Heavier Criminal Penalties for Chinese Intellectual Property Infringement Kick in March 1, 2021
On December 26, 2020, the Twenty-Fourth Meeting of the Standing Committee of the 13th National People’s Congress of China voted to pass the “Amendment to the Criminal Law of the People’s Republic of China (11)” (中华人民共和国刑法修正案（十一）), which will go into effect on March 1, 2021. The Criminal Law includes several articles for intellectual property crime and the amendments increase the maximum sentencing term to up to 1o years. The amendments also add a new article somewhat similar to the US’ Economic Espionage Act potentially in effect if not in wording.
Article 213 increases the maximum fixed-term imprisonment for using the same trademark as a registered trademark on the same kind of goods or services without the permission of the registered trademark owner from 7 years to 10 years when the circumstances are particularly serious.
Article 214 increases the maximum fixed-term imprisonment for knowingly selling counterfeit trademark goods from 7 year to 10 years when the amount of illegal gains is huge or there are other particularly serious circumstances.
Article 215 increases the maximum fixed-term imprisonment for manufacturing counterfeit trademark products from 7 to 10 years when the circumstances are particularly serious.
Article 217 increases the maximum fixed-term imprisonment from 7 to 10 years for copyright infringement for profit-making purposes where the amount of illegal gains is huge or there are other particularly serious circumstances.
For criminal theft of trade secrets, the maximum fixed-term imprisonment is increased from 7 years to 10 years in Article 219 if the circumstances are serious. Article 219 further revises the definition of theft as follows:
(1) Obtaining the right holder’s trade secrets by theft, inducement, bribery, fraud, coercion, electronic intrusion or other improper means;
New Article 219 adds a provision somewhat similar to the US’ Economic Espionage Act and reads as follows:
[Commercial Espionage Crime] Whoever steals, spies, buys, or illegally provides commercial secrets for institutions, organizations, or persons outside the country shall be sentenced to fixed-term imprisonment of not more than five years, and/or a fine; if the circumstances are serious they shall be sentenced to more than five years in prison and fined.
Accordingly, the term for imprisonment is open-ended and hypothetically longer than if the theft of trade secrets was for a domestic beneficiary.
Note that a key difference between this article and US’ Economic Espionage Act (EEA) is that the beneficiary in the criminal law is any foreign beneficiary while the EEA requires the beneficiary to be a foreign instrumentality – “any agency, bureau, ministry, component, institution, association, or any legal, commercial, or business organization, corporation, firm, or entity that is substantially owned, controlled, sponsored, commanded, managed, or dominated by a foreign government.”