On January 10 2011, the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security jointly issued the Opinion on Several Issues Concerning the Application of the Law in Handling Criminal Cases of Intellectual Property Infringement (hereinafter referred to as "the Opinion").The Opinion mainly handles jurisdiction, evidence, definition, calculations of unlawful turnover, online distribution, and criminal accomplices etc.
The Opinion states that criminal IP infringement cases should be investigated by the police in the place where the crime was committed, or, if needed, by the police in the place of residence of the criminal suspect. The Opinion grants police much more clarity and flexibility in establishing jurisdiction in cases where infringing works are being disseminated online or counterfeit goods are been sold through websites.
The Opinion stipulates that physical evidence, documentary evidence, audio-video evidence, test reports, expert conclusions, and crime scene investigation -type records collected or prepared by administrative law enforcement authorities such as local Administrations for Industry and Commerce may be considered as evidence in criminal cases if examined by the relevant police and public prosecutors, and confirmed after cross-examination during court trials. The Opinion further states if the police want to use testimony of witnesses, parties' statements or other investigation records prepared by administrative authorities, such evidence and records should be collected and prepared anew.
The Opinion allows that the police may take evidence samples, or consult with administrative authorities and relevant test centers, and request them to assist with taking evidence as required. Where an expert opinion has been sought and obtained, the police, public prosecutor or court shall grant the IP owner and the criminal suspect or defendant an opportunity to comment on any such expert opinion.
2. Definition of identical trademarks
Article 213 of China Criminal Code defines the crime of “counterfeiting a registered trademark” in terms of the infringing mark being "identical" to the registered mark being infringed. The Opinion extensively interpretates what constitutes an "identical" mark. It states that marks will considered "identical" where:
there are minimal differences in fonts, case (upper case v. lower case) or direction of the text (vertical v. horizontal, left to right or vice versa) the spacing of the text or between letters and/or numerals has been changed without altering the distinctive features of the registered mark a different color has been used; or
in effect, there are no visual differences and the mark in question may mislead the public.
The Opinion also explains what constitutes "the same type of goods" stipulated in the Criminal Code. In cases where the infringing goods use a product name that is different from the genuine product, one is supposed to look at the function, use, main raw materials, target consumers, sales channels, etc., and consider the relevant public's perception for that type of product, as well as the specification of goods covered by the relevant trademark registration. Again, this provision helps avert certain doubts that may be cast on whether criminal liability exists where a different generic product name is used by counterfeiters.
3.Unlawful turnover and unsold goods
The Opinion provides that the value of goods not yet bearing a representation of the counterfeit mark may be included in calculating the amount of unlawful turnover if there is sufficient and substantial evidence that such trademarks were going to be attached on such goods.
The Opinion establishes that anyone that knowingly sells counterfeit goods may be convicted for the crime of attempted sale of counterfeit goods in the following circumstances:
none of the counterfeit goods was sold, and the value of the goods is over RMB150,000; or
some of the counterfeit goods were sold and the sales amount is less than RMB50,000, but the sum of the sales amount and the value of the unsold counterfeit goods is not less than RMB150,000.
4. Definition of "For Profit"
According to China Criminal Code,for criminal liability to stick in copyright infringement cases, one has to prove that the infringement took place "for the purpose of obtaining profit". The Opinion confirms that an act may be deemed profit-motivated in the following circumstances:
- direct or indirect charges are made in the form of publishing a paid advertisement in another's work or bundling the work of others with a third party work;
- direct or indirect charges are made for advertising services on a website used to disseminate the work of others;
- the charging of membership fees by websites used to disseminate the works of others;
- seeking profit using another's work through other circumstances.
5. Interpretation of "Distribution"
Article 217 of China Criminal Code refers to the reproduction and distribution of copyright infringements. The Opinion has interprets the term "distribution" to include general distribution, wholesale, retail, dissemination through the internet, lending and sale by means of display.
6.Investigation standards for online copyright infringements
The Opinion clarifies the catch-all terms “other serious circumstances” and “other exceptionally serious circumstances” used in Article 217 of the Criminal Code.
- unlawful turnover is over RMB50,000
- the aggregate number of disseminated works is over 500
- the actual number of hits on the disseminated works is over 50,000
- works are distributed using a membership system, and registered members total more than 1,000
- the numbers indicated in one of the above items are not met, but they do meet at least half of each criterion set forth in two or more of the above items
- (the catch-all) other serious circumstances.
Where the various numbers shown above are multiplied by a minimum factor of five, the circumstances become “exceptionally serious circumstances”.
The Opinion stipulates that anybody who is well aware of another’s criminal IP infringement but provides any of the following goods or services to an infringer will be considered a criminal accomplice and punished as such:
- primary raw materials
- ancillary materials
- semi-finished products
- packaging materials
- machinery and equipment
- labels and marks
- production technology or formulae
- internet access
- server hosting
- online storage space
- communication and transmission channels
- payment collection
- fee settlement, etc.