Earlier this month, Brand Development & Content Protection co-chairs Tony Keats and Konrad Gatien attended the annual meetings of the International AntiCounterfeiting Coalition and the International Trademark Association in Hong Kong. In addition, Tony Keats traveled to Shanghai, Xi’an and Beijing. During their trip to China, they witnessed several issues that blatantly affect brand protection efforts of high-fashion design and consumer product companies.
DESPITE PRIOR LEGAL SANCTIONS, BEIJING’S SILK MARKET CONTINUES TO OPENLY FLAUNT ITS HIGH VOLUME OF COUNTERFEIT PRODUCT SALES.
Tony Keats reports on visiting Beijing’s notorious Silk Market Building with some 1,700 vendors, over 3,000 salespeople, 10 sales floors, and located on seven floors at Yonganli, in the Chaoyang District. Here, the sales personnel openly flaunt the availability of enormous volumes of counterfeit apparel and luxury goods. In the prior decade, famous brand owners from Burberry, Louis Vuitton, Chanel and Gucci, to The North Face and LaCoste had achieved ground-breaking legal successes obtaining relief against the owner/landlord of Beijing’s Silk Market complex, including obtaining injunctive relief, signage requirements, and even small amounts of damages. However, less than a decade later, this litigation has had little impact as Tony Keats was shown back-rooms of various stores with floor to ceiling inventories of counterfeit luxury products. On the first floor, vendors selling unlicensed apparel were not even hiding the merchandise in backrooms but were openly displaying enormous quantities without any effort to cover up their sales. Tony also reports that dozens of tour buses unloaded anxious buyers at the Silk Market while he was at the market. It is reported that there are approximately 20,000 visitors on the weekdays and between 50,000 to 60,000 shoppers on weekends.
CHINA TRADEMARK OWNER’S BRANDS THE SUBJECT OF COUNTERFEITERS.
It has been suggested that as China develops more of its own famous brands which are counterfeited, that the IP community will see greater enforcement efforts by the authorities in that country. For example, on May 14, the state paper The China Daily reported that customs officials in Jiangmen City in Guangdong Province recently seized nearly 3 million fake batteries with a value of US $90,000. The counterfeits, which were to be shipped to Dubai, have a graphic logo very similar to that of SUNWATT, a famous brand owned by Chinese manufacturer, Guangxi company.
SAM’s Brand Development and Content Protection group was able to assist client Stanley Black & Decker in shutting down a counterfeit battery manufacturer in Fushon City, which was producing counterfeit DeWalt brand batteries used with the companies power tools.
DESPITE NEW CHANGES IN CHINA’S IP LAW, THE ONLY PROOF WILL BE IN WHETHER IT IS VIGOROUSLY ENFORCED.
On May 1, 2014, revisions of the trademark law went into effect. One provision prohibits the use of “well-known trademarks” in advertising and on packaging. The state paper The China Daily reported that the new law was causing a number of companies to change their labels and even destroy products. One Chinese company, Jing Wu Agribusiness Group, a company specializing in food and feed processing, which won the title of most well-known trademark in China in January 2013, has now recalled and destroyed nearly 2 million packages at a cost of approximately US $500,000.
CHINA STATE AUTHORITIES CONTINUE TO TOUT THEIR ENFORCEMENT EFFORTS.
The state China Intellectual Property News proclaimed that agencies nationwide investigated more than 4,700 intellectual property infringements in the first quarter of 2014 that had a combined potential retail value of US $43.25 million. Enforcement officials claimed to have checked a wide range of sectors including garments, electric appliances, toys, shoes and furniture. They claim in March alone, 183 shipments of food and six shipments of cosmetics were proven counterfeit, then destroyed or returned to exporters. These efforts are at best a step in the right direction but a paltry amount in light of the size of the Chinese counterfeiting problem.
It was reported by The China Daily on May 21st, that a district court in Beijing handed jail and monetary penalties against seven men convicted of illegally offering movies and TV downloads in what was described as China’s largest copyright piracy case. The president of the company that operated the website siluhd.com was sentenced to five years in jail and fined US $160,200. The other six defendants were given jail sentences ranging from one to three years. Siluhd.com, founded in 2008, had seven managers and 140 website administrators, becoming the largest portal of pirated movies, TV shows, and music in China. The parent company also had two brick and mortar stores in Beijing. The website had more than 20 million downloads.
For more information about Stubbs Alderton & Markiles’ Brand Development & Content Protection Practice, contact Tony Keats at firstname.lastname@example.org or (310) 746-9802, or Konrad Gatien at email@example.com or (310) 746-9810.