By Richard W. Wigley of King & Wood’s Intellectual Property Group

Today in China, in conjunction with World IP Day 2011, numerous governmental agencies will actively begin a week-long promotion of the role of intellectual property in the nation’s economy, according to Han Xiucheng of the State Intellectual Property Office (“SIPO”)1. Such efforts are to be lauded, but it is well known that copyright piracy rates in China are still significantly higher (80-90+%, depending on the type of work) than those seen in developed countries, such as the United States. Copyright piracy results from a combination of factors, including not only the effectiveness of the enforcement regime, but also from consumers’ attitudes toward pirated works. There has been a shift in recent years in China away from pirated works and toward legitimate works, but this shift has been slow due to a variety of reasons. Into this dynamic, it is valuable to look at some of the most recent efforts of the P.R.C. government to reduce copyright piracy across China.

Though not always required (depending upon the type of copyright work) in China, copyright registration is often seen as a valuable tool in efforts to protect copyright works. Registered works often make for easier tracking, especially in the online world, and registrations can prove useful if enforcement issues should arise. With this in mind, the General Administration of Press and Publication (“GAPP”) is pushing to increase the number of registered copyright works from approximately 451,000 in 2010 to over 700,000 by the year 2015. 2 In addition to increased copyright registrations, the GAPP has “issued administrative penalties in 49,416 copyright infringement cases, closed more than 128,493 illegal companies and confiscated 317 million pirated products”. 3 There have clearly been substantial efforts by the GAPP to reduce copyright infringement in China, but, as per the message of World IP Day regarding the value of IP to the nation, are Chinese consumers really changing their views towards purchasing pirated products?

On the positive side, there is an increased awareness of the value of IP rights and the role of IP in society in China. It was reported that “[i]n 2010, 75 percent of the Chinese were aware of copyright issues, up from 60.6 percent in 2006”, with the GAPP hoping for the “figure to be up to 80 percent by 2015”. 4 Efforts such as the publicity associated with World IP Day help to increase such awareness, as do more direct efforts, such as recent P.R.C. government initiatives to require government entities to use only legitimate software. The stakes are high in nurturing China’ nascent software/publications/digital products industries, as these industries have billion dollar potential, but are now hindered in their growth by rampant copyright piracy. To promote these industries, significant measures have been taken though administrative actions, such as those noted above and, also, through the P.R.C. courts.

The P.R.C. civil courts are overflowing with IP infringement cases, as over forty-two thousand such cases were heard in 2010, but the courts, themselves, cannot solve the IP piracy problem. 5 The ultimate deterrent of criminal prosecution is also available, but though recent changes in the Criminal Law of the P.R.C. have allowed for additional options in seeking criminal prosecutions against copyright infringers, the lure of quick profits still often makes trafficking in pirated works an attractive option to some would-be copyright infringers. It was recently reported that a certain individual was sentenced to “one and a half years and fined 40,000 yuan ($6,100) after she was convicted of continuing to sell pirated videos while on probation for the same offense.”6 It was reported that this individual, after being shut down previously by authorities, had amassed in a matter of weeks an inventory of “more than 36,000 illegal DVDs”.7 It is clear that market forces and consumer demand in many places in China are such that even the imminent threat of criminal detention cannot deter many would-be copyright infringers. As such, not only must the copyright enforcement regime in China continue to show improvement, but the demand for pirated products must also continue to be addressed.

The potential is there for robust copyright-related industries in China, but it will not be fully realized unless the seemingly insatiable demand for pirated products by Chinese consumers is also significantly reduced and these consumers can see the value, to not only to society, but also themselves, in purchasing legitimate copyright works. The recent efforts by the GAPP and other P.R.C. governmental agencies are steps in the right direction in addressing not only improved copyright enforcement, but also reducing demand for pirated products. World IP Day 2011 in China should be a day where the recent progress to date in copyright protection is highlighted, with the hope that continued efforts will result in more and more consumers recognizing the value in purchasing legitimate copyright works.

Note: this publication is for informational purposes only and it does not constitute a legal opinion.

1China Daily, “Campaign for World IP Day”, IP Special, IP Scene (1) Beijing, April 20, 2011, pg. 17.

2Li Yao, China Daily, “Officials look to tackle copyright piracy issue”, April 21, 2011, pg. 4.

3 Id.

4 Id.

5 Id.

6China Daily, “Campaign for World IP Day”, IP Special, IP Scene (2) Shanghai, April 20, 2011, pg. 17.

7 Id.