Opinion on Several Issues Concerning the Application of the Law in Handling Criminal Cases of Intellectual Property Infringement

(Issued by the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on January 10 2011.)

Fa Fa [2011] No.3

The Opinion had been formulated pursuant to the Criminal Law, the Criminal Procedure Law and relevant judicial interpretations and in light of investigation, prosecution and trial practice, in order to resolve new situations and new issues encountered by public security authorities, people's procuratorates and people's courts in handling criminal cases of intellectual property infringement in recent years, punish criminal activities of intellectual property infringement in accordance with the law and safeguard the order of the socialist market economy.

1. Jurisdiction in criminal cases of intellectual property infringement

The public security authority of the locus delicti of a criminal case of intellectual property infringement is responsible for opening and investigating the case. When necessary, such case may be opened and investigated by the public security authority of the place where the criminal suspect is resident. The loci delicti of a criminal case of intellectual property infringement include the places where the infringing product was manufactured, stored, in the course of transportation, and sold; the place where the website server used to disseminate the infringing work or sell the infringing product is located, the place where the internet was accessed, and the place where the creator or the administrator of the website is located; the place where the person who uploaded the infringing work is located; and the place of the occurrence of the consequences of the crime where the rights holder suffered actual harm. Where more than one locus delicti exists for a given crime of intellectual property infringement, the public security authority that first accepted the case or the public security authority of the principal locus delicti has jurisdiction. In the event of a disagreement over jurisdiction between the public security authorities of different loci delicti of the same crime of intellectual property infringement, the public security authority that is their common superior will designate the public security authority that has jurisdiction. If a request needs to be made for approval to make an arrest, or the case needs to be turned over for investigation and prosecution or a public prosecution needs to be instituted, the case is to be accepted by the people's procuratorate or the people's court at the same level and of the place where the aforementioned public security authority that is their common superior is located.

If a crime of intellectual property infringement involving the manufacture, storage, transport, sale, etc. of the same batch of infringing products is committed by different criminal suspects or by a crime ring across more than one region, and the requirements for consolidation of the cases are satisfied, a relevant public security authority may open and investigate the cases together. If it needs to make a request for approval to make arrests, or needs to turn the case over for investigation and prosecution or if a public prosecution needs to be instituted, the case is to be accepted by the people's procuratorate or the people's court at the same level and of the place where the aforementioned public security authority is located.

2. Validity of the evidence gathered and taken by an administrative law enforcement department during the handling of a criminal case of intellectual property infringement

The physical evidence, documentary evidence, audio-visual materials, test reports, conclusions of forensic analysis, crime scene investigation notes and on-the-spot notes gathered, taken and prepared in accordance with the law by an administrative law enforcement department may be used as criminal exhibits if examined by the public security authority and people's procuratorate and confirmed by cross examination at trial by the people's court.

If the public security authority deems it necessary to use the witness testimony, statements of the parties concerned and other such investigation notes prepared by the administrative law enforcement department as criminal exhibits, it should gather and prepare the same anew in accordance with the law.

3. Taking of evidence samples and appointment of a forensic agency in the course of handling a criminal case of intellectual property infringement

When a public security authority handles a criminal case of intellectual property infringement, it may, as required by the work, take evidence samples, or it may request that the administrative law enforcement department at the same level and/or the relevant testing institution assist it in taking such evidence samples. If laws or regulations provide for the sample-taking institution or the sample-taking method, the specified institution should be appointed and the samples should be taken by the specified method.

If a public security authority, people's procuratorate or people's court requires a forensic analysis of a matter when handling a criminal case of intellectual property infringement, it should appoint a state-recognised qualified forensic agency to conduct the analysis.

The public security authority, people's procuratorate or people's court should conduct an examination of the conclusions of forensic analysis, listen to the views of the rights holder, criminal suspect and defendant on the conclusion and may require the forensic agency to give relevant explanations.

4. Gathering of evidence in private prosecutions of criminal intellectual property infringement

When a party that institutes a private criminal prosecution of intellectual property infringement that has been accepted by the people's court in accordance with the law cannot obtain evidence due to objective reasons but, at the time it institutes the private prosecution, is able to provide relevant leads and petitions the people's court to take such evidence, the people's court should take such evidence in accordance with the law.

5. Determination of whether goods are the “same type of goods” as specified in Article 213 of the Criminal Law

Goods that have identical descriptions and goods that although having different descriptions nonetheless refer to the same thing may be determined to be the “same type of goods”. The term “description” means the description of a good as used by the Trademark Office of the State Administration for Industry and Commerce in the course of trademark registration work, which usually is the description of the good as provided in the International Classification of Goods and Services for the Purposes of the Registration of Marks. The phrase “goods that although having different descriptions nonetheless refer to the same thing” means goods that are identical or essentially identical in terms of function, purpose, main raw materials, targeted consumers, sales channels, etc. and that the relevant public generally considers as being the same type of thing.

To determine whether goods are the “same type of goods”, a comparison between the goods on which the rights holder's registered trademark has been designated for use and the goods actually produced and/or sold by the actor should be carried out.

6. Determination of whether a trademark is “identical to its registered trademark” as specified in Article 213 of the Criminal Law

A trademark may be determined to be “identical to its registered trademark” if:

(1) although a change has been made to the font, case of the letters or direction of the text of the registered trademark, the difference with the registered trademark is nevertheless minimal;

(2) a change has been made to the distance separating the words, letters, numbers, etc. of the registered trademark, without affecting the distinctive features embodied by the registered trademark;

(3) the colour of the registered trademark has been changed; or

(4) the trademark is otherwise not essentially different visually from the registered trademark, thereby being able to mislead the public.

7. The issue of whether the value of infringing products to which none or only some of the counterfeit registered trademark representations have been affixed is to be counted as part of the illegal turnover

When calculating the value of infringing products with counterfeit registered trademarks that have been manufactured, are stored, are being transported or have not been sold, the value of those the manufacture of which has been completed but to all or some of which the counterfeit registered trademark representations have yet to be affixed (or adhered) should be calculated as part of the illegal turnover if there is solid and sufficient evidence to show that the products were to pass off another's registered trademark.

8. Conviction and punishment where, in a criminal case of selling goods with counterfeit registered trademarks, some or all of the goods have yet to be sold

Where a party has sold goods that it was fully aware were goods with counterfeit registered trademarks, it should be convicted of and imposed punishment for the crime of attempted sale of goods with counterfeit registered trademarks in accordance with Article 214 of the Criminal Law if:

(1) the value of the unsold goods with the counterfeit registered trademarks is at least Rmb150,000; or

(2) some of the goods with the counterfeit registered trademarks, in an amount of less than Rmb50,000, have been sold, but that amount together with the value of the goods with counterfeit registered trademarks that are unsold is at least Rmb150,000.

If the value of unsold goods with counterfeit registered trademarks is at least Rmb150,000 but less than Rmb250,000, or at least Rmb250,000, the infringer should be convicted and imposed punishment within the respective statutory sentencing ranges specified in Article 214 of the Criminal Law.

When each of the amount of the goods sold and the value of the unsold goods fall into a different statutory sentencing range or both fall into the same statutory sentencing range, the heavier sentence should be imposed in the heavier of the statutory sentencing ranges or in the same statutory sentencing range by taking into consideration the circumstances.

9. Conviction where, in a criminal case of selling registered trademark representations illegally manufactured by another, some or all of such representations have yet to be sold

Where a party has sold registered trademark representations that were forged or manufactured without authorisation by another, it should be convicted of and imposed punishment for the crime of attempted sale of illegally manufactured registered trademark representations in accordance with Article 215 of the Criminal Law if:

(1) the number of unsold registered trademark representations forged or manufactured without authorisation by another totals at least 60,000;

(2) the number of two or more types of unsold registered trademark representations forged or manufactured without authorisation by another totals at least 30,000;

(3) some of the registered trademark representations forged or manufactured without authorisation by another, totalling less than 20,000, have been sold, but that number together with the number that is unsold totals at least 60,000; or

(4) some of the two or more types of registered trademark representations forged or manufactured without authorisation by another, totalling less than 10,000, have been sold, but that number together with the number that is unsold totals at least 30,000.

10. Determination of whether an act, in a criminal case of copyright infringement, was done for the “purpose of making a profit”

In addition to sale, an act may be determined to have been done for the “purpose of making a profit” if:

(1) a fee is charged, directly or indirectly, by means such as publishing a paid advertisement in another's work or tying to a third party work;

(2) a fee is charged, directly or indirectly, for providing a paid advertising service on a website or webpage while disseminating another's work over an information network or using an infringing work uploaded by another;

(3) the work of another is disseminated over an information network by means of a membership system and a membership registration fee or other fee is charged; or

(4) another's work is otherwise used to make a profit.

11. Determination of whether an act, in a criminal case of copyright infringement, was done “without the permission of the copyright owner”

In general, whether an act has been “done without the permission of the copyright owner” should be comprehensively determined based on the copyright certification document for the work in question issued by the copyright certification institution designated by the copyright owner, or its authorised agent, the collective copyright administration organisation or the state's copyright administrative department, or evidence showing that the publisher or reproducer/distributor forged or altered the licensing document or exceeded the scope of the licensing document, and in light of other evidence.

If, in cases where the types of works involved are numerous and the rights owners are dispersed, and the aforementioned evidence is difficult to gather for each work, there is evidence showing that the reproductions in question were illegally published or illegally reproduced and distributed and the publisher or reproducer/distributor is unable to produce relevant documentation evidencing that it obtained the permission of the copyright owners, the acts may be determined to have been done “without the permission of the copyright owners”, unless there is evidence showing that a rights owner has relinquished its rights, a work in question is not subject to the protection of China's Copyright Law or the copyright protection period for a work has expired.

12. Determination of “distribution” as specified in Article 217 of the Criminal Law and related issues

“Distribution” includes general distribution, wholesale, retail, dissemination over an information network, as well as activities such as leasing and exhibition sale.

If copyright is infringed by illegally publishing, reproducing or distributing another's work and such infringement constitutes a criminal offence, the infringer should be convicted of and imposed punishment for the crime of copyright infringement, and such infringement should not be determined to be the crime of illegal operation or other such criminal offence.

13. Criteria for conviction of and imposition of punishment for the act of disseminating an infringing work over an information network

The dissemination to the public over an information network of another's written work, musical, cinematographic or television work, work of fine art, photographic or videographic work, audio or video recording, computer software or other work without the permission of the copyright owner for the purpose of making a profit constitutes “another serious circumstance” as specified in Article 217 of the Criminal Law if:

(1) the illegal turnover is at least Rmb50,000;

(2) the number of the works of another that is disseminated totals at least 500;

(3) the actual number of clicks on the work of another that is disseminated is at least 50,000;

(4) a membership system is used to disseminate another's work and the number of registered members is at least 1,000;

(5) none of the amounts or numbers set forth in Items (1) to (4) is reached but at least half of the amount or number of at least any two of them is reached; or

(6) another serious circumstance applies.

If a party commits the act mentioned in the preceding paragraph and the amount or number set forth in any of Items (1) to (5) of the preceding paragraph is exceeded by at least five times, such circumstance constitutes “another exceptionally serious circumstance” as specified in Article 217 of the Criminal Law.

14. Cumulative calculation of amounts where intellectual property infringement has been committed on multiple occasions

Pursuant to the second paragraph of Article 12 of the Supreme People's Court and Supreme People's Procuratorate, Interpretation on Several Issues Concerning the Specific Application of the Law When Handling Criminal Cases Involving the Infringement of Intellectual Property Rights, if intellectual property infringement has been committed on multiple occasions but has not been subjected to administrative handling or criminal punishment, the illegal turnover, illegal income or sales amount shall be calculated cumulatively.

If intellectual property infringement is committed on multiple occasions during a two year period, has not been subjected to administrative handling and the cumulative amount thereof is sufficient to constitute a criminal offence, the infringer should be convicted and imposed punishment in accordance with the law. The limitation of prosecution for the crime of intellectual property infringement is governed by relevant provisions of the Criminal Law and is not subject to the foregoing two-year limit.

15. Determination of the nature of an act of providing raw materials, machinery, equipment, etc. for the commission of the crime of intellectual property infringement by another

If a party is fully aware that another is committing a crime of intellectual property infringement but nevertheless provides assistance for the production or manufacture of the infringing products such as main raw materials, auxiliary materials, semi-finished products, packaging materials, machinery, equipment, labels, marks, production technology or formulas, or services such as internet access, server hosting, online storage space, communication and transmission channels, payment collection or charge settlement, it should be imposed punishment as an accessory to the crime of intellectual property infringement.

16. Handling of concurrent crimes of intellectual property infringement

If the crime of intellectual property infringement committed by an actor also constitutes the crime of producing or selling fake or substandard goods, it should be convicted and imposed punishment in accordance with the provisions for the heavier of the punishments for the crime of intellectual property infringement or the crime of producing or selling fake or substandard goods.