Beijing is battling to stamp out illegal sales of 2008 Olympic merchandise on dozens of unauthorized Web sites seeking to cash in on the Chinese public’s Games fervor, local media reported on Monday.
Authorities had investigated about 80 commercial and personal Web sites selling fake Olympic merchandise, or lacking licenses to sell the legitimate product, the Beijing Youth Daily said, citing an Olympic e-commerce official. . . .
Beijing Olympic organizers have targeted making $70 million from merchandising from the 2008 Games, from a range of about 4,000 products.
But despite authorities making a point of cracking down on Olympic-related forgery, local media reports of police busting fake Games souvenir makers and street peddlers are common.
The premise of the talk, and Michael’s post, is — quite reasonably — understanding the best way to go into China and utilize their system. There’s no question the People’s Republic wants to spread the word that it has a system, and that it can work; clearly a charm offensive is under way on just that point.
Is my long-standing skepticism, and that of many others, still justified? I don’t know if there’s any way to tell yet. But a 2010 post from Michael Masnick should remind big IP: Be careful what you wish for! The deference big companies and big law firms get from U.S. courts doesn’t translate so well over there. While, as usual, I wouldn’t track Michael’s thinking word for word in this passage, his point, as usual, is still well taken:
Various studies have shown that greater copyright, patent and trademark protections tend to follow a period of great innovation, when the companies that did that innovation look to protect their position from upstarts elsewhere. In other words, it acts in the exact opposite manner as it’s supposed to. It’s not an incentive to innovate, but a tool used to stop competition and innovation from others. The situation in China is playing out exactly according to that formula. The country is growing into a bigger believer in intellectual property laws — but only for the sake of using it to protect against foreigners — which, we assume, is not what US companies wanted, but which they should have expected if they ever bothered to look at the actual history of stronger intellectual property laws.
Looking at history is not something “companies” or their lawyers tend to do at all. Anyway, I’m sure it’s a great learning experience, on the clock and all — a point Stan Abrams nails here.
It seems that Kunming in the southwest corner of China is the world capital of knock-off shops.
Apple recently found five counterfeit versions of its stores there after blogger BirdAbroad posted photos of one online – and now a fake Ikea has surfaced.
It’s called 11 Furniture and is a 10,000 square metre, four-storey replica that’s virtually identical to the Swedish-made version.
It copies Ikea’s blue-and-yellow colour scheme, mock-up rooms, miniature pencils, signage and even its rocking chair designs. Its cafeteria-style restaurant, complete with minimalist wooden tables, has a familiar look, although the menu features Chinese-style braised minced pork and eggs instead of Ikea’s Swedish meatballs and salmon.
With all this fakery, you might well say that rather than solve the endemic counterfeiting problem, China periodically merely … fakes reform. I was inclined to say just that this time around, too.
Earlier this week, however, I received this insightful article from Paul Jones, who argues, as his original subtitle urges, that “the fake Apple and IKEA stores in Kunming do not tell the whole story.” Paul’s law firm, Jones & Co. specializes in advising businesses about the protection and distribution of their goods and services in Canada and in the international marketplace.
This piece was originally published in Singapore’s Asiawide Franchise magazine, which is why it includes Chinese characters — which Paul requested that I retain. Because they are cool, I am happy to do so, and very happy that he allowed me to reprint his unique and insightful perspective on this issue.
A hundred years ago the American west, the original “Wild West,” was a land of opportunity with a reputation for lawlessness. The newspapers in the Eastern U.S. were full of stories of horror and adventure in the Wild West, and of men who made their fortune.
Now it is China’s turn. But instead of stories about Billy the Kid and gunfights in the OK Corral we have tales about fake APPLE and IKEA stores, cyberpiracy and the huge new market in China. Is branding in China only for the adventure-seekers? The Western press treatment of the fake APPLE and IKEA stores would have us think so.
China does not have the same degree of “market order” as the developed countries. But it is not a developed country. Although it now is the second largest economy in the world, when ranked on a nominal GDP per head basis it ranks about 98th. Basically it is a lower middle income country, ahead of Albania but behind Angola. And compared to other lower middle income countries, it has a pretty good legal system.
Despite the impression left by the fake APPLE and IKEA stories, China actually has intellectual property laws that meet international standards. The courts do enforce the laws and most Chinese courts in the more advanced regions have separate divisions for intellectual property cases. These divisions also handle Anti-Monopoly Law cases and franchise cases, and are considered the more sophisticated and elite divisions of the courts. The courts have made posting their decisions online a priority and tens of thousands of IP decisions are now available online, albeit in Chinese.
The fake APPLE and IKEA stores discovered in Kunming, the capital of Yunnan Province, were obviously in violation of the law. In the case of the fake APPLE store, although it sold real APPLE products, it used the APPLE trademarks that had been registered in China, which is a breach of the PRC Trademark Law. There have been court decisions in China on how much use a re-seller may make of the name and trademark of the manufacturer of the goods. Two of the more notable ones, involving PORSCHE (åŒ—äº¬æ³°èµ«é›…ç‰¹æ±½è½¦é”€å”®æœåŠ¡æœ‰é™å…¬å¸è¯‰ä¿æ—¶æ·è‚¡ä»½å…¬å¸(Porsche AG), åŒ—äº¬å¸‚é«˜çº§äººæ°‘æ³•é™¢ æ°‘äº‹åˆ¤å†³ä¹¦ ï¼ˆ2008ï¼‰é«˜æ°‘ç»ˆå—ç¬¬326å· (issued December 19, 2008) and available online here and HARLEY-DAVIDSON (H-Då¯†æ‰§å®‰å…¬å¸è¯‰åŒ—äº¬å“ˆé›·å•†è´¸ä¸å¿ƒ, åŒ—äº¬å¸‚ç¬¬äºŒä¸çº§äººæ°‘æ³•é™¢, ï¼ˆ2007ï¼‰äºŒä¸æ°‘åˆå—ç¬¬10758å· – November 25, 2008, available online here were decided in 2008. In the PORSCHE case, the dealer’s unauthorized use of the “PORSCHE” and the logo in its exhibition hall, on the automobiles in the exhibition hall, and in its brochure infringed the German manufacturer’s trade mark rights.
In addition both the fake APPLE store and the fake IKEA store were in breach of the PRC Anti-Unfair Competition Law (åä¸æ£å½“ç«žäº‰æ³• (“Fan Bu Zhengdang Jingzheng Fa”) adopted at the 3rd Session of the Standing Committee of the 8th National People’s Congress on September 2, 1993 and effective as of December 1, 1993, available online here. Article 5 provides that business operators shall not make :
unauthorized use of the name, packaging or trade dress unique to well-known products or use of a name, packaging or trade dress similar to that of well-known products, thereby causing confusion with the well-known products of another party and causing purchasers to mistake the products for such well-known products.
Questioned about [its] decision [to cooperate] at a conference in China, Yahoo’s co-founder, Jerry Yang, declared, “To be doing business in China, or anywhere else in the world, we have to comply with local law.” His response, according to The Post, “drew spirited applause from many in the mostly Chinese audience.”
In fact, it is not at all clear that Yahoo’s excuse is legitimate. American companies are not always allowed to deviate from U.S. practices when operating in foreign countries. Companies are forbidden, for example, to engage in bribery, even in countries where bribery is condoned. American companies have also been successfully sued in American courts for violating international human rights laws. More important, in 1989 Congress specifically forbade U.S. companies to sell “crime control and detection” equipment to the Chinese. At the time, that meant police gear, such as truncheons and handcuffs. Members of Congress have recently asked the Commerce Department to clarify whether that law covers the sale of filters or other repressive information technology. If the conclusion is that it doesn’t, maybe it’s time for Congress to have a look at that law again.
It’s a problem, though. We can legislate all we want; do you think that the rest of the world will be so particular? It will not. American companies will lose market share and influence, and the majority of Chinese will lose the benefit of contact with and influence of American companies. Yet on the other hand, we know that there must be moral limits on doing business in a way that furthers repression. In the now notorious case of IBM, for example, arguably IBM was the only company at that time that had the technology that the Third Reich was seeking. If indeed the company knew what it was being used for, it was surely immoral to sell it.
But what of a commodity? The only basis for not selling something such as Internet “content,” which is essentially packages (dressed up all sorts of ways) of data, is that you don’t want blood money in your purse. What Yahoo! does not provide can be more or less obtained somewhere else, even if not quite as cheaply or attractively. But there isn’t a dollar on earth that isn’t tainted in this way — where do you draw the line?
One thing it seems Yahoo! could, and probably should, do is keep as little confidential or incriminating information on its servers, or allowing opt-outs. And I would say that if indeed the Chinese forbid the provision of opt-outs or anonymity for users within its borders…. then Yahoo! is crossing that line if it stays.
The New York Times reports about an aspect of trademark enforcement which, among the disputes over rent-seeking and IP overreach, is often forgotten: The value of trademarks as a guarantor of quality in mission-critical, or life-and-death, situations.
The weak link is China:
Experts say counterfeiters are now moving to outlying areas of the country, where it is easier to evade regulation. The counterfeiters are also moving into food and agriculture, which are difficult to monitor because they involve small farmers and entrepreneurs.
Small-time entrepreneurs have played the same game over and over with other products, experts say, adding cheap substitute chemicals to toothpaste; using lower-grade materials to produce car parts, batteries and cellphones; and creating factories that specialize in counterfeit goods.
Last year, for instance, pirates were caught faking an entire company, setting up a “branch” of the NEC Corporation of Japan, including 18 factories and warehouses in China and Taiwan.
“We have to bear in mind they probably don’t think about the consequences at all,” said Steve Tsang, a China specialist who teaches at Oxford University. “They’re probably only thinking of making a fast buck.”
I’m not sure I understand the “we have to bear in mind” part. Adults have to think about the consequences of their actions. So do their governments.
The question of whether consumers are likely to be confused is the signal inquiry that determines if a trademark infringement claim is valid. This blog is about trademark law, copyright law, free speech (mostly as it relates to the Internet) and legal issues related to blogging.
THIS BLOG IS ONLY A BLOG, NOT LEGAL ADVICE. IT IS IN PART AN ADVERTISEMENT FOR LEGAL SERVICES BY ME, LAWYER RONALD D. COLEMAN, BUT I AM NOT YOUR LAWYER. YOU ARE NOT MY CLIENT. JUST WALK BESIDE ME AND BE MY FRIEND.
The term of art maven is used to mean "wise guy" here and is not meant to suggest that I have certified or other "expertise" in any particular field of legal practice. But try me.