After 15 Years In WTO, China Still Weak On Many IP Rights Rules, US Says 10/01/2017 by William New, Intellectual Property Watch Leave a Comment Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window)Innovation and intellectual property rights have set the United States apart from competitors in recent history, and China seems intent on closing that gap any way it can. A US trade office report out this week on China’s compliance with World Trade Organization rules 15 years after accession show the magnitude of China’s continuing compliance problems related to intellectual property rights. “Serious concerns,” “problems,” “challenges,” “weakness,” “insufficient.” These and many other negative terms fill the 200-page report’s sections describing China’s treatment of intellectual property rights. There is plenty of progress cited too, but the report reads as an open to-do list with new issues arising all the time. One question is how much of this behaviour could be brought to the WTO Dispute Settlement Body. Another might be what the new US administration is going to do differently about this list. The Office of the US Trade Representative’s 2016 Report to Congress on China’s WTO Compliance is available here [pdf]. On intellectual property rights, the report concluded: “Despite ongoing revisions of laws and regulations relating to intellectual property rights, and greater emphasis on rule of law and enforcement campaigns in China, key weaknesses remain in China’s protection and enforcement of intellectual property rights, particularly in the area of trade secret misappropriation. Intellectual property rights holders face not only a complex and uncertain enforcement environment, but also pressure to transfer intellectual property rights to enterprises in China through a number of government policies and practices.” “While progress was made on some meaningful issues [in bilateral meetings], many issues of concern remain. The United States will continue to engage China on important issues in the areas of IPR enforcement, including trade secrets, secure and controllable ICT policies, technology localization, indigenous innovation, investment restrictions, excess capacity, government subsidization, export restraints, strategic emerging industries, state-owned enterprises, administrative licensing, government procurement, taxation, standards development, market access for U.S. beef and poultry, biotechnology product approvals, food safety, pharmaceuticals and medical devices, cosmetics, financial services, Internet-related services, theatrical films, telecommunications services, express delivery services, legal services, competition policy and transparency, among others.” Massive trademark violations are also detailed. “Of particular and growing concern is the continuing registration of trademarks in bad faith,” the report said. “Although China has taken some steps to address this problem, U.S. companies across industry sectors continue to face Chinese applicants registering their marks and ‘holding them for ransom’ or seeking to establish a business building off of U.S. companies’ global reputations.” “Since its accession to the WTO, China has established a framework of laws, regulations and departmental rules that largely satisfies its WTO commitments,” said the report. “However, reforms are needed in key areas, such as updating China’s laws and regulations in the area of trade secrets, providing regulatory data protection for pharmaceutical products in a manner consistent with international research and development practices and legal standards, further improvement of China’s measures for copyright protection on the Internet following China’s accession to the WIPO Internet treaties, addressing deficiencies in China’s criminal IPR enforcement measures and revising measures conditioning government procurement, financial benefits and preferences on intellectual property developed by, owned by or licensed to a Chinese party.” Pages 126-139 go indepth into the status of the range of IPR problems the United States has with China. In bilaterals and through the WTO Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS), the US has worked to ensure new policies in China do not unfairly harm US businesses. For instance, it said, “China committed that its innovation policies would be consistent with the principle of non-discrimination and that it would not advance generally applicable policies or practices that require the transfer of intellectual property rights or technology as a condition of doing business in China’s market.” In another case, it said: “With regard to the operation of the integrated circuit investment funds in China, China reaffirmed that they are based on market principles and that the Chinese government does not interfere with the normal operation of those funds and clarified that the Chinese government has never asked the funds to require compulsory technology or the transfer of intellectual property rights (IPR) as a condition for participation in the funds’ investment projects.” The report provides detail of more than a decade of bilateral progress, including many areas related to IP rights. But the report also details thwarted attempts by China to institute what appear to be unfair rules putting foreign companies’ IP rights at risk, and backtracking on earlier commitments. For instance, it says: “Requirements in various “secure and controllable” measures to use domestically owned and registered intellectual property call into question China’s prior bilateral commitments to treat intellectual property owned or developed in other countries the same as intellectual property owned or developed in China.” These requirements could undercut foreign companies’ flexibility, increase their costs, and “create concerns by associating intellectual property rights with national security,” it said. “[D]espite this sustained U.S. engagement and the bilateral commitments that China has made to date, China has continued to issue new and proposed Chinese policies and practices discriminating against foreign rights holders and pressuring foreign companies to transfer their technologies to enterprises in China, USTR said. “A number of measures issued in the name of enhancing cyber security or protecting national security impose unwarranted IP disclosure conditions and contain provisions requiring related IP rights to be owned and developed in China. Of additional concern are recently issued measures affecting the pharmaceuticals and medical devices industries, including the provision of expedited regulatory treatment for localized manufacturing or owning a Chinese patent.” “In 2017,” it concluded, “the United States will continue to press China to closely adhere to the important bilateral commitments that it has made in the area of technology localization. The United States also will urge China to take further steps to address U.S. concerns.” Time will tell whether the incoming US administration tries a different, possibly more aggressive, approach. Share this:Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Facebook (Opens in new window)Click to email this to a friend (Opens in new window)Click to print (Opens in new window) Related William New may be reached at email@example.com."After 15 Years In WTO, China Still Weak On Many IP Rights Rules, US Says" by Intellectual Property Watch is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.