2007 Special 301 Report Presents Special Provincial Review of China

It's that time of the year again. The USTR's presents its annual Special 301 Report. Which countries have protected and enforced their IPR adequately and effectively and which have not. The risers, the fallers and the usual suspects, such as China and Russia.

This year the USTR airs again the frustrations against China's alleged lack of IPR protection and enforcement. Given the fact that the US has filed formal complaints against China at the WTO, because of these alleged failures, it is no wonder that the US has the plan to maintain China on the Priority Watch List. No surprises there.

However, the USTR has done an unprecedented review which spotlights strengths, as well as weaknesses and inconsistencies, in and among special jurisdictions of six provinces that were the focus of industry comments and US Governement discussions: Beijing, Fujian, Guangdong, Jiangsu, Shanghai, and Zhejiang. For the purpose of this review, the jurisdictions at the provincial level (sheng) may include the four municipalities (shi) of Beijing, Chongqing, Shanghai, and Tianjin, as well as China's five autonomous regions (zizhiqu): Guangxi, Inner Mongolia, Ningxia Hui, Xinjiang Uyghur and Tibet.

The executive summary of this Special Provincial Review presents the following:

Strengths:

• "Beijing is showing leadership in the area of internet piracy. There have also been notable cases against internet piracy in Xiamen (Fujian) and Guangdong.
• Shanghai closed down a notorious market for infringing goods and has and has sought to enhance cooperation with right holders.
• Jiangsu has issued rules requiring audiovisual business operators to carry proof of relevant licenses and legality of products sold in their retail outlets.
• Guangzhou (Guangdong) and Beijing achieved measurable reductions in retail piracy during a 100-day crackdown in 2006, according to an industry survey.
• Customs authorities in Xiamen (Fujian) reportedly cooperate well with foreign rights holders.
• Zhejiang reportedly transferred 109 administrative trademark cases for criminal prosecution in 2005.
• Shanghai authorities have instituted a pilot program to improve administrative-judicial coordination on IPR cases and allow police to conduct raids based on suspicion of criminal activity.
• Public security authorities in Guangdong and Fujian have taken some notable actions against pharmaceutical counterfeiting and other counterfeiting directed against major US brand owners.
• China's court system is gradually improving, particularly in Beijing, which has the largest number of civil IPR cases, and in Shanghai."

Weaknesses and inconsistencies:

• "Guangdong and Zhejiang remained provinces in which right holders most consistently encountered all types of counterfeiting, according to an industry survey.
• Guangdong, Zhejiang, and Fujian are home to major ports of lading for exports of infringing goods to the US.
• In spite of the efforts of local authorities, Beijing and Shanghai remain centers for retail trade in pirated goods, and Yiwu (Zhejiang) remains a wholesale center, according to an industry survey. An industry group cited the Silk Market, Tianyi Market, and Yaxiu Market in Beijing and the Ziyuangang Market in Guangzhou (Guangdong) as well-known retail and wholesale markets for pirated products.
• Shenzhen (Guangdong) and Shanghai did not achieve measurable reductions in retail piracy during a 100-day crackdown in 2006, according to an industry survey.
• Transfers of administrative trademark cases for criminal prosecution were especially rare in Guangdong, Jiangsu, Fujian, and Shanghai in 2005, according to official statistics.
• There were reportedly no transfers of administrative copyright cases for criminal prosecution in Shanghai, Zhejiang, and Fujian in 2005."

The complete Special Provinces Review can be found on pages 43 through 53 of the 2007 Special 301 Report, see here.