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 The United States is encouraged by China's recent adoption of amended rules governing transfer of administrative and customs cases to criminal authorities. These rules are not a complete solution and do not address the problem of thresholds, but they show a desire to address the issue and could help to overcome a certain amount of bureaucratic inertia and other institutional barriers to increasing criminal enforcement. The United States is also encouraged that administrative authorities in a few parts of China, notably Shanghai, appeared to show greater willingness to take ex officio enforcement action on behalf of U.S. right holders without the need for a complaint. The United States would welcome more such action, combined with higher, deterrent fines.

The United States is also encouraged that authorities in China started to take enforcement actions against Internet piracy in 2005, following China's 2005 JCCT commitment to carry out a "nationwide crack-down on Internet piracy, including through enforcement at Internet cafes." This included a temporary campaign from October 2005 through February 2006, the concrete results of which remain unclear. So far, enforcement against Internet piracy has largely been a localized, administrative enforcement effort in a few cities. The problems of Internet piracy call for a coordinated, national effort backed by appropriate resources.

The United States also hopes that China will use its implementation of the 2006 Action Plan as an opportunity to examine a variety of structural reforms that would contribute to improving IPR enforcement. In addition to reforming China's criminal laws as discussed above, other areas that China should explore include the positive results that could be achieved through specialized national IPR courts and prosecutors, providing faster trademark examination, and ensuring that the resources available to local administrative, police, and judicial authorities charged with protecting and enforcing IPR are adequate to the task.

Customs Enforcement: The export of infringing products from China is of grave concern worldwide. The statistics on seizures of Chinese-origin goods at the U.S. border, cited above, speak for themselves. China's infringing products dominate the black markets of the world, and the reputation of China's industry has suffered as a result. China is not doing enough to stop the outbound infringing products at its borders. Now that China has put rules in place for transfer of customs cases to criminal authorities, the United States calls on China to begin an aggressive campaign to prosecute exporters of infringing products.

The United States also remains concerned about various aspects of China's 2004 customs regulations and implementing rules, which were intended to strengthen border enforcement and to make it easier for rights holders to secure effective enforcement at the border. For example, these rules impose a deadline of only three days for a right holder to apply for seizure of suspected infringing goods held by Chinese customs. In addition, disposal of confiscated goods remains a problem under the implementing rules, which appear to mandate auction, rather than destruction, of infringing goods not purchased by the right holder or used for public welfare.

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