Welcome clarification of criminal IP sanctions comes into force


The Interpretation on Several Issues Regarding the Application of Law in Handling Criminal Cases of Infringement came into effect on December 22 2004. The text brings welcome clarification of the terminology used in Section 7 of China's Criminal Law, which provides for criminal sanctions against "serious" and "very serious" cases of IP infringement, without defining these terms.

The interpretation text now defines the amount of money that needs to be involved in terms of business operation or illegal gains in order to decide whether there has been a serious or very serious case of piracy or infringement in trademark, patent, copyright and trade secret cases. 'Business operation' is defined to include the value of the infringement from its manufacture, storage, transportation and sale. Where the production of counterfeit trademarks is concerned, the interpretation text also specifies the number of marks the alleged infringer needs to have printed to qualify the matter as a serious or very serious case of infringement.

In addition, the text explains the following terminology:

  • in relation to a trademark infringement offence:

    • 'an identical trademark' refers to a mark that is identical or visually indistinguishable from the infringed mark and which could lead to confusion;

    • 'use' of an infringing mark includes use on goods, packaging, containers, product instruction leaflets or specifications, commercial documents or use in advertising, exhibition or other commercial activities;

    • 'sales volume' means all the illegal income from the sale of goods bearing a counterfeit mark; and

    • 'knowingly' includes knowing that the registered trademark of one's own products has been altered; repeating sales of goods bearing a counterfeit mark after an administrative sanction or a civil liability has been imposed; forging or altering a trademark licensing document or knowing that such document was forged or altered.

  • in relation to a patent infringement offence, 'passing off another's registered patent' means using without authorization another person's registered patent number on packaging, using another person's patent number on advertising and marketing material or on a contract to misrepresent that the technology involved is another's patented technology; and

  • in relation to a copyright offence:

    • 'for the purposes of gain' refers to the use of means to obtain income directly or indirectly;

    • 'without authorization' means without the copyright owner's authorization or the forgery or alteration of any licence document or use outside the scope of a licence; and

    • 'reproduction and distribution' will include publishing other people's literary works, music, movies, visual recordings, computer software and other works through an information network.

The text also deems an accomplice anyone who knows that a party is committing an IP crime and still provides loans, finance, a bank account, invoices, certification, licence documents or provides production, operation, transportation, storage, import or export agency services to facilitate the infringement.

Kenny Wong, Johnson Stokes & Master, Hong Kong

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