The ITC recently completed the first of two studies requested by the U.S. Senate Committee on Finance on the effects of IPR infringement in China on U.S. jobs and the U.S. economy. The report contains many conclusions that are not surprising, e.g., that China and Hong Kong collectively account for approximately 90 percent of the imports into the United States that are seized by U.S. Customs and Border Protection for trademark infringement. The report surveys the four fundamental methods for enforcement of IPR in China: administrative enforcement, criminal prosecution, civil litigation, and customs. Administrative enforcement (consisting of raids and seizures of infringing goods) was reported to result only in temporary shutdowns in productions. Criminal prosecutions were reported as "too rare." Civil IPR cases were reported as involving relatively low damage awards, an absence of robust discovery, an inexperienced judiciary, and onerous requirements for the use of evidence from abroad. Enforcement by Chinese Customs (against the exportation of infringing products) was reported as "still viewed as a second-best solution by IP owners." Overall the report concludes that there is significant and structural impediments to IPR enforcement, including "a lack of coordination among national agencies and between subnational authorities and the central government, inadequate training and resources for enforcement, and corruption and local protectionism." The report notes, however, that many observers are optimistic about improvement in the quality of courts and judges for civil IPR actions in major cities such as Beijing and Shanghai. Further, with regard to Chinese Customs enforcement, the report notes that the Chinese General Administration of Customs seized goods valued at approximately 67 million USD in 2009, a 350 percent increase over the value of 2005 seizures, and that Chinese Customs has reportedly been "proactive in encouraging IP owners to record and to assist in the identification of authorized suppliers."
The ITC's second report on IPR infringement in China is scheduled to be published in May, 2011, and will provide a quantitative analysis of the effect of reported IRP infringement and indigenous innovation policies in China on the U.S. economy and jobs.