China intensifies the fight against IP rights infringement

On April 5 2007 a new judicial interpretation to fight against IP infringement came into effect. The new interpretation, which was implemented by the Supreme People's Court and the Supreme People's Procuratorate, illustrates the Chinese government's efforts to stamp out IP infringement by lowering the threshold to prosecute individuals engaged in IP infringement activities.

The new interpretation significantly lowers the threshold for prosecuting individuals who manufacture or sell counterfeit products. If convicted, a copyright infringer can face a prison term of up to three years if he or she produces and/or distributes 500 or more unauthorized copies of computer software, music, movies, television series and other audio-video products. Previously, an infringer would face such sanctions only if he or she produced/distributed more than 1,000 counterfeit copies.

Further, under the new interpretation, the definition of a 'serious IP rights offender' has been widened so that anyone who produces more than 2,500 counterfeit copies will be considered to be such an offender and shall face a prison term of up to seven years. Previously, 'serious offenders' were those who produced over 5,000 counterfeit copies.

In addition, under this new interpretation, courts may raise fines for convicted offenders - such fines may range from between one and 15 times the illegal gains, or from 50% and 200% of the business turnover. The new interpretation also tightens the rules on the granting of probation.

IP rights owners are also allowed to approach the courts directly if they have obtained evidence to justify their case. The courts are also able to accept litigation cases filed by individual piracy victims, in addition to those filed by procurators.

It appears that, despite the implementation of a previous interpretation, infringing activities still remain rampant. This new interpretation seems to be a response from the Chinese government to try to control the situation. The lowered thresholds may help to widen the anti-piracy net and bring more infringers to court. However, IP rights owners have complained that the earlier interpretation places a heavy burden on them as they need to collect sufficient evidence to convince the police to begin investigations. In the final analysis, this problem still remains even though IP rights owners can approach the court directly under the new interpretation since they may still face difficulties in collecting evidence to prove that the infringing activities constitute a criminal matter.

Ai-Leen Lim, Colin Ng & Partners, Hong Kong