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China IP Enforcement in the Entertainment Industries

Dr. James Luo Managing PartnerLawjay Partners

Berkeley, Oct 2012

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IP Enforcement in China- Overview

Enforcement Channels - Three main options -Administrative enforcement - Unique

-Copyright Bureau- enforce copyright law-“AICs” (Administration for Industry and Commerce)– enforce

trademark / unfair competition laws-“TSBs” (Technical Supervision Bureau)- enforce product

quality Law-Customs – enforce customs regulations-Others: pharmaceutical, tobacco, others

-Criminal enforcement-Civil action (specialised IP tribunals)

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Administrative Enforcement and Issues

Administrative enforcement (AIC / TSB/copyright action)- Pros:

- Relatively cheap- Quick raids - no bond required- Immediate seizure, sometimes destruction of seized items- Repeat offender (as criminal probation not applicable)

- Cons: - Low deterrence / sometimes no fines- Product / machinery given back- Removal of infringing labels, and then auction off goods- Local protectionism

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Administrative Copyright Enforcement : Issues

Enforcement issues Copyright enforcement team is weak and under staffed Lower copyright enforcement team reports to local government,

rather than report to the next upper level copyright bureau Copyright policy may not be enforced properly and efficiently in

some areas In general, IP owners do not enforce IPR proactively through

Customs, do not provide verification as required, due to low amount of

infringing products;

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Criminal Enforcement

Criminal enforcement – three avenues:

- Direct complaint to police

- Transfer from administrative authorities to police

- Private prosecution

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Criminal Enforcement

Art. 217 of Criminal Code (Copyright infringement crime)

- For the purpose of making profits,

- whoever, commits any of the following acts of infringement on copyright shall, if the amount of illegal gains is relatively large, or if there are other serious circumstances, be sentenced to fixed-term of imprisonment of not more than three years or criminal detention or shall only, be fine;

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Criminal Enforcement

Art. 217 of Criminal Code (Copyright infringement crime) Reproducing and distributing a written work, musical work,

motion picture, television programme or other visual works, computer software or other works without permission of the copyright owner;

Reproducing and distributing an audio or video recording produced by another person without permission of the producer

others

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Criminal Enforcement

Art. 218 of Criminal Code (Crime of Sales of Copyright infringement goods)

For the purpose of making profits,

Whoever, knowingly sells works reproduced by infringing on the copyright of the owners’ as mentioned in Art 217 of this Law shall, if the amount of illegal gains is huge, be sentenced to fixed-term imprisonment of not more than three years or criminal detention or shall only, be fined.

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Criminal Enforcement: Issues and Opportunities

Numerical thresholds- Value of goods and prior sales - Number of goods

Interpretation II of the Supreme People's Court and the Supreme People's Procuratorate of the Issues concerning the Specific Application of Law in Handling Criminal Cases of Infringement of Intellectual Property Rights Article 1 The “other serious circumstance” mentioned in Article 217 of

the Criminal Law shall refer to any for-profit duplication and/or distribution, without permission from the copyright holder, of the literal, musical, cinematic, television or video works, computer software or other works of the copyright holder with at least 500 copies of duplicates in total;

Special IP protection campaign (2010.10-2011.6) pushes hard during government’s crackdown

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Criminal Enforcement: Issues

Issues Criminal investigation standard = prosecution standard

Investigation standard should be lower than prosecution standard

“For the purpose of making profits” Problematic, because some infringers illegally make and

share copyrighted works for free should be deleted in the new amended Criminal Code

Hard to define “copy” of 500 copies of duplicates

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Civil Action: Issues and Opportunities

Preliminary injunction available Judgment on copyright infringement is more predictable IP judges are more professional Issues

Compensation (incl, reasonable cost) is too low to cover legal cost

Civil action not allowed to proceed before criminal judgment against the same infringer is issued.

Ideally, criminal and civil actions in parallel Under Art 4 of Tort Liability Law, when there are insufficient

assets, civil liability has first priority over administrative or criminal liability. Untested.

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Civil Action and Issues

Programs Landlord liability program has been successful in the trademark

industries Microsoft has launched the first landlord liability case in the

copyright industries in China Under Art 36 of Tort Liability Law, civil action against network

service provider and network subscriber for joint liability

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Contact details:

Dr. James Luo 罗正红Managing Partner

Lawjay Partners 罗杰律师事务所Tel: 0086 10 5933 5500

james.luo@lawjay.com.cn

In 2012, Lawjay Partners was shortlisted by Chambers & Partners for

“Boutique PRC Law Firm of the Year” ( the only IP firm nominated in this category).

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THANK YOU