- Subject a greater range of violations to criminal investigation and penalties, and apply criminal sanctions to the import, export, storage and distribution of pirated and counterfeit products and to on-line piracy;
- Crack down on IPR violators through nationwide enforcement actions, increased customs enforcement actions and making it easier for rights holders to secure effective border enforcement;
- Improve protection of electronic works by ratifying and implementing the WIPO Internet Treaties as soon as possible, and by extending to local governments the existing ban on the use of pirated software by the central government and provincial agencies;
- Launch a national IPR education campaign; and
- Establish an IPR working group under the JCCT to consult and cooperate with the United States on the full range of IPR issues.
During the OCR, USTR systematically collected and evaluated facts relevant to assessing China's progress in fulfilling its JCCT commitments, its WTO obligations and its commitments under the 1992 and 1995 bilateral agreements with the United States (including additional commitments made in 1996). Through a letter and questionnaire to U.S. industry groups and a subsequent Federal Register Notice, USTR requested detailed information on the prevalence of IPR infringement in China generally, as well as on individual cases of IPR infringement. USTR received 34 submissions from industry, a number of which were very useful in USTR's review.
USTR has now completed the OCR, and is reporting the results in conjunction with this year's annual Special 301 review for China.
Infringement Levels Remain Unacceptably High
China's inadequate IPR enforcement is resulting in infringement levels at 90 percent or above for virtually every form of intellectual property, according to the OCR submissions that USTR received.
Overall piracy rates in China have not declined significantly since WTO accession, and in some sectors have increased from already extremely high levels. OCR submissions report estimated U.S. losses due to piracy of copyrighted materials alone ranging between $2.5 billion and $3.8 billion annually. Internet piracy is quickly becoming the number one threat to the copyright industry according to OCR submissions. End-user piracy of business software and other copyright materials, such as books and journals, remains a key concern.
OCR submissions also confirm that China has not yet achieved a significant reduction in trademark counterfeiting. On the contrary, in 2004, the value of Chinese counterfeits coming into U.S. markets seized by the United States increased 47 percent from US$94 million to US$134 million. These seizures continued to account for 67 percent of all U.S. Customs' IPR seizures in 2004. China's counterfeit products threaten public health and safety in the United
