Setting low thresholds for crimes not enough to strengthen IPR protection

By Wang Yadong and Han Yufeng, Run Ming Law Office

Administrative, civil and criminal law provide the legal system to protect intellectual property rights (IPR). Yet administrative and civil sanctions alone are insufficient to make the public and transgressors aware of the seriousness of IPR infringement.

China has made considerable progress in improving its IPR protection regime in recent years. It is undeniable that IP civil torts and related offences have yet to be contained, and the weak, perfunctory criminal protection of IPR is a source of concern. Below are some thoughts on how this can be ameliorated.

Clarifying conviction and sentencing standards and lowering thresholds of crimes are clear signs that IP protection is being strengthened. Several pieces of legislation provide a clear legal basis to reinforce protection of IPR. In the 1997 revision of the Criminal Law, seven types of crimes on IPR violation were set out, including copyright infringement, counterfeiting registered trademarks and counterfeiting patents. The crimes of production and sale of fake or substandard commodities and illegal business operations may also touch upon IPR infringement in some cases. The Criminal Law, being a more general legislation, lacks specific sentencing criteria.

In 2004, the Supreme People’s Court and the Supreme People’s Procuratorate promulgated their Interpretation of the Issues Concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights. The interpretation resolved several issues related to threshold and sentencing standards in the Criminal Law on the whole.

This was followed up by a second interpretation of the same name in 2007, which lowered the threshold for individual criminal offences. The second interpretation reduced the number of copies issued without the permission of the copyright hold in the sentencing standard for cases of “other serious incidents” of copyright infringement from 1,000 copies to 500. It also decreased the standard for “other particularly serious incidents” of infringement by half, from 5,000 to 2,500.

王亚东 Wang Yadong 润明律师事务所 执行合伙人 Executive Partner Run Ming Law Office
Wang Yadong
Executive Partner
Run Ming Law Office

To give further clarity on the conviction thresholds for disseminating items infringing copyright online or within Chinese jurisdiction, the two bodies later issued their Opinions on Several Issues concerning the Application of Law in Handling Intellectual Property Right Infringement Criminal Cases in 2011.

Law enforcement capacity issues highlight and constrain further attempts made to protect IPR. Having obtained the legislative support to protect IPR, it then rests on cooperation between law enforcement and the judiciary. There are two methods of pursuing IPR protection via criminal proceedings. First, the rights holders themselves can institute criminal proceedings in court. Second, the procuratorate can prosecute the infringer according to law.

Yet copyright infringement is often an underground affair. Evidence of infringement tends to be difficult to gather and highly technical as well. This is why public prosecution remains the primary method of seeking criminal protection of IPR.

韩羽枫 Han Yufeng 润明律师事务所 知识产权顾问 IP Counsel Run Ming Law Office
Han Yufeng
IP Counsel
Run Ming Law Office

The police are the main port of entry for the criminal case. First the rights holder would file a report with the police, or an administrative agency transfers a case to the police. The police then investigate the case and refer it to the procuratorate for further examination and indictment. Indictments are filed with the court for cases satisfying the conditions for prosecution.

Official statistics reveal that the number of cases and convictions for IP-related crimes did not change significantly from 2004-2011. This corresponds to the relatively weak effect of the judicial interpretations issued at the time. IP-related cases see a hike from 1,254 in 2010 to 2,967 in 2011, and then further to 7,684 in 2012 – increases of 137% and 159%, respectively. The number of cases dropped to 4,957 in 2013 (a decrease of 35%), then increased slightly to 5,103 in 2014.

The cause of the fluctuation may lay in the national police campaign organized by the Ministry of Public Security to combat the production and sale of fake and substandard goods and IP infringement in November 2010. Per the general case procedure, the cases investigated during the campaign would have undergone the trial in the first instance in 2011-2012. The campaign ran until the end of 2011, which would explain the spike in cases in 2011 and 2012 and the decrease in 2013 and 2014.

It is clear that a single police campaign would have greater effect than the interpretations which reduce the threshold for crimes. Yet such campaigns are atypical, and protecting IPR cannot rely solely on one or two public campaigns.

The strength and capability of law enforcement agencies – or lack thereof – are the primary factors that constrain current efforts to protect IPR via criminal proceedings. It would be far more effective to increase law enforcement staffing on the frontlines and improve their IP-related professional knowledge and capacity rather than seeking solutions at the legislative level. This would effectively resolve issues often encountered in practice, such as the difficulty parties experience filing IPR-related criminal cases.

Parties must still proactively seek protection from the courts. Criminal prosecution is generally considered a method for the state to exercise its public power. However, as seen in the above, when the public security organ is unable to increase its participation in the short term for whatever reason, parties can engage professionals to perform evidence gathering, investigation, and legal analysis prior to seeking the assistance of the procuratorate. This can be considered to be expediting the procedure by making up for the lack of staffing on the side of law enforcement.

Of course, protecting IPR not only involves the interests of the rights holders themselves – strong IPR protection is extremely important to China’s transition from developing to market economy as well as building China’s image as a major power. To this end, the government and state should also be taking on a major role in protecting IPR in the long run.

Wang Yadong is the managing partner and Han Yufeng is an IP counsel of Run Ming Law Office