IP Dragon Checks International Clothes Market in Beijing: "Waterbedding" Effect of Trademark Enforcement

Building of the International Clothes Market 

While all eyes are fixed on Silk Market in Beijing, IP Dragon focuses its attention to the International Clothes Market in Beijing to check whether counterfeit apparel and bags were on sale.

Let's first take a look at the notorious Silk Market. Tim Smith of Rouse Beijing sent his intern Dominic to take a look at Silk Market. He witnessed that the Beijing Administration for Industry and Commerce (AIC) had put a notice on the wall in Chinese that stated that merchants in Silk Street that were caught selling counterfeit items bearing a list of foreign brands, including Prada, Chanel, Burberry, Givenchy, Boss, Hermes, Miu Miu, North Face would be subject to administrative penalties. If the landlord knowingly permitted the sale of any such goods they were held contributorily liable and it was made clear that they be subject to administrative measures and criminal punishment. It was Dominic's observation that no counterfeit products of the trademarked brands that had filed lawsuits against the landlord, and whose names were mentioned on the notice were on display in Silk Street.

IP Dragon went to the International Clothes Market (金jin 开kai 俐li 德de 国guo 际ji 服fu 装
zhuang 市shi 场chang), which is located near the Beijing Zoo. That it is not hard to find counterfeit products at the second floor of the International Clothes Market is an understatement: counterfeit use of famous foreign brands is omnipresent. From adidas sweaters with hood for 20 RenMinBi (a little over 3 dollar) to North Face jackets for 80 Renminbi. Robe di Kappa, Calvin Klein (but then written as Calvin Kiein), Levi's, Björn Borg. I am not sure whether the design of the pattern on the adidas sweater was also copied. The counterfeit manufacturers also expand the model and product range of famous brands. For example a non-existent LV bag model and “Louis Vuitton” underwear. Text continues below.

The area was patrolled by a police officer. But it seemed not to be his priority. The landlord liability cases in 2005, 2006 and 2010 have shown that private companies can do something about the counterfeit problems at markets by suing the landlord (owner) of the market and the second-hand landlord (the market management company). Check the excellent presentation of Dr. James Luo, Managing Partner of Beijing's Xiang Kun Law Firm about the subject, here. The question is whether the problem just moves away from a place where it seems contained to other places, just like a waterbed. Are the counterfeit products of these active brands not sold in Silk Street, but via a plethora of other channels?

"Calvin Kiein"

"North Face" jackets for 80 RMB

"adidas" sweater for 20 RMB

Robe di Kappa

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Beijing's Silk Market

IP Komodo’s friend Tim Smith of Rouse was curious to know what was happening at the famous Beijing Silk Market. He asked his intern Dominic to take a look and here is what they found. Large public notices appear around the market issued by the Beijing Administration for Industry and Commerce, concerning counterfeit goods. The notices (in Chinese only) state that any merchants in Silk Street caught selling any items bearing any of a finite list of famous foreign brands (Prada, Chanel, Burberry, Givenchy, Boss, Hermes, Miu Miu, North Face etc.) would be subject to administrative penalties, as all such articles would be counterfeit. Further, the management of the Silk Street shopping plaza would, if it was shown to have knowingly permitted the sale of any such goods, be subject to administrative measures and criminal punishment. These are all brands which we believe were involved in civil litigation against the Silk Market management.

There are also large red banners in Chinese and English reading "protect intellectual property rights - be law-abiding vendors" and "embrace national brand - respect intellectual property right". There were red sign boards displayed above the aisles every few metres or so in English advising customers that if they had any concerns with the merchandise they had purchased they could contact the customer service desk, call a telephone hotline or send the details of their complaint to a dedicated email address.

But a look around revealed many articles from jackets and shirts to belts and watches bearing brands such as D&G, Giorgio Armani, Adidas, Nike, Ralph Lauren and Abercrombie, all on unabashed display. Few of the brands listed in the notice, however, were seen. Coincidentally these all appear to be companies which were plaintiffs in civil court actions against the market in recent years. The result of the cases is that those brands who went to court appear to have succeeded in proving secondary liability against the landlord, so he ensures their products are not sold there. But those who have not litigated do not appear to be in that position. Further pending litigation is seeking to widen the landlord's liability further.

Guest post by IP Komodo Dragon

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Sweet Irony: Is IP Dragon Liable For Hosting IPR Infringing AdWords?

Law is often walking a few steps behind the developments in society. I propose the term "law lag", whereby I apply the "cultural lag" concept developed by Thorstein Veblen to law. Of course intellectual property and cyberlaw are not immune for this. One important question that should be answered is to what degree are internet service providers liable for content that infringes intellectual property rights on their site. In Europe there have been cases of Louis Vuitton; Gucci; and Chanel against eBay. And of course in China there were the Baidu and Yahoo! China cases (both companies were sued by music companies at different times with different outcomes), see here.

Another category of cases that is of interest is about Adwords. September 22, 2009, the Advocat-General of the European Court of Justice gave his advice for a pre-judicial decision about whether a Google adwords (for example where Louis Vuitton products are promoted by other companies than authorised by Louis Vuitton or even selling fake Louis Vuitton products) can infringe Louis Vuitton's trademark, that was requested by the French Cour de cassation. In short the advice included: the links in AdWords used do not equal to trademarks (those could be infringed on the sites to which they lead), the AdWords do not prejudice the functions of the brand, guaranteeing quality of the goods or the communication- or the promotional function. Contributory infringement is not part of the legislation in most EU countries. However, if the trademark holder finds that the AdWords link to IPR infringing websites and requests Google to remove these links, Google will be held liable and the trademark holder can get damages. Google was not exempt from liability for hosting, because it is not a neutral information instrument, as is requested by article 14 EC directive 2000/31.

Why I am writing this, you might aks, since IP Dragon is about IPR in China and not EU law?

Well although most of the IPR infringing products, that are key in all of these cases, originate from China, I got the following email (September 24, 2009) that concerned yours truly:

"Dear Mr. Friedmann,
I am a regular reader of your blog, and I enjoy your articles about IP in China. That being said, I noticed today a peculiar Google Ad on your page: « Louis.V. Handbags 50% Off ».Intrigued, and you may guess why, I followed the link : http://www.handbagstime.com/?gclid=CMqR2oDQiZ0CFZQA4wodBG8J3A hum…. A quick look at the « contact us » page : http://www.yeslvgifts.com/contact_us.html It seems to confirm what I thought…What do you think ?
Cheers
Philippe"

This could happen, since IP Dragon writes frequently about fake, counterfeit and IPR infringing products and makes use of Google AdSense (which is the mirror of AdWords), which adapts its content to the subjects and some AdWord users choose these categories to promote their maybe dubious goods. If I would not block these AdWords after I was warned, in principle I would end up being liable. What do you think? Thanks, Philippe, for pointing me out the links.

Photo: Danny Friedmann

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IP Dragon Will Blog About Two Conferences in Hong Kong About IPR in China, Hong Kong and Europe

4 and 5 September the IP & IT: Theory and Practice conference is organised by:

• Law and Technology Centre Faculty of Law, University of Hong Kong (HKU)
• Dept of Computer Science, HKU
• School of Law, King's College London
• Faculty of Law, University of Zurich

Friday, 4 September

Panel I: Trademark Protection: Struggling Ahead.

Chair: Dr Zhao Yun, HKU

Welcome Professor Johannes Chan, SC, Dean, Faculty of Law, HKU

Protecting Brands in Europe - A Step too Far

Professor John Phillips, King's College London

Stay With Europe or Sever the Link - a Dilemma for Trademark Law in Hong Kong

Ms Alice Lee, HKU

Professor Michael Pendleton, CUHK; Emeritus Professor, Murdoch University (Australia)

Enforcement of IP Rights (Trademark) in the PRC

Ms Annie Tsoi, Partner, Deacons

Combating Counterfeit Products Online: Trademark Protection

Ms Vivian Wong, General Counsel, Asia Pacific, Chanel Ltd

Ms Pilar Woo, Senior Counsel - Intellectual Property, Chanel Ltd

Panel II: Challenges in Software Protection

Chair: Professor David Cheung, Head, Dept of Computer Science, HKU

IP Law and Software in Europe: the Struggle Continues

Dr Tanya Aplin, King's College London

Issues in Software Protection in Hong Kong

Dr Kevin Pun, HKU

Software Protection in WTO: Any Results at the End?

Professor Rolf H. Weber, University of Zurich

Software Copying and Adaption: A Case Study on Criminal Investigation

Dr KP Chow, HKU

Saturday, 5 September

Panel III: Policy, Strategy and Competition Practice

Chair: Dr Richard Wu, HKU

IP Strategy in China: from a Business Perspective

Dr Yahong Li, HKU

Competition Law Issues in Standard Setting Activities

Mr Thomas Cheng, HKU

IP as Tool of Competition Law

Professor Reto Hilty, University of Zurich; Director, Max Planck Institute for Intellectual Property

IP and Competition Law in Network Industries: A Practitioner's View

Mr Marc Waha, Partner in International and European Anti-Trust Practice, Norton Rose (Hong Kong)

Council Chamber, 8/F Meng Wah Complex, HKU

You can register online here. Email Ms Leung at fkleung@hku.hk to reserve a place.

Wednesday 9 and Thursday 10 September there is another interesting conference 'Asia-Pacific IP Forum' in Kowloon, see here and the programme here.

Hope to you see you there.

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Zen And the Art Of Intellectual Property in China

I love that title (remix of perfect book title: Zen and the Art of Motorcycle Maintenance, by Robert Pirsig, which is a remix of the title Zen in the Art of Archery, by Eugen Herrigel who brought Zen to Europe after WOII), and have repeated it like a mantra. All the time I meditated until there was an occasion to use the title. That time has come now that the universe has alligned to this mantra, at last.

The occasion is an interesting article in the Shanghai Daily (one page free the rest paid) and a fine adaptation of the article on Xinhua with the same title (shorter but free) "Commercialism or industrialization is path to truth of Zen" about the world famous Shaolin Monastery turning to intellectual property to spread its ideas.

In the article the author asks whether the ideals of Zen Buddhism can be reconciled with commercialism/industrialization. Good question, my first take would be yes, because "seemingly disjunct or opposing forces are interconnected and interdependent in the natural world, giving rise to each other in turn." Here I would like to limit myself to some words on the three pillars of the Shaolin Monastary: Zen, martial arts and medicines.

Martial arts

Shaolin monks know not only how to use their hands (Plum flower fist, eigh flower fist and don't forget Dragon technique) and feet as lethal weapons. They also know how to protect their intellectual property rights assertively, as early as 1997; see the 2005 IP Dragon article about it here.

Martial arts. The Shaolin monastery tried to protect the incredible Shaolin kungfu style as an intangible cultural heritage with Chinese characteristics already in 2002, which was granted in 2006; see the 2006 IP Dragon article about it, here.

Medicines

China is keen to protect traditional Chinese medicines. My perception of traditional Chinese medicines is that the protection is difficult, since these medicines are highly personalised to each patient. Then again the medicines can be standardised. In 2007 Jia Hepeng wrote for Intellectual Property Watch that China still has problems with protecting traditional Chinese medicines, because of the gap between the patent system and the protection efforts for traditional knowledge, read here.

Zen 禪

Looking at the history of Zen Buddhism one could see this set of beliefs as an example of the benefits and appeals of remix, avant la lettre. It all started with Bodhidharma, an Indian prince, who went into China (teaching a special transmission outside normal Buddhist scripture), where the school of thought radically changed. This procedure happened again when the ideas were taken to Korea, and Japan and also to Vietnam it changed very much because of the influence of the local population. The result is that we now have an Indian version of Zen called Dhyāna, a Vietnamese version called Thiền, a Chinese version called Chán, a Korean version called Seon, and a Japanese version that obviously has become most popular in the West, called Zen and which is often used as a denominator of all these styles. I guess Zen is used in a dilutionary way for a long time.

I am doubtful if we would have such a wealth of branches in Zen Buddhism if the manifestations of Buddhism were protected and enforced by intellectual property rights after the time of the adventurous Bodhidharma, who went north to spread his ideas (Bodhidharma was not really infringing upon the intellectual property rights of Buddhism, even if there were any existent at the time, if he taught a special transmission outside scripture, as is said about him). Is remix the way to enlightenment?

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3 of Baker McKenzie's Cases Elected By Supreme People's Court As 2006 Top 10 IPR Cases

Three of the ' Top ten cases' in 2006 elected by the Supreme People's Court concerns cases won by Baker & McKenzie:

• Sony Corporation versus Guangzhou Top Power Electronics Co., Ltd.;
• Starbucks versus Shanghai Xinbake Coffee Shop Ltd;
• Prada, Chanel, Gucci, Burberry and Louis Vuitton versus Beijing Xiushui Haosen Clothing Market.

IP Dragon congratulates Mr. Joseph Simone and his colleages at Baker & McKenzie with their victories.

Read more about these cases on the site of Baker & McKenzie here. The China Daily mentions these cases were foreign companies won to assert that "everone's equal on IPR", read here.

UPDATE: Top Tens also popular with SAIC and GAC

Not only the Supreme People's Court has brought together a top ten of IPR cases, so did the State Administration for Industry and Commerce (SAIC): "one case involved two Beijing companies that fraudulently took application fees from firms wanting to be considered as the "most valuable brand names" by the organizing committee of the 2008 Beijing Olympics. Their scam has been listed among the top 10 "typical IPR violation cases" in 2006." Read the Xinhua article via People's Daily Online here.

The 'Top Ten Cases of IPR Protection by General Administration of Customs (GAC)' of 2006 were:

1. Huangpu Customs unearthed counterfeit old cell phones of Motorola and Philips;
2. Xiamen Customs investigated a large number of counterfeit LINING clothes;
3. Shenzhen Customs uncovered counterfeit "Marlboro" cigarettes;
4. Beijing Customs found out fake "Pfizer" drugs in airport clearance;
5. Changsha Customs investigated batteries counterfeiting the trademark "DURATA";
6. Qingdao Customs captured fake "SHTEX" (P/C) Polyester/Cotton dyeing fabric for export;
7. Shanghai Customs confiscated several continual exports of fake "DIAMOND" inner tubes for bicycle;
8. Hangzhou Customs cracked down on polo shirts infringing the trademark "FIFA";
9. Ningbo Customs captured fake "TIGER HEAD" dry cells;
10. Tianjin Customs seized 55,000 counterfeit goods.

Read more about it here.

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