—Day four of the visit to the United States

(By You Yunting) Beginning at the end of this March, on the invitation of the US government, the writer visited America with other Chinese legal experts with the goal of understanding its IPR system. On the fourth day, the writer visited the US Justice Department’s Bureau of Computer Crimes and IPR, the Department of Homeland Security’s IPR Coordination Center, and the American Chamber of Commerce. The following is the brief record of the writer’s experiences that day:

I. The US Justice Department’s Bureau of Computer Crimes and IPR

The US Justice Department’s Bureau of Computer Crimes and IPR is the authority charged with prosecuting crimes against computers and IPR, and it has a staff of three hundred sixty prosecutors. They introduced the history of law enforcement relevant to this industry in the US. The core of their work is finding those who deliberately use illegal means to make profits through IPR infringement and initiating prosecution against them.

We discussed using cheating programs in online games with them, and they answered that making profits through cheating programs is not commonly seen in the US but is usually done among friends, so it is typically not for a commercial purpose. If it is for a commercial purpose, then it could be pursued under US criminal law.

Also, we raised questions about the investigation of Megaupload, a website established by Kim Dotcom. The prosecutor is pursuing the case, but, due to the limits of US law, he could not disclose too many details of the case. Yet, he told us that once more than ten copies are made in bad faith, including copies of the same work or different works, it will be pursued criminally. Moreover, criminal liability can also be sought once the gains from the IPR infringement total two thousand five hundred dollars. In such a case, the prosecutor is not required to prove that the accused party deliberately broke the law. On the other hand, when intent can be shown and the illegal gains total two thousand five hundred dollars, the accused party could be sentenced to three to five years imprisonment. We then asked if all of Megaupload’s contents are uploaded by users, then why is its founder, Kim Dotcom, being prosecuted? The US representative answered that, according to the current evidence and the emails between the website’s staff, the website was designed for infringement. Furthermore, other normal websites like Youtube withdraw the infringing video’s link upon notice from the rights holder, while a file on Megaupload could be visited through dozens of links, and the staff would only delete one of these links after receiving the infringement notice.

Regarding crimes against trade secret, American prosecutors use three main means of evaluating trade secrets:

1. The cost of development;

2. The market value of the infringed trade secret (the fair value);

3. The gains of the accused party.

Generally, the prosecutor will inform the court of all the numbers calculated using these three means, so that the judge can use them to consider losses.

In terms of trademark protection, American US law follows a strict standard—any sales of the pirated or counterfeit goods on the Internet can be prosecuted under criminal law. The representative also specially noted that, as found in their investigation, some fake commodity sellers will post the counterfeit product and the label of the product separately in order to evade the law. But, according to the prosecutors’ opinions, this is also a crime. We also asked whether passing off old refurbished cell phones as new ones, which is commonly seen in China, constitutes a crime in the US. The prosecutor explained that one of the purposes of brand protection is quality control, and since the refurbished machine can cheat consumers and lower the reputation of the infringed product, it can be prosecuted as criminal fraud. In addition, according to the law of the US, in many situations even the remark of the product year could be prosecuted as the crime of fraudulence.

A consumer using a counterfeit that he or she has purchased will not be prosecuted for a crime under US laws, but transporting such a product could violate the law. For example, buying and transporting a huge amount of counterfeits that are clearly not for self-use constitutes a crime.

II. The Department of Homeland Security Intellectual Property Coordination Center

One of the responsibilities of the US Department of Homeland Security is to reduce the importation of infringing products into the US. The officials from the department first showed us a case they investigated on knockoff vehicle airbags, where the counterfeit had a cost of one hundred dollars and the genuine one was eight hundred dollars. Most counterfeits were purchased by garages. In the video, the fake airbag appeared to be unable to open, blew into ashes, or caught fire. Most of these airbags were related to China, but the American officials stressed that only three thousand the fake airbags were found in the US, and most were exported to other countries.

Currently, among the IPR infringement cases investigated by the Homeland Security Department, seventy two percent are from China, twelve percent are from Hong Kong, and the remaining fourteen percent are from other countries. Fake medicine is the most harmful and is the main object of the agency’s strikes. According to the statistics from US cases, seventy eight percent of fake medicine is from India.

The Department of Homeland Security has also established a system to combat sales of counterfeits online, and each month, they have received roughly three hundred and fifty complaints and reports concerning infringing websites. Each year for the Super Bowl, they work jointly with other departments to combat fake tickets, clothing, and shoes.

III. The American Chamber of Commerce

The representatives of the American Chamber of Commerce provided us their written opinions on China’s drafts of the Patent Law, the Regulation of Inventions Made for Hire, the Interim Management Regulations on National Patent Standards , the Guidelines on Law Enforcement on Anti Monopoly in the IPR Industry, and the Patent Examination Guidelines. The latest opinion was issued on March 18. Each opinion is ten to thirty pages and provides their opinion and reasons for the amendment to the law. Some of the opinions are bilingual in both Chinese and English .

The process of preparing the documents is as follows: they first collect the latest draft of the law. Some of the opinions are made on the basis of consulting with Chinese government departments. After that, the opinions are sent to the members of the Chamber. After the members reply, the Chamber’s staff send the opinions to the Chinese government departments. The detailed and comprehensive process of legislative suggestion greatly impressed us.

It came up in the discussion that Americans think that many Chinese utility model patents lack creativity or applicability, so we asked about it. The representative relied that the junk utility model patents have occupied too much of the resources of the State Intellectual Property Office (SIPO), and patent trolls use these patents to harass companies. Some of these patents are also used to apply for government subsidies, but these subsidies ought to be paid to encourage the innovation rather than to benefit junk patent makers.

In closing, the above record was taken by the writer himself, who saw many contents that might be incomplete and less accurate when revising. He decided to put them on our website primarily to share with our readers, and any opinions or corrections are warmly welcomed. Since the US authorities highlight the protection of personal information, unless the other party agrees, we will not publicize the names of any of the involved parties on the Internet; thank you for your understanding.

Lawyer Contacts

You Yunting：86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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