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Research On Crimes Of Patent Infringement In Mainland China (III Of III)
date: 2013-04-08 John Z. Wang, Hong Liu Read by:

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In the last part of the article, Liu Hong and Wang Zhiyong of Kangxin Partners briefly summarize the current criminal legislation on crimes of patent infringement of other countries and regions, including the United States and United Kingdom, and provide suggestions on perfecting China's criminal legislation on patent infringement.

Research On Crimes Of Patent Infringement In Mainland China (III Of III)

3. Suggestions On Perfecting The Criminal Legislation Of Mainland China On Patent Infringement

3.1 Current Legislation Of Other Countries And Regions On Crimes Of Patent Infringement

3.1.1 Legislation Of The United States On Crimes Of Patent Infringement

There are two types of crimes of patent infringement in the legislation of the United States:

(i) Crime of false marking. Section 292 of the "Patent Act" of the United States provides that the crime refers to one of the following acts: a) whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by a person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words "patent", "patentee", or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving and inducing the public to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; b) whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article the word "patent" or any word or number purporting the same to be patented, for the purpose of deceiving the public; or c), whoever marks upon, or affixes to, or uses in advertising in connection with any article the words "patent applied for", "patent pending", or any word purporting that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public. Any criminal offence in one of the circumstances provided above shall be fined not more than USD500.

(ii) Crime of forging letters patent. The "Letters Patent Code" provides for criminal liabilities for acts of falsely making, forging, counterfeiting, or altering any letters patent, as well as for acts of passing, uttering, or publishing, or attempting to pass, utter, or publish as genuine, any such letters patent, knowing the same to be forged, counterfeited or falsely altered. According to Section 3571 of Title 18 of the "United States Code", an offender committing any of the above-mentioned acts shall be fined under this title or imprisoned for not more than ten years, or both.

 

3.1.2 Legislation Of The United Kingdom On Crimes Of Patent Infringement

Sections 109 to 113 of the "Patents Act" of the United Kingdom provide four types of crimes of patent infringement, which include the crime of falsification of registers, etc., the crime of unauthorized claim of patent rights, the crime of unauthorized claim that a patent has been applied for, and the crime of misuse of the title "Patent Office".

(i) Crime of falsification of the register, etc. Section 109 of the "Patents Act" of the United Kingdom provides that if a person makes or causes to be made a false entry in any register kept under this Act, or writing falsely purporting to be a copy or reproduction of an entry in any such register, or produces or tenders or causes to be produced or tendered in evidence any such writing, knowing the entry or writing to be false, he shall be liable - (a) on summary conviction, to a fine not exceeding £1000, (b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.

(ii) Crime of unauthorized claim of patent rights. Section 110 thereof provides that: ① If a person falsely represents that anything disposed of by him for value is a patented product, he shall, subject to the following provisions of this section, be liable on summary conviction to a fine not exceeding £200. ② For the purposes of subsection ① above a person who for value disposes of an article having stamped, engraved or impressed on it or otherwise applied to it the word "patent" or "patented" or anything expressing or implying that the article is a patented product, shall be taken to represent that the article is a patented product. ③ Subsection ① above does not apply where the representation is made in respect of a product after the patent for that product or, as the case may be, the process in question, has expired or been revoked and before the end of a period which is reasonably sufficient to enable the accused to take steps to ensure that the representation is not made (or does not continue to be made). ④ In proceedings for an offence under this section it shall be a defence for the accused to prove that he used due diligence to prevent the commission of the offence.

(iii) Crime of unauthorized claim that a patent has been applied for. Section 111 thereof provides that: ① If a person represents that a patent has been applied for in respect of any article disposed of for value by him and - (a) no such application has been made, or (b) any such application has been refused or withdrawn, he shall, subject to the following provisions of this section, be liable on summary conviction to a fine not exceeding £200. ② Subsection ① (b) above does not apply where the representation is made (or continues to be made) before the expiry of a period which commences with the refusal or withdrawal and which is reasonably sufficient to enable the accused to take steps to ensure that the representation is not made (or does not continue to be made). ③ For the purposes of subsection ① above, a person who for value disposes of an article having stamped, engraved or impressed on it or otherwise applied to it the words "patent applied for" or "patent pending", or anything expressing or implying that a patent has been applied for in respect of the article, shall be taken to represent that a patent has been applied for in respect of it. ④ In any proceedings for an offence under this section it shall be a defence for the accused to prove that he used due diligence to prevent the commission of such an offence.

(iv) Crime of misuse of the title "Patent Office". If any person uses on his place of business, or on any document issued by him, or otherwise, the words "Patent Office" or any other words suggesting that his place of business is, or is officially connected with, the Patent Office, he shall be liable on summary conviction to a fine not exceeding £500.

3.1.3 Legislation Of Germany On Crimes Of Patent Infringement

The crime of patent infringement is provided in Section 142 of the "Patent Act" of Germany, according to which, any person who uses a patent of another person without authorization commits the crime of using a patent of another person without authorization, and shall be liable to imprisonment not exceeding three years or a fine; where the person acts by way of trade, he shall be liable to imprisonment for up to five years or a fine. It can be concluded from the above that the crime of patent infringement provided in the legislation of Germany refers to an act of exploiting a patent of another person without authorization, and the act of "counterfeiting" a patent of another person in a narrow sense is not subject to criminal penalties under the legislation of Germany. Section 146 of the "Patent Law" of Germany provides that: "any person who places on articles or their packaging a marking of such a nature as to create the impression that the articles are protected by a patent or a patent application pursuant to this Law, or any person who uses a marking of such a nature in public notices, on signboards, on business cards or in similar announcements, shall be required to give on demand, to any person having a legitimate interest in knowing the legal position, information as to the patent or patent application upon which the use of the marking is based." The "Patent Law" of Germany does not impose criminal liabilities on a person who commits an act provided in Section 146 thereof, which is obviously contrary to the criminal legislation of mainland China. The practice of patent infringement shows that, in economic life , the acts of exploiting a patent of another person without authorization are more common than the acts of patent counterfeiting and cause greater loss to rights holders. It is undoubtedly insufficient to protect the legitimate interests of patentees by imposing only civil sanctions on actors exploiting a patent of another person without authorization according to the current legislation of mainland China. Comparatively speaking, the legislation of Germany in this respect offers lessons for mainland China.

 

3.1.4 Legislation Of Japan On Crimes Of Patent Infringement

Chapter 11 of the "Patent Act" of Japan provides for major crimes of patent infringement, including the crime of infringement, the crime of fraud and the crime of false marking, as well as the crime of perjury and the crime of divulging a secret, etc.

(i) Crime of infringement. Article 196 of the "Patent Act" of Japan provides that an infringer of a patent right or exclusive licence shall be penalized by imprisonment for a term not exceeding ten years or a fine of not more than 10 million yen. Paragraph 2 of Article 196 provides that any person who has committed an act that is deemed to constitute infringement of a patent right or an exclusive licence under Article 101 shall be penalized by imprisonment for a term not exceeding five years or a fine of no more than 5 million yen or a combination thereof.

(ii) Crime of fraud. Article 197 of the "Patent Act" of Japan provides that any person who has obtained a patent, a registration of a patent extension or a trial decision by means of a fraudulent act shall be penalized by imprisonment for a term not exceeding three years or a fine of no more than 3 million yen.

(iii) Crime of false marking. Article 198 of the "Patent Act" of Japan provides that a person who fails to comply with Article 188 shall be penalized by imprisonment for a term not exceeding three years or a fine of no more than 3 million yen. Article 188 of the Patent Act provides that it shall be prohibited for a person to commit one of the following acts: (a) affixing a mark of a patent or a mark that is confusing therewith on a non-patented product or on the package of the product; (b) assigning, etc. or displaying for the purpose of assignment, etc. a non-patented product or the packaging thereof on or in which a mark of a patent or a mark that is confusing therewith is put; (c) giving in an advertisement an indication to the effect that a non-patented product is related to a patent or an indication that is confusing therewith for the purpose of having the product produced or used, or assigning, etc. the product; or (d) giving in an advertisement an indication to the effect that a non-patented process is related to a patent or an indication that is confusing therewith for the purpose of having the process used, or assigning or leasing the process.

In addition to the above legislation, other countries also provide corresponding legislation on crimes of patent infringement based on their own national conditions. The legislation varies in complexity and charges, covering three major types of crimes of patent infringement, including the crime of patent counterfeiting, the crime of exploiting a patent of another person without authorization and the crime of patent passing off. There are also some unique charges concerning the crimes, such as the crime of misuse of the title "Patent Office" provided in the "Patents Act" of the United Kingdom.

3.2 Suggestions On Perfecting Mainland China's Criminal Legislation On Patent Infringement

3.2.1 Extending The "Crime Of Patent Counterfeiting" To Make It Function Practically

As mentioned above, the "Implementing Rules of the Patent Law" amended in 2010 integrated Article 84 and 85 of the original "Implementing Rules of the Patent Law" into the current Article 84 by abolishing the distinction between acts of patent counterfeiting and acts of patent passing off, and unifying the aforesaid two types of acts as acts of patent counterfeiting. Such legislative interpretation was made in order to target the "patent counterfeiting" provision in Article 63 of the "Patent Law", which provides that "where any person counterfeits a patent, he shall, in addition to bearing civil liability according to the law, be ordered by the administrative authority for patent affairs to correct his act, and the order shall be announced. His illegal earnings shall be confiscated and, in addition, he may also be imposed a fine of no more than four times his illegal earnings and, if there are no illegal earnings, a fine of no more than RMB200,000. Where the act of infringement constitutes a crime, he shall be prosecuted for his criminal liability." It can thus be concluded that, by unifying acts of patent counterfeiting and acts of patent passing off as acts of patent counterfeiting, the amendments to the "Implementing Rules of the Patent Law" have expanded the scope of application of Article 63 of the "Patent Law", making both of the two types of acts subject to criminal sanctions.

However, it should be noted that the "Criminal Law" did not make any amendment to the "crime of patent counterfeiting" accordingly. Article 216 of the "Criminal Law" of mainland China provides that whoever counterfeits a patent of another person shall, if the circumstances are serious, be sentenced to fixed-term imprisonment of no more than three years or criminal detention and shall also, or shall only, be fined. Article 10 of the "Interpretations of the Supreme People's Court and the Supreme People's Procuratorate on Issues concerning Specific Application of Law When Handling Criminal Cases of Infringement of Intellectual Property Rights" provides that any of the following acts shall be deemed "counterfeiting a patent of another person" as provided in Article 216 of the "Criminal Law": (1) marking the patent number of another person on the products or their packages manufactured or sold by the actor without the permission of the patentee; (2) using the patent number of another person in advertisements or other promotional materials without permission of the patentee so as to mislead consumers to mistake the used technology therein for that of another person; (3) using the patent number of another person in contracts without the permission of the patentee so as to mislead the other party to the contract to mistake the used technology therein for that of another person; and (4) counterfeiting or transforming the patent certificate, patent document or patent application document of another person. Thus, it can be seen that acts of patent counterfeiting as provided in the "crime of patent counterfeiting" under the "Criminal Law" do not include such acts of patent passing off as passing non-patented products off as patented products or passing non-patented methods off as patented methods.

A suggestion is to add a paragraph as the second paragraph of Article 216 of the Criminal Law, which shall read "whoever passes a non-patented product off as a patented product or passes a non-patented method off as a patented method shall, if the circumstances are serious, be punished according to the provisions of the preceding paragraph".

Through the suggested amendment, acts of patent passing off will be assimilated into acts of patent counterfeiting both in the "Patent Law" and the "Criminal Law", and acts of patent passing off will be covered within the scope of the "crime of patent counterfeiting", which will ensure the coordination and consistency of the internal legal system, conform to the spirit of the "Criminal Law" and provide better protections to the legitimate rights and interests of patentees by fighting against the crimes of patent counterfeiting.

 

3.2.2 Adding The "Crime Of Exploiting A Patent Of Another Person Without Authorization"

Considering the modesty principle of criminal law, the current legislation of mainland China did not criminalize acts of exploiting a patent of another person without authorization. However, as a kind of important intangible property, patents have an economic position equal to that of tangible property in today's knowledge-based economy, and as a kind of intangible property right, patent rights have property attributes. Patentees exercise their patent rights in the same way that proprietors exercise their proprietary rights, which will bring huge economic benefits to the rights holders. While criminal laws criminalize acts of infringing tangible property rights, which include theft, robbery and embezzlement, etc., why can patent rights which are also a kind of property right not be protected sufficiently by criminal laws? The current legislation is obviously biased and inadequate in its criminal protections of patent rights, which reflects that mainland China did not pay enough attention to the significance of intangible property nor realize the tremendous positive influence offered to the knowledge-based economy by such intangible property as patents. In addition, the judicial practices of over 30 years since the reform and opening up of mainland China show that acts of exploiting a patent of another person without authorization are more common than acts of patent counterfeiting in economic activities and cause greater loss than that of acts of patent counterfeiting; thus many countries criminalize acts of exploiting a patent of another person without authorization. For example, according to Section 49 of the "Patent Act", any person who uses a patent of another person without authorization commits the crime of using a patent of another person without authorization, and shall be sentenced to imprisonment not exceeding three years or a fine; and Article 196 of the "Patent Act" of Japan provides that an infringer of a patent right or exclusive licence shall be penalized by imprisonment for a term not exceeding ten years or a fine of not more than 10 million yen. It is necessary for mainland China to learn from the legislative experiences of other countries and regions, and provide more adequate criminal protections to patents on the basis of its own national conditions.

A suggestion is to add the "crime of exploiting a patent of another person without authorization" in the "Criminal Law", which will be specified as "acts of exploiting a patent of another person without authorization and the circumstances of which are serious".

3.2.3 Expanding Jurisdiction For Cases Of Intellectual Property Infringement Through Judicial Interpretation

The Supreme People's Court of mainland China has the power to promulgate judicial interpretations for laws passed by the National People's Congress. Just as many issues have been resolved by judicial interpretation, so the authors suggest that, in order to help accumulate experience and improve the efficiency of handling criminal cases concerning intellectual property, the Supreme People's Court may issue a judicial interpretation to expand the jurisdiction for cases of intellectual property infringement by adding the jurisdiction of the court of the place where an intellectual property rights holder has his/its domicile or operates his/its business to the existing jurisdiction of the court of the place where a crime is committed or a criminal defendant has a domicile.

The expansion of jurisdiction also meets the requirement of facilitating litigation. On the one hand, judicial personnel are more familiar with the patents within their jurisdiction that need to be protected and it is more convenient for them to communicate with the companies, enterprises or individuals whose intellectual property has been infringed, and it will help the judicial personnel accumulate case-handling experience. On the other hand, infringing products may be sold all over the country, and wherever a case of intellectual property infringement is handled, the overall case-handling burden will not be increased; even if the infringing products are concentrated in a certain area, the related intellectual property rights holder may still insist on choosing the jurisdiction of the court of the place where he/it has a domicile or operates his/its business so as to facilitate the litigation and to restrain the potential parochial protectionism.

As mentioned in an earlier part of the article, the issue of judicial expertise concerning a crime of patent counterfeiting is suggested to be solved by referring to the corresponding civil procedure, where, before exercising judicial expertise, if both a defendant and a rights holder agree on the expertise institution appointed and recognized by a public security organ, the court shall recognize the authority of the expertise institution when the case proceeds to the trial stage. The legal theory is that a criminal case of intellectual property infringement differs from other common criminal cases, and a patent right is in essence a kind of private right. The essence of handling such a criminal case is not only to recover social order, but also to protect private rights. Thus, if parties in disputes agree on the selection of an expertise institution, it will be considered that both of them recognize the authority of the expertise institution.

Reference:

Zhao Bingzhi, Tian Hongjie: "Comparative Study On Crimes Of Patent Infringement", P.146
Zhao Bingzhi, Tian Hongjie: "Comparative Study On Crimes Of Patent Infringement", P.147

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