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The co-ordination mechanism between administrative and criminal proceedings is a crucial avenue for IP protection in China, and rights holders should play a proactive role in the defence process

China employs a dual-track system of administrative and judicial protection for intellectual property (IP) rights, utilising the co-ordination mechanism between administrative and criminal proceedings.

This mechanism enables administrative enforcement agencies to transfer suspected criminal cases of IP infringement to judicial authorities for criminal investigation, while judicial authorities may also transfer IP infringement cases to administrative enforcement agencies for administering penalties.

Typically, such processes occur between administrative enforcement agencies and the police department or procuratorate.

As the aggrieved party, IP rights holders are encouraged to engage in and facilitate this co-ordination to effectively combat IP infringements and defend their legitimate rights.

Administrative-criminal co-ordination

The law requires administrative enforcement agencies to transfer IP infringement cases to the police department for criminal investigation if criminal facts are discovered. Yet practical challenges, both policy-related and substantive, often deter administrative enforcement agencies from transferring such cases, leading to an unsatisfactory rate of cases properly progressing from administrative to criminal proceedings.

In a recent case handled by the authors, customs seized some exported goods suspected of IP infringement, but interpreted the case differently from the prevailing judicial understanding. Although this case met the criminal threshold, the discrepancy prevented it from being transferred to the public security bureau for criminal investigation.

In response, the authors actively engaged with customs and local police officials on the possibility of administrative-criminal co-ordination, providing legal opinions and judicial precedents for reference.

Citations from relevant laws also clarified that administrative enforcement agencies should transfer IP infringement cases to the police department for further evidence collection in case of criminal suspicion, rather than substituting administrative penalties for transfer. Ultimately, the customs accepted this approach.

When the administrative authorities opt for penalties instead of transferring the case to the police department, or fail to proceed due to jurisdictional constraints, IP rights holders may directly report the case to the public security bureau to trigger criminal investigations.

Criminal-administrative co-ordination

Based on the regulations, opinions and notices issued by the Supreme People¡¯s Procuratorate, the Ministry of Public Security and other authorities, if the police department determines on review that a case transferred by the administrative authorities does not constitute a crime, it should return the case files to the administrative enforcement agency for handling.

For cases where the procuratorate decides not to prosecute, or where the court issues an acquittal or exemption from criminal punishment, if the procuratorate or court believes administrative penalties are warranted, it should provide prosecutorial or judicial recommendations and transfer the case to the administrative authorities.

However, in practice, the police department often suspends a case after the expiration of compulsory measures for individuals involved in unverified criminal activities, or insufficient evidence for prosecution, rather than transferring the case to administrative enforcement agencies through criminal-administrative co-ordination.

In recent years, the authors have successfully persuaded the police department and the procuratorate to transfer several IP infringement cases to administrative enforcement agencies, resulting in administrative penalties.

When the police department determines that the actions in question do not meet the criminal threshold, or lack sufficient evidence for prosecution, IP rights holders may request transfer of the case to administrative enforcement agencies based on discussing the criminal facts with the responsible police officials, considering factors such as the illegal turnover, the infringer¡¯s intent, and duration of the illegal activity.

Proactively contacting administrative enforcement agencies in advance can also facilitate the co-ordination and increase the successful rate of case acceptance.

For cases terminated at the prosecution stage, IP rights holders should actively communicate with the prosecutor about the non-prosecution decision. They should timely request that the prosecutor transfers the non-prosecuted cases or individuals to competent administrative enforcement agencies for administrative penalties through prosecutorial supervision recommendations.

This approach demonstrates the procuratorate¡¯s proactive role in handling criminal cases of IP infringement, and helps effectively combat IP infringement. It ensures that offenders, even if exempted from criminal penalties, are still subject to administrative penalties, thereby protecting the legitimate rights of IP rights holders.

Takeaways

Administrative and criminal proceedings are crucial avenues for IP protection in China. The co-ordination mechanism between the two effectively standardises law enforcement and rigorously cracks down on IP infringements.

Rights holders are encouraged to leverage their initiative and promote the co-ordination between administrative and criminal proceedings in both administrative and criminal cases in compliance with existing laws and judicial practices.

This achieves the objective of the mechanism to protect IP rights and punish illegal activities.