China Stiffens IP Piracy Punishments

by Mary Swire, for LawAndTax-News.com, Hong Kong

09 April 2007

China's Xinhua News Agency announced on Friday that, seemingly in response to vociferous complaints from other countries, the Supreme People's Court is reducing the threshhold levels for music and movie piracy, effective immediately.

In future, anyone possessing more than 500 pirated DVDs or CDs (down from 1,000) will face criminal prosecution with gaol terms of up to three years, instead of fines, while possession of more than 2,500 pirated items (down from 5,000) will triggers more severe penalties of up to seven years in prison.

Fines for piracy must range from one to five times the illegal income generated, or between 50 and 100% of the sales value of the goods produced, the report said, in order to “strip violators of the economic capability and conditions to commit crime”. The Supreme Court also told lower courts to start accepting piracy cases filed by companies and individuals in addition to those brought by prosecutors, Xinhua said.

Jon Dudas, director of the US Patent and Trademark Office said after a visit to Beijing last month that he had pressed officials to lower the threshold for prosecution.

There have been a number of signs in recent months that the Chinese authorities are getting serious about IP theft, including the January court verdict against web portal Sohu.com for offering illegal downloading of pirated movies.

Beijing First Intermediate People's Court ordered Sohu's subsidiary Beijing Sohu Internet Information Service Company, to pay damages of RMB1.08m yuan (US$140,000) to five movie companies and publish an acknowledgement of its infringement.

The Motion Picture Association had brought the lawsuit on behalf of Fox Movies, Warner Bros, Sony Pictures, New Line Cinema and Universal City Studios and the ten movies which were offered for download included The Day After Tomorrow, The Lord of the Rings, Ocean's Eleven and Harry Potter III.

In November, EU Trade Commissioner, Peter Mandelson suggested on a visit to China that a failure to address IP problems could affect fledgling Chinese industries. Commenting after a meeting with State Intellectual Property Office officials, Mr Mandelson revealed that piracy is "the biggest problem for companies trying to do business here", revealing that over half of all counterfeit goods stopped at European borders last year originated in China.

He went on to add that: "Tolerating intellectual property theft is a dead end for China. If China continues to look the other way, this will come back and bite the Chinese."

He welcomed efforts by the Chinese authorities to address this issue, including the establishment of IPR complaint centres to assist aggrieved foreign businesses, stating that: "Europe and China have established a good dialogue and cooperation on IPR matters and I do not want to do anything to undermine or weaken that relationship."

However, he called for strong action from the State authorities, especially with regard to the payment of royalties on European technology patents.

"I would like to see a strong public declaration by the Chinese government that they want to see the appropriate royalty payments being made in the future, without turning a blind eye to their non-payment as has been the case in the past," he announced, according to reports.

Last June, the Beijing authorities announced that they were planning to use the latest online technology to authenticate, monitor and protect intellectual property rights on the Internet. The technology reportedly inludes a software copyright authentication platform and an improved Internet copyright monitoring system.

Speaking to Xinhua, Wang Ziqiang, spokesman for the National Copyright Administration of China revealed that the use of such measures to prevent copyright infringement and piracy on the Internet was increasing.

In addition, a new regulation concerning copyright protection was enacted, according to the report. Under the new regulation, which came into force on July 1, those seeking to upload texts, performance, or sound and video recordings to the Internet for downloading, copying or other use, must first acquire the permission of the copyright owners and pay the required fee. It's this regulation that was used by the MPA to pursue Sohu.com.

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