ENFORCEMENT
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Office of the Intellectual Property Enforcement Coordinator<br />
CHINA IN FOCUS: A SNAPSHOT VIEW OF IPR POLICIES AND PRACTICES<br />
“Effective IPR enforcement remains a serious problem throughout China. IPR enforcement is hampered by lack<br />
of coordination among Chinese government ministries and agencies, lack of training, resource constraints, lack of<br />
transparency in the enforcement process and its outcomes, procedural obstacles to civil enforcement, and local<br />
protectionism and corruption.”<br />
USTR Report to Congress on China’s WTO Compliance (Dec. 2015), p. 120<br />
As detailed by the U.S. Government in annual<br />
IPR-related reporting, China’s weak protection of<br />
intellectual property presents serious implications for<br />
global commerce. Between FY 2005 and FY 2015, the<br />
Department of Homeland Security seizures related to<br />
intellectual property right (IPR) violations leapt from<br />
8,022 to 28,865, with products originating in China<br />
and Hong Kong (often used as a transit point from<br />
goods originating from the mainland) accounting for<br />
83% of all IPR seizures in 2015. These violations of<br />
intellectual property rights cause significant business<br />
losses, undermine U.S. competitiveness in the world<br />
marketplace, undermine the rule of law, and in many<br />
cases, threaten public health and safety, among other<br />
attendant harms.<br />
China has undertaken a wide-ranging revision of its<br />
framework of laws and regulations aimed at protecting<br />
the intellectual property rights of domestic and foreign<br />
right holders. However, inadequacies in China’s IPR<br />
protection and enforcement regime continue to present<br />
serious barriers to U.S. exports and investment and to<br />
affect our markets at home. 27 The U.S. Government<br />
again placed China on the ‘Priority Watch List’ in<br />
USTR’s Special 301 report, and several Chinese markets<br />
were among those included in USTR’s 2015 Notorious<br />
Markets List, which identifies online and physical<br />
markets that exemplify key challenges in the global<br />
struggle against piracy and counterfeiting.<br />
China continues to present a complex and<br />
contradictory environment for protection and enforcement<br />
of IPR. Welcome developments include repeated<br />
affirmation of the importance of intellectual property<br />
by China’s leadership, an ongoing intellectual property<br />
legal and regulatory reform effort, and encouraging<br />
developments in individual cases in China’s courts.<br />
At the same time, progress toward effective<br />
protection and enforcement of IPR in China is<br />
undermined by unchecked trade secret theft, market<br />
access obstacles to ICT products raised in the name<br />
of security, measures favoring domestically owned<br />
intellectual property in the name of promoting<br />
innovation in China, rampant piracy and counterfeiting<br />
in China’s massive online and physical markets, extensive<br />
use of unlicensed software, and the supply of counterfeit<br />
goods to foreign markets.<br />
Additional challenges arise in the form of obstacles<br />
that restrict foreign firms’ ability to fully participate<br />
in standards setting, the unnecessary introduction of<br />
inapposite competition concepts into intellectual property<br />
laws, and acute challenges in protecting and incentivizing<br />
the creation of pharmaceutical inventions and test data.<br />
As a result, surveys continue to show that the uncertain<br />
intellectual property environment is a leading concern for<br />
businesses operating in China, as intellectual property<br />
infringements are difficult to prevent and remediate, and<br />
may cause businesses to choose not to invest in China or<br />
offer their technology, goods, or services there.<br />
As the USTR reports indicate, China’s IPR-related<br />
policies and practices cause particular concern for<br />
the United States and U.S. stakeholders across a wide<br />
variety of areas, including, but not limited to trade<br />
secrets, ICT policies, technology transfer requirements<br />
and incentives, widespread piracy and counterfeiting<br />
in China’s e-commerce markets, software legalization,<br />
counterfeit goods, technical standards involving IPR,<br />
anti-monopoly law enforcement, and IPR protection for<br />
pharmaceutical innovations.<br />
At the same time there have been some positive<br />
developments. In the context of Chinese President Xi<br />
Jinping’s September 2015 visit to Washington, D.C.,<br />
the United States and China made a seires of cyber<br />
commitments, including that neither state would engage<br />
in the cyber-enabled theft of intellectual property for<br />
commercial gain. Since that commitment, we have seen<br />
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