What is so special about Special 301 vis-à-vis China? Part IV

Previous parts can be seen here: Part I, Part II, Part III.

What was said during the Special 301 hearing about Intellectual Property in China?

So who were the four witnesses that spoke about IPR in China?

Ambassador Shaun Donnelly (Senior Director for International Business Policy of the National Organization of Manufacturers) proposed to use both a carrot and a stick. Carrot: the U.S. is already involved in capacity building, training, exchange and industry has been involved a s trade partner. "We have to convince the Chinese to deliver results. To make them clear that we hold them in IPR to a much higher standard." Stick: "If they don't that it has concrete consequences." He urged the USTR to start an Out-of-Cycle review, which involves a systematic evaluation of China's entire IPR enforcement regime, supported by submissions from U.S. manufacturers and businesses to document IPR infringement to the extent possible. This way a strategy could be devised, and a decision be made about benchmarks and on the implications of failure to deliver on the set benchmarks.

Eric Smith (International Intellectual Property Alliance (IIPA) pointed out that although physical copyright piracy remains a problem, for most industries, the internet has taken over as the means to distribute content, including pirated content. China, with its 750 million mobile device users and where 3G broadband has just been introduced, poses a huge problem. For the IIPA criminal action against piracy is the holy grail: "We should ask our trading partners too, first, undertake more criminal actions against piracy of software in the corporate environment, against growing online and mobile device piracy of music, motion pictures, software, video games and books and journals, against continuing piracy of optical disk products and the unauthorized printing and commercial photocopying of books and journals and against the manufacturing and trafficking and circumvention devices."

Mr Smith's wish list continues:

• Enough enforcement resources and training commensurate to the problem;
• To remove onerous and unnecessary procedural barriers to the judiciary acting in civil and criminal cases;
• Impose deterrent penalties in criminal cases and adequate and deterrent damages and remedies in civil cases;
• U.S. government should ask its trading partners to encourage cooperation of ISPs with all content owners so that workable and fair notice and takedown systems and a graduated response mechanisms (3-strikes) to deal with repeat infringers online can be implemented;
• Government agencies, contractors and educational institutions should be urged to use only legal software and legal copies of textbooks and it should be ensured that their networks and computers are not used for infringement of any copyrighted content;
• That laws against camcording motion pictures are enacted and enforced.

Michael Mellis (Senior Vice President and General Counsel of MLB (Major League Baseball) Advanced Media L.B.) testified that his company was affected by an emerging type of telecast IP infringement: unauthorised streaming over the internet of live television programming of all types including live sports telecasts and related programming. The number of sites and services involved in this phenomenon is significant (on an annual bases tens of thousands of hours of live television programming from networks around the world are being pirated) and has grown rapidly. "Many are open doors permitting any type of television programming to be streamed live persistently and globally without authorization from copyright owners." This can be accomplished through the use of this $70 device and some software. "In our rights enforcement efforts through the past several years, during which we have identified and logged thousands of piracy incidents, the dominant pattern we have seen is piracy occurring through a streaming over peer-to-peer services based in China." According to Mr Mellis approximately 75 percent of the pirated retransmissions of the telecast have occurred through offshore sites and services and approximately 50 percent of the total through Chinese sites and services."

Streaming video via the internet presents new challenges to copyright law:

Mr Mellis: "Our domestic copyright law is clear that this is copyright infringement. However, litigation in the United States is a remedial tool available to U.S. exporters of television programming only in limited circumstances."

Mr Mellis pointed out two relevant reports about this matter:

- U.S. House of Representative, Committee of the Judiciary, 'Hearing on Piracy of Live Sport Broadcasting Over the Internet', December 16, 2009.

- OECD, 'Piracy of Digital Content', 2009.

Major League of Baseball works together with the Coalition Against Online Video Piracy(CAOVP) which has had informal discussions with Chinese government agencies.

In reply to a question Mr Mellis makes clear that he cannot quantify the damages of the telecast infringements, because of "the recency of the problem" and the unknown parts such as the size of the audience size is, who was involved beyond what we can find out through our own limited means of figuring that out, patterns of piracy. Mellis sends routinely cease and desist letters and notices to infringers abroad, in particular China. To no avail, with one exception.

Mike Palmedo (Assistent Director of the American University Washington College of Law Program on Information Justice and Intellectual Property (PIJIP) criticized the Pharmaceuticals and Research Manufacturers of America (PhRMA) for criticizing China's government about Active Pharmaceutical Ingredients (API), that the enforcement of health regulations for API, noting that chemical manufacturers may sell and ship API products to locations within China and abroad with either no regard for the intended use of the API or choosing not to comply with existing regulations. However, the enforcement of Chinese regulation of APIs is, according to Mr Palmedo, outside the scope of the Special 301 report, since it doesn't address the adequacy or effectiveness of intellectual property rights and PhRMA doesn't suggest that these Chinese health regulations deny fair and equitable market access to United States persons that

rely upon intellectual property protection. Mr Palmedo has a point. However, his conclusion "So if this complaint is included in the Special 301 report, it will be nothing more than an attempt to intimidate Chinese companies which many developing country producers rely on to produce affordable generics." is based on an assumption which is not necessarily true. The reason for it is that counterfeit pharmaceuticals that originate in China have proved lethal. In the report it says: "(..) in China, domestic chemical manufacturers that produce APIs can avoid regulatory oversight by not declaring that the bulk chemical is intended for use in pharmaceutical products. This contributes to China being a major source country for APIs used in counterfeit pharmaceutical products."

Text/Picture: Danny Friedmann

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What is so special about Special 301 vis-à-vis China? Part III

Previous parts can be seen here: Part I, Part II.

So what does the report say about China?

On the positive side:

• An increase in the number of civil IP cases in the courts (would be nice if the report states the numbers);
• Largest software piracy prosecution in Chinese history in 2009;
• "Continued and constructive discussions in the Joint Commission on Commerce and Trade (JCCT) and the JCCT Intellectual Property Rights Working Group" (this might be a diplomatic way of saying that the U.S. and China are on speaking terms, but nothing concrete has come out of the meetings, why not mention it otherwise?);
• October 2009 the National Copyright Administration of China, the Ministry of Education, the Ministry of Culture, and the National Anti-Pornography Office issued the Notice on Strengthening Library Protection of Copyright, which directs libraries to adhere to the Copyright Law;
• Judicial enforcement related to infringing activities in retail markets in Beijing and Shanghai;
• Judicial authorities sentencing wholesalers to prison terms;
• Holding retail market landlords liable for failing to take appropriate measures to prevent infringement;
• Shanghai municipality is seen as bright spot regarding IPR enforcement;
• Zhejiang province has shown progress, undertook more trademark infringement investigations than any other Chinese province (which could however also indicate that they have a higher level of infringement than the other provinces; what is needed is to use the IP enforcement/infringement ratio);
• Jiangsu province demonstrated, according to USTR, its recognition of the importance of IPR protection: "including through a Suzhou court's criminal sentences in a high-profile software piracy case (sounds rather anecdotal to come to this conclusion, then again it is also encouragement) and set an example of transparency by publishing IPR decisions online: Jiangsu.ipr.gov.cn.

Room for improvement:

• The USTR is concerned about the proliferation of the manufacture, sale, and distribution of counterfeit pharmaceuticals in China;
• China's domestic chemical manufacturers that produce Active Pharmaceutical Ingredients (API) can "avoid regulatory oversight by not declaring that the bulk chemical is intended for use in pharmaceutical products." (according to Mike Palmedo, PIJIP, this is more a health issue not an IP issue, see 'What was said during the Special 301 hearing about IP in China?' below);
• Internet piracy is significant in China. Unauthorised retransmission of live sports telecasts over the internet is a problem (see Michael Mellis, Major League Baseball Advanced Media L.B., 'What was said during the Special 301 hearing about IP in China?' below);
• Pre-loaded illegal content on cellular telephones, palm devices, flash drives and other mobile technologies (see Eric Smith, IIPA, 'What was said during the Special 301 hearing about IP in China?' below);
• "Other countries still need to adopt and implement legislation or improve existing measures to combat illegal optical disc production and distribution, including China, India, Paraguay, and Thailand, which have not made sufficient progress in this area." This is rather vague language: In case of China does the USTR need to implement legislation or improve existing measures? That remains unclear;
• Government use of legitimate software is a problem in China;
• The report gives the USTR's view about what the US achieved with the WTO Dispute Settlement cases DS362 (China - Measures Affecting the Protection and Enforcement of Intellectual Property Rights) and DS363 (China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products);
• USTR is concerned about the promotion of China's "indigenous innovation". They give one example: preferential government procurement. As a comment about my post about the subject "Anonymous" gave many more examples as a comment on my post about the subject. See them here.
• The share of IPR-infringing product seizures at the U.S. border that were of Chinese origin was 79 percent in 2009, a small decrease from 81 percent in 2008.
• "Business software theft (theft is a misnomer, since the software is not taken a way, but copied and used without authorisation by the rights holder) by enterprises is particularly troubling as it not only results in lost revenues to software companies but also lowers the business costs of offending enterprises and my give these firms an unfair advantage against their law-abiding competitors." Don't know why infringed business software is singled out. All companies making use of a counterfeit or pirated product have an unfair advantage in comparison to law-abiding competitors;
• That during a recent internet enforcement campaign, see here (Managing IP) or here (China Daily), in which 558 cases were investigated and 375 websites were shut down, demonstrates according to the USTR that if the Chinese government chooses to utilise its enforcement resources and personnel to deal with an IPR problem, it can produce results. The question is whether these actions are structural.
• "The United States notes that at times particular enforcement actions are directed not only at copyright or trademark infringement, but also include infringement activities that may be considered more serious under the Chinese legal system." Is this a cryptic way of saying that China is more interested in controlling the media? And one should take into account that article 41 (5) TRIPs requires no special allocation of resources to the enforcement of law in general in absolute terms, nor to the enforcement of intellectual property rights in relative term;
• Retail and wholesale market have still pervasive problems. Despite 1. attention from brand owners, the Chinese central government and foreign governments; 2. resources from brand owners; 3. contractual agreements with landlords;
• Civil damages for infringement are deemed inadequate; minor penalties levied by courts;
• U.S. trademark and copyright industries report that administrative fines are too low; and imposed too infrequent, to provide deterrence. The ambition level of TRIPs is not helping: the wording of article 61 TRIPs is not that remedies should provide a sufficient deterrent, but that they should be sufficient to provide a deterrent. China’s implementation of article 61 TRIPs is one of the most vehemently debated issues. Many WTO members seem to expect a lot of this enforcement route. But they should perhaps do some self reflection first, because criminal enforcement in IPR cases is underdeveloped in most countries, or, as professor Hugenholtz (IvIR, UvA) pointed out, not even available, as is the case with patent law. Maybe that is why there has been no jurisprudence or decision of a competent WTO body thus far;
• Market access barriers create incentives to infringe products such as movies, video games and books;
• September 2009, Ministry of Culture issued a "circular that bars providers of imported, but not domestic, digital music from distributing their content online unless they obtain content approval"; and the foreign providers have to enter into an exclusive licensing arrangement with a wholly Chinese-owned entity;
• Some landlords and infringers ignore applicable court rules;
• November 2009, the Standardization Administration of China (SAC) released the Draft Regulations for the Administration of the Formulation and Revision of Patent-Involving National Standards (Chinese) for public comment. The USTR reports that it is "concerned about the expansive scope, the feasibility of certain patent disclosure requirements and the possible use of compulsory licensing for essential patents included in national standards" (Article 9, Chapter III: "(1) The patentee agrees to license, on a reasonable and non-discriminatory basis, any organization and person to implement the patent when implementing the national standard at a price significantly lower than the normal royalties; "; Compare the just released Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, of which section 284 states that "(..) in case of a dispute, the assessment of whether fees imposed for patents in the standard-setting context are unfair or unreasonable, will be based on whether the fees bear a reasonable relationship to the economic value of the patents." Article 12, Chapter IV of the Chinese draft regulation: "In principle, a compulsory national standard shall not involve a patent."; Article 13, Chapter IV of the Chinese draft regulation: "For a compulsory national standard that indeed needs to involve a patent, the patentee shall grant license free of charge or the national administration department of standardization shall request the related departments to consult with the patentee about disposal of the patent. If the related departments fail to agree with the patentee on the disposal of patent, the approval for release of the national standard will be temporary withheld or a compulsory license will be granted according to law.") which could indeed give a disincentive for innovation by foreign rights holders in the development of standards in China. Not only the U.S. but also the European Commission is taking a different approach to standards and IPR from China;
• October 1, 2009, the Third Amendment to the Patent Law is effective (Patent Law 2008). USTR writes that rights holders have raised a number of concerns, including the effect of disclosure or origin requirements on patent validity (rightly so, because it is unclear), inventor remuneration (no reason for this fear, see 'Are Statutory Compensation Rules for Inventors Scary?';
• China's recently got a "naked" Bolar exemption, article 69 (5) Patent Law 2008, which exist of the safe harbor provision. I am not sure whether it is bad that there is no possibility of extending the term of patent protection, as is possible in the U.S. system. I am not sure whether the State Food and Drug Administration (SFDA) has long delays. And 20 years seem long enough to get a return on the investments of innovators. And otherwise generic producers have to wait longer, which might be bad for competition. And in principle, the law applies in the same way to Chinese and foreign companies in China. The USTR has concerns about effective protection against unfair commercial use, as well as unauthorised disclosure, of undisclosed test or other data generated to obtain marketing approval for pharmaceutical products;
• Guangzhou province's IPR enforcement is seen as inconsistent with respect to valuation methodologies for calculating damages, fines and penalties, and the criminal IPR cases initiated are deemed too low;
• According to the USTR, IPR enforcement at the local level is poorly coordinated among Chinese government ministries and agencies; rife with local protectionism, corruption, high thresholds for initiating investigations and prosecuting criminal cases, lack of training, inadequate and non-transparent processes.

The report states that "the overall level of IPR theft in China remains unacceptable." The usage of the term 'IPR theft' could be confusing. Because the IPR are not stolen, but infringed. If they were stolen the rights holders would not have the intellectual property rights anymore.

Mike Masnick wrote an interesting article for TechDirt with the title 'USTR Announces What Countries Have Been Naughty When It Comes To Intellectual Property'.

I have put my comments on Mr Masnick's article in italic.

IP Dragon: Naughty is a term that might be perverse in the case of counterfeited medicines and food/beverages that have proved lethal in China.

Mr Masnick asserts the following about Section 301:

- standard used is mythical;

IP Dragon: Why mythical? The USTR listens to the witnesses, reads the public submissions, and reviews, evaluates and determines whether the standard of proof has been met. If so then it comes with a qualification. What exactly the standard of proof is, is difficult, because it inadequacy and ineffectiveness of intellectual property is contingent on several factors, see directly below.

- no methodology;

IP Dragon: The USTR, together with the interagency Special 301 subcommittee made an assessment. Imput: apart from public engagement, 571 submissions, there was a hearing, seetranscript of 23 witnesses (But only four talked about China, see pages

64:21 65:6,7

69:4,4,5,8 70:10

70:20 71:2,10

93:7,11,16 94:3,4

96:2,3,7,8 128:17

136:14 268:8,13

274

:9,20) For each country they took the following factors into account:

• level of development (this is hard to measure, and controversial: China for example is a country fragmented in regions of different developmental speeds);
• international obligations and commitments (this might be easy);
• concerns of rights holders and other interested parties (question is whether the rights holders and other parties heared form a representative group);
• trade and investment policies of the United States.

John Rawles' legal-philosophical theory of the Veil of Ignorance (devising a legal system without knowing whether it will be applied to you or to someone else) is hard when you want to devise a system for protection and enforcement of intellectual property rights. Especially in case your IP system takes the above-mentioned factors into consideration: it is hard to forget your own level of development, your international obligations and commitments and the particular interests of your own industries.

- Masnick alleges that Section 301 is biased, because it is based on what the entertainment and pharmaceutical industry do not like;

IP Dragon: Academics and journalists should be as objective as possible. Lawyers and marketeers should defend one side/show the best side of something. Governments should be fighting for the interests of their citizens. Including the industry. Industry groups should be fighting for the companies they are representing.

- it is not taken seriously, because "even people of the US Copyright Office" are making fun of it;

IP Dragon: This argument should not be taken seriously.

- no real interest in hearing consumer concerns;

IP Dragon: there was public engagement. 571 submissions that are public via Regulations.gov, with docket number USTR_2010_003.

- no interest in sovereign rights of countries;

IP Dragon: It is each country's right, to protect the interests of its citizens and industry as well as possible. The U.S. trying to do this for a decade with Section 301. Whether it have been effective is another question.

- Mr Masnick wrote that the USTR wants to "monitor" countries that do compulsory licensing of patents.

IP Dragon: However, one can read in the USTR report that "the United States respects our trading partners' rights to grant compulsory licenses, in a manner consistent with the provisions of the TRIPS Agreement and encourages our trading partners to consider ways to address their public health challenges while maintaining intellectual property systems that promote investment, research, and innovation." The USTR also writes that it will follow the scope and procedures related to compulsory licensing. Not so strange. And in the case of standards and IP in China there are enough reasons to be concerned.

- Canada is included in the list;

IP Dragon: I will focus on China only.

- Michael Geist's wrote: "According to the report, approximately 4.3 billion people live in countries without effective intellectual property protection." Masnick suggest that if the USTR has a problem with the countries where the majority (4.3 billion) of people live, then the problem might be the U.S..

IP Dragon: 1. this reasoning is: if most people approve of something, therefore it is true. This is a fallacy ad populum, 2. the people who live in a country do not necessarily agree with their government or their legislation.

A commentor using the name Daemon_ZOGG made some interesting remarks:

- many consumers don't care about whether the product is produced by the original manufacturer as long as the quality is good;

IP Dragon: could be the case.

- half of the time pirated media and software are as good or better than the real products;

IP Dragon: it is a trend that pirated and counterfeit goods are getting a better quality and sometimes are better in tune with the needs of local markets. The way the products are manufactured could be degrading for the environment, and employees, could involve child labour and the funding of organised crime.

- because of the global market, jobs were sent overseas and piracy is a collatoral damage.

IP Dragon: income from innovation (patents), creativity (copyrights) and commerce (trademarks) via intellectual property rights (IPR) is a growth market and creates jobs. Because of globalisation and digitisation, each company has more chances but is at the same time more vulnerable. Rewards and risks are linked.

But what is really special about Special 301?

If you are a WTO member state and you have an IP related problem with another WTO member state, you can take the take the case to the Dispute Settlement Body (DSB) of the WTO. But what if you are a company or a person? Then you first have to lobby with your government to take your case to the DSB. Every U.S. person (natural or legal) can take their case to the USTR. Until there is a possibility for industry groups, individual companies or natural persons, to bring their case against another country for not meeting their IPR obligations and commitments, there is a valid reason for the Special 301 procedure's existence.

To be continued, see Part IV.

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What is so special about Special 301 vis-à-vis China? Part II

The previous part can be seen here: Part I.

Yes, Special 301 is special, but what is rather normal?

Like each sovereign state, the US tries to use its power to encourage/pressure other countries to protect its interests as long as it honours its obligations and commitments. Or as the report states: "(..) USTR works to protect American inventiveness and creativity with all the tools of trade policy, including this Report." And since Special 301 is not incompatible with WTO, I don't see anything wrong with a USTR's assessment excercice from a legal perspective. Subjectivity is completely legitimate for a government. This time I do not share the outcry of Mike Masnick (see below) nor the indignation of my esteemed blogger colleague Shamnad Basheer of Spicy IP. However, I do share Mr Basheer's remark in his open letter to the USTR here that "[i]f your grudge is that we haven't complied with TRIPS, please feel free to take us to the WTO dispute panel." Yes, that is each WTO member's prerogative. From a Realpolitik point of view: the BRIC-countries (Brazil, Russia, India and China) are getting more powerful economically and might be able as a bloc to change the legal and political pressure to the other side, if they wanted to and if they would not be so divided.

To be continued: see Part III and Part IV.

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What is so special about Special 301 vis-à-vis China?

Each year, since 2005, IP Dragon dealt with the annual Special 301 reports, as a ritual dance in April which had to be described concisely and quickly. Not this year. The ferociousness of the tone by some (see below Messrs. Masnick and Basheer) against the perceived lack of legitimacy, methodology and flawed content of the report combined with the important subject matter made me take a closer look.

First the legitimisation of the Special 301 procedure and its report is explored; then the content of the report about the adequacy and effectiveness of intellectual property in China (this is IP Dragon, after all) is investigated (see Part II), then some of the criticism will be debunked (see Part , and some comments on a comment on Mr Masnick's article will be made. After that the testimonies of messrs. Donnelly, Smith, Mellis and Palmedo regarding IPR in China during the hearing will be looked into.

Legitimisation: "You are not strange, you are eh... special"

The Office of the United States Trade Representative (USTR) put China also this year on the so called 'Priority Watch List' and is again subject to 'Section 306 monitoring' ("the USTR may apply sanctions if a country fails to satisfactorily implement an agreement", however these sanctions are restricted to bringing a case to the WTO, see 'Statutory language versus undertakings that remove inconsistency' below). The USTR published its annual report in which it reviews the adequacy and effectiveness of the protection of intellectual property rights in and market access to U.S. persons that rely upon the protection of intellectual property rights.

The Special 301 procedure is pursuant to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994). It was controversial for some time, because many countries thought that it gave the USTR the right in case of a perceived denial of adequate and effective protection of IPRs or market access to retaliate unilaterally. Therefore the European Communities brought a case to the World Trade Organization, which got the code WT/DS152. See an excellent 63-page summary of the case, here.

The main complaint of the European Communities was that Section 301(c), which became later 19 U.S.C. Section 2411, authorises the USTR to "suspend, withdraw, or prevent the application of, benefits of trade agreement concessions", or "impose duties or other import restrictions on the goods of, and … fees or restrictions on the services of, such foreign country for such time asthe Trade Representative determines appropriate". It also came to the conclusion that because the U.S. is a member of the WTO it should bring its trade conflicts to a panel of the Dispute Settlement Body to solve the problems multilaterally. The same is also applicable to Section 306.

Statutory language versus undertakings that remove inconsistency

According to the panel the statutory language was indeed inconsistent with the obligations under the WTO Agreement. However, such inconsistency could be removed upon examination of the US' undertakings: namely a Statement of Administrative Action (SAA) in which the US promised to follow the route set out by the WTO to settle trade conflicts and made a promise that consecutive US governments will honour this pledge.

To be continued: see Part II, Part III and Part IV.

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Interview with Mr Joseph Simone About Which Steps The US Could Take in regard to IPR in China

IP Dragon's Danny Friedmann asked foreign registered lawyer and IPR in China specialist Mr Joseph Simone of Baker & McKenzie in Hong Kong about which course of action the US could take after the decision, WTO DS 362 Report, by the dispute settlement panel on United States’ complaint against “China — Measures affecting the protection and enforcement of intellectual property rights.”

IP Dragon: Could you please give your opinion on the best recommendation the IACC can give to the USTR in regard to their Special 301 Review about China's status: 'Priority Watch List or Priority Foreign Country/Section 306 Monitoring?
Joseph Simone: "I think the issue of thresholds is one which continues to deserve priority attention--along with the other issues mentioned in the 2009 Special 301 report of IACC. So "Priority Foreign Country" seems preferable, but if USTR has no plans to file an appeal or a fresh case in the very near term, then I'd expect them to decide on Priority Watch List and Section 306 Monitoring."

IP Dragon: Why should the US appeal the panel decision?
Joseph Simone: "It's quicker/cheaper than refiling- any refiling would probably require fresh data from industry- USTR wouldn't need more political support from Industry (really) to appeal - they arguably have a fiat already."

IP Dragon: What would a refiling mean?
Joseph Simone: "A refiling would require a lot more preparation work- an appeal would not annoy China so much as a refiling- the WTO Appellate Body has in the past shifted the burden of proof to defendants (here, China) in analogous cases, the latest being the one involving gambling (DS 285)."

IP Dragon: Did the US have enough information to base their claim?
Joseph Simone: "The US should in any case ask China for narrower data under a new article 63 (3) TRIPs request. The last one in 2006 was way to broad. If China comes through with useful data, the US may not need to ask industry for case info.

IP Dragon: What are your hopes in respect to what China should do?
Joseph Simone: "I'm really hoping China will wake up and decide to start a serious governmental/academic and legislative research project to reform all aspects of IP enforcement--including the Criminal Code.

IP Dragon: What is the magnitude of the problem of counterfeits that originate from China in the developing and developed countries?
Joseph Simone: "For example in Tanzania, between 15 and 20 percent of ALL GOODS circulating were found to be fakes from China, according to the Confederation of Tanzania Industries and up to 30 percent of medicines are counterfeit, according to a 2006 report by the World Health Organization. And for example in Japan, as you have seen, almost 82 percent of all counterfeit products originate from China."

More aricles about counterfeit goods in Africa originating from China:
- 'Tanzania: Counterfeit Drugs Put Lives at Risk', allAfrica.com, January 15, 2009, read here.
- Wadhams, Nick, 'Rapid Rise In African Anti-Counterfeiting Efforts Led By Developed Nations' IP-Watch, December 9, 2008, read here.
- Nakaweesi, Dorothy, 'Traders battle counterfeit products from China', Daily Monitor Uganda, October 14, 2008, read here

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How to Sanction Lack of IPR Enforcement in China: Priority Watch List (IILA) or Foreign Country/Section 306 Monitoring Status (IACC)

The International Anti-Counterfeiting Coalition (IACC) is an organisation that represents companies concerned with trademark counterfeiting and copyright piracy. The IACC submitted the following recommendations to the Office of the US Trade Representative (USTR) in their annual Special 301 review of intellectual property protection issues in foreign countries. As in the past years, China and Russia remain the main concern for the IACC. China should be dealt with as a Priority Foreign Country, Section 306 Monitoring, according to IACC.

The International Intellectual Property Alliance (IIPA), an alliance representing U.S. producers of content and materials protected by copyright laws, including computer software (BSA joined IIPA, see here), films, television programs, music, books and journals, has the most problems with China, Russia and Canada. The IIPA submitted these recommendations to USTR. It suggest to the USTR that China stays on the priority watchlist, see here. The IIPA also recommends that Hong Kong SAR deserves 'Special Mention' (which is a warning sign), read here and so does Taiwan, read here.

Priority Foreign Countries: those countries that USTR believes have the most onerous or egregious policies with the greatest adverse impact on U.S. right holders or products. These countries are subject to accelerated investigations and possible sanctions.

Section 306 monitoring: means that the USTR can move directly to the application of trade sanctions against China if monitoring shows a slippage in China's enforcement of bilateral intellectual property rights agreements. The USTR is granted this authority under Section 306 of the U.S. Trade Act of 1974.

Priority Watch List: those countries which do not to provide adequate IP protection and enforcement or market access for U.S. persons relying on intellectual property protection.

Special Mention: These countries have made progress in improving their level of intellectual property protection but USTR believes they still need to be monitored. USTR also included countries in which problems with intellectual property protection were beginning to become more serious.

I will elaborate on these recommendations, later.

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AmCham to USTR: "Remove Taiwan From Special 301 Watch List"

America's Chamber of Commerce (AmCham) in Taipei requested the Office of the US Trade Representative (USTR) to remove Taiwan from the Special 301 Watch List, a list of countries that are allegedly failing to adequately protect IPR and used as a trade tool.

Carrot more effective than stick?

In March, AmCham Taipei wrote a letter in which the laubable progress on the island was noted: Taiwan stenghtened its IPR legislation, tightened its enforcement, through the establishement of dedicated task forces, and the inauguration of a specialised IPR appelate court.

AmCham asserts that rewarding Taiwan for its achievement is the best encouragement for Taiwan "[..] to continue to move forward in IPR as parts of efforts to raise its investment environment to new levels of excellence." Read AmCham's request to Washington here.

Room for improvements

AmCham's 2008 White Paper is called: 'It's Time to Get Down to Business', see here.

The 2008 White Paper Committee on Intellectual Property & Licensing has produced a paper with recommendations to the Taiwan government, see here.

Crackdown on DVD copying factory

An example of Taiwan's actions against IPR infringements could be found in the Taiwan News of yesterday: There was a report by the Central News Agency of Taiwan that the Chiayi (northern Taiwan) unit of the Intellectual Property Protection Brigade under the Taiwan Provincial Police Administration held a DVD copying factory under surveillance for half a year. Whether this is (too) long, is hard to say, with the given limited information in the article. Read here.

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Deadline Submissions for Special Provincial Review of IPR in China Approaches

February 26, before 5 pm is the deadline for public comments concerning the locations and issues that should be the focus of a special provincial review of IPR in China.

April 28, 2006 the USTR released its annual Special 301 Report and announced to conduct a special provincial review.

"The goal of this review is to spotlight strengths, weaknesses, and inconsistencies, in and among specific jurisdictions, and to inform the Special 301 Review of China as a whole."

"Jurisdictions at the provincial level might include in addition to China's provinces (sheng), the four municipalities (shi) of Beijing, Chongqing, Shanghai, Tianjin, as well as China's five autonomous regions (zizhiqu)."

If the transparency increases at a regional level, countries can treat the regions that protect and enforce IPR adequately in a preferential way.

Read more here.

Richard Brubaker of All Roads Lead to China included the following question, while conducting a 20 city survey on manufacturing: "Are there any specific cases where IPR suits have been filed, and what was the outcome?" Read the results of the survey for Ningbo, Wuhan, Xian, Xiamen, Nanjing and Chendu here.

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