Infringers must be convicted of crime for which punishment is most stringent

China

A recent decision has shown that, where an offender simultaneously commits the crime of infringement of IP rights and the crime of manufacturing and distributing fake and inferior goods, he or she shall be convicted of the crime for which the punishment is the most stringent.

On August 9 2012, during a raid against a local rental residence, the Dingzhou Public Security Bureau (PSB) seized large amounts of counterfeit alcohol bearing the marks RED LABEL, BLACK LABEL, JACK DANIEL'S and HENNESSY, among others, with a total value of $10,068, according to the Price Certifying Organisation.

In a post-raid investigation, the PSB later discovered that, since March 2012, defendant Yang Kai had been purchasing the following fake products from Shandong, Guangxi and Guangdong, among other places: whiskey bottles, wine, capsules, trademark labels, anti-fake labels, cartons. Yang had hired the other defendant to bottle the fake spirits and distributed the finished products in Henan, Hebei, Zhejiang, Shannxi and Beijing, among others. In May 2012 Yang hired a third defendant to distribute the products and collect payments. At the time of the raid, the total sales had reached $9,584.

In March 2013 the Dingzhou Procuratorate prosecuted the three defendants for the crime of manufacturing and distributing fake and inferior goods.

The brand owners argued that this indictment was incorrect, since the three defendants had committed not only the crime of manufacturing and distributing fake and inferior goods, but also the crime of counterfeiting registered trademarks, under Article 140 and Article 213 of the Criminal Law of the People’s Republic of China. Under such circumstances, the defendants should have been indicted with the crime of counterfeiting registered trademarks, which receives a harsher punishment.

The court agreed with the brand owners and ruled as follows:

  1. With regard to the charge of committing the crime of counterfeiting registered trademarks, defendant Yang was found guilty and was sentenced to 10 months' imprisonment, together with a fine of $8,121.
  2. With regard to the charge of committing the crime of counterfeiting registered trademarks, the two other defendants were also found guilty and were sentenced to eight months' imprisonment (with one year probation), together with a fine of $6,508, and six months' imprisonment (with one year probation), together with a fine of $4,881, respectively.
  3. All the seized goods, including machines, raw materials and fake goods, should be confiscated.

In this case, the three defendants had committed two crimes simultaneously. There are two judicial interpretations in China dealing with such situations:

  1. the “Interpretation of the Supreme People’s Court and Supreme People’s Procuratorate on Several Issues Concerning the Application of the Laws in Handling Criminal Cases concerning the Manufacturing and Distributing of Fake and Inferior Goods” (released in 2001); and
  2. the “Opinions of the Supreme People’s Court, Supreme People’s Procuratorate and Ministry of Public Security on Several Issues Concerning the Application of the Laws in Handling Criminal Cases of IP Rights Infringement” (promulgated in 2011).

Both interpretations agree that the infringer should receive the punishment that is the most stringent.

If an infringer is convicted of the crime of counterfeiting registered trademarks, according to Article 213 of the Criminal Law, the punishment will consist of incarceration or detention for no more than three years, and may - additionally or exclusively - include a fine. However, if an infringer is convicted of the crime of manufacturing and distributing fake and inferior goods, according to Article 140 of the Criminal Law, the punishment will consist of incarceration or detention for no more than two years, and may - additionally or exclusively - include a fine.

The court thus chose to convict the defendants of the crime of counterfeiting registered trademarks.

Zhang Yan and Wang Jue, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing

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