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Chinese Courts Keep Strengthening Judicial for IPR Protection and Crackdown on IPR Violation

Since the end of 2004 when the Supreme People's Court and theSupreme People's Procuratorate issued and began to implement theInterpretation on Several Issues Regarding the Application of Laws inHandling Criminal Cases of Infringement on Intellectual PropertyRights (hereafter referred to as the Interpretation)， the Chinese Courtsat all levels have adopted various measuresto further strengthen the protection for intel-lectual property rights and chastise IPRviolation. Those measures have achievedmarked effects on the protection for the le-gitimate rights of the infringed as well as themaintenance of the market order.

According to official statistics， fromJanuary to May of this year， the courts haveadjudicated 1，280 cases of IPR violation，producing marketing fake or substandardcommodities， and illegal businessoperations. Compared with the same periodof last year， the cases adjudicated increasedby 23.19%; and the number of completedcases amounted to 1，061， a year-on-year in-crease of 28.29%.

According to the Chinese Criminal Law，IPR violators may be convicted of three kindsof crimes. Firstly， they may be convicted ofinfringing on intellectual property rights asstipulated in Section 7， Chapter 3， Part Two:Specific Provisions of the Criminal Law.Secondly， they may be convicted of produc-ing marketing fake or substandard com-modities as stipulated in Section 1， Chapter 3 of the Criminal Specific Provisions. In judi-cial practice， many of the accused have notonly counterfeited registered trademarks， butalso used these counterfeited trademarks toproduce and sell substandard commodities，for instance， medicine of inferior quality， ormedical apparatus and instruments that are notup to standards， or food that is not up to hy-gienic standards. According to penal theory，such acts should be classified as an embroiledcrime， and be punished much more seriously.

There are 9 accusations in the Section ofProducing Marketing Fake or SubstandardCommodities. Usually the maximum punish-ment for such acts is lifetime imprisonment，but the maximum punishment for the crimeof producing selling fake medicines andthe crime of producing and selling poisonousor harmful food is death penalty， which ishigher than that for the crime of counterfeit-ing registered trademarks. So the acts are gen-erally punished as the crime of producing marketing fake or substandard commodities.

Thirdly， the violators may be convictedof and punished for the crime of operatingillegally in business， and the penalty is muchhigher than those for the crimes stipulated inSection 7， Chapter 3， Part Two of the Crimi-nal Law. In judicial practice， many acts of in-fringing the intellectual property rights wereeventually punished as the crime of operat-ing illegally in business or the crime of pro-ducing marketing fake or substandardcommodities.

In the first half of this year， the numberof cases of illegal business operation and pro-ducing and selling fake and substandardcommodities， heard by the People's courts，increased dramatically compared with thesame period of last year. The main reason isthat the number of IPR violations brought tocourt in the name of the above-mentionedtwo accusations has increased by largeamount. And this reflects that with the imple-mentation of the Interpretation made by theSupreme People's Court and the SupremePeople's Procuratorate， the Chinese govern-ment and judicial organs have been takingeffective moves to fight against violation ofintellectual property rights with fulldetermination.

It's necessary to make it clear here thataccording to Chinese law， the administrativeorgans have certain power to punish illegalacts. There is a clear line drawn between thecriminal penalty and the administrativepunishment. The punishment for IPR viola-tions should be based on their harms to thesociety， and different laws should be appliedaccordingly. For acts that have not amountedto the criminal level， administrative punish-ment will be applied; while only for acts thathave done great harm to the society and theloss caused to the victim amounts to the cri-teria stipulated by law， criminal punishmentwill be applied.

Besides， the work of civil and adminis-trative adjudication has made great devel-opment in the protection for IPR. From Janu-ary to May of this year， the courts at all lev-els have adjudicated 5135 civil cases of IPRviolation at the first instance. Compared withthe same period of last year， the number ofadjudicated cases increased by 48.9%， andthe number of completed cases amounted to3076， a year-on-year increase of 36.7%. Dur-ing the same period， the courts at all levelshave adjudicated 266 administrative IPRcases at the first instance， the number of ad-judicated cases increased by 24.8% com-pared with the same period of last year， andthe number of completed cases amounted to 83， increased by 2.4% compared with thesame period of last year.

Since the beginning of this year， the Chi-nese courts have been focused on the imple-mentation of the Interpretation issued by theSupreme People's Court and the SupremePeople's Procuratorate， further strengtheningthe protection for the intellectual propertyrights as well as chastising of IPR infringe-ments according to law.

Ⅰ.Great emphasis has been put on theadjudication of both criminal and civil casesof IPR infringements.

This May， the Supreme People's Courtissued the Notice on Fully Developing theTrial Function and Actively Participating inthe Work of Rectifying and Regulating the Market Order， requiring the People's courtsat all level to pay great attention to the workof crackdown on the infringements of the in-tellectual property rights.

Ⅱ.More efforts have been made to pub-licize the work of punishing IPR violationaccording to law.

At the beginning of this year， the Su-preme People's Court has publicized throughthe Paper of the People's Courts ten completedcases of intellectual property rights， whichhave great influence in China. The Court alsoheld interactive commumcation with peopleon the Intemet， disseminating relative regu-lations in the Criminal Law and the Interpre-tation and advocating and encouraging the es-tablishment of the idea of IPR protection inthe whole society. Cases with relativelygreater influence were tried openly and re-ported in time. For example， Shanghai No. 2Intermediate People's Court in Shanghai pub-licly tried and Randolph Hobson Guthrie III，an American citizen who sold piratedproducts. Open trials and reports of impor-tant cases have achieved good social results.In order to further broaden the good impactsof such trials and to deter similar crimes， theSupreme People's Court will publicize a se-ries of important trials of cases concerningIPR violation.

Ⅲ.Cooperation with relevant depart-ments has been enhanced and joint efforts hasbeen formed to punish crimes IPR violationaccording to law.

While working on their own， all thecourts， the Police and the pocuratorates arecooperating with each other closely to main-tain the results achieved by \"the Eagle Action，\"and arrange adjudicating staff in advance，ensuring that the case can be tried and pro-nounced as soon as being sued. Against thecharacteristic that in cases of IPR violationsit's hard to tell the criminal acts from torts，the people's courts should pay special atten-tion to distinguishing between crime and non-crime and between this crime and that crimeduring the trial， as well as communicatingwith related administrative enforcingdepartments. Only in this way， can the armof the law be strong. Judicial suggestionshould be put forward in time when otherdepartments are found to substitute the crimi-nal penalty with the administrative punish-ment and handle cases improperly.

Ⅳ.A system of supervising and urgingthe handling of important or big IPR- infring-ing cases is to be established， and the judicialsystem of IPR protection should be improved.

The Supreme People's Court is conduct-ing investigation and research on the prob-lem of\"improving the judicial system of IPRprotection.\" The Supreme Court plans to putforward scientific policy responses and fea-sible suggestions on the furtherimprovement of the system ofIPR protection with the aim tofacilitate the litigation of theparties and trials of the court，optimize the deployment ofthe adjudicative resources，simplify the relief process andensure the judicial unity. Manyeffective measures of foreigncountries can be considered tofurther strengthen the protec-tion for the intellectual prop-erty rights as a whole by start-ther their efforts to strike the crimes concern-ing IPR infringement， the Procuratorial Or-gans have protected， in pursuance of laws， thelegal rights and interests of IPR holders andtherefore promoted the establishment and per-fection of the order of the socialist marketeconomy. Our primary achievement includesthe following six aspects:

Ⅰ.Aapproving the arrest of and initiatingprosecutions against a batch of the criminalsinfringing intellectual property rights. Since2004， the Procuratorial Organs have approvedtotally the arrest of the 3，387 suspects whoproduced and/or marketed fake or substan-dard commodities， 2，968 of these suspects hadbeen initiated prosecutions; approved the ar-rest of the 942 suspects who infringed other'sintellectual property rights， initiated prosecu-tions against 896 ofthem.

Ⅱ.Supervising andurging the competent au-thorities to handle majorIPR infringement cases.Sorting out nearly a hun-dred influential majorcases from the clues pro-vided by the public， re-ported by the newsmedia， transferred to theProcuratorial Organsfrom relevant adminis-trative organs or reflectedby the High QualityBand Protecting Com-mittee of the Associationof the Foreign Invest-ment Enterprises in China， the SupremePeople's Procuratorate hung out shingles tosupervise and urges the handling of thesecases， beef up efforts to guide the handling ofthe cases.

Days ago， the Supreme People'sProcuratorate issued an urgent notice on thetimely approval of arrest and initiation ofprosecutions against the suspects who com-mitted major crimes such as producing ormarketing the fake or infringing upon the in-tellectual property rights， hung out shinglesto supervise and urges the handling of 56major cases concerning the production ormarketing of the fake or IPR infringement，and required that the Procuratorial Organs atall levels should comb through all such caseswhich have entered the procuratorial link，study case by case， concentrate forces to ap-prove the arrest or initiate the prosecutionagainst a batch of case in the last ten-day ofJune or the first ten-day of July.

Ⅲ.Strengthening supervision over casefiling， preventing the replacement of penalpunishment by fine. Since March 2004， theProcuratorate organs launch special case fil-ing supervision campaign on combatingproducing， selling fake goods and intellectualproperty infringement crimes， by visiting in-terviewing the Industrial and CommercialAdministration Organ， Medicine SupervisionOrgan， Culture Administration Organ， Pressand Publication Organ， Tobacco monopoli-zation Administration Organ， found and heldlots of crime clues involving producing， sell-ing fake goods and intellectual propertyinfringement， suggested the administrativeorgans to summit 1257 cases involving 1483people to the Public Security Organ， super-vised the Public Security Organ filing on 868cases involving 1111 people.

Ⅳ.Investigating a group of state func-tionaries duty crimes related to producing，selling fake goods and intellectual propertyinfringement crimes according to law. Fromlast year， the Procuratorate organs have filedon 41 such cases involving 41 people， wip-ing out the \"umbrellas\" for those producing，selling fake goods and intellectual propertyinfringement crimes. Recently， the SPP havedeployed special campaign on investigatingmalfeasance crimes of destroying socialisteconomic order， filing cases supervision ac-tivities on combating producing， selling fakegoods and intellectual property infringementcrimes will be cooperate and interact closelywith it， the People's Procuratorates pledge topunish the state functionaries duty crimes ofconniving and hiding up producing， sellingfake goods and intellectual propertyinfringement.

Ⅴ.Promoting to establish and improvethe mechanism of linkage between adminis-trative law enforcement and criminal judicialactively. In March 2004， the SPP and the Of-fice for National Leading Group of Rectifi-cation and Standardizing Market EconomicOrder， the Ministry of Public Security jointlylaunched \"Opinions on enhancing workingliaison between the administrative lawenforcement， public securities and people'sprocuratorate organs，\" in order to solve theproblems existing in the administrative organtransferring criminal cases， the SPP and theOffice for National Leading Group of Recti-fication and Standardizing Market EconomicOrder， the Ministry of Public Security， theMinistry of Supervision jointly draft out \"pro-vision about transferring criminal cases in ad-ministrative enforcement in time.\" Recently，this document will be published on theProcuratorial Daily and \"Justice Web\" hostedby the SPP to gather opinions from people inChina and aboard. The SPP will issue thedocument to all procuratorates for applicationat the end of this year after making someamendments according the opinions.

Ⅵ.Fhe Supreme People's Procuratorateparticipated in the enactment of the judicialexplanations on dealing with intellectualproperty infringement cases. On December2004， the SPP and the SPC jointly announcedthe Explanations on the Law Application Is-sues Concerning the Intellectual Property In-fringement Cases. Considering the practicalneeds to combat the crimes on intellectualproperty infringement，the criteria lowered onconviction， hence solved the problems on theapplication of laws and improved the ma-neuverability of the relevant articles of theCriminal Law. Since the announcement ofthe Explanation， the number of intellectualproperty infringement cases whereprocuratorate organs have authorized arrestsand later prosecuted the suspects has appar-ently increased. From January to May， 2005，882 suspects had been arrested on the chargeof producing and marketing fake and sub-standard commodities， 51.5 % more than thecated 16 million cases of perfume， cosmeticsand package boxes worth 16 million yuan.Zhejiang public security authorities demol-ished the You Fushun criminal group whichproduced 650，000 boxes of fake Gillette ra-zor blades with a value of over 30 millionyuan. The major suspect， a Russian nationalnamed Haraff， was also arrested. The publicsecurity agency in Guangdong also closed thecase of drug counterfeit including fake Viagra，and seized large quantity of fake drugs andraw materials， involving a value of 40 mil-lion yuan.

At present， the Ministry of Public Secu-rity (MPS) is giving priority to 50 major caseswith widespread influence， severecircumstances， serious damage and big in-volved value， and will do its utmost to moni-tor the handling of 100 major cases so as toensure substantive effects of the \"MountainEagle\" action.

In a bid to strengthen copy-right protection， MPS assignedpublic security authoritiesthroughout the country to com-bat illegal copyright violatingactivities and regulate the print-ing industry. Together with rel-evant administrative enforce-ment authorities， MPS severelycracked down on printeries and undergroundorinting hideouts that operated illegally. Theydso straightened out the illegal sites for busi-aess operation， stalls and vendors that soldcopyright infringing publications includingbooks， audio and video products and softwareor whose operation violated laws andregulations. Various copyright infringingbooks， audio and video products and softwarewere also confiscated.

In combating illegal infringement and pi-racy activities， 7 high-profile cases werebrought under monitored processing， includ-ing Case 6.7 in Chongqing (production and dis-tribution of pirated publications)， Case 5.28 inBeijing (pirated textbooks， study aids andsupplementary readings) and Case 7.26 inGuangzhou (making and distribution of piratedCDs). Local public securities (PS) authoritieshave been rendered more coordination andguidance to intensify efforts of investigationand hunt-down of the suspects. The public se-curity authorities in Hebei， Jiangsu， Jiangxi，Shandong， Henan and Guangdong have suc-cessfully cracked down on a number of piracyand infringement cases as represented by theone involving the production and selling of pi-rated publications by someone named ZuoChunjin and his accomplices. The prime sus-pects in Case 9.26 in Jiangsu (large-scale pi-rating of textbooks and study aids) and Case 3.05 in Guangzhou (production and selling ofpornographic and pirated publications) havebeen sentenced to 16 months to 19 years ofimprisonment on the charges of copyright vio-lation and illegal selling.

In order to contain infringement and pi-racy activities from the very source， the pub-lic security authorities continued its role in 2004 asa leading force in unearthing under-ground CD production lines. In particular， inlight of the pirated HDVD discs emerging inthe publications market in the second half of 2004， the public security authorities actedpromptly in association with other relevantagencies and carried out well-targeted seizureraids. They adopted a wide range of measures，intensified their investigation and went deepdown to uproot illegal CD production lines.In the whole year of 2004， the public securityauthorities seized 21 illegal CD productionlines， bringing the total number of illegal CDproduction lines seized nationwide since 1996up to 2000. These illegal CD production lineswere without exception originated in devel-oped countries in Europe and America. OnJune 20， 2005， the Ministry of Public Secu-rity (MPS)， the General Administration ofPress and Publication (GAPP) and other rel-evant agencies waged a special campaign forharshly cracking down on illegal criminalactivities of audiovisual products infringe-ment and piracy. Work related to this cam-paign is now ongoing in greater depth.

In addition， the public security authoritieshave also made active efforts in conducting bi-lateral and multilateral exchanges and coop-eration on IPR law enforcement to learn thegood practices and experiences of developedcountries in the area oflPR protection by crimi-nal laws in order to extend the channels andspace for criminal judicial protection on IPR.In January 2003， China sent representatives toattend the third meeting of the INTERPO In-tellectual Property Crime Action Group. InOctober 2004， the Ministry of Public Securityco-hosted the China-UK IPR Law Enforce-ment Training Course with Queen Mary'sSchool of London University. Given the cur-rent growing momentum of cross-border crimi-nal offences in particular， the Chinese publicsecurity authority is intensifying its coopera-tion with its foreign counterparts in informa-tion sharing with an effort to fight against cross-border IPR violations in all linkages such asmanufacturing， sales， customs declaration forexports， and retail， and to destroy the wholenetwork. In July 2004， the Chinese public se-curity authority， in cooperation with the UScustoms， seized 7 suspects with American na-tional Guthrie III Randolph Hobson as thehead， demolished 3 pirated DVD hideouts， andconfiscated over 500，000 pirated DVDs， whichset a precedent for Chinese-foreign coopera-tion in IPR law enforcement.ing with improving the judicialprotection system. The Su-preme People's Court will alsoreinforce its direction over theIPR-related cases tried by thelocal courts， and will cooper-ate with relevant departments to establish thesystem of supervision big or important IPR-infringing cases. Each big or important casediscovered should be registered， and theirhandling should be supervised and urged soas to guarantee proper punishment.

Ⅴ.The judicial interpretations applicableto the trials of IPR cases should be improvedall along.

In order to solve the problems of apply-ing concrete laws in the judicial protectionfor the intellectual property rights， the Su-preme People's Court is making drafts of 5judicial interpretations and guidance on thecriteria of deciding patent infringement， onthe concrete laws applicable in cases of im-proper competition， infringement on newplants species and the copyrights of MTVs，and on resolving the conflicts of the intellec-tual property rights. These interpretations andguidance will be released， after furtherresearch， argumentation and listening to thepublic opinions. Problems in the re-examina-tion of patents and the administrative proceed-ings of invalid patents will be directed andclarified in the form of meeting summaries.The 0new problems during the implementa-tion of the published interpretations have beenregarded as important investigation topics，and will be investigated completely. Newproblems will be resolved in time.

Ⅵ.The training of and communicationamong judges will be further enhanced

The cases of IPR infringement usually arecomplicated with many new problems andprofessional features， so many of these casesface the same difficulty as which law shouldbe applicable. In order to practically improvethe quality of the adjudicative staff， the Su-preme People's Court will further the profes-sional training of the judges in charge of theintellectual property cases， to enrich their pro-fessional knowledge on the intellect propertyrights. On the foundation of two trainings forsenior IPR judges by the National Judge Col-lege on Aprils of last year and this year， theSupreme People's Court plans to hold one ortwo trainings for judges in charge of the in-tellectual property rights in this autumn， try-ing to make sure that the IPR judges all overthe country， including those responsible forthe criminal trials of the IPR cases， can get atraining. The Supreme People's Court willalso reinforce the exchanges with the coun-tries and regions with rich experience of try-ing IPR cases， and promote the abilities oftrying the IPR cases.

Procuratorial Organs CombatingAgainst IPR infringement inAccordance with laws

In accordance with the Constitution of thePeople's Republic of China， the ProcuratorialOrgans are in charge of the national legalsupervision. In recent years， stepping up fur-corresponding period last year; 844 suspectshad been prosecuted， a 45%increase over thecorresponding period last year. 340 suspectswere arrested on the charge of intellectualproperty infringement， a 58.9 % increaseover the corresponding period last year; 258 had been prosecuted， 20.6 % over the corre-sponding period last year.

Public Securty Authorities Throughout the Country Rigorously Crack down on IPR Infringement

In recent years， the Chinese public secu-rity authorities have been attaching great im-portance to IPR protection by identifyingcombating IPR violation as an important partof market order rectification andstandardization. The authorities havelaunched a series of actions to fight againstvarious IPR crimes in a sweeping and fiercemanner， and successfully solved a large quan-tity of criminal cases involving widespreadinfluence and relatively large amount ofmoney.

According to the statistics， from 1998 to2004， the public security agencies through-out the country altogether dealt with over7000 criminal cases of infringement of regis-tered trademarks， trade secrets and copyrights，involving a total value of 2.6 billion yuan.

In November 2004， in order to implementthe arrangement of the State Council for spe-cialized campaign of IPR protection， and tointensify efforts in fighting against IPRinfringement， the Ministry of Public Securitykicked off the one-year-long \"MountainEagle\" action across the nation to combattrademark violations， under which seven cat-egories of trademark violating criminal ac-tivities including counterfeiting trademarks offood， drugs and farm-use products， famousbrands， faking trademarks in import， exportand wholesale processes and cross-bordercounterfeiting and selling of products withfake trademarks.

In the operation， aware of the increasinglycunning， covert， professional and organizednature of the crimes， the public security au-thorities at various levels focused on \"solv-ing major cases， demolishing hideouts， com-bating criminal groups and checkingnetworks\"， adopted forceful measures and successfully closed more than 1000 IPR vio-lation cases with a total value of over 860million yuan. In those cases， they arrestedmore than 2600 suspects and completely de-molished a series of counterfeit manufactur-ing and selling hideouts and networks.

This year， after a careful detection， thepublic security authority in Tianjin settled atransnational criminal case of manufacturingand selling fake Panadol through Intemet. TheShanghai public security agency solved thecase of selling counterfeit Nissan and Toyotacar accessories by Zhao Weilun and othercriminals， involving a value of more than 100million yuan. The public security authorityin Jiangsu closed the case of manufacturingand selling of fake Boss and other interna-tional famous perfume and cosmetics brandsby Li Yade (a Lebanese national) and confis-