WORLD TRADE
ORGANIZATIONIP/C/W/365
29 August 2002
(02-4603)
Council for Trade-Related Aspects
of Intellectual Property RightsOriginal:  English
REVIEW OF LEGISLATION
Questions by the United States
By means of a communication from the Permanent Mission of the United States, dated
12 July 2002, the Secretariat has received copies of the following questions and comments that United
States has communicated to China in furtherance of its transitional review mechanism.
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A. GENERAL COMMENTS AND QUESTIONS
1. The United States recognizes and appreciates the hard work done by China's legislators,
administrative officials, judicial officials, and others in reviewing, enacting and drafting newintellectual property laws and regulations as part of implementing China's WTO commitments and in
strengthening China's legal regime for the protection and enforcement of intellectual property.  We
recognize that in addition to revision to key laws, such as the patent, trademark and copyright law,
conducted over the past two years, China has had to enact, revise or annul many central government
laws, regulations and other measures as well as sub-central measures dealing with intellectual
property.
2. In addition to the obligations contained in the Agreement on Trade-Related Aspects of
Intellectual Property Rights (the TRIPS Agreement), these comments and questions are based on the
Report of the Working Party on the Accession of China (WT/MIN(01)/3) (the "WPR").  In
paragraph 305 of the WPR, China agreed to fully apply the provisions of the TRIPS Agreement upon
its accession to the WTO.  China became a member of the WTO on 11 December 2001.
3. The United States considers transparency in making laws, regulations, rules and other
measures including the opportunity to provide comments on such provisions as set forth Section 2,
paragraph 2(C) of China's protocol of accession and in paragraphs 324 through 336 of the WPR to be
a key aspect of China's WTO commitments.  In particular, China has committed to publish its laws,
regulations and other measures in an official journal and provide a reasonable period for comment to
the appropriate authorities before such measures are implemented.  Moreover, China has agreed thatto make these laws, regulations and other measures available to WTO Members upon request before
they are implemented or enforced.  The Law on Legislation authorizes officials to provide the
opportunity to receive comments and requires publication of laws, regulations and other measures.
We strongly urge China to provide this opportunity in all cases.
4. The United States looks forward to cooperating with China on revisions to its trademark and
copyright implementing regulations as well as assisting China in its efforts to harmonize its laws with
new treaties to which it may wish accede, such as the WIPO Copyright Treaty and WIPO
Performance and Phonograms Treaty.IP/C/W/365
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5. Please provide a report on the laws that have been nullified or repealed, amended, or enacted
to bring China's IPR regime into conformity with TRIPS consistency, as well as plans for any further
nullifications, repeals or amendments that are currently scheduled or that are planned to be scheduled
by China's various law, regulation, and rule making bodies on either a national or local level, as well
as efforts to receive comments from foreign and other IPR owners in drafting and issuing thesemeasures and facilitating technical assistance.
B. N
ATIONAL TREATMENT
6. China's WPR set forth certain commitments regarding national treatment (Paragraph 255).  In
particular, the following matters were identified as raising national treatment concerns:
(a) the Rules on Banning the Infringement of Business Secrets (23 November 1995),
which only protected business secrets of citizens or enterprises of China;
(b) enforcement action in copyright matters which required clearance by the National
Copyright Administration in China when a  foreign rights holder was involved;  and
(c) protection of well-known trademarks and re quirements for use of certain trademark
agents.
We would appreciate an update on efforts to provide national treatment with respect to these
issues.
C. COPYRIGHT
7. We have a number of questions regarding specific provisions of China's amended Copyright
Law, its implementation, and its consistency with relevant TRIPS provisions.  In particular:
(a) Does the compulsory license for textbooks in Article 23 of China's Copyright Law
apply to works of foreign authors?  If so, please explain the scope of this provision
and its application.  Does it apply to higher education, e.g., universities and technical
schools?  Does it apply to all works, e.g., digital forms and multimedia?  Please
explain how this provision is consistent with the standards in TRIPS Article 13.
(b) What are the limitations on the scope of the decompilation exception in Article 17 of
the Computer Software Regulations?  Please explain how this provision is consistent
with the standards in TRIPS Article 13.
(c) Does the right of reproduction in Article 10 of China's Copyright Law include
temporary copies, such as those made in the random access memory (RAM) of a
computer, as required by Berne Article 9, as incorporated into TRIPS Article 9?  Is
there any statement in your law, regulations or other measures that indicates that such
temporary copies involve the reproduction right?  If so, please provide the citation.
D. TRADEMARKS
8. As noted in paragraph 6, we have continuing concerns about receipt of national treatment
under China's trademark law.  We note the requirement to use a designated trademark agent, as set
forth in the original implementing rules of the Trademark Law, Article 3, which provides that:
when a foreigner or foreign enterprise is to apply for trademark registration in China
or to deal with other trademark matters in China, the application or other matters shallIP/C/W/365
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be handled by an agency designated by the State Administration for Industry and
Commerce.
Not only may a Chinese enterprise file for a registration directly without an agent, foreign
enterprises have been restricted to use of only certain agents.  While Article 3 of the TRIPSAgreement  provides a limited exception with regarding to national treatment for "the
appointment of an agent within the jurisdiction of a Member," this exception applies only
where "it is necessary to secure compliance with laws and regulations which are not
inconsistent with the provisions of this Agreement and where such practices are not applied in
a manner which would constitute a disguised restriction on trade."
We note the following discriminatory aspects of  China's requirement:(a) The restrictions only apply to foreigners applying for trademarks in China,
irrespective of whether they have a place of business in China.
(b) Only some trademark agents can be used by foreign enterprises.
(c) This rule only applies to trademarks.  No similar rule applies to patents.  China's
patent law has a less restrictive provision:  "where any foreigner, foreign enterprise or
other foreign organization having no habitual residence or business office in China
applies for a patent, or has other patent matters to attend to, in China, he or it shall
appoint a patent agency designated by the patent administrative organ under the State
Council to act as his or its agent."
(d) Foreigners making applications pursuant to the Madrid Protocol do not require use of
Chinese agent.  Implementing Rules for Madrid International Registrations (Sec. 2).
(e) Points (c) and (d) indicate that use of a trademark agent is not necessary to secure
enforcement of China's trademark laws and is a unjustified restriction on trade.
9. The WPR noted that "while China had provid ed protection to "well-known trademarks"
owned by nationals, such protection had, as yet, not been extended to the well-known trademarks of
foreigners" (Paragraph 262).  This issue has become especially acute, as lower thresholds are
available for initiating criminal investigations and penalties for counterfeiting well- known marks, i.e.,
enhanced enforcement may exist for marks owned by  Chinese entities when compared to foreign
marks.
Since China became a WTO member, China's Trademark Office has established a website
listing well-known marks.  Approximately 150 marks are listed, none of which is a foreign
mark.  Another website run by a provincial organization lists 196 well-known marks, but
none of these marks are foreign marks:  http://www.zmsb.com/info.a sp?page=0&count=196).
Please inform us as to the steps that China's  government is undertaking to ensure protection
of well-known marks on the basis of national treatment and the need for effectiveenforcement of all marks.  We are concerned that the failure to include foreign well known
marks on such lists could unfairly prejudice foreign rights holders seeking administrative,
civil or criminal enforcement, i.e., deny national treatment.
10. We recognize that China's courts have recognized the well-known status of certain marks,
e.g., in  Beijing Cinet Information Co.Ltd v. E.I. Dupont De Nemous and Company, Case Number
2002, Beijing Higher People's Court, Intellectu al Property Tribunal, Final Decision, No. 47
(November 2001).  Judicial recognition also raises risks of inconsistencies.  The 1998 regulations,
noted above, for example, imposes fines on companies that state their mark is well-known which haveIP/C/W/365
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not been approved by the China Trademark Office (Article 12).  Thus, even companies with  marks
that courts recognize as well-known could face penalties.  Again, we emphasize the need for national
treatment and effective enforcement.
E. GEOGRAPHICAL INDICATIONS
11. Does China's law relating to the protection of geographical indications include any of the
exceptions to protection contained in Article 24 of the TRIPS Agreement?  If so, please describe the
way in which the exception is applied, indicating the relevant provisions of law.
12. Please explain the procedure(s) by which na tionals of WTO Members may obtain protection
for their geographical indications.
13. Please explain how owners of trademarks might object to protection of third-party
geographical indications.
14. Are any geographical indications currently protected in China?  If so, please identify some
domestic and foreign geographical indications that are protected in China.  How did these geographic
indications become protected?  What is the scope/nature of their protection?
15. Are the procedures for obtaining protection for a foreign geographic indication the same as
those that are used to obtain protection of a domestic geographic indication or when the applicant is a
national of China?
F. PATENTS
16. China indicated in the WPR that it would provide in the Implementing Rules of the Patent
Law a provision ensuring that Article 5 of the Patent Law complies with Article 27.2 of the TRIPS
Agreement.  Has this been done and, if so, please describe and explain the provision.
17. Please indicate the provisions in the Implementing Rules of the Patent Law that implement
TRIPS Articles 31(b), 31(c), 31(h) and 31(f) relating to the grant of compulsory licenses.
18. Please indicate the term of protection for patents granted prior to 1992.  Where is this term
stated in your laws, regulations or implementing rules.
19. Please inform us as to whether or not process inventions that facilitate the conduct of business
are eligible to be patented if they are otherwise novel, involve an inventive step and are industriallyapplicable.
G. L
AYOUT -DESIGNS FOR INTEGRATED CIRCUITS
20. With respect to the protection of layout designs of integrated circuits (WPR Paragraph 280),
we would appreciate being advised what protections are afforded to discretes as part of semiconductor
layout design protection.
H. UNDISCLOSED INFORMATION
21. In the WPR China identified its Anti-Unfair Competition Law as the principal basis for the
civil protection of trade secrets, and Article 219 of the Criminal Law providing criminal remedies
(WPR Paragraph 283).  In addition to the laws identified in the Working Party Report regarding the
protection of trade secrets, the following laws and regulations have existed in China:IP/C/W/365
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(a) Notice of Ministry of Labor on Several Issues Involved in Enterprise Worker
Mobility (No. 355, 1996) (Art. 2);
(b) Law for Promotion of Science of the P.R.C. (Oct. 1, 1993) (Art. 60);
(c) Rules on Banning the Infringement of Business Secrets (23 November 1995);
(d) Guangdong Provincial Regulations;
(e) Regulations of the Protection of Technical Secrets of Enterprises in the Shenzhen
Special Economic Zone (Jan. 1, 1996);
(f) Zhuhai Municipal Regulations;
(g) Company Law;  and
(h) Software Protection Measures.
We would appreciate being advised:
(a) whether these laws continue to be in full force and effect,
(b) the scope of "reasonable compensation" that is required of an employee in order for a
binding confidentiality agreement to exist between the employer and the employee, in
light of inconsistent provisions in d, e and f, above,
(c) whether the definition of Trade Secret as set forth in WPR Paragraph 283 is the same
as those in the above items, and
(d) whether those regulations that remain in effect equally apply to foreign and domestic
enterprises and individuals.
(e) Will the protection accorded under any of these laws apply to protection of test and
other data submitted to obtain marketing approval for a pharmaceutical or agriculturalchemical?  If so, please explain wh ich provisions would apply and how.
22. In the WPR, China confirmed that it would "in compliance with Article 39.3 of the TRIPS
Agreement, provide effective protection against unfa ir commercial use of undisclosed test or other
data submitted to authorities in China as required in support of application for marketing approval of
pharmaceutical or of agricultural chemical products which utilized new chemical entities."(Paragraph 284).  The United States understands that such regulations have been issued with respect
to agricultural chemicals and that work is proceeding on pharmaceutical regulations.
We understand that for imported pharmaceuticals that are new to China's market the owner
must submit non-disclosed data to obtain a certificate that permits both importation and marketing (an
import permit).  Please confirm that undisclosed data submitted to obtain an import permit will also
receive protection against unfair commercial use.
23. Articles 13 and 14 of the Regulations for Protection of Chinese Pharmaceuticals
(14 October 1992, State Council Promulgation No. 106) provides for protection of the composition
and methods of manufacturing of traditional Chinese medicines, including restrictions against
disclosure by Chinese government officials, and establishment of "confidentiality procedures
according to national regulations"  The level of protection extended to these products lasts from 10 toIP/C/W/365
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30 years.  The United States would appreciate being advised of the following with respect to these
regulations:
(a) Are these regulations still in effect?
(b) What are the State Council regulations that protect against such disclosure?
(c) Do these regulations also relate to protection of clinical and other data submitted to
obtain marketing approval?  If so, to what extent?
(d) What protections, if any, also exist against improper use of proprietary information
disclosed to China's government with respect to a domestically produced
pharmaceutical?
(e) Are any of these foregoing  regulations being applied to foreign or Western
pharmaceutical clinical data as well?
I. RIGHT OF APPEAL
24. Within the framework of the rights to appeal decisions regarding patent and trademark rights,
we would appreciate being advised whether (a) final decisions of the patent and trademark offices are
appealed to an administrative tribunal or a specia lized intellectual property tribunal within China's
judicial system;  (b) if China's intellectual property courts can entertain both validity and infringement
issues in the course of an infringement action;  (c) if the criminal panels of China's courts areauthorized to hear criminal intellectual property cases or if such matters are heard by the civil
intellectual property  panels.
We suggest that China consider providing its specialized intellectual property courts with
jurisdiction over trials and appeals of these cases, because the judges have developed greater expertise
on the relevant issues.
J. E
NFORCEMENT
25. Civil Actions:  TRIPS Article 41 requires that enforcement procedures permit effective action
against any act of infringement.
(a) Taking note of recent amendments to the patent, trademark and copyright law that
provide for provisional relief in those matters, as well as interpretations of the
Supreme People's Court to provide provisional relief in trademark and patent matters,
we would appreciate being advised of the status of implementing rules providing
detailed guidance related to provisional relief for copyright infringements.
(b) In the light of Berne Conventions prohibition on formalities, we would also
appreciate being advised how China intends to permit plaintiffs to prove subsistence
of copyright.  In particular, we woul d appreciate an explanation of how the
requirements suggested in a National Copyright Administration of China letter
(25 December 2001) requesting notarized and certified registration certificates
complies with Berne and TRIPS Agreement obligations.IP/C/W/365
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26. Administrative Enforcement:  Enforcement Actions at the Border:  Please advise us of  the
status of proposed revisions to the 5 July 1995 State Council regulations on border measures for the
protection of intellectual property rights.
27. Criminal Enforcement:  TRIPS Article 61 requires the application of criminal fines and
imprisonment at levels sufficient to provide a deterrent in cases of willful piracy or counterfeiting on a
commercial scale.  In its Working Party Report, China agreed  that repeat offenders and willful piracy
and counterfeiting cases "would be referred to re levant authorities for prosecution" (Paragraph 298)
and agreed to recommend to the judicial authori ties that they lower the thresholds for initiating
criminal investigations. (WPR Paragraph 304).
(a) Please provide a copy of the recommendation to China's judicial authorities that they
lower the thresholds for initiating and prosecuting criminal cases against those who
infringe intellectual property rights.  In addition,  please provide copies of referencesto any recommendations from the judicial authorities to make necessary adjustments
to lower the criminal thresholds for piracy and counterfeiting, as well as any actions
by these authorities to lower the thresholds.
(b) We would appreciate statistical or other information on the following issues:
(i) the number of cases involving copyright piracy and trademark counterfeiting
that were prosecuted through administrative penalties in China;
(ii) the number of such cases transferred from administrative proceedings to
criminal prosecutions;
(iii) the number of criminal investigations initiated for copyright infringement and
trademark piracy;
(iv) the number of criminal convictions have been obtained this year;
(v) the level of criminal fines assessed this year;
(vi) the number and length of jails terms imposed this year;  and
(vii) the final disposition of seized goods, materials, and implements in criminal
prosecutions.
(c) With regard to copyright cases in particular, the Untied States would appreciate
knowing of criminal copyright prosecutions and convictions by China under other
provisions of Chinese law, such as illegal business operations (feifa jingying).
28. We note that prior to WTO accession, China's authorities enacted certain regulations or rules,
including the Provisions on the Transfer of Susceptible Criminal Cases by Administrative Organs for
Law Enforcement (9 July 2001) and Regulation of the Supreme People's Court and Ministry of Public
Security Concerning Standards for Initiating Cases In Economic Crimes (18 April 2001), and thatrevisions to the trademark and copyright laws change various aspects of the administrative
enforcement systems, and in particular cases mandate referral to criminal prosecution in appropriate
cases.
We would appreciate being advised of legislative and enforcement efforts to coordinate
administrative, civil and criminal enforcement,  including new regulations or initiatives have
been undertaken to (a) preserve evidence from administrative investigations for use inIP/C/W/365
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criminal investigations and prosecutions;  (b) insuring that appropriate copyright and
trademark matters are referred to criminal investigation;  (c) ability of a rights holder to
participate in administrative or criminal proceedings;  (d) providing for coordination or
cooperation among various enforcement authorities on complex cases;  (e) providing for
expeditious transfer from administrative enforcement to criminal prosecution;  and (f)treatment of recidivist violators of administrative regulations, e.g., have they been subject to
criminal prosecution.
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