September 21,2004

Grassley Urges Iowa Businesses to Help Enforcement of Intellectual Property Rights in China

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, todayannounced his support for the Bush Administration’s out-of-cycle review of China’s intellectual property rights commitments and encouraged Iowa companies that may be experiencing intellectual property rights problems in China to participate.

The Administration is soliciting comments from businesses as part of an effort to measurethe progress of China’s commitments to significantly reduce intellectual property rightsinfringements. The Administration negotiated specific commitments from China during the U.S.-China Joint Commission on Commerce and Trade in April.

“This out-of-cycle review of China’s intellectual property rights commitments is an importantelement of the Administration’s efforts to ensure that China is abiding by its international tradecommitments,” Grassley said. “I’m calling on all companies doing business in China to provide dataon the prevalence of intellectual property rights infringement in China and provide examples ofspecific individual cases in which these rights have or have not been respected.

“Strong enforcement of our international trade agreements is an important priority forPresident Bush and for me. To succeed, we need to work in partnership with the businesscommunity in Iowa and across the nation. I hope Iowa companies that have information aboutChina’s intellectual property rights enforcement efforts will help us in this important endeavor.”

The “Special 301” provisions of the Trade Act of 1974 require the United States TradeRepresentative to identify foreign countries that deny adequate and effective protection of intellectualproperty rights or fair and equitable market access for U.S. persons that rely on intellectual propertyprotection. The Special 301 process concludes by May 1 of each year, while out-of-cycle reviewscan be conducted at any time.

Details on how to participate follow.

The Bush Administration’s Out-of-Cycle Review Data Request Information Sheet

Dear interested member of industry:

Improving protection for intellectual property in China is a top priority for this Administration. Tothat end, we negotiated specific commitments from China during the April JCCT that would resultin significant reductions in infringement. We seek your help to accurately measure progress.As announced in USTR’s 2004 Special 301 Report, we will be conducting an out-of-cycle review(OCR) in early 2005 to evaluate China’s implementation of the commitments announced at the JointCommission on Commerce and Trade meeting on April 7, and whether China’s actions are achievingresults. As U.S. IPR leaders and participants in China’s market, your direct input is critical to ourability to thoroughly evaluate China’s progress.

In the coming months, we will publish in the Federal Register a formal announcement commencingthe OCR. To effectively evaluate China’s progress and to protect U.S. IPR interests in China, weneed industry to provide data on the prevalence of IPR infringement in China and provide examplesof specific individual cases where IPRs in China have or have not been respected. Given the scaleand nature of the information we need and the importance of this issue, data regarding both successesand failures from January 2002 and onward is crucial to identifying short- and long-term progressin China, and any additional shortcomings in China’s IPR regime. It is up to each industry andcompany to decide how to respond. One possible approach is for industry groups to provide data onprevalence of IPR infringement, while individual companies focus on specific individual cases ofIPR infringement.

The following information will be particularly useful for our evaluation process:

-- detailed retail and consumer market surveys (for example, calculating on a monthly basis the ratesof pirated product available through various retail channels in major cities across China);

-- detailed reports on major centers around China dealing in or producing infringing product and thesuccess or failure of Chinese authorities in eliminating those centers;

-- detailed reports on particular geographic areas or sectors where China’s enforcement of IPRs isnotable for either its weakness or its strength;

-- industry data on exports of infringing products from China to the United States and otherinternational markets

-- information on sources and supporters of the production of infringing products (e.g., whetherinfringing production is individual, corporate, state-supported, supported by organized crime orofficial corruption, etc., and whether such support is local, provincial, regional or national in scope);

-- trade estimates showing any effect on trade of IPR infringing goods;

-- statistical data, if appropriate, aggregated from the experiences of members of right holderorganizations, on the actions undertaken and results produced by China’s authorities responsible forenforcement of specific IPRs of concern to industry, including data based on right holder experiencewith

– type and amount of penalties (e.g., fines, license suspensions, imprisonments) and seizures ofinfringing goods and implements used to make them;

-- frequency and type of all relevant forms of enforcement action, such as initiation of administrativeaction, raids, referrals for criminal prosecution, imposition of penalties, and other relevantenforcement actions; and

-- data on deterrence or lack thereof, e.g., recidivism; and

-- dossiers prepared by individual right holders on significant enforcement cases, preferably in theformat specified by the attached template, together with other information that right holders considerto be relevant.

In addition to this factual information, we encourage industry to provide its detailed evaluation ofspecific strengths and weaknesses of China’s legal regimes for enforcement of IPRs in light ofrelevant international standards and U.S.-China bilateral commitments.

The attached template includes guidance for submission of information on specific cases, and alsoprovides a means for marking information that respondents may wish to designate as “businessconfidential,” when appropriate. Any other submitted information that should remain confidentialshould be certified and marked as indicated in the template. This template will soon be madeavailable in a word-processing format on the USTR website.

Respondents need not wait until commencement of the OCR process to share information withUSTR. In fact, we would like to receive pertinent information as soon as it becomes available, sothat we can begin to develop a sense of China’s progress in these areas. We would welcome initialresponses by November 1, 2004. My staff and I would be pleased to discuss any questions regardingthe type of information we need, so please do not hesitate to contact us. We will also hold a formalmeeting in the coming weeks to discuss the OCR process in greater detail.

Preparing for the upcoming OCR process will require significant effort and commitment of resourcesfor both industry and the government. Your assistance in providing information regarding yourbusiness transactions and experiences with China will be invaluable to our efforts. In anticipationof your cooperation, we thank you for your time and effort in assisting us.

The electronic mail address for submissions is Please note that industrysubmissions, while critical, are strictly voluntary. For further information, please contact VictoriaEspinel, Deputy Assistant U.S. Trade Representative for Intellectual Property, at (202) 395-6864,Angela Davis, Director of China Affairs, at (202) 395-3900, or Stan McCoy, Assistant GeneralCounsel, at (202) 395-3581.

Ambassador Josette S. Shiner