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Effective as of 26 April 2025, the Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Intellectual Property Infringement Cases consolidates and revises existing judicial guidance. It furnishes a systematic refinement and explicit articulation of the benchmarks for handling criminal IP matters, with a specific focus on the elements and penalty calibration for selling goods that bear a counterfeit registered mark. This article distils the practical essentials of this particular offence.

Key revisions

Under the 1997 Criminal Law and subsequent amendments, the ¡°sales value¡± served as the principal metric for criminalisation. The 11th amendment to the Criminal Law in 2020 altered this approach, recasting the threshold for liability in terms of ¡°considerable illegal gains or other serious circumstances¡±.

Article 5 of the interpretation now gives full and detailed effect to this shift, setting a specific entry threshold of ¡°illegal gains of RMB30,000 (USD4,400) and above¡± and classifying ¡°sales value of RMB50,000 and above¡± as one of the ¡°other serious circumstances¡±, thereby preserving its function in assessing the gravity of the conduct.

The article also establishes the ¡°goods value¡± as an independent criterion for determining aggravating circumstances, allowing non-sale scenarios to trigger liability directly without recourse to the doctrine of criminal attempt. This progression marks a shift in legislative and judicial emphasis away from sales volume alone towards a holistic assessment of unlawful enrichment and the extent of social detriment.

Constituent elements

Counterfeit registered mark. Establishing that the goods in question bear a counterfeit registered mark is an essential element of the offence. Article 2 of the interpretation stipulates that, for the purposes of criminal law, an ¡°identical trademark¡± is not confined to precise duplication; it also embraces any mark that is essentially indistinguishable from the registered mark and liable to mislead the relevant public. Specific instances include:

1. 1. Modifications to font, capitalisation or textual arrangement that result in no fundamental difference;
   2. Adjustments to spacing between characters, letters or numbers that are effectively imperceptible;
   3. Changes in colour that do not compromise the mark¡¯s salient characteristics;
   4. The addition of solely generic product descriptors, model designations or other non-distinctive matter that fails to affect the mark¡¯s distinctive impression;
   5. Marks that are materially identical to the registered three-dimensional form and its planar components; and
   6. Any further circumstance in which the mark is essentially identical to the registered mark and apt to deceive the relevant public.

In application, the assessment of an ¡°identical trademark¡± generally adheres to a test of material confusion. There is no requirement that the offending mark be a precise facsimile of the mark at issue. Instead, the conduct qualifies as counterfeiting where the marks are fundamentally indistinguishable and the resultant impression is likely to deceive the relevant consumer base.

Subjective knowledge. ¡°Knowledge¡± constitutes the requisite mental element for this offence and remains a perennial challenge in judicial practice. Article 4 of the interpretation, while retaining certain pre-existing scenarios, introduces a significant amendment and clarification. It revises the prior formulation ¨C ¡°shall be deemed to have knowledge¡± ¨C to the more qualified standard as ¡°may be deemed to have knowledge, unless evidence proves a genuine lack thereof¡±.

This textual refinement signals a doctrinal shift from a rigid presumption of fact towards a more flexible, evidence-led approach. The article further adds two specific circumstances:
(1) purchasing or selling goods at a price manifestly below market value without legitimate justification; and (2) destroying, transferring or falsifying evidence following investigation. These additions sharpen the provision¡¯s focus on commercial realities, and on attempts to evade enforcement.

Serious circumstances. Article 5 of the interpretation establishes a multi-tiered, comprehensive framework for criminalisation and sentencing. While setting ¡°illegal gains of RMB30,000 and above¡± as the baseline threshold for liability, it expressly designates ¡°sales value of RMB50,000 and above¡± as an instance of ¡°other serious circumstances¡± ¨C satisfaction of either suffices for prosecution.

For cases involving repeat conduct within two years of a prior criminal or administrative penalty for trademark infringement, the monetary thresholds are markedly reduced to ¡°illegal gains of RMB20,000 and above or sales value of RMB30,000 and above¡±, reflecting a policy of stricter punishment for persistent, recalcitrant offenders.

The threshold for ¡°particularly serious circumstances¡± is raised substantially from five times to 10 times the amount required for ¡°serious circumstances¡±, widening the sentencing gradient between offences of differing severity and better aligning punishment with culpability.

Key concepts. Article 28 of the interpretation sets out clear parameters for ¡°illegal gains¡±, ¡°sales value¡± and ¡°goods value¡±. Crucially, ¡°illegal gains¡± is delineated as the total unlawful income derived or derivable by the offender from disposing of infringing items, after deducting outlays for raw materials and the initial purchase price.

The provision thus introduces a standardised and even-handed calculus, enabling a more accurate measurement of actual criminal enrichment and a more reliable appraisal of the harm occasioned to society.

Judy Li is a senior partner and Winnie Wu is a paralegal at Ronly & Tenwen Partners