The criterion of substantial proceeds of an offence should normally be greater than the amount of the proceeds of an offence, so that the criterion and requirement of “other aggravating circumstances” alongside “significant amounts” should naturally be more stringent and higher than the criterion of “other aggravating circumstances” parallel to “large amounts”。
The difference between the offence of violation of copyright and the offence of sale of a tort in replica is due to the different manner in which copyright is violated. As far as the offence of copyright violation is concerned, reproduction is the first direct violation of copyright, and distribution is the first dissemination to a third party after the act of reproduction, with indirect and helpful features in the violation of copyright。
In the identification of “loss amounts” and “incurred gains”, priority should still be given to “reasonable licence fees” in cases of breach of confidentiality。
Amendment (xi) to the penal code, by adding “other aggravating circumstances” and “serious circumstances”, by replacing the offence of sale of goods in counterfeit trademarks, sale of torts and replicas, respectively, with the “amount + circumstance” pattern, and by changing the offence of violation of trade secrets to the offence, thereby harmonizing the above-mentioned three offences with the criteria for criminalization of other offences against intellectual property. The criteria for determining “gravity” on these three counts are characterized by a variety of opinions and wisdom in judicial practice. In order to promote uniformity and accuracy in the administration of justice, the author considers that “other aggravating circumstances” or “serious circumstances” of the three above-mentioned offences can be identified in judicial practice in four respects。
First, for the determination of “other serious circumstances” or “serious circumstances” in the three above-mentioned offences, reference may be made to the judicial interpretation of the “serious circumstances” in other offences against intellectual property. As a result of amendment (xi) of the penal code, the above-mentioned three offences have been harmonized with the criminalization criteria for false registration of trademarks, forgery of patents, infringement of copyright and illicit manufacture and sale of illegally manufactured registered trademarks. Thus, the judicial determination of “other aggravating circumstances” or “serious circumstances” in respect of these three offences may be based on judicial interpretations of the “gravity” of other offences against intellectual property, including, inter alia, the amount of illicit business, the amount of the proceeds of the offence, the amount of the offence in question, the amount of damage caused to the rights holder, the amount of fraudulent work, the actual number of hits on the dissemination of the work, the number of registered members, etc。
Secondly, each crime should have its own specific “gravity” criterion. Although the offence of infringement of intellectual property establishes the “circumstances” as the criteria for its criminalization, there is a difference between the “other aggravating circumstances” or “serious circumstances” of each offence. For example, the offence of the sale of counterfeitly registered trademarked goods and the offence of infringement of copyright are subject to the test of incrimination as “larger or other aggravating circumstances” while the offence of incurring the offence of tortious replicas is defined as “significant or other aggravating circumstances”. Since the large standard of proceeds of an offence should normally be higher than the amount of proceeds of an offence, the standard and requirement of “other aggravating circumstances” in parallel to “significant amounts” should naturally be stricter and higher than the “other aggravating circumstances” in parallel to “large amounts”. Moreover, the statutory penalty for the offence of “other aggravating circumstances” for the sale of torts is imprisonment for a term not exceeding five years, while the statutory penalty for the offence of “other aggravating circumstances” for the sale of counterfeit registered trademarks and for the offence of infringement of copyright is imprisonment for a term not exceeding three years. Therefore, the criteria and requirements for “other aggravating circumstances” in the offence of the sale of torts and replicas should also be more stringent and higher than “other aggravating circumstances” in the offence of the sale of counterfeit registered goods and infringement of copyright。
It should be noted that it is precisely because the offence of the sale of a tort replica has higher standards of incriminating than the offence of infringement of copyright that has led to the general recognition in judicial practice of the sale of a tort replica, including the piracy of disks, as a crime against copyright. According to the author, this is in fact a misperception of “replicating” the offence of infringement of copyright, while at the same time obfuscating the offence of sale of tort replicas. The difference between the offence of violation of copyright and the offence of sale of a tort in replica is due to the different manner in which copyright is violated. As far as the offence of copyright violation is concerned, reproduction is the first direct violation of copyright, and distribution is the first dissemination to a third party after the act of reproduction, with indirect and helpful features in the violation of copyright. The latter should therefore be smaller than the former in terms of the social hazard of the act. It is on the basis of relatively less harmful considerations that the threshold of entry for the offence of sale of torts is lower than the offence of violation of copyright. It would therefore be more appropriate to criminalize the sale of torts and replicas for those who do not reproduce the source of the distribution of pirated audiovisual products, but simply sell them, such as small vendors selling cds。
Thirdly, in the case of offences against commercial secrecy, “serious circumstances” still cover situations in which “significant harm is caused to the right-holder”. Although the amendment (xi) to the penal code changed the threshold for offences against trade secrets from “significant loss to the person entitled” to “serious circumstances”, this does not mean that “significant loss to the person entitled” is no longer one of the circumstances in which the offence was committed. Indeed, the “severe circumstances” of the offence of violation of commercial secrecy include “significant damage to the rights holder”. Thus, the three circumstances listed in article 4 of the “interpretative (iii) (hereinafter referred to as “interpretative”) interpretations on certain questions of the specific application of the law in criminal cases of violations of intellectual property rights, as well as the manner in which “the amount of loss” and “the amount of proceeds obtained in violation of the law” as enumerated in article 5 are determined to be “serious” are still applicable。
In response, it was argued that, in the context of the interpretation, “reasonable licence fees” should remain the preferred criterion for the determination of “loss amounts” and “infractions of proceeds” in cases of breach of confidentiality. The main reason is that the infringer takes, discloses and uses business secrets without permission, provided that he has to pay a certain licence fee to obtain the corresponding information. The licence fee is the unauthorized acquisition of “payable but unpaid” amounts, which can be accounted for as property losses. The breach of confidentiality requirement for disclosure of business secrets for use by others is equally eligible for “payable but unpaid” and there is a sufficient systemic basis for the criterion of reasonable licence charges as a basis for the determination of loss. Changes in acts of mere means should not be grounds for refusing to apply the criterion. Therefore, in the author's view, this criterion should be applied as a matter of priority in cases of violations of business secrets, whether they take the form of illegal acquisition or breach of confidentiality requirements. Moreover, the interpretation, in providing for the manner in which the determination is made, uses only the phrase “may be determined in the following manner”, which also provides the feasibility of giving priority to reasonable royalties as a criterion for recognition。
Fourth, in the case of offences against commercial secrets, the means of crime, the consequences of crime and the high cost of research and development of commercial secrets could also be included in the “serious” consideration。
First, the manner and number of violations of commercial secrets committed by the perpetrator are important factors in determining “serious circumstances”. In terms of the manner in which the violations were committed, the manner in which they were committed varied, as did the degree of social harm. For example, disclosure of commercial secrets, either orally or in a directional manner, is clearly of a lesser scope, leading to a lower likelihood that commercial secrets will become known to the public. Disclosure of business secrets through the media has a relatively wide-ranging impact. What is worse is the use of the internet, for example, to divulge business secrets, which may be completely declassified and more harmful. As a result, aggravating circumstances can be established when the perpetrator discloses a commercial secret via the internet, creating a high risk of loss of confidentiality. In view of the number of acts, each violation of a business secret and sale for profit is an infringement on the owner of the business secret, so that the repeated commission of a breach of a business secret and sale for profit can also be considered “serious”。
Second, article 4, paragraph 1 (b), of the interpretation recognizes as “significant loss” the right-holder who directly causes a trade secret to become insolvent or bankrupt as a result of a major business difficulty, and it should also be considered “serious” in cases where the right-holder loses a competitive advantage because of the disclosure of the business secret and is then subject to liquidation proceedings or has to dissolve himself。
Finally, violation of a business secret with higher r & d costs can also be a case of “gravity” for offences against commercial secrets. While r & d costs cannot be directly linked to the amount of the loss, this does not mean that they are irrelevant in determining the extent to which business secrets have been violated. Since rights-holders in commercial secrets are bound to invest in research and development, this cannot be a matter for the rights-holders who have been violated. Moreover, in cases where rights holders refuse to license commercial secrets, the reason for their improper acquisition and use of commercial secrets is because they do not possess the conditions of human, technological, financial, etc. In this sense, its practice of obtaining commercial secrets actually saves the cost of autonomous r & d, which can also be considered a profit in essence. Thus, violations of the commercial secrecy of higher r&d costs can be considered “serious”。
(by vice-president and associate professor, school of criminal law, university of political and legal law, china)
