15. The representative of China, briefing the Council on China's progress in the implementation of its TRIPS-related commitments since the last transitional review, said that as regards legislation, a number of new regulations and judicial 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 Copyright 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.
16. Regarding enforcement, he said that China had already stated previously that it regarded a good system of enforcement and transparency as essential 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 order 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 functioning well. In order to bring a complaint or to report an IPR infringement case to China's enforcement 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 from administrative to criminal enforcement.
17. 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 People's Court and local high courts had begun to establish a spokesman system, through which important IPR issues were publicized regularly. Comprehensive up-to-date information on the protection 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, education 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.
18. He said that it was clear that China had made tremendous efforts to promote better protection of IPRs in line with its economic development level 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 mind 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.
19. Before responding to the specific issues and questions raised by Members, he said his delegation would want to make a number of comments. 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 document 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 documents 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.
20. Secondly, he said that his delegation had summarized Members' questions and divided them into six parts which would be addressed by the answers, 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.
21. Thirdly, he pointed out that, although the time available to translate the questions into Chinese, obtain answers from the numerous competent authorities in China and translate the replies back into English was very short, his delegation was still making every effort to answer as many questions as possible. However, if a delegation felt 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.
22. Fourthly, he said that Members, in their questions, 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 courts 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 could expect to resolve all issues under the TRM process in just one meeting.
23. He said that the importance the Chinese Government attached to the TRM process was reflected in the size of the delegation at the present 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, and also from the State Intellectual Property Offices and Trademark Offices, as well as representatives from the Ministry of Commerce.
24. In responding to the specific questions by Members, 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 interpretations, new laws, regulations or judicial interpretations relating to IPRs since the last review, his delegation had already 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, the 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 Annex 1A provided more information on these instruments.
25. 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 industry 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 customs had dealt with 1,210 IPR infringement cases involving the import or export of goods. No separate statistics were available on the number of cases dealt with on the basis of right holders' complaints.
26. No data was yet available on the number and percentage of cases referred from administrative enforcement to criminal enforcement under the revised transfer mechanisms that had been developed by the Supreme People's Court, Supreme People's Procuratorate, Ministry of Public Security (MPS), and General Administration of Customs.
27. He confirmed that the treatment 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 Administrations 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.
28. The representative then turned to his delegation's answers concerning copyright (Part 2). With respect to the availability of statistical data on prosecutions under Article 225 of the Criminal Law on "illegal business operations" that involved copyright 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 Improve the Operation of Audio 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.
29. Regarding Article 43 of the Copyright 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.
30. 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 Administrative Organs for Law Enforcement in 2006, in order to enhance the coordination and cooperation among law enforcement bodies in cracking down on IPR criminal offences.
31. 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 (8th edition), then the applicant was not required to provide additional information. Otherwise, the applicant was required to provide a description of the product or service which would then be classified according to the Nice Classification.
32. 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, the similar group was the reference standard for the purpose of establishing whether there was confusion between 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 the similar group of 2510 and the scarf fell under the similar group of 2511.
33. Regarding a minimum amount of damages stipulated for trademark infringement, he said that neither the Implementing Regulations on trademark law before 2002 nor the Implementing Regulations on trademark law revised in 2002 contained any provisions on minimum amounts of damages.
34. 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 bodies, in order to improve transparency and deliver a strong message against counterfeiting.
35. 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 appeal 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.
36. With regard to the grounds on which the Chinese Trademark Office could refuse protection of a geographical indication and the independent qualification 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.
37. With regard to China's measures and procedures for designating so-called "famous brands" and "famous trademarks”, he said that the procedures 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.
38. 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. Under the provisions of the trademark law, the AICs were able to investigate and deal with action infringing exclusive rights to registered trademarks, both on an ex officio basis and in response to a complaint or report.
39. Concerning the length of the time period currently necessary for the review of trademark applications, he said that the number of applications had been increasing at an annual rate of 100,000 in recent years. The current time span from the submission of an application to the first action by the trademark administration office was approximately 24 months, or more in cases of disagreement or dispute. China was taking proactive measures to try to shorten the time length of the registration cycle.
40. On the issue of opposition without substantive reasons, he said that any opposition document had to be accompanied by clear claims and factual evidence. China would consider the issue of "vicious opposition" during the future revision of the trademark law.
41. With regard to the treatment of foreign and domestic applications for well-known trademarks, he said that there was no discrimination at all.
42. 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.
43. Regarding the issue of linkage between patent approval and drug approval processes, he reported that the ongoing study by the State Food and Drug Administration was not yet completed.
44. Regarding approval procedures for patent or technology transfer, he said that the main provisions relating to this issue were in the Regulation on the Administration of Technology Import and Export. According to that Regulation, patent applications 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.
45. Regarding the protection of test data for pharmaceutical products, Article 35 of the Implementation Regulations of the Pharmaceutical 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 product 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.
46. 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 TRIPS Agreement and China had no plans to grant any additional protection at present.
47. 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.
48. The representative then turned to his delegation's answers concerning enforcement (Part 5). With regard to the procedures for the destruction 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 confiscated 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 infringing 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.
49. Regarding the procedures for obtaining a preliminary injunction, especially procedures to "establish" a case before the request for a preliminary injunction was considered, he said that the right holders or interested parties who required the court to place the case on the docket had to submit a written application to the court that had jurisdiction over 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 the person against whom the application was made within five days. Parties not satisfied with the court'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 requests and evidence preservation order requests, and the rate of their grant of denial, he said that since 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.
50. Concerning the results of the 50 new IPR Service 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 triggered criminal proceedings.
51. He said that the combat against text book piracy on university campuses was already part of the 100-day anti-piracy activity.
52. Regarding the question of which other localities, apart from Beijing, had initiated "trademark authorization systems", he said that to his knowledge these were in Zhejiang Province and in some parts of Guangdong Province.
53. Regarding the question of legalization of powers of attorneys and documentary evidence, his delegation believed that the current procedures were normal procedures to ensure the legality of important documents.
54. He said that the question regarding the difference in criminal prosecution between individual and unit crime had already been answered during the April trade policy review process.
55. With regard to criminal thresholds for the prosecution of manufacturing and/or supply of dangerous counterfeit goods, he said that China had no plans to abolish the criminal threshold.
56. 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.
57. He said that statistics concerning administrative penalties in 2005 were contained in the document provided pursuant to Annex 1A.
58. Regarding the proportion of IPR infringement cases in the criminal cases, in respect of the crime of production, sale of counterfeit and inferior products and illegal business operations, he said that this data could not be singled out under the current statistical method.
59. Regarding data on trademark infringements in alcoholic beverages, he said that no separate statistics for alcoholic beverage trademark infringement were available.
60. With respect to the understanding that, in China, criminal penalties were not imposed on an infringement by "similar" trademarks, he said that this understanding was incorrect and referred Members to Article 8 of the Interpretation of the Supreme People's Court and the Supreme People's Procuratorate Concerning Some Issues on the Specific Application of Law for Handling Criminal Cases of Infringement upon Intellectual Property Rights.
61. He confirmed that administrative as well as criminal penalties were imposed on services mark infringement and said that the same law applied to goods trademarks and services marks.
62. He confirmed that, in trademark infringement, heavier administrative penalties were imposed on repeat offenders.
63. With respect to the development of clearer or up-to-date judicial interpretations regarding the calculation of illegal business operation and unit crime, stated in the "2006 Action Plan for the Protection of IPR", he said that this was subject to further study in light of results of the application of relevant judicial interpretations.
64. 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 Protection of IPRs had already helped alleviate this burden in that they obliged all customs offices to conclude an investigation within 30 working days from the date of detaining the goods. This shortened case-handling time at the customs offices and consequently reduced storage time and costs. Furthermore, 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 cases 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.
65. With respect to measures to enhance the protection 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 cities, 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 their respective overall socio-economic development programmes. The Action Programme also included a training programme for local officials and managerial personnel at the enterprise level.
66. The representative then turned to his delegation's answers concerning other issues (Part 6). Regarding the issue of the protection of trade names 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 law was still in the process of being revised, his delegation was not in a position to prejudge the results.
67. Concerning the licensing regulations contained in the Regulations on the Administration of Import and Export Technology, he said that the provision "where the exploitation of a technology given by a transferee in accordance with the terms of the contract infringes upon the legitimate right and interests of others, the transferor shall be held liable" was compulsory, not discretional. China had no plans to revise the provision on liability of third parties' infringement.