TRIPS Article 61: Criminal Procedures

In one line

Criminal procedures and penalties at least for wilful trademark counterfeiting or copyright piracy on a commercial scale, with imprisonment or fines sufficient to deter and, in appropriate cases, seizure, forfeiture and destruction.

Article 61, sentence by sentence

"Members shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright piracy on a commercial scale."

Four limits on the obligation.

Wilful, so negligence and inadvertence are outside.

Trademark counterfeiting or copyright piracy, so patent, design, geographical indication and trade secret infringement need no criminal sanction.

On a commercial scale, which is the phrase the whole article turns on.

And "at least", which makes this a floor.

"Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity."

Note the comparator. Deterrence is measured against the Member's own penalties for crimes of corresponding gravity, not against any international scale. A Member with generally low penalties is not required to make intellectual property crime an exception.

"In appropriate cases, remedies available shall also include the seizure, forfeiture and destruction of the infringing goods and of any materials and implements the predominant use of which has been in the commission of the offence."

"Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed wilfully and on a commercial scale."

So extension is permitted. India has extended it, and so have most Members.

What commercial scale means

The phrase was litigated in the China dispute.

The panel's construction was that commercial scale refers to the magnitude or extent of typical or usual commercial activity with respect to a given product in a given market. So it is relative: what counts as commercial scale for luxury watches differs from what counts for pirated discs, and differs between markets.

The consequence for the complainant is a heavy evidentiary burden. The United States had to show what the typical commercial activity was in China for the products in question and that infringement below China's thresholds still reached that magnitude. It did not do so, and the claim failed.

The consequence for a Member is real discretion. A Member may set a threshold, provided it can be justified by reference to what commercial scale means in its own market.

The worked dispute

The case, worked in the general enforcement chapter, is China: Measures Affecting the Protection and Enforcement of Intellectual Property Rights.

On Article 61 the panel held that the United States had not established that China's criminal thresholds were inconsistent with the first sentence of Article 61. It read commercial scale as a relative standard requiring evidence about the market, and it found the evidence insufficient, some of it being press articles and a single unverified study.