On April 25, 2020, China’s Supreme People’s Procuratorate issued a list of the top example cases in 2019 of criminal IP rights infringement. The cases cover trademark, copyright and trade secret theft. Verdicts included both imprisonment and fines. While the punishments were severe for trademark and copyright cases, only 2 of the 18 cases are for trade secret theft and defendants received minimal or no jail time, perhaps indicating room for improvement on trade secret protection in China.
Case 1: Shanghai: Wang – Honeywell trademark. Main defendant Wang sentenced to 3 years 3 months in prison plus a 100,000 RMB fine.
Case 2: Shandong: Yao– selling counterfeit optical fiber modules with CISCO, HP, and HUAWEI trademarks generating revenue of more than 31 million RMB over 4 years. Main defendant Yao received a term of 4 years imprisonment and fine of 5 million RMB.
Case 3: Chongqing: Gu -Gu infringed Shi’s trademark for 阿诗玛 (A Shi Ma) for garden instruments, etc. Gu generated 23,000 RMB in revenue selling sickles with the trademark. Gu was sentenced to 9 months imprisonment and a 80,000 RMB fine.
Case 4: Beijing: Zhang – Zhang purchased waterproof materials for the construction trade bearing the trademark of Beijing Dongfang Yuhong Waterproof Technology Co., Ltd. (北京东方雨虹防水技术股份有限公司) at very low prices. There were some undetermined sales revenue and rolls of the material worth 159,000. Zhang entered into a non-prosecution agreement and his case was referred to the Market Supervision Administration of Fengtai District, which administratively fined him 800,000 RMB.
Case 5: Jiangsu: Deng – The defendants collectively sold counterfeit Starbucks instant coffee, generating 11 million RMB in revenue. Lead defendant Deng received 5 years of imprisonment and a fine of 3 million RMB.
Case 6: Fujian: Gao – Defendants sold counterfeit whisky, including Chivas, generating 17 million RMB in revenue. 1600 bottles of counterfeit whisky were found in storage. Apparently, the whisky did meet national quality standards however. Lead defendant Gao was sentenced to 5 years 8 months in prison and fined 4.5 million RMB.
Case 7: Henan: Xiao – Xiao knowingly purchased toiletries having counterfeit trademarks at far below market price. The goods were valued at 160,000 RMB and were to be resold in rural areas. Xiao was sentenced to 1 year in prison with 6 months suspended.
Case 8: Sichuan: Xu, Li, etc. – Defendants sold, via a storefront on e-commerce platform Alibaba. counterfeit Gucci, Burberry and other branded products generating 2.2 million RMB in revenue. Police also seized 27,000 unsold items. Xu received 4 year 6 months imprisonment plus a fine. Li received 3 years imprisonment and a fine.
Case 9: Jiangsu: Xue – Xue counterfeited packaging for alcoholic products including Maotai generating revenue of 12 million RMB. He was sentenced to 7 years imprisonment and a 6.38 RMB million fine.
Case 10: Zhejiang: Chen – Chen manufactured children’s products on the request of Hu for 7,200 RMB using a TM without licensing authorization. The People ’s Procuratorate of Yunhe County decided not to prosecute and referred the case to administrative law authorities for enforcement.
Case 11: Guangdong: Li – Li manufactured and sold packaging having a “DW” trademark belonging to Daniel Wellington without authorization. Li apparently did not manufacture the products, e.g., watches, themselves but only the packaging for watches, etc. Li was sentenced for 4 years 6 months imprisonments and a fine of 60,000 RMB.
Case 12: Shanghai: Chen et al. -Chen et al. was responsible for distributing 20,000+ pirated films including the Chinese science fiction blockbuster “Wandering Earth” as well as other films from Europe, America, Japan, South Korea, mainland China and Taiwan. Defendants were sentenced to prison terms ranging from 10 months to 4 years 6 months and fines of 20,000 RMB to 500,000 RMB.
Case 13: Anhui: Xu and Wang – Defendants set up a website so users could read content collected without authorization from other websites generating more than 7 million RMB in revenue via advertising. Xu received 4 years imprisonment and a 4 million RMB fine. Wang, Xu’s first employee, was sentenced to 2 years with a 3-year suspension a 150,000 RMB fine.
Case 14: Anhui: Zhao – Zhao organized the mass pirating of hard copy print books selling more than 1.78 million pirated books. Zhao was sentenced to five years imprisonment and a fine of 1 million RMB.
Case 15: Sichuan: Qiu – Qiu, through his employment at a licensee of game software, accessed the licensor’s servers and downloaded source code of the game software, resigned, started a new company, modified the “game skin” but retained the core of the game and released the modified game as his own generating 82 million RMB in revenue. Qiu was sentenced to 5 years in prison and fined 4 million RMB.
Case 16: Beijing: Tian -Tian, as employee of Beijing Jingdiao Company, stole files from his employer. He then resigned and joined Shenzhen Genesis Machinery Co., Ltd.. At Geneisis, Tian used the drawings and technical data in the files on Jingdiao’s JDLVG600 equipment to produce and sell the B-600A-B equipment at his new employer, causing more than 2.15 million RMB in losses to his prior employer. Tian was sentenced to 1 year 10 months prison and fined 100,000 RMB.
Case 17: Zhejiang: Jin – JIn was a salesperson at Wenzhou Bright Luminescence Technology Co., Ltd. After resigning, he established a new company, Wenzhou Fresnel Optics Co., Ltd., and purchases same equipment and materials from Bright’s suppliers and using the same method to manufacture lenses as his prior employer despite signing a confidentiality agreement. Bright suffered 1.2 million RMB in losses. Jin received a 700,000 RMB fine.
Case 18 – Changshu City Yushan Town Xinlong Entertainment Club – The Xinlong club infringed 282 copyrighted music and TV shows owned by Taiwan Sony Music Entertainment Co., Ltd. by screening them on-demand at Xinlong Club’s venue. Individuals were not indicted. Xinlong was subject to an injunction and compensated the authorized licensor 98,700 RMB.