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American Shipper

U.S. outlines problematic Chinese IP regulations in WTO complaint

The United States’ request for World Trade Organization consultations over allegedly unfair Chinese intellectual property policies coincided with tariffs proposed last Thursday by President Trump.

   Chinese regulations require foreign license holders of technology imported into the country to indemnify Chinese licensees for all liability for infringement resulting from the use of technology transferred to China, the United States said in its March 23 request for World Trade Organization (WTO) consultations over China’s allegedly unfair intellectual property (IP) requirements.
   The U.S. complaint points to the 2002-effective “Regulations of the People’s Republic of China on the Administration of the Import and Export of Technologies,” as amended Jan. 8, 2011, as the problematic policy forcing that IP practice.
   That set of regulations also requires any improvements in imported technology to be the property of the party making the improvement, which means less favorable treatment for foreign IP holders than Chinese IP holders, the complaint said.
   Further, those regulations ban imported technology license contracts from restricting a Chinese party from improving the technology or from using the improved technology, the consultation request said.
   Another problematic policy is the 1979-effective “Regulations for the Implementation of the Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures,” as amended in 1990, 2001, and 2016, the U.S. said.
   A provision of that policy provides a Chinese joint-venture party the right to continue using technology transferred under a technology transfer contract after the expiration of the contract, the complaint said.
   The U.S. said these regulations violate rules outlined in the 1995 WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).
   For example, China’s joint venture regulations deny foreign patent holders their exclusive rights, including by providing a Chinese joint-venture party the right to continue to use technology transferred under a technology transfer contract after the expiration of the contract, the U.S. complaint explained.
   The WTO posted the U.S.’s consultation request document on Monday. If WTO consultations don’t resolve the matter by the end of May 22, either party can request the matter be formally adjudicated by the WTO Dispute Settlement Body.
   The U.S.’s WTO move coincides with President Trump’s proposal announced March 22 that he is seeking to impose 25 percent tariffs on about $50 billion worth of Chinese goods, after an investigation by the Office of the U.S. Trade Representative pursuant to Section 301 of the Trade Act of 1974 found that China is unfairly forcing U.S. companies to transfer technology and other IP to Chinese entities.

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