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 Customs/Administrative Enforcement: The export of infringing products from China is of grave concern worldwide. At the U.S. border alone, counterfeit and pirated imports from China account for 67 percent of seizures by U.S. Customs and Border Protection, and the value of the products seized rose by 47 percent in 2004. Seizures by Chinese customs authorities are down, despite China's JCCT commitment to increase customs enforcement actions. Rights holders report finding infringing products of Chinese origin in most major world markets, but being unable to secure customs seizures in China. This raises serious concern.

Following China's April 2004 JCCT commitments, China's General Administration of Customs (GAC) issued new regulations and implementing rules intended to strengthen border enforcement and to make it easier for rights holders to secure effective enforcement at the border. The new regulations outline GAC's duties and provide guidance on the implementation of the customs IPR recordal mechanism, extend the term of IPR recordations from seven to ten years, and lower the cap on the security bonds required from rights holders seeking the seizure of allegedly infringing goods. In a significant step backward, however, the new rules no longer expressly authorize customs authorities to levy administrative fines on companies engaged in trading counterfeit or pirated goods and reduce the fines that Customs authorities can impose from 100 percent to 30 percent of the value of the goods. Proposed amendments to China's Foreign Trade Law also fail to address this important issue. In addition, the new measures fail to address the transfer of cases for criminal investigation and prosecution and do not authorize nationwide bonding to cover China's more than 100 customs ports of entry. Disposal of confiscated goods also remains a problem under the regulations, which allow for auction rather than mandating destruction of seized goods.

Civil Enforcement: In part because of the ineffectiveness of the administrative and criminal enforcement systems in China, there has been an increase in the number of civil actions seeking monetary damages or injunctive relief. Most of these actions have been brought by Chinese rights holders, although foreign rights holders are increasingly turning to the civil system for redress. While seeing some success, we continue to hear complaints of a lack of consistent, uniform and fair enforcement of China's IPR laws and regulations in the civil courts. Litigants have found that most judges lack necessary technical training, court rules regarding evidence, expert witnesses, and protection of confidential information are vague or ineffective, and the costs of investigation and bringing cases are prohibitively high. In the patent area, where civil enforcement is of particular importance, the process is inefficient and unpredictable. A single case can take four to seven years to complete.

Copyright infringement on the Internet is a growing phenomenon in China because of loopholes in existing regulations and implementing rules. Despite its JCCT commitment, China still has not acceded to the WIPO Internet Treaties. China's current regulations, implementing rules and judicial interpretations do increasingly address copyright issues related to the Internet. China is currently drafting additional Internet-related regulations.