China Will Increase Fines, Punishments for Counterfeiters to Deter Piracy

China, poised to become the world’s largest market for pirated software, will increase fines and punishments for counterfeiters to improve deterrence of offenders.

The nation will impose flexible fines that are multiple the values of infringed goods, moving away from fixed amounts, Vice Chinese Commerce Minister Jiang Zengwei said at a briefing in Beijing today. China will amend its criminal law to make it more effective in fighting piracy, and improve evidence rules to aid owners of intellectual property, he said.

The moves build on a pledge by Vice Premier Wang Qishan last month to improve monitoring of intellectual property rights in China. The nation is set to become the world’s largest market for copied software as it isn’t reducing piracy quickly enough, Robert Holleyman, chief executive officer of the Business Software Alliance, said in October.

“We are working to amend the relevant laws and regulations to increase punitive measures against law breakers so that they will bear the corresponding legal responsibility for their crimes of infringement and counterfeiting,” said Jiang, who is also office dean of China’s National Leading Group for Combating IPR Infringement and Counterfeits.

Almost four out of five computer programs used in China are pirated, according to the annual report of the alliance, a trade group representing companies in the software industry, including Microsoft Corp. (MSFT) and Apple Inc. (AAPL)

‘Greatly Pushed’

The central government has “greatly pushed forward” its effort to use legal software nationwide, including the adoption of licensed programs at 135 state departments and some provincial governments, the State Council said in a statement distributed before Jiang’s briefing.

The $7.78 billion commercial value of software pirated in China last year was second only to the $9.52 billion lost in the U.S., the alliance said. Only 20 percent of software in the U.S. is pirated, compared with 78 percent in China, according to the group’s report issued in May.

While the percentage of pirated software in China has declined, from 79 percent in 2009 and 92 percent in 2003, its value has increased as the Chinese software market expanded, the report showed.

Chinese authorities investigated 16,000 cases of counterfeiting involving 13.12 billion yuan ($2.1 billion) of goods during the government’s “Sharp Sword” campaign, said the State Council, China’s cabinet. The campaign, from October 2010 to June 2011, led to prosecution in 2,176 cases, it said.

China will deploy enforcement inspections during the New Year and Lunar New Year holidays, according to the cabinet statement.

Websites involved in counterfeiting and infringement will be “rectified” and companies producing unauthorized duplications of CDs and DVDs will be “sorted out,” the State Council said. China will also crack down on the import and export of counterfeit foods and drugs, it said.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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