03 April 2017
Washington DC
Reporter: Barney Dixon

US complains about China’s pharma patent and trade secret problems


Intellectual property enforcement has contributed to a reduction in the US goods trade deficit in China, but infringement continues to be a key barrier.

According to the US Trade Representative’s 2017 National Trade Estimate, which was released on 31 March, China has undertaken a “wide-ranging revision of its framework of laws and regulations aimed at protecting the intellectual property rights of domestic and foreign rights holders”, as part of its accession to the World Trade Organisation.

These actions have contributed to a 5.5 percent decrease ($20.1 billion) in the US goods trade deficit with China. The deficit stood at $347 billion in 2016.

But “inadequacies in China’s IP rights protection and enforcement regime continue to present serious barriers to US exports and investment”.

The US highlighted China’s commitment to permit supplemental data supporting pharmaceutical patent applications, but noted that, to date, it has only implemented the commitment in part.

The US is hopeful, however, that the Chinese government will implement its proposed revisions to its patent examination guidelines, which includes an amendment to the supplemental data commitment.

If implemented, the proposed revision would “represent an important step toward the supplemental data practice in the US and other jurisdictions”.

Trade secret theft was also targeted in the report, an area that the USTR said is “a serious problem”, and subject to “high-profile attention and engagement in recent years”.

“Most troubling are reports that actors affiliated with the Chinese government and the Chinese military have infiltrated the computer systems of US companies, stealing terabytes of data, including the companies’ intellectual property, for the purpose of providing commercial advantages to Chinese enterprises.”

The US has previously received commitments from China not to condone state-sponsored misappropriation of trade secrets, and to revise its Anti-Unfair Competition Law.

But China’s proposed provisions for the law only included minor changes to the provisions on trade secrets and “did not address the full range of US concerns in this area”.

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