Dec 03, 2019 02:44 PM

Editorial: Intellectual Property Infringers Should Feel the Pain

Beijing established its first intellectual property court on Nov. 6, 2014. Photo: VCG
Beijing established its first intellectual property court on Nov. 6, 2014. Photo: VCG

Whether intellectual property (IP) protections can be strengthened in the next few years is crucial. Recently, China’s General Office of the State Council and the Central Office of the Communist Party of China’s (CPC) issued opinions on strengthening intellectual property protections. The opinions state that by 2022, the occurrence of infringement will be effectively curbed and the current problems of “difficult to prove, long process, high cost, and low compensation” for rightsholders will be significantly improved. By 2025, the protection of intellectual property will be further advanced. Whether it is through social satisfaction or the protection system itself, improving intellectual property protections will substantially improve the business environment’s respect for the value of knowledge as well as stimulate innovation. If this blueprint can be realized, the intellectual property situation in China will undoubtedly change.

Though this is a beautiful vision, we must begin by solving the current problems. At present, the unbridled infringement is in sharp contrast with the hard work to safeguard rights. There are many infringements, showing that current protection is weak. The illegal income obtained from infringement is far greater than the cost, so it has become a rational choice. Therefore, improving protections of intellectual property must be based on increasing the punishment of infringement. Only when all of society is fully aware of the serious consequences of infringing on intellectual property rights and when infringers feel the pain can we truly establish conscious respect for IP rights. According to the opinions, the government will target speeding up the introduction of a punitive compensation system for patent and copyright infringements, will study and reduce the criminal standard for IP infringement, and will increase punishment. Punitive damages for infringement have been reflected in the trademark law, and there are applicable trademark infringement cases where a 1 million yuan ($142.3 million) profit resulted in 3 million yuan of compensation. It is also reasonable to increase the upper limit of legal compensation for patent and copyright infringement as soon as possible.

The infringers must feel the pain in order to increase punishment and also to reform the system. If the enforcement mechanism fails to keep up, it will damage the authority of the law and embolden infringers no matter how severe the punishment is. At present, the concept and ideas have been clear, but the next step is to establish an effective implementation mechanism.

In recent years, China has made great efforts to build an innovative country, and its economy has stepped into a stage of high-quality development. If there were some controversies over IP protections in the past, some believed that infringement in late-developing economies was reasonable. However, in recent years, strengthening IP protections has become a consensus across all of society. It is not only an important part of improving the property rights protection systems, but is also a strong incentive to improve China’s economic competitiveness and a practical way to eliminate international economic and trade conflicts. However, the specific intellectual property protection mechanism and system construction lag far behind this expectation. Neither the response and processing speeds, the level of rights protections, nor the implementation effectiveness are satisfactory. This is precisely what the opinions should strive to solve.

Administrative law enforcement and justice are two important systems in intellectual property protections. Having legal grounds is the premise of law enforcement and the administration of justice. We should not only modify the basic norms of patent, trademark, and copyright laws, but must also improve the judgement standards of trademark and patent infringement in the process of administrative law enforcement as soon as possible. This also applies to the specific norms and rules in civil IP litigation relating to the difficulties in collecting adequate evidence. Together, these constitute the legal system with regard to IP. The construction of an IP legal system cannot just provide expectations for the protection of rights. It must also empower and limit rights to the subject of law enforcement. The lack of norms often becomes an excuse for legal or judicial inaction and provides opportunities for “disorderly actions.”

The top priority for IP protection is to establish an administrative law enforcement system and a justice system in line with international norms and grounded in Chinese law as soon as possible. In recent years, IP courts have been set up in Beijing, Shanghai and other cities. IP courts have emerged one after another and relevant judicial institutions have gradually specialized. In addition, administrative law enforcement agencies are also adjusting. After institutional reforms in 2018, the China National Intellectual Property Administration, which is under the administration of the State Administration for Market Regulation, is responsible for the centralized and unified management of IP rights in trademarks and patents, establishing the intellectual property protection department, and more. The institutional reform is intended to strengthen the protection of IP rights, and we look forward to seeing the adjustments put in place as soon as possible. Of course, rarely is a transition period smooth-going. The adjustments must be carried out unswervingly with reasonable changes made according to the situation. It is forbidden to suddenly “flip the pancake.”

Linking IP infringement with integrity is one of the severe punishment methods mentioned in the guidance from the central office and the State Council General Office. This initiative deserves appreciation. We hope that in the process of establishing and improving the integrity of market subjects, enterprises that repeatedly infringe or intentionally infringe will be placed on a blacklist and that the punishment mechanisms for dishonesty will be improved. For IP infringement, the use of credit punishment is truly a punishment that fits the crime.

In the era of the digital economy, IP infringement in the world of the internet is increasingly rampant, which should make it the focus of strict control efforts. The opinions requires websites to regulate, delete, block, disconnect, and stop the dissemination of infringing content as well as crack down on the use of copyright litigation for speculative profits. The problems of easy infringement, difficulties in proving infringement, and low compensation are especially serious in the online sphere. In the future, special laws and regulations should be vigorously formulated to rectify this.

Let infringers feel the pain, but some confused understandings must be qualified. Some people say that the quality of IP in China is not high and there is no need to increase the punishment. This is nonsense and a confusion of concepts. There are also concerns that increasing punishment may encourage extortion disguised as prosecution, which is an alarmist take. China is far from this step. Moreover, the opinions suggest a clear crackdown on speculative profit-making litigation.

The protection of IP rights is not only a matter for administrative departments and judicial organs. It is inseparable from the governance of society. A society with high respect for IP rights is a dignified one; a country with effective IP rights protection is a dignified one.

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