Customs Enforcement: The export of infringing products from China is of grave concern worldwide. Right holders have praised the achievements of China Customs over the past year in increasing seizures, starting to refer criminal cases to police and prosecutors, and cooperating with U.S. right holders. The United States is encouraged by the 2007 Memorandum of Agreement between China's Customs Administration and U.S. customs authorities to cooperate on preventing the exportation of counterfeit and pirated goods. Nonetheless, the statistics on seizures of Chinese-origin goods at the U.S. border, cited above, indicate that additional efforts are needed to stop outbound infringing products at China's borders. The United States calls on China to begin an aggressive campaign to prosecute exporters of infringing products and to expand enforcement cooperation as agreed at successive JCCT meetings. Also, the United States remains concerned about China's rules for disposal of IPR-infringing goods, seized by Chinese customs authorities, which among other things, appear in some circumstances to mandate auction of seized goods following removal of infringing features, rather than destruction or disposal outside of the channels of commerce. The United States has included these customs border enforcement measures as part of its WTO dispute challenging apparent deficiencies in China's IPR enforcement regime.
Civil Enforcement: U.S. right holders won several victories in civil IPR litigation in China in 2007. However, the United States continues to hear complaints of a lack of consistent, uniform, and fair enforcement of China's IPR laws and regulations in the civil courts. Litigants have found that most judges lack necessary technical training; that court rules regarding evidence, expert witnesses, and protection of confidential information are vague or ineffective; and that costs of investigation and bringing cases are prohibitively high. In the patent area, where civil enforcement is of particular importance, the process is inefficient and unpredictable. Concerns have also been raised that some Chinese companies may be inviting local protectionism, for example by bringing civil cases in their home areas against foreign companies in order to obtain disproportionately high damages, compelling detention of foreign nationals, and obtaining litigation or patent filing subsidies, among other things.
Patents and Data Protection: While China's patent laws are largely compliant with the TRIPS Agreement, right holders have noted that the narrow scope of patentable subject matter under Chinese law makes patents for transgenic plants and animals and methods of treatment or diagnosis virtually unobtainable. Concerns have been raised regarding draft amendments to the Patent Law that were recently made available for public comment on issues such as: the role of compulsory licensing; introduction of a two-year period of "laches" after the expiration of the two year statute of limitation; continuing challenges with low quality utility model and design patents; the introduction of disclosure of origins of genetic resources used in the completion of an invention and the concern that that claims in a patent application may be rejected on the basis that this disclosure requirement is not met. A lack of clarity in laws involving generic drug patent infringement is contributing to the continued growth of drug counterfeiting, with corresponding health and safety problems. In that regard, the United States welcomes proposals in the 2008 Action Plan to more closely link patent grants to pharmaceutical marketing approval. In addition, the United States has concerns about the extent to which China provides adequate protection against unfair commercial use for data generated to obtain marketing approval.
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