How to Address Intellectual Property Legal Dispute with Other
States in the Scope of International Trade from the Perspective of
China?
LLM International Trade and Investment Law
Graduate School of Universiteit van Amsterdam Faculty of Law
Presented by
Wang Xiaoyang (student number: 12349550) Email: wangxy0204_dl@163.com
26-07-2019
Thesis Advisor: Dr. Geraldo Vidigal
I affirm that I have written the dissertation myself and have not used any sources and aids other than those indicated.
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Abstract
In present international intellectual property trade affairs, China faces great intellectual property legal dispute with other States. How to solve those disputes effectively and properly is an important task of China for a better international trade development. This thesis will discuss the question through three main sections: firstly, the background of international intellectual property dispute of China, secondly, the analysis of the WTO Dispute Settlement Cases between China and United States and thirdly, the influence of TRIPS Agreements on China’s intellectual property protection both in legislative aspect and judicial aspect.
Through the analysis, it will find out the core reasons of the existence of intellectual property dispute – the defect of China’s intellectual property law or the inaccurate understanding of the requirements of TRIPS Agreement by United States. In the former situation, China should amend or draft detailed rules to better regulate the relevant intellectual property affairs; for the latter one, China will refuse the compromise of the unnecessary protection beyond the minimum standards which may impede competition in the domestic market.
After the research and analysis, this thesis gives several suggestions for China including a better understanding of the requirements of TRIPS Agreement, timely amendment of the legal defect of China’s intellectual property law and a more specific and detailed implementation method under the “Belt and Road” Initiative policy.
Key Words: international intellectual property protection; TRIPS Agreement; China’s
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Table of contents
Abstract ... 1
1. Introduction. ... 3
2. The Background of China’s International Intellectual Property Dispute. ... 3
2.1. China’s domestic intellectual property law. ... 3
2.2. The “Section 301” of US. ... 5
2.3. Requirements of TRIPS Agreement play a key role ... 5
3. The Case Analysis of Dispute Settlement between China and United States ... 6
3.1. Simple introduction of the WTO dispute settlement cases concerned. ... 6
3.2. Copyright aspect: China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights (DS362). ... 7
3.2.1. Article 4(1) of China’s Copyright Law. ... 9
3.2.2. Article 17 Berne Convention (1971). ... 11
3.2.3. Article 41.1 of TRIPS Agreement. ... 12
3.2.4. Interim conclusion of copyright aspect. ... 17
3.3. Patent: China –Certain Measures Concerning the Protection of Intellectual Property Rights (DS542)... 17
3.3.1. Article 29(2) of Regulation of the People's Republic of China on the Administration of the Import and Export of Technologies. ... 18
3.3.2. Articles 24, 27 of Regulation of the People's Republic of China on the Administration of the Import and Export of Technologies. ... 19
3.2.3. Article 43(4) of the Regulation for the Implementation of the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures. . 22
4. The Influence of TRIPS Agreement on China’s Intellectual Property Protection ... 27
4.1. Legislative aspect: ... 27
4.2. Judicial aspect: ... 29
4.3. The Influence of “Belt and Road” Initiative on China’s Intellectual Property Right Protection. ... 31
5. Conclusion ... 35
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1. Introduction.
As one of the Member States of WTO, China is supposed to comply the requirements of relative conventions and treaties of WTO concerned for a better international trade development, definitely including the aspect of the intellectual property protection in the international trade. However, China’s domestic intellectual property law and relevant domestic regulations are not completely consistent with the requirements in the treaties recognized by other Member States as well as the different interpretation of the TRIPS Agreement standards by the States, which attributes to intellectual property right protection problems and dispute, consequently obstructing the progress of over-border intellectual property trade.
To find out the approaches to address intellectual property legal dispute with other States in the scope of international trade, this thesis analyzes the question through three main sections, the background of China’s international intellectual property dispute, the analysis of WTO Dispute Settlement Cases between China and the United States and the influence of TRIPS Agreement on China’s intellectual property protection. The first section is to indicate the current existence of international intellectual property dispute between China and the United States, the second section is to research the reasons attributing the dispute and how to solve the dispute in an effective and proper way and the third section illustrates China’s attitude and its reaction of the pressure of international intellectual property protection. Finally, after the research and analysis, the thesis gives some suggestions to China for the addressing of international intellectual property dispute with other States.
2. The Background of China’s International Intellectual Property Dispute.
2.1. China’s domestic intellectual property law.
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bound by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) as one of the international legal agreement between all the member nations of the WTO, China has officially entered the TRIPS era.1 The TRIPS Agreement sets a series of minimum standards for the protection and enforcement of intellectual property rights of the parties, and imposes mandatory requirements on the domestic law of member states.2
In contrary to a comprehensive intellectual property rights code, China's intellectual property law is a legal system composed of a large number of independent single law.3 In legal practice, for a same case, the relevant laws has different or even opposite interpretations; in some areas, it is still existing some gaps that are not clearly defined by all the laws.4 No independent comprehensive intellectual property code leading to that some area leaves blank or has defect (which would be analyzed in the copyright aspect in the second section); some intellectual property regulations overlap each other making them conflicting or ambiguous (which would be discussed in the case analysis of international technology transfer dispute). All of these legal problems could be attributed that China, as one of the developing country—the appearance of intellectual property law and the consciousness of the protection on intellectual property rights are later than developed countries.5
Thus, compared with a comprehensive intellectual property code, China’s intellectual property system has serious defects. The current task of the State is to find out the legal conflict between China’s intellectual property law and the articles
1
UNGC “The Report of Working Party on the Accession of China (December 11, 2001)”, WT/ACC/CHN/49. https://www.wto.org/english/thewto_e/countries_e/china_e.htm.
2
Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994), Article 1(3).
3
In 1982, China promulgated the Trademark Law (and amended four times); in 1984, China promulgated the Patent Law. In 1986, China promulgated the "General Principles of Civil Law", which explicitly stipulated the protection of intellectual property rights; in 1990, China promulgated the "Copyright Law" to protect copyrights. In June 1991, the State Council promulgated regulations on computer software protection; In September, China promulgated the "Anti-Unfair Competition Law" and began to protect business secrets in plaintext; in March 1997, the State Council promulgated the "Regulations on the Protection of New Varieties of Plants." In addition to several separate laws and administrative regulations, China's revised Criminal Law in 1997 also contains a special chapter that provides for criminal sanctions against those who seriously infringe trademark rights, infringe copyrights, infringe on trade secrets, and impersonate others.
4
Liu Bochi, ‘Analysis of the Problems Existing in China's Intellectual Property Law under the Framework of TRIPS Agreement’ (2017) Industrial and Science Tribune, Issue 3, Volume 16, page 35.
5
The first intellectual property law of China, Patent Law, was stimulated in 1982, which is later than the first intellectual property right law of United States ( Copyright Law of United States 1790) for 192 years.
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provided in TRIPS Agreement and other relevant international intellectual property agreements initially, then amend the articles properly to undertake the obligation provided in the agreements if it really exists legal defects in those questioned provisions.
2.2. The “Section 301” of US.
The Trump Administration launched a Section 301 investigation of China’s intellectual property and patent policies in August 2017,6 and it has threatened to increase tariffs on nearly all remaining imports from China.7 In history, the Office of the US Trade Representative has launched five "301 investigations" on China, including three "special 301 investigations" for Chinese patents and intellectual property rights.8 After the United States implemented the Uruguay Round agreements and joined the WTO in 1995, the USTR still sometimes began Section 301 investigations but then brought the issues at hand to the WTO for dispute resolution whereas after 2010, the USTR brought all trade disputes involving WTO members directly to the WTO for adjudication.9 After the Section 301 investigation in 2017, United States requests WTO for the consultation named China –Certain Measures Concerning the Protection of Intellectual Property Rights (DS542), which would be discussed in the second part.
2.3. Requirements of TRIPS Agreement play a key role
However, whether China violates the obligations of intellectual property protection provided in the TRIPS Agreement and other relevant international agreements or not does not depend on the one side arguments of United States, but on whether China’s
6
Sections 301 through 310 of the Trade Act of 1974, as amended, are commonly referred to as “Section 301.” It is one of the principal statutory means by which the United States enforces U.S. rights under trade agreements and addresses “unfair” foreign barriers to U.S. exports.
7
Wayne M. Morrison, ‘Enforcing U.S. Trade Laws: Section 301 and China’(2019) Congressional Research Service.
8
The Special 301 Report is prepared annually by the Office of the United States Trade Representative (USTR) that identifies trade barriers to United States companies and products due to the intellectual property laws, such as copyright, patents and trademarks, in other countries. The documents could be found on the website of USTR: https://ustr.gov/search.html?q=301+section++on+China
9
Wayne M. Morrison, ‘Enforcing U.S. Trade Laws: Section 301 and China’(2019) Congressional Research Service.
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intellectual property law is inconsistent with TRIPS Agreement. On the one hand, there is an opinion that, for China, to avoid political and trade retaliation under WTO, it is wise to combine the compliance with the minimum standards of TRIPS Agreement proposed by foreign researchers; whereas the unnecessary protection beyond the minimum standards may impede competition in the domestic market and the formulation of high standards will produce the view of overprotection issues prematurely.10 Although there are specific rules in TRIPS Agreement for the Member States complying, the understanding of those rules may differ through different interpretations. The vital task is to seek out the true meaning of the articles in the agreement and the fairest approach to regulate the international trade.
On the other hand, although it is admitted that the intellectual property law in China has a great room for improvement, China will not admit the unwarranted charges from other States, especially from the United States. To discuss this legal issue more specifically, this thesis will discuss the cases of dispute settlement of the WTO Panel between China and other States according to TRIPS Agreement, and among 41 cases cited TRIPS Agreement in the request for consultations,11 there are three cases that China as respondent requested by United States in the scope of intellectual property protection.
3. The Case Analysis of Dispute Settlement between China and United States
3.1. Simple introduction of the WTO Dispute Settlement Cases concerned.
Here are three dispute settlement cases found in the WTO website, including China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights (DS362), China–Certain Measures Concerning the Protection of Intellectual Property Rights (DS542) and China–Certain Measures on the Transfer of Technology
10
Wei Li and Xiang Yu, ‘China’s intellectual property protection strength and its evaluation – based on the accession to TRIPS Agreement (Agreement On Trade-related Aspects of Intellectual Property Rights)’(2015) R&D Management, Issue 4, page 399.
11
Index could be found on WTO website:
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(DS549)—patent and protection of undisclosed information. But current status of the second one is Panel composed and the third one is in consultation. Neither of them has Panel Report, thus to indicate the legal issues clearly, it can only find out the claims raised by United States, summarizing the main issues of patent protection and then analyzing the rules of China’s intellectual property law and TRIPS Agreement, referencing the scholars’ opinion and jurisprudence of those issues.
The international dispute settlement cases related to intellectual property works between China and other States also include the cases named China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products (DS363) and China – Measures Related to Demonstration Bases and Common Service Platforms Programmes (DS489). However, the core disputing point in these cases is not exactly relevant to intellectual property rights—the former one is about articles of GATT Agreement and GAT Agreement concerning the market access commitments between China and United States while the latter one is concerning the provisions under SCM Agreement, in terms of the certain measures providing subsidies contingent upon export performance to enterprises in several industries in China. Due to those dispute cases are not relevant enough to the discussion on intellectual property rights, this thesis would not make analysis on them. Instead, the main content focuses on the China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights (DS362) and China – Certain Measures Concerning the Protection of Intellectual Property Rights (DS542).
3.2. Copyright aspect: China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights (DS362).
A document published by United States International Trade Commission in 2011 shows that US firms experiencing intellectual property right infringement in China reported total global losses of $48.2 billion in 2009 due to that infringement, with significantly higher losses from copyright infringement than from other types of
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Chinese IPR infringement,12 showing that the conflict of copyright protection between China and United States takes up the largest part of the intellectual property protection issues, taking an unparalleled position in the intellectual property protection dispute. To solve the question, it is hard to ignore the first far-reaching WTO Dispute Settlement Case between China and US, in the scope of IP protection — China –Measures Affecting the Protection and Enforcement of Intellectual Property Rights (DS362), showing the dispute between Copyright Law of China and the relevant provisions under TRIPS and the reasons contributing this which has a great value to discuss.
The Panel of this case concludes that “the first sentence of Article 4 of Copyright Law13, was inconsistent with China's obligations under: (a) Article 5(1) of the Berne Convention (1971) 14, as incorporated by Article 9.1 of the TRIPS Agreement15; and (b) Article 41.1 of the TRIPS Agreement.”16 The Panel reckons that that sentence, “works prohibited from being published or distributed in accordance with the law are not protected by this Law…” 17
, is inconsistent with the obligations the State should undertake under Article 5(1) of the Berne Convention, as those “illegal works” could not be protected just as what is stipulated in the Convention.18
After the releasing of the Panel Report, China amended the concerned rule and deleted the disputed sentence,19 to keep consistent with the requirements of the
12
Alexander Hammer and Katherine Linton, ‘China: Effects of Intellectual Property Infringement and Indigenous Innovation Policies on the U.S. Economy’(2011) United States International Trade Commission, page 3-9, https://www.usitc.gov/publications/industry_econ_analysis_332/2011/china_effects_intellectual_property_infringe ment.htm
13
Article 4(1) of China's Copyright Law states: “Works the publication and/or dissemination of which are prohibited by law shall not be protected by this Law.”
14
Article 5(1) of Berne Convention: “Authors shall enjoy, in respect of works for which they are protected under this Convention, in countries of the Union other than the country of origin, the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this Convention.”
15
Article 9.1 of TRIPS Agreement: “Members shall comply with Articles 1 through 21 of the Berne Convention (1971) and the Appendix thereto. However, Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Article 6bis of that Convention or of the rights derived therefrom.”
16
China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights WT/DS362/R, para. 7.191.
17
According to Article 4 of Copyright Law of China, those works violating the Constitution or laws or prejudice the public interest are “illegal works”, which are not protected by Copyright Law of China.
18
Under Article 5(1) of Berne Convention, there is no distinction of “legal works” and “illegal works”, thus all works, no matter the categories of them, should be protected by the Convention. The minimum standards of protection relate to the works and rights to be protected, and to the duration of protection, which could be found from the website of WIPO: https://www.wipo.int/treaties/en/ip/berne/summary_berne.html
19
After the amendment, Article 4: “The copyright owner's exercise of copyright shall not violate the Constitution and the laws, and shall not harm the public interest. The State has power to supervise and manage the publication and dissemination of works in accordance with the law.”
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Report, there still exists voice saying that China’s compliance still reflects an imperfect attempt to absorb WTO norms, as the dissident holds the view that yet the amendment did not dramatically alter the Copyright Law.20 The meaning of “paper compliance” here is that this amendment does not have actual effect, just pretending to comply the WTO obligation in intellectual property protection. Thus this part mainly discusses whether China’s copyright law was truly conflicting with the requirements of international agreement, the reason why China corrected the rule and the influence of the amendment.
3.2.1. Article 4(1) of China’s Copyright Law.
In practice, according to a number of regulations in China, the overseas works have to get the import licenses ratified by national administrative entities before legally imported into the State,21 otherwise the works cannot come into internal market of China legally. Some works are defined as “illegal works” under China’s copyright law which not only could not enter the internal market of China, but their dissemination would even be judged as crime by China’s Criminal Law because of their content.22 Article 4(1) refused to provide protection on this category of works. According to the Report, the core disputed point is the actual meaning of Article 5 (1) of Berne Convention and whether the protection copyright protection of “illegal works” is a part of obligation China should undertake provided by the Convention. As for the first point, there are two different viewpoints in respect of the understanding of Article 5 (1)—Panel agrees with the argument of United States that the article not only provides national treatment, but also the minimum protection of works pursued by the Convention—Article 5(1) of the Berne Convention (1971)
20
Timothy Webster , ‘Paper Compliance: How China Implements WTO Decisions’(2014) Michigan Journal of International Law, Volume 35 Issue 3, page 530.
21
The regulation includes “Administrative Measures of Importing Audio-video Products”, “Regulations on the Administration of Movies” and “ Notice on Strengthening the Management of Dissemination of Radio, Film and Television Program to the Public through Information Network”, etc. Various regulations deal with the different categories of overseas works’ importation into China.
22
For example, Article 363 of China’s Criminal Law is called Crime of Spreading Pornographic Works; the written reply of the National Copyright Administration of China to the Supreme People's Court of China in the Inside Story case was translated as follows: "Yet the 'works the publication and dissemination of which are prohibited by law' in Article 4 of the Copyright Law refer only to works whose contents are illegal (reactionary, pornographic, or superstitious contents)."
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provides for the enjoyment of two overlapping sets of rights that have been described as “the twin pillars on which protection under the Convention rests”23
;24 However, another viewpoint (Wang Qian, 2009) in China argues that the core principle of the article is national treatment, as the headline of this article in Guide to the Berne Convention for the Protection of Literary and Artistic Works (Paris Act, 1971) is “National Treatment”25
. In his opinion, because of under the headline named “National Treatment”, the article concerned is just for the national treatment. China’s Copyright Law does not violate Berne Convention, as China implements the same content review upon the works originated domestically and those domestic “illegal works” are not protected by the copyright law, neither. In other words, there is no discrimination between the domestic copyright works and abroad copyright works.
However, the opponent (Hang Jiang, 2015) holds that the title “National Treatment” of the Article 5(1) cannot be a sound reason, because the citation under the Article 1of Berne Convention states that: “Each Article and the Appendix have been given titles to facilitate their identification.” Thus the title is just for convenience to search out the provisions which cannot be the basis of understanding the true meaning of the article. Furthermore, national treatment and minimum standard are two aspects of rights contained by Article 5 (1) which could overlap by each other but are not totally contained by each other.26
It is considered in this thesis that as an international treaty provision, the interpretation of this article should be read based on Article 31(1) Vienna Convention on the Law of Treaties (1969), which “shall be interpreted in good faith in accordance with the ordinary meaning of the article”. From the sentence structure of Article 5(1)—“Authors shall enjoy… the rights which their respective laws do now or may hereafter grant to their nationals, as well as the rights specially granted by this
23
Ricketson, S., The Berne Convention for the Protection of Literary and Artistic Works: 1886-1986 (Queen Mary College, 1987), p. 543, para. 5.66; and also Ricketson, S. and Ginsburg, J.C., International Copyright and
Neighbouring Rights – The Berne Convention and Beyond (Oxford University Press, 2006), p. 310, para. 6.90.
24
China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights WT/DS362/R, para.7.106.
25
Wang Qian, ‘WTO ‘China-US Intellectual Property Dispute’: What has the United States won?-- Evaluation of the panel's ruling on Article 4 of China's Copyright Law’(2009) Law Forum, Issue 4, page 23-31.
26
Jiang Hang, ‘Research on the Protection and Enforcement of Intellectual Property in China – In the Background of the First Case Between China and United States of America on TRIPS’(2015), Guangxi Normal University. Retrieved from https://vpn.cuc.edu.cn/kns/brief/,DanaInfo=kns.cnki.net+default_result.aspx
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Convention”, the conjunction “as well as” shows the authors enjoys not only national treatment rights but also the minimum protection provided in the Convention. Thus without “National Treatment” title, this article regulates both national treatment and minimum standard enshrined in the Convention obviously. The over-read of the title is the core dispute point, leading to different interpretation between China and the Panel in terms of article 5(1) of Berne Convention.
Therefore, it could be summarized that, although the title of the article is a part of the Convention, it is not the only consideration to understand the meaning of the article and the actual meaning of the article should be interpreted based on its ordinary meaning in terms of the article content itself. Therefore, as a Member State of the TRIPS Agreement and Berne Convention(1971), China has obligation to guarantee the minimum protection of copyright even if the overseas copyright works are identified as “illegal works”.
3.2.2. Article 17 Berne Convention (1971).
From the aspect of China, the State wants to regulate the works through the content review and it argues that every State has power to “permit, to control, or to prohibit, by legislation or regulation, the circulation, presentation, or exhibition of any work or production” under Article 17 Berne Convention (1971),27 and makes this as a reason defending for its measures’ reasonability.28 In terms of this, the Panel accepts that under Article 17, the three terms “circulation, presentation, or exhibition” are not necessarily an exhaustive list of the forms of exploitation of works. More importantly, a noticeable feature of these three terms is that, they do not correspond to the terms used to define the substantive rights granted by the Berne Convention (1971), although they may be included within some of those rights29 or they may refer to acts
27
Article 17 of : “The provisions of this Convention cannot in any way affect the right of the Government of each country of the Union to permit, to control, or to prohibit, by legislation or regulation, the circulation, presentation, or exhibition of any work or production in regard to which the competent authority may find it necessary to exercise that right.”
28
China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights WT/DS362/R, para.7.120.
29
For example, the term “la representation” is expressly included in the French text in Article 17 as well as in Articles 11(1)(i) (ii), 14(1)(ii) and 14bis(2)(b) in the phrase "la représentation et l'exécution", rendered as "performance" in the English text.
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incidental to the exercise of some of those rights.30 The interpretation made by the Panel means that the rights regulated by the authorities under Article 17 are not same as the minimum rights granted by the Convention. Therefore, it cannot be inferred that Article 17 authorizes the denial of all copyright protection in any work.31 In other words, the Panel finds that while China has the right to prohibit the circulation of “illegal works” under domestic law, which does not give the State right to the denial of all copyright protection of any work –the government still need to ensure the minimum protection of the work’s copyright.
This thesis also has another route to consider the question that the definition of “illegal works” is various in different countries and changes with time. For example, “Dream of the Red Chamber”, as one of the China’s four famous masterpieces was a prohibited novel in Qing Dynasty, but in the modern society, this masterpiece is respected by the world. The definition of the “illegal works” changes because of the evolution of culture and the development of whole society. A country has power to prohibit the publication and dissemination of some categories of works, but cannot deny the protection of its copyright. Thus this thesis agrees with the Panel’s opinion that Article 4(1) denying the protection of prohibited works is unreasonable and China should amend this provision. Therefore when a State regulates the circulation or presentation of any work, it only has the authority to review the work through its own standard and ban the work, but does not have right to refuse the responsibility of the copyright protection.
3.2.3. Article 41.1 of TRIPS Agreement.
Then, in terms of enforcement of remedies, to solve the issue concerning Article 41.1 of TRIPS Agreement, the Panel recalls its conclusion that the first sentence of Article 4 is inconsistent with China's obligations under Article 5(1) of that Convention,
30
For example, the word "la circulation" used in Article 17 of the French text is also used in provisions on possible limitations on the rights of translation and reproduction in Articles I(4), II(6), II(8), III(2)(b), III(4)(d), III(6) and IV(5) of the Appendix, rendered as "circulation" in the English text in Articles II(8) and III(4)(d) of the Appendix and "distributed" or "distribution" elsewhere.
31
China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights WT/DS362/R, para. 7.127.
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and in the absence of protection of the rights specially granted by the Berne Convention, there can be no enforcement procedures against any act of infringement of such rights with respect to the relevant works.32
The Panel states that from the text of Article 41.1 of the TRIPS Agreement which specifies that these procedures include "remedies".33 Where copyright protection is denied to a work under Article 4(1) of the Copyright Law, the judicial authorities have no such authority under Chapter V of the Copyright Law plus it is not asserted that they are available in China under any other law. Therefore, this set of enforcement procedures, including remedies, is not available to the right holders as required by Article 41.1 of the TRIPS Agreement. 34
Thus the Panel reckons that regardless of the works are illegal or not, the protection of copyright should be enforced through proper enforcement procedures under Article 41.1 of the TRIPS Agreement. In other words, a State has power to control or prohibit some works, but it still has the responsibility to protect their copyright through the procedures of remedy enforcement. Although China prohibits the publication and dissemination of “illegal works”, the only approach of “prohibition” is not enough for the remedy enforcement as mentioned above. Meanwhile, as the copyright of a work automatically generates as soon as the work is completed, no matter with its content or the State regulations.35 Back to the rules in China’s copyright law, the set of enforcement procedures, including remedies, is not available to the right holders of “illegal works” under Article 4(1) as required by Article 41.1 of the TRIPS Agreement.
However, as for the specific remedies, in the legal system of China, the compensation of infringement of IP (also in all other rights ensured by China’s law) is calculated based on the loss of “legal interests” of the copyright owner.36 In other
32
Ibid, 7.168.
33
For example, Articles 44, 45, 46 and 50 of the TRIPS Agreement specify that the judicial authorities shall have the authority to make certain orders, such as injunctions, orders to pay damages, orders for the disposal or destruction of infringing goods, and provisional measures.
34
Ibid, para.1.179.
35
Article 2 of China’s Copyright Law.
36
For example, Article 49 of China’s Copyright Law: “If there is an copyright infringement or a copyright-related right infringement, the amount of compensation given by the infringer should be calculated according to the actual loss of the right holder…”
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words, if the used works are illegal under domestic law, there is no legal interests the author could acquire through the “illegal works” in China’s internal market, then there would be no actual loss of the author. A scholar’s view (Li Yufeng, 2010) states that “for works that are illegal in content, as they cannot be published in China, even if someone has issued the works abroad, they still have no precondition for compensation. The compensation loss is calculated by the legitimate loss of the copyright owner’s income through the works. The banned works should not be spread in China so how to determine the legitimate interests or the losses?”37 In this circumstance, the owners of illegal copyright could only request the injunction of copyright infringement activities but have no right to claim for the compensation.
But Panel does not make a detailed response in this question. The Panel Report states that Part III of the TRIPS Agreement includes “a multilaterally agreed minimum set of enforcement procedures” that Members must make available and where a Member chooses to make available other procedures, that policy choice does not diminish the Member's obligation under Article 41.1 of the TRIPS Agreement.38 In this sense, the Panel just indicates that the infringement of illegal works’ copyright should also enjoy the minimum set of enforcement procedures ensured under Part III of the TRIPS Agreement, but not explain the meaning of articles in Part III of the TRIPS, especially Article 45.1 of TRIPS Agreement concerning the compensation of the infringement.39 But the expression in the article, “the injury the right holder has suffered” in Article 45.1 of TRIPS Agreement is similar with “the actual loss of the right holder” in Article 49 of China’s Copyright Law. An illegal work could not published or dissemination in China legally, which means that its owner could not acquire legal interests in China’s internal market, thus there is no actual economic loss
37
Li Yufeng, ‘Protection of Unauthorized Overseas Works——Comment on Article 4, Section 1 of China's Copyright Law’(2010) Electronics Intellectual Property, 1, p60-63.
38
China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights WT/DS362/R, para. 7.180.
39
Article 45.1 of TRIPS Agreement: “The judicial authorities shall have the authority to order the infringer to pay the right holder damages adequate to compensate for the injury the right holder has suffered because of an infringement of that person’s intellectual property right by an infringer who knowingly, or with reasonable grounds to know, engaged in infringing activity.”
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because of the infringing activities. There is no remedy for the owner to claim for the compensation of the infringement.
Furthermore, in the jurisprudence of both China’s copyright law and international law, the nature of copyright is a kind of “negative exclusive right”, which means it could only prohibit others from using the work without the consent of the author, rather than ask others (who do not own the copyright) positively to comply something because of the existing of the right.40 When the author finds the infringement of its work’s copyright, the author has right to raise a claim to stop the illegal activity according to the China’s Copyright Law.41 The compensation is just an approach to enforce the prevent of the unconsented use of other’s copyright work and make up for the author’s legal loss. Plus it could not determine the amount of compensation (there is no legal loss through the banned work), after the amendment, China gives the author right to force the remedies (except for the compensation) to stop the infringement of copyright. Thus after deleting the first sentence of Article 4 of China’s copyright law, it is hard to insist that China does not undertake the obligation of the Convention properly.
As a big State in the international intellectual property trade cooperating with other member states, in order to obtain the legitimacy that is required to play a leadership role in negotiations over any reforms, China must comply with its current obligations under the TRIPS agreement.42 As analyzed above, as Article 4 of the China’s Copyright is inconsistent with Article 5(1) Berne Convention, China amended this article and deleted the first sentence and emphasized the State supervision and management of the publication and dissemination of works. But this amendment does not satisfy all the people. There is a viewpoint that yet given the large number of
40
Similar view could be found in the Panel Report of Australia – Certain measures concerning trademarks, geographical indications and other plain packaging requirements applicable to tobacco products and packaging (WT/DS458/R, WT/DS467/R), para.7.2344. “the core object and purpose of the TRIPS Agreement is to ensure that all WTO Members provide a minimum level of exclusive rights to owners of IP. These exclusive rights are in the nature of "negative rights to prevent certain acts", not "positive rights to exploit or use certain subject matter"… the "fundamental and overall thrust" of the TRIPS Agreement ‘is about the protection of intellectual property rights, not about the freedom to exploit them in trade’.”
41
For example, Article 48 of China’s Copyright Law: “If there are any following infringements, the infringer shall undertake civil liability for stopping the infringement, eliminating the influence, apologizing, and compensating for the loss according to the actual circumstances…”
42
James A Brander, Victor Cui and Ilan Vertinsky, ‘China and intellectual property rights: A challenge to the rule of law’(2017) Journal of International Business Studies, Issue 48, 908–921.
16
works banned in China, there are still a great number of banned works freely flowing through underground channels,43 which means that this kind of grant is just for showing the adherence to TRIPS Agreement but cannot solve the copyright infringement problem dramatically. It has to admit that the phenomenon of copyright infringement is extremely rampant44, however, China has spared no effort to regulate this unwilling situation—the amendment of China’s Copyright Law mentioned above is one aspect. To deal with the flowing of the illegal works, stead of tangling in whether the amendment is paper compliance or not, China should increase the intensity of combating the copyright infringement through the legislative approach and practical activities.
But it cannot deny the State has shown its positive attitude to undertake the obligation under the TRIPS agreement and Berne Convention: When the State finds out the legal defect in its copyright law, it could correct it timely and China provides the affected private parties their rights to desist from the infringement, thus it is unreasonable to say that the China implementation of WTO decisions is paper compliance.
From the argument raised by the United States, it is trying to misinterpret and expand the meaning of China’s Copyright Law. The United States claims that China denies the protection of its Copyright Law to creative works of authorship that have not been “authorized for”, or are otherwise prohibited from, publication or distribution within China,45 but the Panel does not accept this argument. United States changes expand the “illegal works” into the “unauthorized works”, trying to enlarge the scope of works that China does not provide protection. Actually, in terms of those works which do not get the administrative license or just wait for the license and their content is legal, China still has provided protection of them.46 The
43
Timothy Webster , ‘Paper Compliance: How China Implements WTO Decisions’(2014), Michigan Journal of International Law, Volume 35 Issue 3, page 530.
44
For example, according to a 2011 report on piracy published by the Business Software Alliance, the market for illegal software in China was $9 billion, while the market for legal software was only $3 billion. The Office of the US Trade Representative estimated that, in 2013, the value of unlicensed software in China was about $8.8 billion (Office of the United States Trade Representative, 2016).
45
China–Measures Affecting the Protection and Enforcement of Intellectual Property Rights WT/DS362/R, para.2.4.
17
explanation of the United States is tricky and the State wants to pressure China to take more obligation which is far beyond the provisions pursued in the international treaties and conventions for its own trade interests. Thus under the pressure given by the United States, China should seize the true requirements of TRIPS Agreement tightly combating with the distorted understanding of other States.
3.2.4. Interim conclusion of copyright aspect.
In summary, to solve the intellectual property legal conflict between other states in the scope of international trade from the perspective of China, it is important to understand the true meaning of the provisions written in the international treaties and conventions. In the articles discussed above, Article 5(1) of Berne Convention provides both national treatment and minimum standard enshrined in the Convention at same time, not just for the national treatment obligation. The precise understanding of the articles is the fundamental basis of taking the responsibility ensured in the international treaties and conventions. Meanwhile, it should be cautious on the interpretation of the domestic law from other States (for example, United States enlarges the scope of “illegal works” under China’s Copyright Law, arguing more serious violation of international obligation than it actually be), as every State hopes to gain a more conducive interpretation for itself.
3.3. Patent: China –Certain Measures Concerning the Protection of Intellectual Property Rights (DS542).
In 2018, a legal document named China –Certain Measures Concerning the Protection of Intellectual Property Rights (DS542) submitted by the United State, claiming that China denies foreign patent holders the ability to enforce their patent rights against a Chinese joint-venture party after a technology transfer contract ends.
made administrative penalties for the unauthorized copying and sale of foreign textbooks by three universities, the special crackdown on the US film "Shrek II" pirated CDs, and the National Copyright Administration in 2001. According to the complaints of the Motion Picture Association of America, the local copyright offices are required to issue the notification of the strengthen of 788 foreign film law enforcement protection.
18
It also claims that China imposes mandatory adverse contract terms that discriminate against and are less favorable for imported foreign technology.47 In the request, the United States argues that several provisions under China's laws and regulations on technology transfer,48 appear to be inconsistent with Article 3 (National Treatment) of the TRIPS Agreement, solely or in conjunction with Article 28 of the TRIPS Agreement.49 This part of thesis would analyze whether the disputed provisions are actually inconsistent with the international agreement individually.
3.3.1. Article 29(2) of Regulation of the People's Republic of China on the Administration of the Import and Export of Technologies.
Firstly, Article 29(2) of Regulation of the People's Republic of China on the Administration of the Import and Export of Technologies has the similar content with Article 239 of Contract Law of the People's Republic of China and Article 10 of Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Technical Contract Dispute Cases, which provides that “provisions stipulated in technical licensing contracts should not restrict the licensee from improving the technology provided by the license or restrict the use of the improved technology by the licensee”.
The existence of this article is based on the consideration that if the holder of technology patent prohibits the improvement of the technology to make itself market monopoly, which has negative affect both on the principle of fair competition in the market and the positive development of technology. The prevention of unfair competition caused by technical abuse which is also in line with Article 8.2 and Article 40.2 of the TRIPS Agreement50. The content of this article is totally consistent
47
China - Certain Measures Concerning the Protection of Intellectual Property Rights WT/DS542/1, page 1.
48
The law and regulations include the Regulations of the People's Republic of China on the Administration of the Import and Export of Technologies, the Regulations for the Implementation of the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures, operating separately or together with other relevant instruments.
49
China - Certain Measures Concerning the Protection of Intellectual Property Rights WT/DS542/1, page 2.
50
Article 8.2: “Appropriate measures, provided that they are consistent with the provisions of this Agreement, may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which unreasonably restrain trade or adversely affect the international transfer of technology.”
Article 40.2: “Nothing in this Agreement shall prevent Members from specifying in their legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market.”
19
with the obligation pursued by TRIPS Agreement for the fair competition and the stimulation of innovation, thus it is unreasonable to argue this article violates the National Treatment obligation under TRIPS Agreement.
3.3.2. Articles 24, 27 of Regulation of the People's Republic of China on the Administration of the Import and Export of Technologies.
Then it comes to whether the Article 24 and Article 27 of the Regulation do not comply the National Treatment clause under TRIPS Agreement. The United States claims that the treatment of foreign patent holders under the concerned articles are less favorable than national holders. To figure out the issues clearly, it should illustrate the content of Article 24 and Article 27.51 Compared with the articles in the Contract Law of China,52 there are truly distinction between the rules regulating the technology transfer activities abroad and domestically. However, whether those distinction actually leads to the violation of TRIPS obligation is under controversy. In the legal environment of China, there are two opposite opinion leading to their separate legal logic but none of them is seeking the excuse of China to violate the TRIPS provisions, on contrary, China is making its greatest effort to undertake the obligation provided in TRIPS Agreement.
On the one hand, when investigating the relevant laws of China on the application of international technology transfer contracts, according to the relevant regulations, it could be found that China does not completely restrict the autonomy of the parties just as some developing countries do, nor does it allow absolute autonomy as some developed countries do, but adopts an “appropriate restriction” attitude. 53 Under Article 126 of the Contract Law, the parties of a foreign-related contract may choose the law applicable to the contract dispute, and the closest connecting law shall be
51
Article 24: “If the transferee of the technology import contract uses the technology provided by the grantor in accordance with the contract leading to the infringement of the lawful rights or interests of others, the transferor shall bear the responsibility.”
Article 27: “During the valid period of the technology import contract, the results of improvement of the technology belongs to the improving party.”
52
Specifically under Articles 353, 354 of Contract Law of the People's Republic of China.
53
Zhang Lina, ‘On the application of law in international technology transfer(2003) Journal of Hainan University: Humanities and Social Sciences, Issue 3, page 347.
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applied when there is no precise choice; Article 41 and Article 49 of the Law of the Application of Law for Foreign-related Civil Relations of the People's Republic of China also stipulate that the parties may agree to choose the proper law for the protection of intellectual property rights. Thus in the perspective of China, the autonomy of the parties of the technology transfer contract is guaranteed.54 However, this thesis reckons that this argument cannot stand up stably, as the situation those articles could only be applied is when there is no specialized law for the foreign-related contract and the parties of the contract need to find out the closest rules in laws to analogy. When there is specific articles under the Regulations mentioned above, there is not so much autonomy for the choice of the laws given to the parties.
Although it is not one hundred percent autonomy, the Regulations on the Administration of Import and Export of Technology still does not prohibit or restrict the parties from making the agreement on the manner or extent of the liability undertaken by the transferor. The basic attitude adopted by China in the technology transfer contract is to allow the parties to autonomy. Of course, the choice of applicable law by the parties needs to be regulated when it may violate of the public interest of the country.55 Therefore, we believe that in normal overseas technology transfer contract, it could be provided in the contract how to undertake the responsibility and the degree of responsibility, to reduce the impact of Article 24 of the Regulations on the grantor.56
Back to the Article 24 itself, the purpose of it is preventing the defect of the technology transferred to the grantee and when period of using the technology, the grantee should not take the responsibility caused by that defect. The article does not prohibit that both parties make more detailed provisions in the contract on the aspect
54
Shi Hua, Zhou Jiao, Zhang Pei, ‘WTO (DS542) a Research on the Legality of China’s International Technology Transfer Regulations’(2018) Journal of Shanxi University (Philosophy & Social Science), Volume 41, Issue 4, page 131.
55
Law of the Application of Law for Foreign-related Civil Relations of the People's Republic of China, Article 5; Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Technical Contract Dispute Cases, Article 6, etc.
56
He Tao, ‘Interpretation of Article 24 of the Regulations on the Administration of Import and Export of Technology--On the Nature of the Guarantee Liability’(2016) Legality Vision, Issue 7, page 92.
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of the method of undertaking of the responsibility caused by the defect which is totally same as the rules regulating the domestic technology transfer. Then how could one say it is the violation of the National Treatment under TRIPS Agreement?
Furthermore, there are specific approach that could be applied to avoid the controversy when making an overseas technology transfer contract. Except for clearly statement in the contract in terms of the conditions and limitations of liability of the transferor caused by the “defective guarantee”, both parties could choose the properly applicable law and / or dispute settlement body to circumvent the application of Article 24: Agreement on the application of foreign law and/or providing the jurisdiction of foreign (international) arbitration institutions in the event of such a dispute.57 All of these approach of dispute settlement is legal under China’s relevant laws even if China may lose the advantage as host-state, from which there is no doubt that China does not make any discrimination against the overseas technology transfer. The State as a developing country only hopes to guarantee the due rights in the international intellectual property trade.
The similar interpretation could be made in terms of Article 27 of the Regulation as the article itself does not restrict the agreement rights of both parties from making the detailed provisions in the contract to decide the distribution of the improvement of the original technology. Based on the Article 354 of the Contract Law of China, “…If there is no agreement or the agreement is still not clear under the provision of Article 61 of this Law, the technical achievements of the subsequent improvement of one party shall not be shared by other parties.” It is stated that under the situation without a clear agreement of the ownership of the improvement of technology, the laws regulating the foreign-related contract and domestic contract have the same content.
Usually, the parties would make relevant agreement in the contract on the distribution of the improvement during the valid period of technology transfer contract. Meanwhile, as the making of an technology transfer contract is based on the reciprocal of both States and the contract cannot be concluded without the consent of both parties, thus China cannot force other States to conclude the unfair technology
22 transfer contract.
On the other hand, the scholar also reckons that in case of the confusion of the application of the laws, facing plenty of laws and regulations concerning the common legal issues, China should make a clear statement of the approach of the application. We should keep in a clear mind that China has certain problems in the legislation on technology transfer, which provides an opportunity for other countries to criticize as there are certain contradictions or repetitions between various laws and regulations. For example, the provisions on technology transfer in the Contract Law should be applicable regardless of whether they are domestic or foreign, however, under Article 315 of this chapter gives priority to the application of the special law. Both of the Patent Law and the Regulations on the Administration of Import and Export of Technology belong to the special law, thus the former has a higher level of effectiveness whereas the latter belongs to the new law, thus how to cooperate those two laws is still a problem to figure out.58 The reason of this could be attributed to the lack of a complete intellectual property law in China and different intellectual property law and regulations may exist contradictions or repetitions on the same disputed issues, even worse making the opposite regulations.
3.2.3. Article 43(4) of the Regulation for the Implementation of the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures.
Lastly, for the analysis of Article 43(4) ofthe Regulation for the Implementation of the Law of the People's Republic of China on Chinese-Foreign Equity Joint Ventures, there are also different arguments based on the content of it. The United States argues that Article 43 of the Regulations accords less favorable treatment to foreign intellectual property rights holders as compared to Chinese intellectual property rights holders and denies foreign patent holders their exclusive rights, including to prevent third parties not having the foreign patent holder's consent from acts listed in Article 28.1(a), (b) of the TRIPS Agreement. Concretely, Article 43(4) provides a Chinese
58
Ma Zhongfa, ‘On the legal coordination system of international technology transfer under economic globalization’(2005) graduation paper of Fudan University.
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joint-venture party the right to continue to use technology transferred under a technology transfer contract after the expiration of the contract.
There is a view that in response to the allegation of the United States in terms of Article 43(4), the Article 30 of TRIPS on “Exceptions to Rights Conferred” can be used to refute.59 Only one case resolved by the WTO panel could be searched concerning the exception of the patent rights granted under Article 30 of the TRIPS— Canada－Patent Protection of Pharmaceutical Products case.
According to the Panel Report of this case, Article 30 establishes three criteria that must be met in order to qualify for an exception.60 Meanwhile, the three conditions are cumulative, each being a separate and independent requirement that must be satisfied.61 Furthermore, the Report also states that the three conditions must be interpreted in relation to each other and each of the three must be presumed to mean something different from the other two, or else there would be redundancy.62 The syntax of Article 30 supports the conclusion that an exception may be "limited" and yet fail to satisfy one or both of the other two conditions.63 Whether Article 43(4) of the Regulation could satisfy the criteria of the exception article should be examined step by step.
Firstly, in terms of the interpretation of “limited exception”, the Panel agreed that the word "limited" has a narrower connotation, which makes only a small diminution of the rights in question and the Panel agreed that "limited" is to be measured by the extent to which the exclusive rights of the patent owner have been curtailed.64 In the consideration of the actual situation of foreign international technology transfer in China, Chinese-Foreign equity joint ventures are a relevantly common form of foreign investment in China. The transfer of related technologies by the foreign patent holders
59
Shi Hua, Zhou Jiao, Zhang Pei, ‘WTO (DS542) a Research on the Legality of China’s International Technology Transfer Regulations’(2018) Journal of Shanxi University (Philosophy & Social Science), Volume 41, Issue 4, page 125-128.
60
(1) the exception must be “limited”; (2) the exception must not “unreasonably conflict with normal exploitation of the patent”; (3) the exception must not “unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties”.
61
Canada－Patent Protection of Pharmaceutical Products, Report of the Panel WT/DS542/1, para.7. 20, page 152．
62 United States –Standards for Reformulated and Conventional Gasoline
WT/DS2/AB/R, page 23
63
Canada－Patent Protection of Pharmaceutical Products WT/DS114/R, para.7. 21, page 152．
24
could help Chinese-foreign joint ventures operate successfully and also improve their competitiveness which means that those enterprises’ continuous development relies on the transferred technology. Thus based on this cooperation and dependence, the Chinese side has reason to believe that foreign investors could realize the importance of the technology to the joint venture at the beginning of the establishment of the enterprise; once completely detached from the technology, it may seriously affect the existence of the joint venture, which would be contrary to the original intention of co-investing in establishing a Sino-foreign joint venture. Therefore, there is an opinion that according to Article 43(4), even if the technology transfer contract expires, the Chinese has the right to continuously use the technology transferred under the technology contract which would not have a negative impact on the patentee's exclusive rights—the diminution of patent owner's right is extremely limited. Except for the relevant technology before the expiration of the technology transfer contract of Sino-foreign joint ventures, the patentee's patent ownership has no restrictions or reductions, and the effect of this degree is a “limited exception”.65
Back to the content of Article 28.1(b) of TRIPS, “A patent shall confer on its owner the following exclusive rights… to prevent third parties not having the owner’s consent from the act of using the process, and from the acts of: using… or importing for these purposes at least the product obtained directly by that process”, it is clear that the owner of the patent has exclusive right to prevent third parties from using the patent process without the consent of the owner, which is the most basic right of the ownership and the fundamental right of patent. It also could be seen as a situation that under Article 43(3) of Regulation (which exists a plenty of years without disputes), when a State sign the technology transfer contract with China, it gives its consent on the continuous usage of the technology acquiescently or it accepts the limitation of the patent rights, otherwise it would not consent to conclude the contract. It could be seen as the trading custom since the Regulation made in 1983 and the latest amendment is in 2001 still preserving this provision. This article has accepted for 36 years is also an
65
Shi Hua, Zhou Jiao, Zhang Pei, ‘WTO (DS542) a Research on the Legality of China’s International Technology Transfer Regulations’(2018) Journal of Shanxi University (Philosophy & Social Science), Volume 41, Issue 4, page 127.
25
evidence that the exception in this situation is limited enough to the transferor side. Secondly, in regard of “normal exploitation”, the Panel gave the interpretation that “exploitation” refers to the commercial activity by which patent owners employ their exclusive patent rights to extract economic value from their patent; the word “normal” combines the two meanings: one is the dictionary definition: “regular, usual, typical, ordinary, conventional” and it can also be understood to refer either to an empirical conclusion about what is common within a relevant community, or to a normative standard of entitlement.66 The existing argument indicates the economic interests foreseen by the patent holder in the market exclusivity obtained from the patent would not be harmed, as the Chinese side only continues to use the original field of technology signed in the contract which is also in line with the intention of concluding a technology transfer contract for the development of Sino-foreign joint ventures,67 however, this thesis holds a questioned attitude towards this explanation. As “exploitation” refers to the commercial activity by which patent owners employ their exclusive patent rights to extract economic value from their patent, the patent holder could obtain the economic interests through the conferring of the technology. The explanation above excludes the value which could be acquired after the expiration of the concluded contract, only includes any other commercial activity outside the scope of the signed contract. However, acquiring the value from the new conclusion of contract after the expired contract is also in the field of normal exploitation and the concluding of the contract itself cannot make the patent holder give up its exclusive rights based on the patent unless the holder gives its consent.
Thirdly, as for “legitimate interests”, as a normative claim calling for protection of interests that are "justifiable" in the sense that they are supported by relevant public policies or other social norms and the Panel gives one of the most widely adopted “Article 30-type exceptions” in national patent laws.68
It is often argued that this
66
Canada－Patent Protection of Pharmaceutical Products WT/DS114/R, para.7. 54, page 161．
67
Shi Hua, Zhou Jiao, Zhang Pei, ‘WTO (DS542) a Research on the Legality of China’s International Technology Transfer Regulations’(2018), Journal of Shanxi University (Philosophy & Social Science), Volume 41, Issue 4, page 128.
68
The exception of the use of the patented product for scientific experimentation, during the term of the patent and without consent, is not an infringement.
26
exception is based on the notion that “a key public policy purpose” underlying patent laws is to “facilitate the dissemination and advancement of technical knowledge”.69 This criterion is a more limited scope of the exception compared with the former two criteria—a key public policy purpose for the dissemination and advancement of technical knowledge. As the transferee side, China should raise more persuasive proof satisfying this condition. But in the common situation, the normal China-foreign joint ventures are difficult to satisfy this condition as most of them just pursue for the economic interests acquired through the management of the companies rather than a key public policy just in the same level as the dissemination and advancement of technical knowledge.
In summary, Article 43(3) of the Regulation could not fall in the scope of Article 30 of TRIPS. However, in practice, this article is rarely used by enterprises. Thus there is an opinion that this article should be deleted in case of becoming the excuse of United States to make an accusation of China’s violation of TRIPS obligations. As for the reason of the existence of this article, in the event that the technology transfer regulation stipulates that “continue use after the expiration of the technology transfer agreement”, it might be a consideration that the technology provider would continue to ask transferee to pay unnecessary authorization fees after the patent is invalid. Because the issuance of the Regulation was in 1983—the information of the patent is not so transparent and as the developing country, China was in a disadvantage position in the international intellectual property trade with other developed countries. This article made was to prevent the unnecessary loss of China which also pursues the fair and equitable treatment in the normal trade affairs. Nowadays, it is almost impossible as patent search system could quickly show the validity period of patents, and technology development is changing with each passing day. The life cycle of technology patent is constantly shortening. Thus it is no longer necessary to make such regulations on the transfer of patent technology.70 If the transferee side has the access of the complete information of the validity period of patent whilst Article 43(3)
69
Canada－Patent Protection of Pharmaceutical Products WT/DS114/R, para.7. 69, page 165.
70
Ma Zhongfa, Peng Yayuan and Xie Diyang , ‘Legal Analysis of China's ‘Compulsory Technology Transfer”(2018) China Academic Journal Electronic Publishing House, Issue 12, page 88.
