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Coudert Brothers LLPCoudert Brothers LLP

Jingzhou TaoManaging Partner

Coudert Brothers LLP China Practice

ABA Office, Washington, D.C., February 14, 2005

IPR Enforcement in China: Problems and New Legislative

Developments

Coudert Brothers LLPCoudert Brothers LLP 2

IPR Enforcement in China: Problems and New Legislative

Developments

I. Overview of PRC IPR Legislation Reforms since China’s WTO Accession

II. Problems in IPR Enforcement in China

III. The Latest Legislative Developments in PRC IPR Enforcement


I. Overview of PRC IPR Legislation

Reforms since China’s WTO Accession

Significant Legal Reforms since 2000 Patent Law: Amended on Aug. 25, 2000 and made effective as of July 1,

2001

Trademark Law: Amended on Oct. 27, 2001 and made effective as of Dec. 1, 2001

Copyright Law: Amended on Oct. 27, 2001 and made effective as of Oct. 27, 2001

Regulations on the Protection of Computer Software: Amended on Dec. 20, 2001 and made effective as of Jan. 1, 2002

Regulations on the protection of integrated circuit layout designs: Issued on Apr. 2, 2001 and made effective as of Oct. 1, 2001

Regulations on the Administration of the Import and Export of Technology: Issued on Dec. 10, 2001 and made effective as of Jan. 1, 2002

PRC Regulations on Customs Protection of Intellectual Property Rights: Issued on Dec. 2, 2003 and made effective as of March 1, 2004

Conclusion: a lot of paperwork has been done



A. Rampant Counterfeiting and Piracy

B. Poor Administrative Enforcement

C. Weak Judicial Enforcement

D. Lack of Transparency & Poor Public Awareness


II. Problems in IPR Enforcement in

China A. Rampant Counterfeiting and Piracy

The U.S. GAO report and the Amcham in China evaluation report reveal certain issues in IPR enforcement

37,489 trademark-related violation cases were handled by AIC in 2003, with the number of trademark infringement and counterfeiting cases accounting for 70.66% of all trademark-related violation cases

6,860 IP cases were handled by PRC courts in 2003 90% of all business software in China at a value of

USD1.5 billion is pirated

B. Poor Administrative Enforcement Weak Enforcement Teams and Poor Coordination Local Protectionism Non-deterrent Administrative Penalty Costly Burden on IPR Owners



C. Weak Judicial Enforcement Inefficient civil proceedings Weak criminal charge to infringers Few infringers receive criminal punishment

D. Lack of Transparency & Poor Public Awareness Lack of transparency Poor public awareness


III. The Latest Legislative Developments in PRC IPR Enforcement

A. Newly Updated IPR Customs Protection Regulations

B. Newly Issued Judicial Interpretations on the Handling of Criminal IP Cases


III. The Latest Legislative Developments in PRC IPR

Enforcement A. Newly Updated IPR Customs Protection

Regulations

Favorable Improvements Disadvantages How Does the Customs IPR Protection Regime Work?

Recordal of IP Rights (Patent, Trademark and Copyright) With the GCA

Local Customs' Handling of IPR Infringement Cases

Official Statistics: 5247 IPRS Recorded With the GCA (1995-2005); Multinational Corporations that Made Customs Recordal in China: GM, IBM, P&G, Adidas, Nike, Philip Morris, Pfizer, Sony, Panasonic, etc.



Enforcement

B. Newly Issued Judicial Interpretations on the Handling of Criminal IP Cases

(Issued on Nov.2, 2004 and Effective as of Dec. 22, 2004)

Chinese legislation on the criminal liabilities of IP crimes: involving four types of IPR infringements and two levels of sanctions

No More Than 3 Years; or No Less Than 3 Years and No More Than 7

Years



Enforcement

B. Newly Issued Judicial Interpretations on the Handling of IPR Criminal Cases (cont’d.)

Significant provisions in the new interpretations

Considerably lower thresholds for prosecution of IP crimes

Conviction standards for legal entities: 3 times those for individuals under the new

interpretations

5 times those for individuals under the old interpretations



Enforcement

B. Newly Issued Judicial Interpretations on the Handling of IPR Criminal Cases (cont’d.)

Key terms specified and technical issues resolved “Illegal business volume”/“illegal amount of

sales” “Identical marks”/“use of marks”/“clearly know” “For the purpose of making profit”/“without

authorization of copyright owner”/network copyright infringement

Accomplices and cumulative punishment

Case study: The first IP criminal case in Shanghai City under the new interpretations – two infringers sentenced to 5 and 7 years’ fixed-term imprisonment respectively


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Documents

prc ipr enforcementa

prc regulations

customs recordal

china rampant counterfeiting

prc courts

trademark law

donecoudert brothers

china evaluation report