Page:Special 301 Report 2015.pdf/45

 have not significantly deterred repeat and large-scale offenders who quickly place new postings offering infringing goods soon after complying with takedown notices.

In a welcome development, the SAIC published a report on IPR infringement and other concerns at the online sales platform Taobao. The report indicated that only about a third of products offered at the site were authentic. The United States commends SAIC's commitment to address this concern and urges Taobao to promptly address concerns identified in the report, consistent with the recommendations in the 2014 Notorious Markets List.

In another welcome development, in July 2014 at the S&ED, China committed to develop regulatory amendments to assert better regulatory control over manufacturers of bulk chemicals that can be used as API in counterfeit drugs. China recognized the goal of fighting against the illegal manufacture, distribution, and export of counterfeit and substandard pharmaceutical products. The United States urges China to implement these reforms in short order.

In another positive note, over the past year, U.S. investigators and prosecutors have improved bilateral law enforcement cooperation with their Chinese counterparts on significant cross-border IPR cases. This has allowed U.S. authorities not only to prosecute and convict distributors of counterfeit goods in the United States, but to further investigations by exchanging information with Chinese authorities about the companies in China that manufacture or traffic in those goods. In one example last year, U.S. authorities convicted two individuals of trafficking in counterfeit airbags imported from China. As part of the U.S. investigation, U.S. authorities shared evidence with Chinese authorities regarding the entities and individuals supplying the U.S. defendants with the airbags and the Chinese opened their own investigation. Subsequently, Chinese police raided those sources, seizing counterfeit airbags and auto parts valued at about $200,000 and arresting four individuals. According to Chinese authorities, based on business financial records, the operation made hundreds of thousands of dollars selling counterfeit auto parts primarily through e-commerce sites to customers in the United States, Canada, and elsewhere. The United States looks forward to working with MPS, GACC, and other enforcement authorities in China to pursue additional coordinated actions against traffickers of counterfeit goods and to seize fake products.

IPR and Technology Transfer Requirements

In addition to challenges with IPR protection and enforcement, rights holders in China must also contend with government measures, policies and practices, such as the recently-suspended ICT measures discussed above, that are purportedly intended to hasten China's development into an innovative economy, but that also disadvantage foreign rights holders. The United States is concerned about reports that many of China's innovation-related policies and other industrial policies, such as strategic emerging industry policies, may have negative impacts on U.S. exports 40