China revises rules for piracy punishment

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BEIJING -- China has stepped up the fight against intellectual property theft by lowering the threshold to prosecute the makers and sellers of illegally copied movies, television, music and software, a Supreme People's Court spokeswoman said Friday.

The new rules follow a March visit by top trade officials who, along with Chinese film producers, pushed Beijing to toughen piracy punishments. During the visit, the U.S. undersecretary of commerce for intellectual property rights said that 81% of counterfeit goods seized by U.S. customs officials in 2006 originated in China.

The new judicial interpretation issued by China's top court late Thursday states that anybody caught manufacturing 500 or more counterfeit discs can be prosecuted and faces up to three years in prison, the official Xinhua news agency first reported.

MPA estimates say piracy caused losses of $2.7 billion in potential sales of movie tickets and legitimate home entertainment products in China in 2005.

Repeated government crackdowns mean fewer lone salesmen of pirated or "daoban" discs are free to hawk their wares on China's streets for $1 each, even as their suppliers flourish by moving their inventory into storefront operations that sell a mix of legal and illegal products.

A top court official who gave only her surname, Xu, confirmed the Xinhua report but declined further comment.

The new rules take effect immediately and replace the 2004 rules, which extended only to pirates who produced at least 1,000 illegal discs.

The old rules reserved harsher sentencing of up to seven years in jail for "serious offenders" who produced at least 5,000 illegal discs. Under the new rules, "serious offenders" need only be caught making 2,500 illegal discs before facing a possible seven-year term.

Lester Ross, chief China rep of U.S. law firm Wilmer Hale, said that a lot depends on China's police, who are not subject to the new rules.

"The new judicial interpretation will have a marginal impact on piracy as it reduces the economies of scale," said Ross, author of several papers on IPR in China.

"The rules will increase the burden on the courts, but it's not at all clear how quickly other institutions will be able to ramp up to handle this," he said.

China last lowered the counterfeit product threshold in 2004 and, in 2005, saw a 28% jump in the number of IPR protection cases handed in criminal court to 3,567.

Chinese courts settled 17,769 IPR protection cases in 2006, court sources told Xinhua.

"The courts will extend the protection of intellectual property rights and play to the full their role in punishing infringers and preventing crimes," a court spokesman told Xinhua.

The new judicial interpretation also instructs courts at all levels nationwide to raise fines for convicted counterfeiters and tighten the rules for granting probation.

China's top court also instructed IPR criminal courts to accept litigation cases filed by individual piracy victims, opening the door to more lawsuits filed by the Hollywood studios.

"Envoys of foreign governments and representatives of international organizations will be allowed to attend IPR trials if they wish," Jiang Zengwei of the State Office of Intellectual Property Protection told Xinhua on Wednesday.

This would be the first time non-Chinese would be allowed to attend public IPR trials, an official from the top court told Xinhua.

In the largest single crackdown on CD and DVD piracy in China's history, more than 1.81 million pirated CDs and DVDs were seized March 17 in a production factory in Guangzhou, the capital of south China's Guangdong Province, the government announced Tuesday.
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