66. With respect to the guidelines for penalties to be provided for wilful trademark counterfeiting or copyright piracy on a commercial scale, he said that Chapter 3 of the Chinese Criminal Law, revised in 1997, criminalized the destruction of the socialist market economic order. Section 7 of Chapter 3 was set to target the infringement of IPRs and listed seven crimes in detail, covering trademarks, patents, copyright and confidential information. In addition, on 17 December 1998, the Supreme Court's Interpretation on the Practical Problems on Application of Laws Against Illegal Publications clarified the standards of penalty regarding copyright offences, including the penalty against a crime of illegal business operation. Moreover, the Regulations of the Standards for Litigating Cases in Economic Crimes, which had been promulgated by the Supreme People's Procuratorate and the Ministry of Public Security on 18 April 2001, set the standards of prosecution in IPR offences except copyright crimes. He said that Section 7 of Chapter 3 of the Criminal Law and these two above-mentioned Interpretations constituted the most fundamental basis for the protection of IPRs in terms of the criminal law. In addition, he said that Section 1 of Chapter 3 of the Criminal Law, which criminalized the production and distribution of counterfeiting products, and the Supreme Court's and the Supreme People's Procuratorate's Interpretation of Practical Problems Concerning Criminal Cases of Production and Distribution of Counterfeiting Products were applicable to some of the IPR infringement cases, mainly trademark offences. Relevant regulations could also be found in Articles 54 and 59 of the Trademark Law, Article 58 of the Patent Law, Article 47 of the Copyright Law, Article 24 of the Software Regulations, Article 40 of the New Species of Plant Regulations, and Article 21 of the Anti-Unfair Competition Laws. Those infringing offences, once proved criminal, would be brought to justice by the Criminal Law.
67. Regarding the interpretation of the notion "identical trademarks", he said that Article 5 of the Advice on the Practical Problems Concerning Administrative Enforcement Regarding Trademark, which had been promulgated by the State Administration for Industry and Commerce, provided that "identical trademark means the characters, pictures and patterns or the combinations of the characters and pictures on two trademarks are identical or have no visual difference by comparison". Article 9 of the Supreme Court's Interpretation on Practical Questions Concerning Applicable Laws Governing Civil Disputes on Trademarks, which had been promulgated on 12 October 2001, stated that "an identical trademark defined in Item 1 of Article 52 of the Trademark Law means, by comparison, the trademark being accused of infringement generally has no visual difference from the registered trademark of the plaintiff". Article 10 of this Interpretation also defined the principle on judgement of identical or similar trademarks as "(1) set the attention of the relevant public as the standard; (2) comparison should be made not only to trademarks as a whole, but also to the major parts of them". The process should only be undertaken when the compared objects were separated and isolated. Therefore, he inferred that identical trademarks in legal terms made a difference to what "identical" meant in daily language.
68. "Goods of the same class" meant goods that were completely identical, or of the same category and class, or with the same name, that shared basically the same nature and function. "Goods of the same class" had a bigger extension than "identical goods". The practical judgement of "goods of the same class" was usually subject to comprehensive assessment by the judge based upon the general knowledge of the public of certain products and the classification of goods by the international classification list of goods and services, with the trademark registration. He clarified that the classification list was not the only benchmark for judgement, but an important standard for reference. To sum up, one of the important criteria to tell whether two products were of the same class was whether they shared the same product name, though they might have different practical functions. However, those goods with different names could also be defined as goods of the same class as long as they bore the same practical function or scope.
69. He reiterated that "identical trademark" was different from what "identical" meant in daily language. China's standard for judgement was whether marks had no visual difference. According to this understanding, this standard generally conformed to the principle of being "not distinguished in essential aspects". He recalled that, as he had already stated, commercial import and export actions constituted a "sale" in real terms. However, under these circumstances, a party involved could be criminally liable for smuggling or illegal operations.
70. With respect to the criminalization of copyright piracy which was not for the purposes of profit, he said that although some infringing acts did not constitute acts of crime according to Articles 217 and 218 of the Criminal Law, that did not mean that they were not criminal acts. They could constitute the crime of intentional property damaging or the crime of construction impediment. China had noticed that some foreign countries, including the United States, the United Kingdom, and Japan, did not specify the aim of making profits as a subjective element for copyright crimes. China was taking this factor into consideration and weighing up the possibility of integrating it into its legal system. Regarding whether China had undertaken criminal, administrative or civil prosecutions against individuals or entities who used the Internet to obtain access to computer systems, he said that though the acts per se did not constitute the copyright crimes defined by Articles 216 and 217 of the Criminal Law, their following acts usually did.
71. In regard to the financial threshold for criminal prosecution, he said that the financial threshold was a major element, but by no means the complete element in IP-related crimes. The record of the administrative penalty for counterfeiting and piracy and serious consequences could all be regarded as factors in crime determination. On the other hand, financial threshold was a generic term which might refer to sales volume, value of goods, illegal profits or damages to the right owner. It could also exist in various forms like money or commodities, as they could be transferred in money terms. As to the so-called illegal business amounts, he said that on the one hand, the illegal business amounts could be determined using other evidence, such as written documents from the purchaser, witness, testimony, and assessment on goods. On the other hand, in cases where the illegal business amount could not be verified, the constitution of crime could be determined through other factors.
72. With respect to counting the value of infringing imports, he said that the Customs would follow the Customs Law, the Customs Regulation for Protection of Intellectual Property Rights and other administrative regulations. The Customs cooperated with traditional authorities, including public security, according to the Regulation on Transfer of Suspected Criminal Cases by the Administrative Agencies, and other laws or regulations.
73. China was considering the revision of the Customs Regulation for the Protection of Intellectual Property Rights according to the TRIPS Agreement and to China's promises upon its accession to the WTO. He also said that the customs had the administrative authority over the import or export of pirated goods over the Internet. The customs and other IPR agencies would make a decision on infringement according to the Customs Regulation for Protection of Intellectual Property Rights, the Patent Law, the Trademark Law, and the Copyright Law.
74. Regarding the number of criminal cases of intellectual property rights infringement, he said that there had been 301 persons and 128 cases in 1998, 379 persons and 248 cases in 2000, and 702 persons and 408 cases in 2002. A total of 1,273 criminal cases relating to intellectual property rights had been closed within the five years, and 2,104 persons had been sentenced. At present, the Supreme People's Court was drafting the judicial interpretation on the application of law in criminal cases of intellectual property rights' infringement, which would include the criteria for conviction and imposing penalties. The interpretation would be adopted and published by the Supreme People's Court after strict examination.
75. The cost of confiscation and disposal of counterfeiting goods undertaken by the Customs shall be borne by right holders. According to Articles 14 and 15, and other relevant provisions of the Regulation on the Customs Protection of Intellectual Property Rights, the applicant who requested the Customs to detain suspected infringing goods should provide a bond to the Customs. After a relevant administrative determination, judicial judgement or adjudication came into effect, the Customs should refund the remainder of the bond, from which the cost of storage, custody, and disposal of the goods as well as the compensation fees to the interested parties for the loss induced by the inappropriate application had been deducted.
76. The Chinese Government had always been engaged in fighting against "localism". The State Council's Provisions on Prohibiting Regional Blockage in Market Economic Activities, published on 21 April, 2001, showed the positive attitude of China against localism in the field of intellectual property rights. China protected right holders in strict accordance with the laws and administrative regulations on the protection of intellectual property rights which were in complete conformity with the WTO TRIPS Agreement. China was now making every effort to implement the obligations of the TRIPS Agreement.
77. With respect to measures against piracy of software, he said that the guiding ideology of the Activity Plan for Fighting against Pirated Software, which had been published in June 2003, was to resolutely crack down on various piracy and infringing acts in respect of software and to promote the development of the Chinese software industry. The working objective was to establish a fair and orderly software market and to realize the fundamental improvement in the social environment of software copyright protection. The Activity Plan was a provisional measure, while the crackdown on various piracy acts was a long-term and standing task. At present, a crack-down on software piracy was included in this Plan in the light of the current situation of China, and it was possible for this Plan to include anti piracy work in other respects later.
78. Article 47 of the revised Copyright Law had added a provision on legal liability for infringing the right of communication through an information network. The principles of illegal application were the same as the liabilities for various infringing acts, whether on-line or off-line, including ISP liability. Although the issue concerning ISP liability was not within the framework of the TRIPS Agreement, China was making an active and serious study of the issue. Other countries' relevant legislation, in particular that of the United States and the European Communities, had aroused general concerns in China.
79. Regarding the regulations of the export of counterfeit and pirated goods, he said that in the year 2002, the Chinese customs had seized a total of 573 cases worth of RMB 95.62 million, including four worth RMB 230,000 and 569 cases worth RMB 95.39 million.
80. Regarding the relationship between civil, criminal and administrative enforcement, he said that theoretically an administrative punishment did not preclude the subsequent criminal enforcement for the same act. According to the Provisions on the Removal of Suspected Crime Cases by Administrative Enforcement Agencies of 2001, which had been enacted by the State Council, cases of suspected crime of violating the Copyright Law should be removed to judicial authorities. Consequently, it was infrequent that a criminal enforcement came after an administrative punishment.
81. He further said that, in 2003, the NCAC had launched three special actions. In February, the NCAC had launched the Special Action for Striking Piracy during the World Intellectual Property Leader's Meeting. According to incomplete figures, the copyright administrative departments in Beijing, Shanghai, Tianjing, Chongqing, and the provinces of Liaoning, Jilin, Hainan, Guangdong, Fujian, Zhejiang, Anhui, Jiangxi, Jiangsu, Yunnan, Guizhou, Gansu, Shanxi and Inner Mongolia had checked 2,588 markets, 30 schools, and 77 enterprises, imposed administrative punishments on 1,430 infringing or pirating entities, imposed a forfeit of RMB 1,339,500, suppressed 816 shops, removed five cases to judicial authorities, and investigated one underground compact disc press. In July, the NCAC combined with the General Administration for Press and Publication, Ministry of Education, and the National Anti-Piracy and the Pornography Working Committee, had launched the 2003 Autumn Special Action for Striking Pirated Textbooks and Assistant Teaching Materials. This action was still under way at present. In August, the NCAC had launched the 2003 Special Action for Striking Pirated Software. On the first day of this action, 250,000 infringing copies of software alone had been confiscated in Beijing, Shanghai, and the provinces of Sichuan and Guangdong. The local agencies of the industrial and commercial administrations would also step up the efforts to clamp down on trademark infringements. Furthermore, he said that local administrative authorities for industry and commerce conducted routine monitoring and investigation to discourage counterfeit markets. If any counterfeit goods were found in the market, they would strictly enforce the relevant laws and regulations. He added that the relevant IPR agencies undertook enforcement actions every year at the Canton Trade Fair.