China to Toughen Penalties for Piracy

China will make piracy of intellectual property an offense punishable by as many as seven years in prison, responding to pressure from the U.S. and other countries to crack down harder on the theft of software, movies and other products.

The Supreme People’s Court set the maximum penalty in a reinterpretation of China’s criminal law, according to a statement issued Tuesday at a news conference in Beijing, fulfilling a government pledge to strengthen anti-piracy rules by the end of the year.

Imposing tougher penalties on makers and sellers of counterfeit goods may help China head off the threat of World Trade Organization actions by the U.S. and the European Union. The U.S. has said piracy is the biggest problem in the $181-billion commercial relationship between the two nations.

“This is good,” said Giorgio Magistrelli, executive director of the European Chamber of Commerce in China. “This is something they promised they were going to do. They kept their promise.”

Chinese companies copy an array of foreign products, including Microsoft Corp. software, Gillette Co.’s Duracell batteries and General Motors Corp.’s AC Delco spark plugs, according to U.S. government and industry officials. Pirate discs of the latest Hollywood films sell openly on the streets of Beijing and Shanghai for as little as 97 cents each.

The U.S. trade representative’s office in September asked companies to provide details of Chinese theft of trademarks and patents as part of a special review of China’s anti-counterfeiting measures. The review, to be undertaken early next year, may form the basis of a WTO complaint against China, Deputy U.S. Trade Representative Josette Shiner said in September.

European Trade Commissioner Pascal Lamy said last month that the 25-nation bloc would step up pressure on countries including China to crack down on counterfeiting and might seek penalties in the WTO against those that didn’t comply.

China is imposing stiffer penalties on piracy offenders as part of a yearlong campaign against copycat products started in September. Until now, piracy and counterfeiting were considered infringements, with conviction carrying only minor penalties.