Recently, significant progress was made in the criminal case of “Xu Mou’s Illegal Business Operations,” which was handled by Attorney Zhu Junchao, a founding partner of Kinding Law Firm. The People’s Procuratorate of a certain city in Zhejiang Province requested that the public security authorities dismiss the case, and the matter was concluded with the public security authorities dropping the charges.
PART 1
Case Overview
In 2022, a competitor reported to a cultural law enforcement brigade in Zhejiang that the company’s operated game was suspected of misusing game version numbers. Upon receiving the report, the cultural law enforcement brigade initiated an investigation. During the investigation, they determined that the company was suspected of criminal activity and transferred the case to the public security authorities.
The public security authorities arrested three company employees on charges of illegal business operations involving the misuse of game version numbers and conducted a focused investigation into the company’s game version number issues.
PART 2
Case Handling Process
Accepting the Mandate and Forming a Professional Team Upon accepting the mandate, Kinding Law Firm immediately formed a specialized task force to analyze and study the case, and appointed Attorney Zhu Junchao as the defense counsel for Mr. Xu.
Promptly Arranging a Meeting and Securing Bail
After accepting the mandate, the handling attorney immediately met with the involved party to fully understand the situation and identify potential breakthroughs from both factual and legal perspectives.
Thanks to the attorney’s efforts, the public security authorities agreed to release the suspect on bail, temporarily restoring his personal freedom and laying the groundwork for a favorable outcome in the subsequent proceedings.
Dismantling the Public Security Authorities’ Key Evidence: The Appraisal Report on Illegal Publications
After the release on bail, the attorney’s primary focus shifted to the case’s ultimate outcome: Does a case involving game version numbers constitute a crime?
The key evidence cited by the public security authorities to establish that Xu was suspected of the crime of illegal business operations was an appraisal report issued by a certain Zhejiang Provincial Bureau of Culture, Radio, Television, and Press and Publication, which classified the game in question as an “illegal online publication.”
The attorney carefully analyzed the appraisal report and discovered several issues with the bureau’s appraisal process, including: manifestly erroneous conclusions, procedural violations, formal deficiencies in the report, and irregularities in the collection of evidence.
Based on this, the defense attorney filed complaints regarding the appraisal report with the Bureau of Press, Publication, Radio, Film, and Television and the local People’s Government, and applied to the procuratorate for a re-appraisal. Ultimately, through the defense attorney’s relentless efforts, the procuratorate ruled that the appraisal report on illegal publications issued by the Zhejiang Provincial Bureau of Press, Publication, Radio, Film, and Television was invalid, thereby undermining the key evidence in the case.
Repeated Communication Leads to Case Dismissal by Public Security Authorities
The attorney submitted a legal opinion on the case to the relevant public security bureau and People’s Procuratorate. Given the significant flaws in the evidence and the insufficient legal basis for the case, the procuratorate ultimately remanded the case to the public security authorities, who subsequently dismissed the case.
PART 3
Defense Strategies for Lawyers in Criminal Cases Involving Publishing Licenses
(1) The basis for requiring a publishing license for games does not constitute a “national regulation.”
The prerequisite for establishing the crime of illegal business operations is a violation of laws enacted by the National People’s Congress and its Standing Committee, or relevant regulations issued by the State Council. The primary basis for requiring a publishing license for online games is the Regulations on the Administration of Online Publishing Services. However, the Regulations on the Administration of Online Publishing Services are classified as departmental rules and do not constitute the “national regulations” explicitly required for the crime of illegal business operations; Although the “Regulations on Publication Administration” are classified as administrative regulations and thus fall under “state regulations,” they merely mention that electronic publications require publication qualifications and do not explicitly classify online games as electronic publications.
Therefore, while operating games without a license constitutes an act of operating without prior approval, such conduct does not violate the “state regulations” as defined by the Criminal Law and does not constitute a criminal offense.
(2) Operatinvg games without a publication license does not constitute a serious disruption of market order and should not be classified as a crime.
The crime of illegal business operations has long been regarded as a “catch-all offense.” Given the current support from the political and legal system for a favorable business environment, the application of this crime must be strictly enforced in practice. Its scope of application should not be interpreted in an overly broad manner. Where the objective of punishment can be achieved through administrative penalties, there is no need to escalate the matter to the level of criminal punishment.
In determining whether the operation of games without a license constitutes the crime of illegal business operations, one must consider whether the act constitutes a serious disruption of market order. The assessment of whether there is a serious disruption of market order should be based on whether the relevant conduct possesses social harmfulness, criminal illegality, and the necessity of criminal punishment equivalent to the illegal business operations specified in the first three items of Article 225 of the Criminal Law.
First, game version number licensing constitutes a general license, not a special license. Violating a general license constitutes only a general administrative violation; only a violation of a special license should constitute the crime of illegal business operations.
Second, even if a game company operates a game without a version number, this merely indicates a problem with the licensing qualification. Provided the game content does not involve illegal elements such as pornography, gambling, or political content, it lacks social harmfulness and thus does not reach the level of harm required by the crime of illegal business operations—namely, “seriously disrupting market order.”
Finally, as online gaming is a relatively new phenomenon that has emerged in recent years, while regulating it, we should also rationally guide and encourage its development. It is understandable that administrative authorities establish various administrative permits to facilitate administrative management; however, when the objective of punishment can be achieved through administrative penalties, there is no need to escalate the matter to the level of criminal punishment. The competent administrative authorities could have imposed penalties such as criticism, public censure, or fines; in severe cases, they could have shut down the website, but they should not have abused criminal law measures to impose punishment.
In summary, the operation of games without a license has not yet reached the level of seriously disrupting market order. For games operated without a license, cultural authorities generally order the game to be taken down and impose hefty fines ranging from 5 to 10 times the game’s revenue. Such penalties are sufficient to deter violators and do not need to be elevated to the level of criminal punishment.
Final Thoughts
With game license approval becoming increasingly stringent, many game companies have opted to operate games without a license or by reusing existing licenses. Now that public security authorities have begun using criminal measures to regulate license compliance, game companies must proactively guard against criminal risks related to licensing. If a game company faces criminal charges due to licensing issues, it should promptly retain a professional attorney to mount a defense and strive for a favorable outcome.
