doubled in 2012 compared to the prior year, and that the number of criminal convictions appears to have doubled as well. However, while rights holders report some impact on counterfeiting activity in China, the problem remains widespread.
Trade Secrets
As noted above, trade secret theft is a serious and growing problem in China. Thefts may arise in a variety of circumstances, including those involving departing employees, failed joint ventures, cyber intrusion and hacking, and misuse of information submitted to government entities for purposes of complying with regulatory obligations. In February 2013, the independent information security firm Mandiant released a report that detailed efforts by an arm of the People's Liberation Army starting in 2006 to systematically infiltrate 141 companies in over 20 major industries, including 115 U.S. companies. Information reportedly stolen by this entity included "technology blueprints, proprietary manufacturing processes, test results, business plans, pricing documents, partnership agreements and emails and contact lists from victim organizations' leadership." The industries targeted have been listed as "strategic," emerging industries that need to be fostered and encouraged as part of China's 12th Five Year Plan.
Available remedies under Chinese law are difficult to obtain, given that civil, administrative, and criminal enforcement of trade secrets theft remains severely constrained. Enforcement obstacles include various deficiencies in China's Anti Unfair Competition Law, constraints on gathering evidence for use in litigation, difficulties in meeting the criteria for establishing that information constitutes a trade secret, and criminal threshold requirements that are unclear. As noted above, rights holders identify deficiencies in China's Anti-Unfair Competition Law (AUCL). Unlike other Chinese IP laws, the AUCL does not expressly authorize judges to issue certain provisional orders that are critical to the successful pursuit of a civil enforcement action. While China's new Civil Procedure Law may address, or partially address, that problem, there has been insufficient time to ascertain whether this new law is facilitating access to civil remedies in practice. Additionally, the AUCL only applies to commercial undertakings and requires that a trade secret have "practical applicability," which can limit the scope of protection for early stage research. There are other important weaknesses in China's civil enforcement system, including insufficient evidence-gathering, difficulties in obtaining preliminary injunctions, problems in obtaining procedures and the weight afforded certain kinds of evidence, such as the overreliance of original documentary evidence over oral testimony. Without changes to address these weaknesses, effective enforcement against misappropriation of trade secrets in China will remain illusory. The United States will continue engaging with China on these matters.
Legal Reform
Despite serious reservations regarding certain measures, the United States welcomes China's sweeping legal reform effort overall. In 2012 and early 2013, China invited comment on draft revisions to the existing laws on patents, copyrights, and trademarks. On January 1, 2013, a new Civil Procedure Law came into effect, which it is hoped will address some obstacles encountered by U.S. rights holders attempting to enforce their rights in civil court actions. Also effective January 1, 2013 was a judicial interpretation (JI) issued by the Supreme People's Court on the liability of Internet intermediaries ("Rules of Supreme Court on Several Issues Concerning the
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