublicSecurity are working on this issue, but there's no timetable available for when the work will be
finished.
B. P
ATENT
Ad response to question 9:
The average time needed for examination of patent applications filed by Japanese
nationals is currently 36.8 months and is being shortened. Japan also understands from
discussions between the Japan Patent Office and SIPO (State Intellectual Property Office) that
the total average time needed for examination of patent applications (filed by all applicants) is
46 months.  Please advise if there have been recent changes to these time periods.  Please
provide the average time needed for examination of patent applications filed by Chinese
nationals, if available.
We do not have new statistics on average time needed for examination.  The average term of
46 months is also true for Chinese nationals.
The average time needed for examination of patent applications filed by Japanese
nationals is currently 36.8 months and is being sh ortened.  Even if the average time period is
36.8 months, does China agree that any time period that far exceeds 36.8 months might not be
considered  "a reasonable period of ti me" under Article 62.2 of the TRIPS Agreement?
The term of 36.8 months and 46 months all refer to average time used and this means that
sometimes the time needed is shorter and sometimes longer.  Therefore, it is possible for a certain
case to exceed the average time of 36.8 months or 46 months.
C. ENFORCEMENT
Ad response to question 11:
Please confirm that the cost for confiscati on and disposal of patent infringing goods
concerning patent right for inventions, utility models and designs, undertaken by enforcement
agencies including the Customs, is also borne by the State government.
The administrative authorities for patent enforcement do not do confiscation so there is no
cost involved on the part thereof.  In case of the customs, there is no provision in China's Laws andIP/C/W/374/Add.5
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Regulations providing that government shall bear th e cost for confiscation and disposal of infringing
goods undertaken by the customs.  This modus operandi is consistent with the TRIPS Agreement.
Ad response to question 16:
In application of administrative procedure,  Chinese authority requires right holders to
establish not only the infringement but also the precise amount of damage caused by thatinfringement.  Unless right holders establish th ese two things, the Chinese authority does not
initiate the administrative procedure.  However, the object of "administrative procedure" is not
to recover the damage of right holders.  It is clear that mandating the establishment of precise
damage to right holders would impose unreasonable burden on the right holders, despite it can
be done through the investigation of relevant authority.  This situation might not be consistent
with Article 41 of TRIPS Agreement.  Please explain why the Chinese authority does not initiate
the administrative procedure ev en though there is a clear in fringement, until the right holders
establish the precise amount of damage.  Does the Chinese authority have any intention of
helping right holders to establish the amount of damage in order to facilitate the administrative
procedure?
There is no legal requirement that right holders must establish the precise amount of damage
caused by infringement for application of administrative procedure.  The Patent Law (Article 57), theTrademark Law (Article 53) does not require right holders to make a clear claim of their damage. As
to the Copyright Law, although there is requirement according to Article 47 that right holders must
provide evidence, including the amount of damage, the amount of damage shall be understood as the
damage that can be proved and the purpose of the requirement is to make sure that the infringement
alleged by the right holder really exists.
Ad response to question 17:
According to the Supreme People's Court's notification (17 December 1998) which is
mentioned in the answer, criminal penalty is applied to the individua l who earned more than
RMB 50,000 in infringement activities for commercial purpose and to the organized personswho earned more than RMB 200,000.  That is, criminal penalty would not apply to the
infringement on copyright whose illegal earnin gs is not quite high, even though it is in
commercial scale. For example, it can be understood that the organized persons who sold off
10,000 copies of pirated CDs (RMB 10/CD) earning RMB 100,000, is not liable for any criminal
penalty, if this notification is applied (pirated CDs are sold at around RMB 5-15 per copy in
some market place).  Such situation indicates that the Criminal Law and its interpretation
might hardly work as deterrent against copyright infringement at all.  Please explain why the
Chinese Government believes that such a situation is consistent with  Article 61 of the TRIPS
Agreement.
According to Article 13 of the Criminal Law, crime is an act that seriously endangers the
society and is in violation of and punishable according to Criminal Law.  An illegal act will be
deemed as crime and be imposed punishment according to Criminal Law only when that actendangers society to a certain extent.  The Criminal Law provides a standard taking into account of
both the nature and the extent of the harm caused by an act in deciding whether the act is a crime or
not and this standard is identical with the standard of "commercial scale" used in the TRIPS
Agreement.  The notification of the Supreme People's Court referred to in this question is for the
purpose of clarifying the relevant articles of the Criminal Law so as to provide a clear legal basis forimposing criminal penalty on piracy cases of commercial scale.
Comparing the standard for criminal penalty of piracy cases applied in countries such as
Japan, Germany and France with that applied in China, it is true that the former is lower and does notIP/C/W/374/Add.5
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have the requirement of "for purpose of making profit" or "the amount illegal earning is large or
existence of other severe circumstances".  However,  the highest criminal penalty for piracy in China
is a seven-year fixed term imprisonment, much h eavier than the three-year fixed term imprisonment
applied in the above mentioned countries.  Moreover, in addition to criminal penalty, China also has
civil and administrative penalties against piracy, and some of the non-criminal penalties are similar tothe minor crime penalties in other countries.  Therefore, China has a complete enforcement system for
copyright, which is fully in compliance with the requirement of the TRIPS Agreement.
Ad response to question 18:
Japan understands that the administrative procedure would be initiated after the right
holder's claim to an administrative organization.   Please explain why such a claim is necessary,
where the "injury of public interest" is the es sential reason which justifies administrative
punishment.  Moreover, in the case of infringement over the Internet, please explain whether ornot it is possible to apply effective administrative punishment on such infringement as the act of
"injuring public interest".
Such problems do not exist in case of patent infringement, because the administrative
authority does not impose administrative penalties. In case of trademark, the administrative
procedures are not necessarily initiated by the right holder's application, the administrative authoritycan act on its own initiative according to Article 54 of the Trademark Law.
D. O
THERS
Ad response to question 15:
Article 24 of the Technology Import/Export Control Regulation prescribes
responsibility of surety for a third party.  However, Article 353 of the Civil Law not only
stipulates responsibility of surety for a third party but also explicitly allows parties to agree
otherwise in their contracts.  Please explain if Article 24 likewise allows parties to agree
responsibility of surety for a third party in a manner different from what Article 24 explicitly
provides.  In other words, please confirm that th e licensor shall not be responsible for surety for
a third party under Article 24 of the Technology Import/Export Control Regulation if the
contract between the parties provides that the licensor shall not be responsible for surety for a
third party.  If this is correct, please make this interpretation known to the public.
Article 353 of China's Contract Law lays down the principle for allocation of liability
between licensee and licensor in general terms and Article 355 of the same Law further provides that
"where laws or administrative regulations provide otherwise to contracts of technology introduction or
contracts of patent and patent application, the said provisions shall apply accordingly".  Therefore, itcan be understood that Article 24 of the Technology Import/Export Control Regulation, instead of
Article 353 of the Contract Law, shall apply in case of contract for technology import or export.
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