zheng chengsi: in china, jail is mainly for drug struggling and robbing and killing people. many scholars would think it was very stupid to put someone into jail for ip infringement. for example, if someone downloads a film illegally from the internet in the us - it may be more damaging to the company than copying discs and selling them - but do you put those people in jail? i think the problem in china is that people cannot recover the economic damage caused by ip infringement. another problem is that many infringers are companies. if they infringe ip once and again or even frequently, you must close them down. but the way that china does it isn't effective enough. that is the main reason why counterfeiting is so rampant. i think our problem is the enforcement is far from adequate -it can't punish the infringers economically. some people aren't afraid of going to jail - they perhaps have some guanxi (connections) and can get released the next day. although we have promised to strengthen criminal sanctions i don't think it is a good way. i don't think it's an effective way. if you can punish them economically - to close down their businesses, that would be more effective. that's the critical point.

shi xiamei: i think that education is still the most important area if you want to tackle infringement. we are a developing country with our own situation. i agree with professor zheng. we should punish the biggest infringers. but the biggest problem for us as an agency is finding really excellent investigators. how can you find the main source of the counterfeits? it's very difficult.

zcs: it needs the help of the police.

sxm: yes, the police or some special expert investigator. as we see it in hk, we invite some investigation company?

zcs: but in china that could be illegal. the problem is that the police might not always do anything and there can be difficulties using an investigation company.

sxm: yes, you're right. we just punish the person selling the fakes - but that isn't the most important thing. then the second point is how to punish them? we ask the local aic to take some infringement action. but how do they calculate the fine? sometimes they calculate it based on the contract they signed with the producer, but it's very difficult to say. take handbags for example - a genuine one might sell for hk$5,000. but in a market you might be able to buy one for hk$50. how is the aic to calculate the fine? it really creates difficulties. they base it on the hk$50 dollar price. but some foreigners think this is not enough.

eb: some ip owners say that they prefer not to use administrative measures to tackle piracy because they don't act as a deterrent to repeat infringers. should the measures be strengthened? if so, how?

zcs: i think this also relates to questions about cooperation between ip enforcement bodies. i have seen many big changes taking place in china. this year the central government has determined that it will use administrative, judicial or legal means to crack down on counterfeiting acts and to improve the economic order in china. so i think many of you have seen on tv and newspapers that more efforts will be made to crack down on counterfeiting. central government has named 15 provinces as the key centres of this action. some experts once suggested that if you can't crack down on counterfeiting in china as a whole then why not try those big cities that sell most of the counterfeits. i think measures will be taken not only to fine counterfeiting companies but also to send those people to court. according to the state council, if there are any officials involved then china will punish them.

in many other countries the police investigate counterfeiting acts. but in china we have various types of crimes and so the police force is rather weak. at the moment i think it is very important to give the full play to the efforts of the administrative organizations. once they find counterfeiting companies they can send them to court. i am also very pleased as a judge to see that this year the supreme people's procuratorate has made it one of their top priorities to crack down on ip infringement. only by paying more attention to this can we see a big change in our country. by taking administrative actions, companies making genuine goods in china will not have to spend too much money or effort trying to control counterfeiting cases. administrative organizations can help them do a lot in this regard. so i think with the joint efforts with criminal, civil and administrative actions we will see a big change in a few years.

let's take a step forward. if ip is really a very important issue for china then maybe in the future a specific group of police will be established to investigate ip infringement. a special bureau or organization could be established under the people's procuratorate and a special court or tribunal could be established to sentence these people. but the thing we are waiting to see is how important it is in china. in my opinion, these suggestions will not happen in the near future. however, if we can just concentrate the efforts of the administrative organizations or the police a little bit better than at present then maybe we will see better results.

eb: what are your clients telling you about their experience of administrative measures? are they still useful?

sxm: i think most of our clients still want to use all options. generally speaking, in trade mark infringement cases they still mostly prefer administrative measures. and for utility model and design patent cases they may use administrative measures because it's less expensive and they want to stop the infringement straight away - they don't want to get money back. of course we prefer administrative action to be brought in the big cities - officials have more experience and there is less localization. that's very important.

jh: do our clients find administrative measures a deterrent? they do and they don't. it depends upon the actual situation. one client commented how good ip protection was in china: they found a counterfeit in the market place on monday, tuesday we sent out an investigator. by friday the raid was finished and the counterfeiting was stopped. so if you have one counterfeiter of one product, and you stop that one, then you're in good shape. but if you have a thousand counterfeiters and you stop just one, then what have you gained? several years ago it was preferable to go to the administrative agencies because they would stop the infringement quickly, at least for that one case. but it's not a long-term solution because the penalties are not enough to prevent others from counterfeiting. so which route is best, administration or the courts, also depends upon the size of the company doing the counterfeiting and the proof that ip owners are able to obtain about the quantity of counterfeiting. with the courts getting better and the judges becoming more educated in ip law, we are now commonly advising clients to go through the court system. not only do you stop the counterfeiting but it has a bigger influence on other counterfeiters since damage awards are increasing. you can do the administrative action first and then go to the courts.

of course penalties should be boosted in the administrative agencies. the agencies must take an active part in stopping counterfeiting because there are now too many cases for the courts to handle. i'm very pleased to hear about the 15 provinces judge jiang mentioned that are attempting to determine ways to stop the counterfeiting within their own province. china is a great ongoing social experiment. there is an effort to get counterfeiting penalties standardized. this effort is the result of the frustration over the fact that some locations make penalties way too low. but it's not yet known what penalties are sufficient to solve the counterfeiting problem. china achieved remarkable economic progress by opening up its economy. its economic model was based on allowing the provinces to experiment with their own economic programmes. then the country could see which province was doing the best and which techniques received the best result. this same model should also be used to solve the counterfeit problem. rather than use a centrally mandated solution, allow the provinces to experiment with different penalties and schemes to stop the counterfeiting. then see what method and penalties are most effective to solve the problem.

to do that though, you need to have the ability to gauge the amount of infringement that is taking place. measures commonly mentioned by the chinese to demonstrate the anti-counterfeiting effort such as how many cds you're crushed or how many court cases you have, is not a good gauge of whether counterfeiting methods are succeeding. in fact, those increasing numbers may mean just the opposite. what is needed is a standardized survey mechanism to obtain a "counterfeit index" which could be used to gauge the effectiveness of the programmes or penalties to decrease the level of infringement taking place in the marketplace. that way, one could see which areas of china are the most effective and what they are doing right.

wxk: i think ip owners may well choose which way to go - either through the judiciary or the administrative way. as far as patents are concerned, i think to deter and get a quick result against repeated infringement it is better for them to go the administrative way. of course the administrative way cannot replace the judicial way, but for patents, the administrative authorities for patent affairs may well make a decision about repeat infringers - they do not need to investigate the facts again according to our administrative measures published by sipo.

eb: do foreign companies criticize china's record on enforcement unfairly while failing to protect their own ip assets properly?

sxm: i don't think all of our clients would criticize china for ip prosecution. but in terms of enforcement, they do have some questions about getting preliminary injunctions, how to bring criminal actions, the compensation is not enough and so on. i think they should understand that there has been a great improvement in ip prosecution in china and that they should register their ip assets here.