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 semiconductor components in electronic equipment, including in equipment used for critical functions related to safety and security.

Where counterfeiting manufacturing and sales are concerned, attitudes regarding IPR infringement vary greatly by province and locality. For instance, administrative authorities in Shenzhen have lowered the criminal case thresholds for bringing cases against optical disk pirates, and those authorities regularly transfer cases for investigation to the Public Security Bureau. In one case, those authorities followed up regularly with online sales platform TenCent to discuss the company's enforcement efforts. By contrast, rights holders have expressed concerns that local Administrations for Industry and Commerce (AIC) in Guandong and Fujian have refused to refer cases for criminal prosecution even when thresholds are met. Even more worrisome are reports that in Fujian and Guandong, local protectionism has impeded rights holders who have investigated and provided clear evidence of counterfeiting operations (including, in one case, evidence of an entire supply chain to support massive counterfeiting of children's toys and accessories, from design to manufacturing to packaging) only to be stymied by provincial officials who have turned a blind eye to the evidence and have failed to act. The United States is encouraged that State Council Order 37 notes that provincial and local officials will be rated on their ability to enforce against IPR infringement in their provinces and localities, and hope that this will help motivate provincial and local leaders to shut down infringing operations.

On a positive note, trademark rights holders are beginning to report that there has been a noticeable reduction in the visibility of counterfeit goods for sale in some of the notorious physical markets. This appears to be the result of intensified criminal enforcement, and more proactive intervention by landlords. This may be attributable to steps taken by national and local AICs to target landlords of physical markets as part of a wider effort to promote enforcement of IPR rights, as well as Court decisions that have found landlords liable for infringement they knew or should have known was taking place on their premises. However, guidelines regarding landlord liability are not legally binding, and Court decisions in China's civil law system are not precedential. The United States therefore continues to urge the Chinese Government to include explicit provisions on landlord liability in the new amendments to the Trademark Law that are currently under consideration by the State Council's Legislative Affairs Office.

Furthermore, there remain many markets that continue to trade in counterfeit and pirated merchandise. In particular, there are still many markets that serve as wholesalers for counterfeits distributed around the world. These include the notorious Yiwu market where all types of products can be copied and exported throughout the world; or the night market in Putian which specializes in counterfeit athletic shoes, sports equipment, handbags, and watches, and where most products are being sold for export to U.S., European and African markets. The United States will examine markets such as these during the Out-of-Cycle Notorious Markets review in autumn 2012.

Counterfeit goods are also prevalent in online markets and auction sites, including those listed in the 2011 USTR Notorious Markets Report, as well as others such as DHGate, TradeMe, HC360, and Global Sources. Rights holders, however, are encouraged that the Chinese Government appears committed to intensifying efforts to address online counterfeiting, including through the issuance of SAIC Order 49, and through civil court decisions which have imposed liability on the 30