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Intellectual Rights Law

• Introduction

The purpose of this report is firstly, to understand the state of development of the Intellectual Property Rights (IPR) Law in various countries, and examine if such legal framework aids or hinders businesses. It will approach the IPR topic from a macro level, highlighting the challenges faced by various government bodies in effectively implementing IPR and the issues businesses face in complying with the legal requirements.

The report also attempts to study how the “Trade Aspects of Intellectual Property Rights (TRIPS)” Agreement helps to bring about greater harmony in the acquisition and maintenance of IPR within the WTO economies, its limitations and areas for enhancement.

For the purpose of this study, the project team had selected countries that are members of the WTO and are at various stages of IP implementation. Developing countries selected are China, Indonesia and Vietnam. At the same time, for the purpose of comparison, Singapore and USA were also included. The USA in particular plays an instrumental role in the international IP platforms.

• Intellectual Property Rights (IPR)

Intellectual Property (IP) generally refers to the creations of the human mind and IP rights protect the interest of the creators by granting them rights to their creation.

IP is categorized under industrial property and copyright. Industrial property protects inventions such as patents, industrial designs, trademarks as well as geographical indications. Copyrights, on the other hand, cover artistic creations such as books, music, paintings and technology-based work.

• State of IP Development in Selected WTO Economies

• China

The establishment and implementation of IPR laws have made great progress in China, taking only 20 years to achieve what other countries did in a century. According to “Report on China's Intellectual Property Protection in 2006”, with the economic development, the function of IP in Chinese economic construction and scientific and technological innovation has become increasingly important to the extent that the status and role of IP has been enhanced by the Chinese government to a historical height.

Great improvement was achieved in the protection of IP in China. “In 2006, three kinds of patent applications accepted by the State Intellectual Property Office (the SIPO) amounted to more than 570 thousand, and the trademark registration applications accepted by the Trademark Office under the State Administration for Industry and Commerce (the TMO) were more than 990 thousand. Fruitful results had been obtained in copyright protection. Notable results were attained for customs offices, public security organs and cultural departments to crack down on IP infringement and piracy. The protection of new varieties of plants achieved new progresses. The standard of IP judicial protection was raised continually. The level of IP international cooperation was improved constantly.”

3.2Indonesia

Indonesia has ratified the Agreement on Trade-Related Aspects of Intellectual Property Right (TRIPs), and is also a member of the World Intellectual Property Organization (WIPO). Currently, Indonesia has six Intellectual Property Rights (IPR) laws administered by the Directorate General of Intellectual Property Rights under the Ministry of Law and Human Rights:

3.3Singapore

With the changing Singapore business landscape and drivers of Singapore's economy, growth industries, specifically the biotechnology, pharmaceutical and information technology businesses, and creative industries like entertainment, fashion and gambling, have impacted the way IPR is to be managed in Singapore. Key challenges arose due to the nature of such industries and the blurring of traditional industry-lines (like entertainment and gambling).

The current set of IP laws would need to be re-examined, reviewed and adapted where applicable to allow for such industries to blossom and in due course promote Singapore as an international business hub and knowledge-based economy. Not unexpectedly, the Singapore government recognizes that a strong IP framework is important in attracting research-based, creative-based and copyright-sensitive businesses and commercial applications. This, together with other government initiatives, is important in helping Singapore as a knowledge-based economy.

The Singapore government also recognized that business commerce will trot or walk depending upon the IPR shaping its behaviours and actions. To encourage innovation and creativity and the growth of industry and commerce in Singapore, it is acknowledged that a robust IPR regime is critical. In addition, Singapore's legal and judiciary system has developed well and has kept pace with the latest developments and issues with regards to IP. It too has been perceived to be fairly capable of delivering well-reasoned judgements on complex and highly technical cases.

3.4Vietnam

“Stepping” into WTO, Vietnam has had more rights in selling goods to foreign countries and being recognized as an attractive destination for multi-national companies. In order to integrate and attract foreign investment from developed countries, Vietnam is determined to prevent infringement and to protect prestigious inventions, designs, trademarks, etc in order to encourage creative investment, setting up fairly competitive environment. In order to achieve this target, it needs the participation of government and the business itself.

In the past, there are various codes related to IPR in Vietnam, such as decrees and circulars, as well as internal regulations issued by the National Office of Intellectual Property. In late 2005, the new IP law was promulgated and came into effect in July 2006. Although it did not dramatically change the IP landscape, it developed the law in certain respects and, importantly, consolidated all existing IP laws.

As part of the WTO, Vietnam committed to the implementation of TRIPS convention, including all the regulations related to IP protection in which the countries could protect higher than the requirements that were mentioned in the TRIPS convention provided it is within the legal framework.

IPR in Vietnam is compatible with International Protective Standard. Most of the terms have been compatible with respective contents mentioned in bilateral or multi-international treaties.

3.5 USA

The United States of America is a forerunner in the field of IP. It has a well established legal framework that had been tried and tested. The United States Patent and Trademark Office (USPTO), which is a federal agency under the Department of Commerce had been established for more than 200 years. Its mandate is to promote the progress of science and the useful arts by securing for limited times to inventors the exclusive right to their respective discoveries (Article 1, Section 8 of the United States Constitution).

Although built based on similar concepts, when the US system is compared with the EU system, there are significant differences. For example, US patent system is based on “first to file” whilst EU's system is based on “first to invent”. This has significant implications on international business. When businesses from countries that adopted the EU IP system, they would need to bear in the mind these differences when doing business in US.

US also plays an influential role in international IP flora such as the WTO. A significant example would be its push for review of compulsory licenses by developing countries to access life-sustaining medicine. In a report tabled to the US congress, Ian Fergusson, specialist in International Trade and Finance reported that “The United States has been forceful in defending the interest of the US pharmaceutical industry in the negotiations. In December 2002, the US blocked a compromise on the compulsory licensing issue to which all other nations had agreed; however, it was also the first nation to ratify the December 2005 amendment.”

• Key Challenges in IP Protection

• Poor Enforcement and Dispute Resolution Mechanism

This is a prevalent issue amongst many of the newer members of the WTO including China, Indonesia and Vietnam.

All these countries, with the exception of Vietnam being one of the latest additions to WTO and is still developing its IP legal system, have put in place a well developed legal framework for IP protection. Many of them have also on-going review to ensure that the legal system is updated and relevant to the changing business environment.

• China

For example, great improvement was achieved in the protection of IP in China. “In 2006, three kinds of patent applications accepted by the State Intellectual Property Office (the SIPO) amounted to more than 570 thousand, and the trademark registration applications accepted by the Trademark Office under the State Administration for Industry and Commerce (the TMO) were more than 990 thousand. Fruitful results had been obtained in copyright protection. Notable results were attained for customs offices, public security organs and cultural departments to crack down on IP infringement and piracy. The protection of new varieties of plants achieved new progresses. The standard of IP judicial protection was raised continually. The level of IP international cooperation was improved constantly.”

However, China's system of legal enforcement of IPR is still young and lacks sufficient resources to significantly attack the current prevalence of infringement.

According to the International Intellectual Property Alliance, China was on the US software, music and movie industries' annual list of countries with the worst record of fighting piracy of copyright goods.

The industry coalition said, “…it ‘conservatively' estimates that US companies lost at least $30 billion to $35 billion in sales around the world in 2007. China again led the list with estimated lost sales in that market of $2.98 billion, from $2.43 billion in 2006. US business software companies suffered the biggest piracy losses $2.47 billion.”

• Indonesia

In the case of Indonesia, in spite of having a fairly well developed legislative framework in place, the country still continues to struggle with the problems of poor enforcement and dispute resolution mechanisms.

The US Trade Representative listed the problems in Indonesia as being on off “lack of effective IPR enforcement, adequacy of the new regulations to reduce the production, distribution, and export of pirated optical media products and… deficiencies in Indonesia's judicial system” (Letter from the International Intellectual Property Alliance to Ms Sybia Harrison, Special Assistant to the Section 301 Committee dated 2 December 2005).

As a result, the country was on the Office of the US Trade Representative's Special 301 Priority Watch List for violations of IPR since 2001. However, in Nov 2006, they were moved out of the priority list as they were observed to have taken steps to improve the enforcement of IPR protection in the country.

• Vietnam

Vietnam recognised that the most important thing in implementing IP is enforcement effectiveness. In spite of this, it has a high ratio in violation of IP although IP Law had been established. Violation of IP tends to be more complex, especially in IT industry, copyrights, trademark, design, source, etc. The phenomenon is wide spread, made serious and complicated by uncompleted legal framework, especially if the sanctions and punishments do not provide sufficient deterrent.

• Lack of Skilled and Knowledgeable Personnel

In order to effectively implement IP and enforcement, it is crucial to have a pool of knowledgeable personnel. Unfortunately, as IP Law and enforcement is a relatively new area in some countries, effective enforcement cannot be carried out smoothly.

For example, although Vietnam has 5 agencies, each with the separate mission, in charge of implementing IPR, their operations have not been effective due to the shortage of qualified staff and limited coordination amongst the 5 agencies.

• Lack of Public Awareness and Inadequate Information Services

Another challenge lies with the IP awareness level of general public especially in the business community.

In the case of China, although they took only 20 years to establish the current IP regime, the change in people's ideas and perceptions has been much slower. As such, they recognise the need to increase public awareness in IPR.

China's IPR chief Tian Lipu reiterated that China needed a long time to get the notion of IPR into people's heads. He said “There is this couple near my home. The husband earns a 50-cent profit for selling a watermelon and his wife earns the same for vending a pirated DVD. In their minds, the two things are the same - they don't know that a DVD is a product with IPR and that right should be honored. ”

“Ordinarily, people make judgments based on immediate gains and benefits and we need more efforts to make them regard IPR as a priority,” said Yan Xiaohong, deputy director of the National Copyright Administration. ”

• Striking a Balance and Misrepresentation Trap (Singapore)

Some key concepts and issues affecting the businesses in the area of copyright and related rights have been discussed and debated between the law makers and the business communities affected by the laws. Two issues will be discussed here :-

Striking a Balance

The issue of striking a balance between the protection of the creator's rights over his work and the provision of access to such information has become more intricate. The tussle and contention is on the flexibility in the application of IP laws for businesses (and countries) in areas like copyrighted works, such as academic research journals from transnational publishing houses and scientific databases and materials, which is critical for the transfer of scientific know-how and technology.

The Berne Convention Article 9(2) has allowed for considerable flexibility for respectively countries to design and adapt their IP regimes, but somehow, with the harmonization of TRIPS across member states, such a flexibility seems to have been withdrawn. This broadening of the protection of copyright has given greater incentives for authors but significantly confined the general access in the public domain and for innovators to build on one another's work. This has a significant impact on the research-based industries, like Singapore's biomedical sciences initiative. Local research institutes and biotech companies have been making impressive progress in drug discovery research and development but the desired protection of its IP has inadvertently stifled the proliferation of its benefits and wide-ranging use by other international researchers and users in a timely fashion. Such delays in its commercialization has affected the time-to-market for such drugs and caused these businesses significant opportunity costs.

The “Misrepresentation Trap”

The “misrepresentation trap” refers to the issue of patent revocation of the patent due to the specific reference to double patenting. This would mean that business owners and IP owners need to understand the consequences of adopting certain strategies from a wide range of routes to protect their IP. As part of Singapore's effort to internationalise its economy (and businesses), the issue of double patenting has been exacerbated when relying on corresponding applications in other jurisdictions.

For example, in the US it is common for a patent to be issued with apparatus claim (patent A), and for a second patent to be issued with closely-related method claims (patent B). If the patent owner chooses to rely on the examination results from patent A to substantiate his Singapore patent, then the method claims might not be admissible within that patent (because they may unrelated to the claims of patent A). However, under Singapore's jurisdiction and practice, method and apparatus claims can co-exist in one patent (ie, they have unity of invention). As such, the patent owner may not be able to protect the method claims as part of a second Singapore (divisional) patent, due to the consideration of double patenting.

This problem can be compounded where a series of sister applications are filed on the same day protecting different aspects of the single technology. Such applications could lead to double patenting interpretations as there may be overlap somewhere in the dependent claims.

Singapore's law made the issue worse as it produces conflicts between granted patents but also between pending patent applications. In addition, unlike many other countries, the onus is on the applicant in Singapore to avoid double patenting. If a mistake is made, the result may be a revocation of the patent.

Singapore may be said to be a victim of its own successes in the implementation of its IP regime. Despite some grouses by businesses on their level of involvement required in policing IP infringements, Singapore still stands head and shoulders above the others in the region. At this juncture of its transformation into a value-based and knowledge-based economy, Singapore needs to address these challenges where creativity and entrepreneurial spirit should not be straight-jacketed but instead could be engendered amongst its businesses and population in order for Singapore's economy to be sustainable.

• Contradicting Societal Values and Systems (Indonesia)

The communal nature of the Indonesian society makes it difficult for Indonesia to accept IPR concepts which emphasize individual rights. It is not an issue for society members if somebody else imitates their creation, either in the field of arts or in other fields. In fact, it is hard for them to understand why other people would have to be prohibited from using their creation?

In the life of the Balinese community, for example the principle of catur purusharta prevails, namely: dharma, artha, kama, moksa. The dharma principle creates a system of values or norms which require a person to do things that are useful for other people. In the field of science, the adnyanayoga principle motivates a person to share knowledge with other people, with the aim of empowering them. Imitation is a way to acquire knowledge from another person. No wonder then that IPR concepts appear rather strange to the Balinese community. Monopoly, or put in a more polite way, the exclusive right for its owner, is a dominant IPR concept. For the Balinese community, prohibiting other parties from using their (individual) creations is a strange thing to do, because they themselves have learned by imitating other people's work.

• Addressing IPR Challenges

• Country Specific Measures

In the countries that we have highlighted earlier, most of them are aware of the issues they are facing in the implementation of IP Law. They have taken steps to strengthen their legal framework, law enforcement and awareness level.

• China

In the case of China, Chinese President Hu Jintao promised the implementation of a new "national strategy" on IPR protection in the near future during the 17^th National Congress of the Communist Party of China held in October 2007.

China's blueprint in enhancing its IPR legal system lies was drawn up in a Five Year Plan. The State Intellectual Property Office (SIPO) elaborated :

“In the 11th Five-Year Plan (2006-2010), formulation and amendment of IPR laws and regulations will focus on encouraging independent innovation, optimizing innovative conditions, establishing and maintaining a sound investment for trade and investment and fair competition. China will continue its effort to completely establish an IPR legal system that contains Chinese characteristics while conforming closely to international practice.

In the five-year period, China plans to finish the following work in this regard:

1. Revising the Law on Patents, Law on Trademarks, Law on Copyright, and the implementation rules for all three;

2. Speeding up the drafting of regulations for folk literature and arts copyright protection and the Payment Standards for Works Played by Radio and Television Stations;

3. Expediting research into legislation for protection of new plant varieties, cultural heritage protection, traditional knowledge protection and geographical sign protection, and try to complete the National Basic Law on IP. Whenever any of the research or drafting of these laws or regulations is finished, SIPO will report to the Central Government so that the can be listed in the national annual legislative plan;

4. Completing relevant regulations for IPR law enforcement and the judgment criteria of IPR infringements;

5. Carrying out further research and the formulation of supplementary policies and supporting measures to IP laws and regulations;

6. Giving priority to the formulation of measures supporting independent IP rights and the industrialization of IP, and improving the flexibility of the laws and regulations;

7. Improving the IP legal system at the local level.”.

• Singapore

The Singapore's Ministry of Law stated that it is committed to help create an environment that is conducive for the development of IP, which covers patents, trademarks, copyrights, industrial designs, geographical indications, new plant varieties and integrated circuit topographies. In addition to enacting laws and formulating policies to create a conducive environment for business, with regards to IP, the Ministry also participates actively in the development of the international IP landscape. The Intellectual Property Office of Singapore (IPOS), a statutory board under the Ministry of Law, is mandated to implement the IP policies formulated by the ministry. IPOS provides the infrastructure, platform and environment for the creation, protection and exploitation of IP. Its core services include the registration of patents, trademarks and designs in Singapore. Besides operationalising the policies of the ministry, IPOS is also the secretariat of the Copyright Tribunal. In addition, several other institutions have also been setup to specifically deal with IP, namely the Composers and Authors Society of Singapore (COMPASS), the Recording Industry Association (Singapore) and dispute resolution centres like the Singapore International Arbitration Centre (SIAC) and the Singapore Mediation Centre (SMC).

Singapore's approach to protecting IP lies in a combination of comprehensive laws, strict enforcement and stiff penalties. The Copyright Act provides that persons found guilty of manufacturing, distributing or selling infringing articles of any work in which copyright exists are liable for a fine of S$10,000 per copy of pirated merchandise (up to S$100,000), a prison term of up to five years, or both. A civil action may not be enacted more than six years after the date of infringement. The law eases the copyright owner's burden of proof in infringement cases through a series of presumptions of ownership and subsistence of copyright. With the implementation of the Copyright (Amendment) 1998 Act, the law now permits copyright owners to ask the Customs and Excise Department to restrict the import of pirated articles. Individuals advertising or trading in pirated goods face prosecution, and the police have search-and-seizure powers in certain situations. Under the provisions of the US-Singapore FTA and with effect from January 1st 2005, criminal penalties for wilful infringement now apply to infringement that is not necessarily related to trade. This includes distribution via the Internet and significant infringement by companies using pirated software.

• Vietnam

In 2006, the legal documents on industrial property have been promulgated concerning industrial property including on handling administrative violations in the field of industrial property; intellectual property; confidentiality protection of testing data of agro-chemical products; and data protection applied to Drug Registration Dossiers.

However, recognising the weakness in its system of protection standard and procedure of implementing IPR, Vietnam has started to take steps to ensure that its IP regime's documentation continues to be promulgated timely, effectively, equitably,

• International Platforms

Implementation of IP Rights often cannot be confined to localized legal framework. With the promotion of international trade, issues pertaining to IP has now become cross border. The need to harmonize IP frameworks in different countries is increasingly important. In fact, many international platforms included IP as a topic for discussion. Some examples are listed in the table in Annex A.

Of these, the two most active organizations involved in defining and protecting IPRs are the World Intellectual Property Organization (WIPO) and the World Trade Organisation (WTO). Here we shall take a close look at the role of WTO in IP implementation and enforcement.

• WTO and The TRIPS Agreement

The WTO's Agreement on TRIPS was negotiated in the 1986-94 Uruguay Round and came into effect on 1 January 1995. For the first time, IP rules were introduced into the multilateral trading system.

The TRIPS Agreement is to date the most comprehensive multilateral agreement on IP. It is an attempt by WTO to narrow the gaps in the way various rights are protected around the world, and to bring them under common international rules. It establishes minimum levels of protection that each government has to give to the IP of fellow WTO members. Trade disputes on IPR could also be surfaced to the WTO's dispute settlement system. The scope of TRIPS is detailed in Annex B.

6.1 Dispute Settlement

Article 63 and Article 64 of the TRIPS spell out the requirement and procedure of dispute resolution through the Council for TRIPS.

In recent years, WTO had received repeated requests from US to resolve the deficiencies in China's IP regime. This is the result of several cases of China companies infringing on US IP Rights. (See Annex C & D for two media reports by ChinaDaily).

In the latest CRS Report for Congress dated 7 March 2008, Wayne M. Morrison

Specialist in International Trade and Finance, Foreign Affairs, Defense, and Trade Division, prepared a detailed report on China and US Trade Issues. One of the key areas highlighted in his report is the violation of US IPR by China. Specifically, two cases which were filed to WTO for resolution were against China for IPR. (See Annex E for cases)

• Criticisms of TRIPS

Since being in forced in 1995, there had been multiple criticisms on the effectiveness of TRIPS in bringing all WTO members under common international IPR rules.

• Interest of Developing vs Developed Nations within WTO

A recent controversy lies in the access to medicines by developing nations.

In the CRS report prepared for US Congress in Dec 2006, both developing and developed countries put forth their argument. From the developing countries' point of view :-

“The issue of access to affordable medicines is one of great concern to developing countries whose health-care systems are often overwhelmed by HIV/AIDS and other infectious diseases. Some developing countries have viewed the TRIPS agreement as an impediment in their attempts to combat such public health emergencies by restricting drug availability and by transferring scarce resources from developing countries to developed country manufacturers. For the developing world, the issue of compulsory licenses is an important test as to whether the WTO can meet the development needs of its members, and conversely, whether the developing world can influence the actions of the world trading system.”

On the other hand, the developed nations claimed :-

“Developed country pharmaceutical industries view the TRIPS agreement as essential to encourage innovation in the pharmaceutical sector by assuring international compensation for their intellectual property. Without such protection, industry claims it could not recoup the high costs of developing new medicines.”

• Influence of US on TRIPS decisions

In addition to the tussle between the two groups, one of the strongest criticisms had been the influence of US on IPR rules under TRIPS.

“United States has been forceful in defending the interest of the U.S. pharmaceutical industry in the negotiations. In December 2002, the United States blocked a compromise on the compulsory licensing issue to which all other nations had agreed however, it was also the first nation to ratify the December 2005 amendment.”

In an article published by the “Centre for International Development at Harvard University” on intellectual property, it said, “The US argues that IPRs encourage innovation by protecting inventors' right to their creation for a limited amount of time and allowing them to reap the profits that make innovation worthwhile. The US trade representative's firm stance on IPRs seems largely in line with powerful commercial lobbies, such as the pharmaceutical industry.”

China, who had been on constant attack by US on infringement of IP Law had also held strong views on the aggressive actions by the US counterparts.

In a dissertation written by a law student of Beijing University, he claimed that TRIPS was US's strategy to retain its competitiveness by protecting its intellectual property. Through TRIPS, US had indirectly increased the cost of developing nations in using their patented technology. Such actions were deemed as protectionist towards the large US enterprises.

• Unlevel Playing Field

Though many countries may claim that they had applied the TRIPS agreement provisions, as they may not be on level playing field with the developed countries, many may still be struggling with internal legal enforcement issues.

• Going Forward

With the limitations and criticisms highlighted earlier that seemed to shed a bleak future on TRIPS, would WTO continue to be effective in harmonising IPR and bringing its members under common international rules ?

To date, WTO members are on schedule in meeting deadlines set by the TRIPs agreement. They have established laws protecting various forms of IP. They also have established formal judicial channels to enforce IPR and legislated penalties to deter potential violations.

However, controversies such as that over genetically modified foods and patents on life forms may affect negotiations in agriculture and dispute settlement. “In addition, regional trade agreements have begun formulating their own IPR enforcement rules, making dispute settlement more complicated as the WTO wades through the conflicting, and often vague, IPR regimes.”

In spite of these, TRIPS continue to remain the most credible benchmark for international IPR practise. The process of developing IPR frameworks in each member country had also raised the standards of IPR awareness, implementation and enforcement. The teething challenges faced by developing nations are temporary. The playing field will find its equilibrium in due time, while WTO Council will continue to wade through disputes to find the most effective means of resolution.

Annex A

Annex B

Scope of TRIPS

TRIPS cover five broad issues:

• “How basic principles of the trading system and other international intellectual property agreements should be applied;

• How to give adequate protection to intellectual property rights;

• How countries should enforce those rights adequately in their own territories;

• How to settle disputes on intellectual property between members of the WTO;

• Special transitional arrangements during the period when the new system is being introduced.”

The areas covered by the TRIPS Agreement are :

• Copyright and related rights

• Trademarks, including service marks

• Geographical indications

• Industrial designs

• Patents

• Layout-designs (topographies) of integrated circuits

• Undisclosed information, including trade secrets

The agreement has three main features :-

• The Agreement spells out the minimum standards of protection to be provided to each WTO member. . Members are however, left free to determine the appropriate method of implementing the provisions of the Agreement within their own legal system and practice. It includes provisions requiring substantive obligations of main conventions to be fulfilled. These conventions include :-

• WIPO

• Paris Convention for the Protection of Industrial Property (Paris Convention)

• the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention)

“The TRIPS Agreement adds a substantial number of additional obligations on matters where the pre-existing conventions are silent or were seen as being inadequate. The TRIPS Agreement is thus sometimes referred to as a Berne and Paris-plus agreement.”

• The Agreement lays down certain general principles applicable to all IPR enforcement procedures for the enforcement of intellectual property rights.

• In the event of disputes between WTO Members about the respect of the TRIPS obligations, the Agreement spells out the procedures for dispute settlement procedures.

Annex C

US asks WTO to settle IPR dispute

(Xinhua) Updated: 2007-08-14 09:06

WASHINGTON -- The United States on Monday requested the World Trade Organization (WTO) to establish a dispute settlement panel regarding so-called China's deficiencies in intellectual property protection.

"The United States and China have tried, through formal consultations over the last three months, to resolve differences arising from U.S. concerns about inadequate protection of intellectual property rights in China," said USTR Spokesman Sean Spicer.

"That dialogue has not generated solutions to the issues we have raised, so we are asking the WTO to form a panel to settle this dispute," he added.

"We will pursue this legal dispute in the WTO and will continue to work with China bilaterally on other important IPR issues," he said.

The U.S. initiated the dispute over so-called China's deficiencies in intellectual property protection by requesting consultations with China on April 10, 2007.

Under WTO rules, the WTO Dispute Settlement Body (DSB) will consider the U.S. request for the establishment of a panel at its next meeting on August 31

Source : ChinaDaily (http://www.chinadaily.com.cn/china/2007-08/14/content_6025395.htm)

Annex D

China 'regrets' US repeated IPR complaint to WTO

(Xinhua) Updated: 2007-09-27 23:54

China regrets that the United States has appealed to the World Trade Organization (WTO) for the second time to set up an expert panel to investigate US complaints that China is failing to do enough to protect intellectual property rights (IPRs), a Chinese government spokesman said on Thursday.

The Chinese government would actively respond to the US request and protect China's interests under WTO rules, said Wang Xinpei, spokesperson of the Ministry of Commerce.

The WTO decided on Tuesday to establish the panel according to US request, after the first request was rejected by China last month according to WTO rules.

The United States initiated the case at the WTO on April 10, claiming that China's legal structure for IPR protection is unfairly deficient and inconsistent with WTO regulations. Consultations between the two sides failed to solve the dispute.

China had repeatedly expressed its position since the start of the case, and had showed great sincerity during negotiations, said Wang.

For nearly 30 years and particularly since joining the WTO in 2001, China had spared no efforts to improve its IPR legislation, and the legislation was in full accordance with WTO rules, said Wang.

By initiating the case, the United States was actually trying to change the international practice on IPR protection, with an attempt to make developing members shoulder extra obligations through the dispute settlement system.

China firmly opposed accepting obligations that went beyond what is prescribed in the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and believed that other developing members would not accept the outcome of such an attempt, said Wang.

Wang reiterated that China would continue to pay much attention to IPR protection, as it was necessary for China's economic development.

As a developing country, China is ready to make its due efforts for promoting worldwide IPR protection, Wang said.

Source : ChinaDaily (http://www.chinadaily.com.cn/china/2007-09/27/content_6140308.htm)

Annex E

Motion Pictures Association of America, Inc - IPR Piracy

“On December 12, 2007, the Motion Pictures Association of America, Inc. issued a press release stating that “China may have instituted a block on the import of American films into their country.”32 Although Chinese officials said no such ban was in effect, several U.S. industry officials claimed that such restrictions were in place and speculated they were in retaliation over the U.S.”

Toyota vs Geely - Trademark Infringement and Unfair Competition

“At the end of 2002, Toyota filed a lawsuit with the Beijing No 2 Intermediate People's Court against Geely, a fast growing domestic automobile manufacturer based in Zhejiang Province, for trademark infringement and unfair competition. Toyota claimed that Geely's trademark was confusingly similar to Toyota's trademark, therefore constituting trademark infringement, and that Geely's use of Toyota's trademark and making reference to Toyota's trade name constituted unfair competition. Toyota asked for a total of 14 million yuan (US$1.77 million) in damages, calculating the amount by charging 1 per cent of each of the over 20,000 cars sold. In addition, Toyota also petitioned to have its trademark recognized as a well known trademark. Because Geely was China's first domestic car manufacturer to be sued for IPR infringement, this case was also referred to as the first case of China's automobile industry after China entered the WTO.”

General Motors vs Chery for unfair competition

“In June 2003, GM accused a car model known as QQ manufactured by Chery, a domestic car manufacturer which was gaining momentum in growth, of copying its Spark (known as Matiz in Korea), a model manufactured by GM's Korean subsidiary GM Daewoo. Chery maintained no infringement and said it had obtained 24 patents for its QQ.

This high profile dispute attracted attention from the ministries of commerce of both countries. In January 2005, US Secretary of Commerce Donald Evans openly claimed that QQ is just a replica of Spark, and the fact that QQ's mathematical formula and other design information are stolen from GM Daewoo is almost irrefutable. The Chinese Ministry of Commerce interfered as early as December 2003 and discussed the IPR disputes with the parties. In 2004, State Intellectual Property Office stated that because GM Daewoo did not file for patents for its designs, these designs were not protected in China.”

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