China still number 1 on the “Priority Watch List” of the US Trade Representative

On April 29, 2020, the US Trade Representative office released the new edition of its annual 301 report. It does not specifically target China, but like the previous years, the People’s Republic gets a place of choice in it, with the number 1 spot on the ? Priority Watch List ?. Why ? Because as the report states, ? China continues to be the world’s leading source of counterfeit and pirated goods […]. Over the past three years, China and Hong Kong accounted for over 80% of U.S. IP seizures ?.

Reviewing the legislative and regulatory changes that took place in the past year, it notes a few positive steps (most notably the signing of the U.S. – China Economic and Trade Agreement (Phase One agreement) in January 2020) but also quite a few disappointing ones that ? fall short of the full range of fundamental changes needed ? like the Trademark Law (effective November 1, 2019), Anti-Unfair Competition Law (AUCL), and Administrative Licensing Law (effective April 23, 2019). Some others like the new Drug Administration Law (August 2019 ) and the draft revisions to the Drug Registration Regulation (October 2019) ? represent missed opportunities to establish an effective mechanism for early resolution of potential patent disputes and data protection ?.

Many horizontal issues are highlighted, such as the lack of transparency, Chinese judicial authorities ? publishing only selected decisions rather than all preliminary injunctions and final decisions ? and the ? Administrative enforcement authorities failing to provide right holders with information regarding the process or results of enforcement actions ?. Broader concerns include “old” issues that are inherent to the political system such as independence of the courts and the rule of law, as well as new ones such as the implementation of a “social credit system” (? The United States objects to any attempt to expand the “social credit system” in the field of IP ?).

All in all, this report makes for a sobering read but a useful one nonetheless for any company exporting to China or planning to do so. The situation is far being ideal, to put it mildly, but it does not mean companies are powerless to protect their IP rights, as there are many tools available to mitigate IP related risks. Experience has shown time and again that preparation is key and relying on the expertise of a patent & trademark attorney is essential.