1 China IP Enforcement in the Entertainment Industries Dr. James Luo Managing Partner Lawjay Partners Berkeley, Oct 2012

2 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)

3 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

4 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;

5 Criminal Enforcement Criminal enforcement – three avenues: -Direct complaint to police -Transfer from administrative authorities to police -Private prosecution

6 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;

7 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

8 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.

9 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 ( ) pushes hard during government’s crackdown

10 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

11 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.

12 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

13 Contact details: Dr. James Luo 罗正红 Managing Partner Lawjay Partners 罗杰律师事务所 Tel: 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).

14 THANK YOU