China Cracking Down on Piracy?

In a decision delivered in late December, China's top court has elevated intellectual property theft from misdemeanor status to felony. The move may be a sea change for the giant Asian nation, where piracy has long been a way of life.

The 17-part ruling by the Supreme People's Court in Beijing lowers the monetary threshold for piracy convictions, increases fines and potential jail terms, and makes willful profiteering from piracy a major offense. The move came in response to pressure from trading partners, following China's acceptance into the World Trade Organization three years ago. Chinese manufacturers are amazingly adept at knocking off all kinds of copyrighted products, including clothing, luggage, watches, pharmaceuticals, motorcycles, and electronics.

Software piracy, including movies and music, is rampant throughout the country. Some trade organizations believe that at least 90% of all the prerecorded optical discs sold in China are unauthorized. US trade officials estimate that losses to Chinese piracy cost companies worldwide as much as $50 billion annually. The new law could subject violators to as many as seven years in prison if they are convicted of trafficking in pirated goods worth more than $30,000.

The court's ruling came only a week after news from Beijing that the Chinese government was considering stiffer penalties for makers and distributors of counterfeit products. Criminal cases in the country involving intellectual property have increased by about 30% each year between 1998 and 2001, according to a China Daily report quoted by Dow Jones Newswires on December 16. China's Economic Criminal Investigation Department of the Public Security Ministry "investigated more than 2000 piracy-related crimes in 2002–03," the report noted.

The Ministry has urged consumers to alert police when they detect bogus goods, but brisk street trade continues unabated, according to a December 24 report by The San Francisco Chronicle foreign service correspondent Kathleen McLaughlin. "For common Chinese people, copyright protection is a brand new topic . . . thus it would need more time for them to get a full understanding of the issue," said Ministry official Zhang Tianwu.