Page:Special 301 Report 2007.pdf/42



On April 28, 2006, USTR announced in its annual Special 301 report that the United States would conduct a special provincial review (SPR) in the coming year to examine the adequacy and effectiveness of China's IPR protection and enforcement at the provincial level. This review spotlights strengths, as well as weaknesses and inconsistencies, in and among specific jurisdictions, and informs the Special 301 review of China as a whole.

Strengths identified in this review include the following:

 Beijing is showing leadership in the area of Internet piracy. There have also been notable cases against Internet piracy in Xiamen (Fujian) and Guangdong.

Shanghai closed down a notorious market for infringing goods and has sought to enhance cooperation with rights holders.

Jiangsu has issued rules requiring audiovisual business operators to carry proof of relevant licenses and legality of products sold in their retail outlets.

Guangzhou (Guangdong) and Beijing achieved measurable reductions in retail piracy during a 100-day crackdown in 2006, according to an industry survey.

Customs authorities in Xiamen (Fujian) reportedly cooperate well with foreign rights holders.

Zhejiang reportedly transferred 109 administrative trademark cases for criminal prosecution in 2005.

Shanghai authorities have instituted a pilot program to improve administrative-judicial coordination on IPR cases and allow police to conduct raids based on suspicion of criminal activity.

<li>Public security authorities in Guangdong and Fujian have taken some notable actions against pharmaceutical counterfeiting and other counterfeiting directed against major U.S. brand owners.</li>

<li>China's court system is gradually improving, particularly in Beijing, which has the largest number of civil IPR cases, and in Shanghai.</li> </ul>

Weaknesses and inconsistencies identified in this review include the following:

Guangdong and Zhejiang remained provinces in which rights holders most consistently encountered all types of counterfeiting, according to an industry survey. Guangdong, Zhejiang, and Fujian are home to major ports of lading for exports of infringing goods to the United States. In spite of the efforts of local authorities, Beijing and Shanghai remain centers for retail trade in pirated goods, and Yiwu (Zhejiang) remains a wholesale center, according to an industry survey. An industry group cited the Silk Market, Tianyi Market, and Yaxiu