Penalties for IP right infringement strengthened

As part of a pattern indicating a shift by the Chinese courts towards heavier penalties for IP right infringement, the Supreme People's Court has issued a Notice on Further Strengthening of Intellectual Property Rights Protection (200 of 2004).

The notice sets out a number of requirements to be implemented by courts at all levels. These include the following:

• Enhance recognition and give priority to the enforcement of IP rights.
  
  
• Severely penalize criminal offences of counterfeiting and other IP infringement. In particular, timely and heavy penalties should be imposed where:
  
  
  • public interest may be endangered;
    
    
  • fake foodstuffs, drugs or agricultural products or huge criminal proceeds are involved;
    
    
  • the infringement causes serious consequences or damage; or
    
    
  • government officials are participants in the infringement
    
    
• Treat all parties to civil or administrative actions that concern the enforcement of IP rights fairly. Local protectionism and interference by government departments should be eliminated. The People's Court may order confiscation of illegal gains and heavy fines in addition to the usual civil remedies in serious infringement cases; if there is any suspicion of crime, the case shall be timely referred for criminal investigation. To stop infringement effectively, minimize damage and ensure execution of decisions, property preservation and pre-trial execution should be applied whenever appropriate.
  
  
• Publicize and educate IP protection on the basis of judicial experience.
  
  
• Strengthen investigation, research and supervising works to ensure the smooth development of IP protection programmes. The Higher People's Courts will help to supervise and direct courts in the lower levels. The Supreme People's Court will issue judicial explanations on the applicable law to target criminal cases of IP infringement.

The notice highlights the new, stricter approach taken by Chinese courts in relation to the infringement of IP rights. This is underscored by a number of recent decisions in which defendants have been severely punished by various courts in China.

In the YU SHENG TANG Case (Case (2004) Yi Zhong Ming Chu 276, September 20 2004) the Beijing Municipality Number One Intermediary Court held that the defendants had infringed the 400-year-old trademark YU SHENG TANG in Chinese characters. It ordered them to cease infringement and pay Rmb5 million in damages.

Another example saw the Beijing Higher People's Court order the defendants in the SINOCHEM Case (Case (2004) Ko Ming Zhong 214, May 19 2004) to change their enterprise names and pay damages of Rmb500,000 - the maximum amount in cases where neither the infringement gain nor the plaintiff's loss can be ascertained.

Chloe Lee and Cyril Yeung, Wilkinson & Grist, Hong Kong