TRIPS implementation and intellectual property enforcement in China

Regs of TRIPS, domestic implementation and impact upon China

The Regulations of TRIPS

Domestic Implementation and the Impact Upon China

The purpose of this work is to review relevant and available literature in relation to the Agreement on Trade Related Aspects of Intellectual Property or TRIPS in relation to IP Protection in China, as well as the impacts of TRIPS and to research this subject and then to accurately state the findings.

There is an expanding conflict that exists in relation to intellectual property rights and the violations against those rights of Americans by China individuals, companies, or entities. The piracy is illustrated through the pharmaceutical Viagra in relation to the Pfizer secured Chinese patent and the Chinese Ministry's categorization that imposes restrictions that allow the drug to be distributed at only a very few hospitals. Due to this generic Viagra is being sold in China by Chinese companies.

The problem is specifically that the remedies available in developing countries or those recently developed are few to none in relation to intellectual property. Cultural differences in regards to the amount of respect appointed to intellectual property rights vary greatly from one region of the globe to another.

The continued shift of manufacturing from Hong Kong and Taiwan to China

The greater access of Chinese manufacturers to world markets through the loosening of export controls; and Improvements in China's domestic distribution networks, particularly in communication and transport infrastructure.

Clark (2000) states that:

There is little doubt that freer trade will results in greater counterfeiting in the short-term. But greater counterfeiting in China would have occurred with or without China's accession to WTO, as long as China's economic growth continued. Moreover, the counterfeiting problems in China today are not unique to China. All developing countries pass through a stage of development where copying of products is widespread. Both the United States and Japan have passed through similar stages. The difference in China's case is that a country with one-fifth of the world's population will soon join the world's trading regime at the very time that international trade is freer than ever before. This has unleashed a flood of products both genuine and counterfeit onto the world market.

The Chinese IP Protection and TRIPS and the Problems/Impact and Recommendations of Actions to Improve

The comparison below shows clearly the differences that exists in TRIPS and China's Intellectual property laws:

Trips Agreement, Degree of Relevant

Provision/Article/

Compliance of Chinese Law

Requirement

Part I: General Provisions and Basic Principles

(1) Members to comply Complaint China is a party to the With Arts. 1-12 and Paris Convention

And Art. 19 of the Paris

Convention

National Treatment

Complaint Law doesn't discriminate required between Chinese and foreigners

Most favored nation Compliant Law does not discriminate treatment forbids between Chinese and Discrimination between foreigners

Between the nationals of members (Art. 4)

Part II Section 1: Copyright and Related Rights

10(1) Computer programs

Compliant Art. 7, Provisions

Programs, whether implementing in source or object code International to be protected as literary

Copyright Treaties works under the Berne

Convention

10(2) Compilations of Complaint Art. 14 Copyright

Data to be protected Law

Art. 8 Provisions

Implementing International copyright treaties

Rental Rights: Complaint Art. 14 Provisions

Authors of Computer Implementing

Programs and International

Certain cinematographic copyright treaties

Works have the right to authorize

or prohibit commercial rental of their copyright

China is in compliance throughout Part II Section One and as well is compliant throughout the Trademark section Part II Section Two, however in Part II Section 3: Geographical indications in relation to Protection of geographical indications and Additional Protection for geographical indications for wines China is not complaint and no legislation exists to protect geographical indications and spirits. China is compliant in Part II Section 4: Industrial Designs.

In Part II Section 5: Patents China is compliant in all areas except 27 Patentable subject matter: patents compliant available for any inventions whether products or processes, in all fields of technology provided that they are new, involve an inventive step and are capable of industrial application and in this area China is listed is "Essentially compliant" under articles 22 Patent Law and 25 Excludes scientific discoveries, rules and methods for mental activities and substances obtained by means of nuclear transformation. Exclusions not covered by TRIPS.

Under Part II Section 67: Layout Designs (Topographies) of Integrated Circuits China is not compliant and there is no legislation existent to protect layout designs of integrated circuits. In Part II Section 7: Protection of Undisclosed Information China is complaint however in Park II Section 8: Control of Anti-Competitive Practices in Contractual Licenses: China is not complaint but will become bound upon joining the WTO. This section is the control of anti-competitive practices in contractual licenses. A mechanism whereby a country seeking to take action again anti-competitive practices in contractual licenses can enter into the consultations with that other Member.

In Part III Section 1: General Obligations: (Enforcement of IP rights: effective enforcement proc3edures and judicial review shall be available. However does not require special intellectual property judicial system) China is stated to be complaint in view of the laws but in view of practice China is not always complaint. In Part III Section 2: Civil and Administrative Procedures and Remedies China is complaints although the laws are not always complaint. However in Part III: Section 2: 43 Evidence: Availability of disclosures/discovery of other side's evidence China is not complaint having no discovery or disclosure obligation but People's Court has the power to collect evidence from the defendant and other under Arts. 64 and 65 of the Civil Procedure Law. Furthermore under Part III Section 2: 47 and 48 China is only "arguably" complaint as follows:

47: Right of information: Court to have power complaint to order disclosure to plaintiff or third-party infringer. Article 60 of the Patent Law and Article 25 of the Anti-Unfair Competition Law holds not specific provision however, Article 118 of the General Principles of Civil Law provides that the plaintiff possess right to have ill effects of infringement eliminated. This is also including disclosure of third-party infringers.

48: Indemnification of the defendant in relation to the Courts holding of the power to order that damages be paid by the plaintiff to the defendant if enforcement complaint procedures are abused under Article 98 Civil Procedure Law which required compensation be paid if interim preservation is obtained and the Plaintiff loses the suit

China is complaint under Part III Section 3: Provisional Measures, Part III Section 3: Special Requirements Related to Border Measures, Part III Section 5: Criminal Procedures, and Part IV: Acquisition and Maintenance of Intellectual Property Rights and Related Interparties Procedures. China is "essentially complaint and "not complaint" in Part V. Dispute Prevention and Settlement 63 and 64 respectively. But will be required to comply with 64 Dispute Settlement under GATT rules upon joining the WTO.

In November of 1999 the U.S. And China negotiated WTO issue that was non-inclusive of issues relating to IP issues. China must:

Remove import and export barriers to licenses

Free up distribution networks; and if Taiwan also joins

China must as well

Institute direct trade with the Island.

On paper China complies with the majority of the TRIPS requirements, however, non-compliance exists in:

The Protection layout design of integrated circuits; and protection of geographical indications.

Some of China's rules of civil litigations procedure are not compliant at least not explicitly according to Clark (2000)

IV. TRIPS and Public Health

U.S. pharmaceutical and biotechnology companies invested the approximate amount of $33.2 billion toward activities of research and development which is about 18% of the sales total of all their combined products. The discovery costs in pre-tax amounts of a new drug experienced an increase from $500 million to $880 million between 1990 and 2003 and as well the time of waiting for approval and the like has grown in length due to regulatory requirements and other associated technicalities. In order to limit the risk in the activities related to therapeutic areas the U.S. companies must find business partners and associates in China and other countries who are trustworthy. (Greguraus & Banait, 2005)

Patents are generally not issues early in the approval process and it is at this time that there is a danger of these new drugs hitting the counterfeit market and many times the drugs have not been approved save for use. The generic drug market, in terms of counterfeit drugs is a growing one in India and China. It is vital that U.S. companies obtain patents in these countries as well as in the U.S. (Greguraus & Banait, 2005)

V. TRIPS and the Convention on Biological Diversity

The TRIPS Article 27.3(b) addresses certain items that may be excluded from patentability - plants and animals other than micro-organisms and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes. Stated is that members are required to provide for the "protection of plants varieties either by patents or by an effective sui generic system or by any combination thereof." (the Trips Council's work is informed by developments in other international forums including the World Intellectual Property Organization (WIPO)

Convention on Biological Diversity (CBD)

Food and Agriculture Organization (FAO); and United Nations Committee on Trade and Development (UNCTAD)

There are two reasons given in support of the viewpoint that states that there is an 'inherent conflict' between the TRIPS Agreement and the Convention on Biological Diversity (CBD) which are as follows:

The TRIPS Agreement, by requiring that certain genetic material be patentable or protected by sui generis plant variety rights and by not preventing the patenting of other genetic material, provides for the appropriation of such genetic resources by private parties in a way that is inconsistent with the sovereign rights of countries over their genetic resources as provided for in the CBD;"

The TRIPS Agreement provides for the patenting or other intellectual property protection of genetic material without ensuring that the provisions of the CBD, including those relating to prior informed consent and benefit sharing, are respected."

Those in disagreement are stated to cite the following reasons supporting the view that there is "no conflict" between the TRIPS Agreement and the CBD and little or no likelihood of a conflict in practical implementation:

The TRIPS Agreement and the CBD have different objects and purposes and deal with different subject-matter;"

The granting of patent rights over inventions that use genetic material does not prevent compliance with the provisions of the CBD regarding the sovereign right of countries over their genetic resources, prior informed consent and benefit sharing;"

No specific examples of conflict have been cited."

The WTO report states that:

The issue of what can be learnt about the relationship between the TRIPS Agreement and the CBD from the way in which the CBD refers to intellectual property matters and other international agreements has also been discussed: one view is that Article 16.5 of the CBD itself acknowledges a conflict between the objectives of protecting IPRs and those of the conservation of biological diversity when it states that "[t]he Contracting Parties, recognizing that patents and other intellectual property rights may have an influence on the implementation of this Convention, shall cooperate in this regard subject to national legislation and international law in order to ensure that such rights are supportive of and do not run counter to its objectives"; another view has been that the mere fact that the CBD refers to the possibility of conflict does not mean that one exists."

Arguments state that the following advantages would be realized by the proposed disclosure requirement:

it would help provide a predictable environment for governments, investors, traditional communities and researchers and would lead to more biotechnological R&D in developing countries;" it would facilitate the conclusion of contracts, such as material transfer agreements for the transfer of biological materials and information transfer agreements for the transfer of traditional knowledge;" several countries have already established such requirements in their national legislation as a means of implementing the CBD and there would be legal certainty if the TRIPS Agreement was amended accordingly;"

Incorporation of such an obligation in the TRIPS Agreement and its enforcement through the WTO dispute settlement system would provide a mechanism to help ensure compliance with the prior informed consent/benefit rules of the CBD."(WTO, 2002)

VI. Summary

It is apparent that there is much to be addressed in relation to the protection of Intellectual Property, most particularly in the developing countries of the world where little respect is given to rights associated with Intellectual Property. The dangers that inherently lie within the realm of generic and counterfeit medications is one area that simply cannot be overlooked or ignored in terms of the public health aspects that have become inclusive in view of this problem of counterfeiting and pirating of goods.

China is one country but yet accounts for a total of one-fifth of the population of the entire world and counterfeiting on this level is one that is horrendous but will stop upon Chinas joining of the World Trade Organization due to the obligatory compliance that will be including the General Agreement on Tariffs and Trade (GATT) Agreement on Trade Related Aspects of Intellectual Property (TRIPS).

Conclusion

Projections are that within five years of China and other countries having joined the WTO that infringement of Intellectual Property will decrease however it is projected as well that China's government will have to be very active in implementing more extension reforms in order to liberalize the domestic market in China and to allow People's Republic of China and other foreign companies to more freely import and export products.

Clark, Douglas (2000) IP Rights Protection Will Improve in China - Eventually - Online available at www.chinabusinessreview.com/public/0005/clark.html

The Relationship Between the TRIPS Agreement and the Convention on Biological Diversity (2002) Summary of Issues Raised and Points Made - World Trade Organization Report Noted by the Secretariat 2002 August 8 IP/C/W/368 (02-4363) Council for Trade-Related Aspects of Intellectual Property Rights ii the Relationship Between the TRIPS Agreement and the Convention on Biological Diversity (2002) Summary of Issues Raised and Points Made - World Trade Organization Report Noted by the Secretariat 2002 August 8 IP/C/W/368 (02-4363) Council for Trade-Related Aspects of Intellectual Property Rights iii the Relationship Between the TRIPS Agreement and the Convention on Biological Diversity (2002) Summary of Issues Raised and Points Made - World Trade Organization Report Noted by the Secretariat 2002 August 8 IP/C/W/368 (02-4363) Council for Trade-Related Aspects of Intellectual Property Rights iv Ibid