USTR Pursues WTO Process to Probe IPR Enforcement in China

October 26, 2005

GENEVA – US Trade Representative Rob Portman announced that the United States has initiated a special process under World Trade Organization (WTO) rules today to obtain information on China’s intellectual property enforcement efforts. Japan and Switzerland joined the United States in submitting similar requests.

“The United States is deeply concerned by the violations of intellectual property rights in China,” said U.S. Trade Representative Portman. “The development of intellectual property is one of the driving forces of U.S. economic competitiveness, and we will utilize all tools at our disposal to ensure that U.S. intellectual property rights are protected.”

“Based on all available information, piracy and counterfeiting remain rampant in China despite years of engagement on this issue. If China believes that it is doing enough to protect intellectual property, then it should view this process as a chance to prove its case,” Portman added. "Our goal is to get detailed information that will help pinpoint exactly where the enforcement system is breaking down so we can decide appropriate next steps."

The United States is utilizing a process established under Article 63.3 of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), which, among other things, allows WTO Members to request information pertaining to judicial decisions or administrative rulings in the area of intellectual property rights (IPR) that affect their rights under the TRIPS Agreement. The U.S. anticipates a response from China in approximately three months.

The request will be made available on USTR’s website at www.ustr.gov.

Background:

As indicated in last year’s Out of Cycle Review (OCR) of China, published in USTR’s April 29, 2005, Special 301 Report, industry sources believe that China’s inadequate IPR enforcement is resulting in infringement levels of approximately 90 percent or above for virtually every form of intellectual property. USTR observed at that time that “lack of transparent information on IPR infringement levels and enforcement activities in China continues to be an acute problem.” The Special 301 Report noted expressions of concern by several industry groups about the Chinese Government’s unwillingness to provide sufficiently detailed enforcement information. The OCR results also noted that “when criminal prosecutions are pursued, a lack of transparency makes it difficult to ascertain whether they resulted in convictions and, if so, what penalties were imposed.” As a consequence, USTR announced its intent to invoke Article 63.3 of the TRIPS Agreement.

The U.S. request seeks to obtain a more complete picture of China’s intellectual property enforcement efforts since 2001. The U.S. transparency request calls upon the Chinese government to make available detailed information concerning the application of criminal, administrative, and civil remedies for infringement cases that affect U.S. right holders.

China’s promise to “substantially reduce IPR infringement” during bilateral talks in April 2004 has yielded mixed results. Recent commitments made during July’s bilateral talks have proven promising. Data collected from the Article 63.3 transparency request will help to evaluate China’s progress implementing its commitments to substantially reduce counterfeiting and piracy.

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