Assessing Compliance with the TRIPS Agreement in China

Implementing the TRIPS Agreement in China

The Impact of the TRIPS Agreement on the IP System in China

In this chapter, China’s compliance with the obligations associated with the World Trade Organisation (WTO) Agreement on Trade-Related Intellectual Property Rights (TRIPS) will be discussed. China’s implementation of the TRIPS Agreement into domestic intellectual property (IP) legislation will first be introduced, and then the implementation of TRIPS obligations into the enforcement system will be considered. Then, overall compliance with the TRIPS Agreement will be evaluated. Compliance will incorporate both procedural and substantive compliance as well as compliance with the spirit of the treaty. The chapter will conclude by examining how China’s TRIPS compliance has been formally challenged through the use of WTO’s dispute settlement mechanism since accession in December 2001.

According to research conducted on China’s pre-WTO entry compliance with TRIPS, China needed to make substantial changes to the law to comply with the TRIPS norms. Almost 40 substantive TRIPS requirements were identified, of which China was already compliant with less than half (Maskus 2002). Consequently, China needed to take action to comply with the remaining requirements. The actions required to comply with the remaining provisions included the following:

  • • Removing discrimination to uphold the national treatment principle
  • • Restricting compulsory licences
  • • Copyright: introducing rental rights and clarifying/enhancing performer rights and broadcast rights
  • • Trademarks: establishing protection for well-known marks, clarifying provisions on prior use and ineligible signs

© The Author(s) 2017 85

K. Thomas, Assessing Intellectual Property Compliance in Contemporary China, Palgrave Series in Asia and Pacific Studies,

DOI 10.1007/978-981-10-3072-7_5

  • • Introducing protection for geographical indications
  • • Patents: clarifying basic exemptions and coverage of plant and animal varieties
  • • Enforcement: sanctions to be enhanced, particularly preliminary injunctions and seizures, as well as levels of damages
  • • Ensuring the availability of judicial review

With such a multitude of changes necessary, it is clear that China faced a major legislative task to fully comply with all the TRIPS standards.

From the responses gathered in the initial stage of this research project, it is immediately clear that China’s IP system changed dramatically in response to the TRIPS Agreement. On the initial questionnaire dispatched in 2005, respondents were asked if they had noticed any changes in the intellectual property system in China in the past five years. Of the 45 valid responses, 43 stated that they had noticed a change, with only two respondents noticing no change. Furthermore, when asked to characterise this change as positive or negative on a scale of -2 to 2 (with -2 representing strong negative changes and 2 representing strong positive changes), the changes were ranked 1.26 by respondents, which suggests that respondents overall perceived the recent changes observed as positive. Moreover, it is notable that only one respondent judged recent changes to be negative.

However, the influence of the TRIPS Agreement on the framework of intellectual property protection in contemporary China actually predated WTO accession by several years. Despite not being a full member, China did participate in the Uruguay Round of negotiations as an observer and had used the TRIPS Agreement as a model law to improve the IP legislation throughout the 1990s (Yang 2003, p. 139). Moreover, the influence of the TRIPS Agreement on the intellectual property system in China was not limited to substantive changes in the formal laws and regulations. Besides the role of TRIPS as a model for China’s legislative improvements of the IP protection system, TRIPS implementation also raised the prospect of using the formal dispute settlement proceedings provided by the WTO to make “an objective determination on the efficacy of enforcement measures” (Taubman 2003, p. 347). This possibility further increased the emphasis on enforcement of substantive rights that was already being stressed by foreign rights-holders and trade partners alike.

Indeed, several respondents did explicitly refer to this function of the WTO, as:

The threat of the WTO dispute settlement procedures1 Another respondent felt that:

The dispute resolution mechanism in there probably does have a little bit of fear factor and also (pulling) factor.2

Thus, the impact of WTO entry in terms of China’s TRIPS commitments was multifaceted. Firstly, the TRIPS Agreement was said to have been influential during formal legal revisions of the 1990s. Secondly, the threat of the dispute resolution mechanism that is part of the WTO framework may also have held a bit of a “fear factor” for China. More importantly, the TRIPS Agreement led directly to wide-ranging legislative changes in intellectual property protection and finally, there were also important changes in the IP enforcement system directly linked to WTO accession. These important legislative changes and changes to the enforcement system made as part of China’s attempts to observe its TRIPS obligations, as well as an outline of the resulting post-TRIPS system of protection, will be presented below.

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