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IP penalties soar significantly as laws revised

Author:IPR in C…     Source:IPR in China     Hits:925     Time:2013/3/15
China's State Council (the Cabinet) recently promulgated four pieces of revised legislations regarding intellectual property (IP) protection, that is, the Regulation on the Implementation of the Copyright Law of the People's Republic of China, the Regulation on the Protection of the Right to Network Dissemination of Information, the Regulation on the Protection of Computer Software and the Regulation of the People's Republic of China on Protection of New Varieties of Plants.

"There are two significant changes regarding the amount of fines," introduced by Tang Guangliang, secretary general of the IP Center of China Academy of Social Sciences, when interviewed by Legal Daily. "One is related to the fines imposed on illegal business proceeds, which is to be increased from an amount discretionarily decided based on actual sales income to a unified stipulation of one to five times of the said unlawful gains, and the other is about the upper limit of threshold penalties, which is to be raised from the original 50 or 100 thousand yuan to 200 or 250 thousand yuan."

100 thousand yuan not enough to deter infringement

The primary changes to the four regulations are all related to adjustment of administrative fines.

According to Feng Xiaoqing, director of a research center on intangible assets management under China University of Political Science and Law, the above changes are in line with and also reflection of the strengthened IP protection and law enforcement in China.

This was echoed by Tang, who believes "administrative fines have been proved effective as a means to protect intellectual property since 1980s,but the original upper limit of 100 thousand yuan is now far from enough to deter violations, especially as the economy and payment ability enormously grows. "

Actually, as early as on November 13, 2011, the State Council had already required in its Opinions on Further Cracking Down upon the Infringement of Intellectual Properties and Manufacturing and Selling of Fake and Shoddy Products to revise relevant laws and regulations to reinforce penalties.

Increased penalties seen in three revised IP regulations

In fact, China has attempted for several times to reinforce administrative enforcement against IP violations, such as the ongoing revision of the current Copyright Law, the third amendment to the Trademark Law and the fourth amendment to the Patent Law.

In its latest attempt, Article 75 of the newly revised draft of the Copyright Law clearly stipulates that copyright offenders shall be imposed on a fine equal to one to five times of their illegal sales when the revenue exceeds 50 thousand yuan, while a fine of not more than 250 thousand yuan shall be imposed on those who have no illegal business revenue, or whose revenue are difficult to calculated or lower than 50 thousand yuan.

Similar provisions can also be seen in the revised Trademark Law and Patent Law. "Besides, these amended IP laws have all introduced punitive damages, which represents a trend that IP enforcement and protection are gradually reinforced as China continues to improve its IP regime," said Feng.

In the proposed Copyright Law submitted for review by the National Copyright Administration to the State Council, double and treble damages were introduced, said Tang, adding that the proposed changes to the administrative fines in the Implementation Regulation of this law were also incorporated in the submission.

Irreversible increase of the cost of IP violations

"The administrative fines were not significantly increased this time, and therefore would be quite limited in restricting the more easily and commonly seen IP violations, especially when compared with billions of dollars of fines imposed in Europe and the U.S.," Tang Guangliang expressed his concerns after fully recognizing the positive aspect of the amendment. "But this progress, although limited, still takes years of efforts of all stakeholders, which reveals from another perspective that how hard it actually is to promote IP protection in China."

Tang estimated that "as the market economy becomes further mature, an irreversible momentum will definitely be seen towards a strong and deterrent IP system".

However, it shall also be worth noticing that specific conditions must be treated on the merit of each case despite the overall trend towards strengthening penalties, Feng warned, citing his opposition to one change in the Regulation on the Protection of the Right to Network Dissemination of Information, which increased the penalties for providing infringing materials to rural areas.

"Although we cannot take helping rural areas as an excuse to infringe copyright, yet the support is definitely out of good will and may not deserve heavy penalties."

He also mentioned some problems on IP enforcement emerged in parallel with the huge progress the country has made in this regard, such as abuse of power and dereliction of duty; some enforcement officials even regard administrative fines as a means to make money.

"These problems are not prevailing, but are baneful and extremely harmful. Therefore, restrictions and limitations shall also be placed on administrative authorities to make sure their power are properly used," said Feng.