Cracking down: China’s tougher approach to IP crimes

Counterfeiters and infringers face lower thresholds for criminal convictions and severer penalties following guidance issued last year, says Ling Zhao of CCPIT Patent and Trademark Law Office.

Criminal protection of intellectual property rights (IPR) constitutes the most deterrent measure in IPR protection and serves as a pivotal safeguard.

In April 2025, the Supreme People’s Court and the Supreme People’s Procuratorate of China jointly issued the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Intellectual Property Infringement (hereinafter referred to as the Interpretation).

The Interpretation offers detailed guidance for judicial adjudication and prosecutorial practice in handling IPR-related criminal cases in China.

The Interpretation lowers the criminal conviction thresholds for relevant IPR crimes, adds new circumstances triggering criminal conviction, stipulates provisions on aggravated punishment, and raises the upper limit for the application of fine penalties.

Lowering criminal conviction thresholds

The Interpretation largely adheres to the criminal conviction standards stipulated in the previous judicial interpretations. In light of judicial practice, however, it lowers the conviction thresholds for the crimes of illegally manufacturing and/or selling illegally manufactured registered trademark signs; counterfeiting patents; and selling infringing reproductions.

Take the crime of illegally manufacturing and/or selling illegally manufactured registered trademark signs as an example.

Pursuant to Article 6 of the Interpretation, the thresholds for triggering criminal prosecution and conviction have been adjusted as follows: the quantity of illegal trademark signs is reduced from 20,000 pieces to 10,000 pieces; the amount of illegal gains is cut from RMB 30,000 ($4,400) to RMB 20,000; and the illegal business turnover is lowered from RMB 50,000 to RMB 30,000.

New circumstances for conviction

The 11th Amendment to the Criminal Law of the People’s Republic of China revised the conviction rules for the crimes of selling goods bearing counterfeit registered trademarks; selling infringing reproductions; and infringing on trade secrets. In response to judicial practice needs, the Interpretation adds new circumstances that trigger criminal conviction for relevant IPR crimes.

For instance, it stipulates that the sales amount, the value of in-stock goods, and the quantity of infringing reproductions sold shall all serve as conviction criteria for the crime of selling infringing reproductions.

To impose severe legal penalties on repeated and long-term IPR infringement in accordance with the law, the Interpretation also lowers the quantitative conviction thresholds for recidivist infringement acts—namely, acts of committing IPR infringement again within two years of being subject to criminal punishment or administrative penalties.

For such recidivist IPR criminal offences, the threshold amount (eg, illegal gains or illegal business turnover) for criminal prosecution shall be reduced by approximately 30% to 50%.

Stipulating provisions on aggravated punishment

The Interpretation sets out specific provisions on aggravated punishment, with a focus on cracking down on IPR infringement acts that are highly harmful to society and committed with malicious intent.

Such acts include engaging in IPR infringement as a professional activity; counterfeiting registered trademarks for special commodities and services during special periods (eg, public health emergencies or natural disasters); and refusing to hand over illegal gains without showing any remorse.

These provisions give full play to the deterrent effect of criminal punishment and its preventive function against IPR crimes.

Raising the upper limit of fines

IPR crimes undermine the legal environment and market order that are foundational to investment and industrial development. The Chinese government attaches great importance to imposing fine penalties on IPR infringers.

The Interpretation amends the original provision that “the amount of the fine shall generally be set at one to five times the amount of illegal gains” to “one to ten times the amount of illegal gains”, thereby raising the upper limit for the application of fine penalties for IPR crimes.

Defining identical goods/services and identical trademarks

The Interpretation clarifies the criteria for determining identical goods and services in the context of the crime of counterfeiting a registered trademark. In cases where the designated names of the goods are different, a comprehensive assessment shall be made from the perspective of the general perception of the relevant public, based on such factors as the functions, purposes, main raw materials, target consumers and sales channels of the goods.

The Nice Classification for Goods and Services and the Classification of Similar Goods and Services issued by the China National Intellectual Property Administration (CNIPA) serve as a reference for determining whether goods fall into the category of identical goods.

The perspective of the relevant public and the assessment factors adopted here are substantially consistent with the civil judicial standards for determining identical goods in trademark infringement cases.

For example, if the approved goods for the rights holder’s registered trademark are ‘fertilisers’ and the infringing goods are ‘organic fertilisers’, then ‘fertilisers’ and ‘organic fertilisers’ may be found to be identical goods based on the general perception of the relevant public and in combination with the aforementioned assessment factors.

As for the determination of identical services, the Interpretation mainly draws on the Judicial Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Trademark Dispute Cases, the Trademark Infringement Judgment Criteria issued by the CNIPA, and established judicial practices.

It stipulates that a comprehensive judgment shall be made based on the purpose, content, mode, target audience and venue of the services in question. Identical trademarks under criminal protection refer to trademarks that are either exactly identical or substantially identical to the registered trademark.

The determination of substantially identical trademarks has long been a difficult issue in judicial practice.

The Interpretation clarifies the criteria for identifying such trademarks, which is limited to situations where there are only minor differences between the counterfeit trademark sign and the registered trademark.

Examples of such minor differences include changes to the case or spacing of the text in a word mark, or only slight variations in a graphic mark. In judicial practice, it is common for infringers to add elements such as prefixes or suffixes to a registered trademark.

In such cases, the principle of stringent determination must be applied. A finding of “substantial identity” may only be made if the added elements are limited to words lacking distinctiveness (eg, the generic names or models of the goods) and do not impair the distinctive character of the registered trademark.

In civil trademark cases, the isolated observation method is generally used to determine whether trademarks are identical or similar, which means the trademarks are observed separately at different times and locations.

By contrast, the standard for identifying identical trademarks in criminal cases is more stringent: the side-by-side comparison method must be adopted, which requires the trademarks to be examined and compared together in the same context.

Conclusion

The issuance of this landmark Interpretation has established a systematic and updated legal framework for combating IPR crimes in China.

It unifies the relevant legal standards for adjudicating and prosecuting IPR-related criminal cases, facilitates the efficient and standardised handling of such cases by judicial and prosecutorial organs, and ultimately forges a more robust and sounder legal environment for innovation and creative activities in the country.

Takeaways

• Stricter stance on IPR offences
• Criminals face higher fines
• TM similarity test is clarified

Ling Zhao is director of the International Trademark Department at CCPIT Patent and Trademark Law Office. She can be contacted at: zhaol@ccpit-patent.com.cn