85 percent of all products seized at EU border originate from China

85 percent?!.
If only the other IP infringing countries could sue China
for anti-competitive behaviour...

For the statistically inclined, Commisioner Algirdas Šemeta, responsible for customs of the European Union, shared some results about the seizures at the EU border. According to the Lithuanian:

-  "Overal, China continued to be the main source country from where goods suspected of infringing an

IPR were sent to the EU (85% of the total amount of articles)."

- Hong Kong was the main source for memory cards. 

Read the complete 33-page Report on EU customs enforcement of intellectual property rights, results at the EU border 2010 here. 

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Trends Counterfeit Trademarks/Infringed Patents From China: Smaller Scale, Bigger Risks

Two trends can be abstracted from the 2010 report of the Austrian Federal Finance Ministry to the National Council about the application of Council Regulation (EC) 1383/2003 of July, 22 2003, concerning customs action against goods suspected of infringing certain intellectual property rights and measures against goods found to have infringed such rights. According to the report these trends are in line with the other countries of the European Union.

Unlike in the movie
Matrix, there is no choice
between a blue or red pill.

Only blue pills.
But which one is real?

• Trend 1. From containers and trucks to postal packages via internet

The Austrian customs administration in 2010 seized 2,803 cases after it implemented the EC Counterfeiting Regulation 2004, these consisted out of 292,606 articles. This resulted in (because sometimes a consignment involves more than one person) 4,038 prosecutions. The products represent a value, if they were genuine goods, of € 6,765,057. This is much less than in 2009, when the amount was 16 million euro. So smaller amounts representing lesser value per consignment. These were ordered via the internet and send via the postal service.

• Trend 2. From counterfeit luxury goods to counterfeit daily products with lower original prices
and higher risks

Mass consumer products such as food, cosmetics and hygiene products, auto spare parts, toys and equipment, with all inherent health and safety related risks. Fake drugs were mainly lifestyle drugs such as sexual enhancers, diet pills and hair growth preparations. These trends together are quite a challenge for customs the world over. To check each and every postal package is hardly feasible. If customs in cooperation with industry can find an automised way to authenticate goods, it could decrease risks.

The report says that the EU-China customs action plan, which intensifies the contact between the respective customs, will be extended to 2012. The action plan was a pilot project and will now probably become institutionalised.
For those who can read German, read the Piracy report 2010 of the Federal finance ministry of Austria (in German): Produktpirateriebericht 2010 des Bundesministers für Finanzen (III-226 d.B.) , April 1, 2011.

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Global Review Counterfeit and Piracy 2008: "Production Infringing Goods Is Still Increasing"

The World Customs Organization (WCO) has launched its annual report for 2008, read the Global Review on Counterfeit and Piracy here.

Kunio Mikuriya, secretary general of WCO wrote:

"The results reported by Members during 2008 for combating counterfeiting and piracy are the best ever published. While we can commend the exemplary work doneby Customs administrations and a real effort by Members world-wide to eradicate these fraudulent activities, the statistics for 2008 are also noteworthy for another reason: the production of goods which infringe intellectual property rights is still increasing, thereby posing an ever-greater threat to the health and safety of consumers on every continent, and to artistic and industrial design in countries around the world."

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EU Customs Report 2008 About IPR Enforcement Activities not IPR Infringements from China

Yesterday the European Commission Directorate-General Taxation and Customs Union (DG TAXUD) published the 'Report on EU Customs Enforcement of Intellectual Property Rights. Results at the European Border 2008'.

On page 9 we find a crucial alinea, which disclaims the scope the report:

"Although the overall amount of IPR infringing goods entering or leaving the EU cannot be

ascertained from these figures, or whether the problem is growing, the figures do show that IPR

enforcement continues to be a priority for customs authorities in the EU."

Of course it would be interesting to know whether the IPR infringements that originate from China were growing or decreasing. That was the very reason why I devised theEnforcement/Infringement Ratio, see here.

The report states that 80 percent of the cases concerned seizures that were requested by the right holder and that 20 percent of the cases were done on the initiative of customs (ex-officio). So the number of cases and articles detained and the percentages of the countries of origin and provenance were all these products come from are interesting, but only show the perception of the right holders and customs of the goods that are suspected of infringing IPRs. A few times in the report the distinction is not made between seized goods that may or may not infringe IPRs and goods that actually do infringe IPRs.

Read the report here.

Thank you Rogier Creemers for pointing out to me the report.

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81.5 percent of Counterfeit Products in Japan originates from China

The Japan Times is running (and probably translated) Kyodo News' article which is quoting Japan's Finance Ministry saying that 81.5 percent of counterfeit products come from China.

• Japan's 9 customs houses handled 26,415 cases of fake imported goods in 2008, up 16.6 percent from 2007 and the seventh consecutive record;
• Cases linked to China (excluding Hong Kong), grew 33.6 percent from the previous year to 21,529;
• compared with 2004 the number of counterfeit itmes from China expanded about sixfold in 2008.

Read The Japan's Times article here.

In the video below you can see how the seized counterfeit goods, including fake Louis Vuitton bags, are being destroyed by Japanese customs (in the text under the moving images you can see the Kanji, which are the Chinese characters the Japanese also use: 中国 for China, plus 82 percent, which refers to the rounded up 81.5 percent of all seized counterfeits goods by Japanese customs that originate from China).

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US Customs Seizure Statistics 2008: "China number one, India number two and Hong Kong number three counterfeit producer"

The U.S. Customs and Border Protection and Immigration and U.S. Customs Enforcement divisions of Homeland Security gives some statistics about the numbers, characteristics and origins of counterfeit goods seized in the U.S. in 2008.
IPR seizures of goods from China rose 40 % by value in 2008. Footwear from China accounts for almost 96% of all IPR infringing footwear. "In 2008, China, India, and Hong Kong, the top three trading partners for IPR seizures overall, accounted for 94% of all IPR seizures of products posing potential safety or security risks." Read more about on the CBP.gov site here.

IPR seizures counterfeit products originating from:

• 1. China $ 221.7 million (81 %);
• 2. India $ 16.2 million (6 %);
• 3. Hong Kong $ 13.4 million (5 %);
• 4. Taiwan $ 2.6 million (1 %);
• 5. South Korea $1 million (<1%).

Read more statistics here.

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Comparison Between The IPR in China Relevant Provisions Of the Foreign Trade Law 2004 and 1994

I have just added links to the Foreign Trade Law of the People's Republic of China 1994 and 2004 on IP Dragon's blogroll ( under "IPR in China Laws and Regulations").

The IPR relevant article 6 Foreign Trade Law 1994 is almost identical to article 6 Foreign Trade Law 2004 (most favoured nation treatment and national treatment because of articles 4 and 4 TRIPs, respectively, before 2001 because of article 5 (1) Berne and aricle 3 Paris Conventions)

Article 14 Foreign Trade Law 1994 is similar to article 13 Foreign Trade Law 2004 (the departments that get information from the foreign trade operaters should keep business secrets to themselves, see pages 15-16 Thesis).

Article 27 (2) Foreign Trade Law of 1994 prohibits explicitly infringing upon intellectual property rights and article 27 (5) Foreign Trade Law 1994 "other acts violating laws or administrative rules and regulations" can also be used to base a prohibition against IPR infringement.

It can be concluded from article 14 Foreign Trade Law of 2004 that import and export of goods is not free if law or administrative regulation provides otherwise.
Different from Foreign Trade Law 1994 is that Chapter V of the 2004 amendment is dedicated to Foreign-trade-related Intellectual Property Protection. Article 29 Foreign Trade Law 2004 includes: "Where any of the import goods violates any intellectual property right and, at the same time, endangers the foreign trade order, the foreign trade department of the State Council may take such measures as prohibiting the import of the relevant goods that the infringer has produced or sold for a certain period of time." No word about export goods that violate IPRs. This is in compliance with TRIPs, since article 51 TRIPs only obligates that WTO members shall adopt procedures to enable a right holder that has valid grounds that counterfeit trademark or pirated copyright goods import may take place, to lodge an application. Article 2 Regulations of the People's Republic of China on Customs Protection of IPRs 2003, however, goes beyond this obligation and applies to both import and export.

Article 30 Foreign Trade Law 2004 is to give the foreign trade department of the State Council the legitimacy to take measures in case of an IP right holder that hinders the licensee from questioning the validity of the IPR involved in the license agreements, conducting forced package license or providing exclusive selling back conditions in the license agreement, etc.

Picture: threecee

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First Coordinated EU Customs Campaign Catches 34 Million Counterfeit Medicines

Reuters reports that the customs officials of the 27 EU members worked together to intercept counterfeit antibiotics, anti-cancer, anti-malaria and anti-cholesterol medicines, painkillers and Viagra.

"The main countries of origin for the illegal products were China, India and Pakistan, a [European] Commission official said."

Read the Reuters article here.

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Who Won The IPR Dispute At The WTO Between China and the US?

Remember April 10, 2007, when the US brought claims against China at the World Trade Organisation (WTO) for allegedly violating the TRIPs Agreement because of unsufficient IPR enforcement (DS 362) and lack of market access (DS 363)? Read here.

Mr Jonathan Lynn reports about DS 362 for Reuters that sources at the WTO have said that China won the dispute on two counts against one brought against it by the US for its allegedly ineffective enforcement of intellectual property rights.

The interim ruling by the WTO Dispute Pannel about the US claims was as follows:

• China has not done enough to tackle counterfeiting and piracy on a commercial scale, was acknowledged by the WTO Dispute Panel;
• China's criminal code does not protect IP sufficiently, was rejected by the WTO Dispute Panel;
• Chinese customs rules allow goods that infringe IP rights to be sold rather than destroyed, the WTO Dispute Panel found on some points that the TRIPs Agreement did not apply, and on other points that the US had not established that the Chinese rules infringed the TRIPs Agreement, so it rejected this claim as well.

Read Mr Lynn's article here.

However, Reuters also reports about an anonymous US official that said exactly the opposite, read here.

So who is right? At this moment the report remains confidential. You can, however, predict who is going to win by reading the following:

Paper Tiger or Roaring Dragon, China's TRIPs Implementations and Enforcement.

The final ruling is expected in November. To be continued ...

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How to Prevent and Act Upon Intellectual Property Rights Infringements in China

I wrote an article for Duncan Bucknell Company, the Australian company specialised in Global IP Strategy about how to protect and enforce your IPR in China. Read it on the site of Duncan Bucknell Company or below:

By Danny Friedmann

Intellectual property infringements in China are prevalent and a challenge for every company in every industry. If companies that do business in China take adequate precautionary measures, and at the same time anticipate infringements and be prepared to aggressively enforce their rights, they can substantially minimise their risks and damages. Below you will find an overview of the ways to protect and enforce intellectual property rights infringements.

Be prepared

Be aware that your intellectual property is a high risk factor in China.
Be committed in the protection and enforcement of your most valuable property: your intellectual property rights.
Budget enough financial means to protect and enforce your intellectual property rights.
Raise the awareness in your whole organisation about the risks of intellectual property infringements in China.

Do your homework

One of the clichés about doing business in China is the importance of guanxi (relationships). Indeed, guanxi are very important in China, however, one should by no means overlook the phase before one enters into a relationship.
Do a due diligence research of your potential business partners. Were they in any way involved in an intellectual property infringement before?
Demand that potential business partners sign an confidentiality agreement before you hand over any sensitive business information.
Set up a contract that includes all aspects of intellectual property rights. Who owns what intellectual property right? In what way can the business partner use the intellectual property rights? What is the time frame he can use these? Spell out that you can visit the plant unexpectedly to control how your intellectual property is used. If a potential business partner refuses to sign the contract, find another business partner.

No registration equals no right

If you do not register your intellectual property rights (with the exception of copyrights) in China, you are unprotected and it makes it near impossible to stop counterfeiters.
Although with copyright there is no registration needed, according to the 'no formalities provision' of the Berne Convention to which China is a signatory, it can be very helpful to establish prima face evidence, for example ownership. So do register your copyright at the
National Copyright Authority of China. Register your trade marks in Chinese characters too. If you want to register the phonetic equivalence of your Western name, it is possible you need different sets of Chinese characters, because Chinese characters are pronounced differently in different Chinese dialects, such as Cantonese. Make sure the Chinese characters have a laudatory meaning appropriate for your brand.
Register your patents, utility models and design rights. In China designs are, together with inventions and utility models, part of the so called inventions-creations, which are protected by the Patent Law of China..

To trust is nice, to control better

Monitor the use of your intellectual property in the plant frequently.
Know who has access to your plant, to your intellectual property rights.
Use and combine several anti-counterfeit technologies.
Monitor whether there are intellectual property infringements in your market.
If there are counterfeit products, track the origin, gather the evidence.

Be ready to enforce

In case of an intellectual property infringement act in an optimal way. Different situations ask for different enforcement routes. Timing is important too. Strike the infringers at a moment when they have added maximum value to their infringed products, because of packaging and transport, in order to hit them hardest financially.

Administrative enforcement route

In China the administrative enforcement route is the most commonly used. The Administration for Industry and Commerce (AIC) enforces trade marks, the State Intellectual property Organisation (SIPO) enforces patents, utility models and design rights and the National Copyright Administration of China (NCAC) enforces copyrights. Apart from the enforcement of patents, SIPO is responsible for the patent work throughout the country. At the national level SIPO is also responsible for the examination of foreign and domestic patents (Patent Re-examination Board). The Trademark Office (TMO) is responsible for the registration of trade marks and the Trademark Review and Adjudication Board (TRAB), which deals with trade mark disputes, are both under the control of AIC.
The advantage of the administrative enforcement route is that it is an easy and a cost efficient way. The disadvantage is that no damages are awarded and that the punishment is often limited to the confiscation of the infringing goods and/or a fine for the infringers. And often the infringers use another company as vehicle to continue their infringements.
Customs is one of the underestimated routes of enforcement. The Chinese customs authorities are willing and able to cooperate with intellectual property right holders. So instruct them on how to recognise genuine from infringing goods and how to track down infringing cargo.
A lesser known way for trade mark and design rights holders is to base their case on infringements of the Product Quality Law at the Administration of Quality Supervision Inspection and Quarantine.

Civil enforcement route

If the complexity of the infringement is high and the scale serious, then going to the People’s courts is the preferred route of enforcement.
The advantage is that the People’s courts can award damages. Disadvantage is that this route is often time-consuming and costly.
Legal protectionism can be a problem outside the big cities, such as Beijing, Shanghai and Shenzhen, which makes forum shopping of crucial importance.

Criminal enforcement route

Alot is expected from the criminal enforcement route in China, because of the alleged deterrent effect. The advantage is that you can harm infringers by locking them up or punish them with serious fines. However, the disadvantage is that there are relatively high evidentiary thresholds before alleged criminal infringers are prosecuted.

Institutions that regularly give information about IPR in China

Quality Brands Protection Committee (QBPC) http://www.qbpc.org.cn/, lobby group of 180 multinational companies that want to improve the protection and enforcement of intellectual property in China.
Business Action to Stop Counterfeiting and Piracy (BASCP) http://www.iccwbo.org/bascap/id1127/index.html address intellectual property rights issues and petition for greater commitments by local, national and international officials in the enforcement and protection of intellectual property rights.
Intellectual Property Owners Association http://www.ipo.org//AM/Template.cfm?Section=Home trade association for owners of patents, trademarks, copyrights and trade secrets.
International Trademark Association http://www.inta.org/ association of more than 5,500 trade mark owners.
American Chamber of Commerce in China http://www.amcham-china.org.cn/amcham/home/index.php.
European Union Chamber of Commerce in China http://www.euccc.com.cn.
British Chamber of Commerce in China http://www.britcham.org/index.php.
Australian Chamber of Commerce in China http://austcham.org/index.html.
Websites about IPR in China
Intellectual Property Protection in China http://english.ipr.gov.cn/en/index.shtml, official website about the activities of the Chinese government to improve protection and enforcement of intellectual property in China.
IP Dragon http://ipdragon.blogspot.com, weblog by Danny Friedmann. Gathering, commenting on and sharing information about intellectual property to make it more transparent, since 2005.
China Law Blog http://www.chinalawblog.com weblog by Daniel Harris has often interesting articles about IPR in China.
China Hearsay http://www.chinahearsay.com weblog by Stan Abrams, has often interesting posts about IPR in China.

Conclusion

Prevent as much infringement as possible, protect your intellectual property rights assertive, anticipate that infringements will still happen, enforce your rights aggressively. In other words build a fierce reputation that no one can infringe the intellectual property rights of your company without feeling the consequences.

Danny Friedmann

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Mr László Kovács: "Customs in 2008, a real test for EU-China trade relations"

Mr Lászlo Kovács, European Commissioner for Taxation and Customs Union wrote an interesting article to commemorate the 40th anniversary of the Customs Union. Is there something to celebrate you might ask yourself?

Well at least the Commissioner is belligerent to fight counterfeit and pirated products:

"The growing trend in counterfeiting in some health-threatening sectors like foodstuffs, pharmaceuticals or spare parts is worrying. The EU is a target market of fake products, and China the main source of production, with almost 80 % of all articles seized by EU customs coming from there. Chinese people and companies are equally affected by this illegal industry. But we can do something about this. The EU is committed to strengthen customs cooperation with China in the fight against counterfeiting and the enforcement of IPR. We want to see concerete results in the shape of less counterfeited products on our markets. I am confident that this year, the EU and China can agree on an ambitious strategy to effectively reduce trade in counterfeit goods."

If the EU wants to see concrete results, a plaudible goal, it should consider applying the enforcement/infringement ratio, as IP Dragon suggested here and in its thesis, see here.

Read Mr Kovács article he wrote for the China Daily here.

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China and EU Customs Unveiled Plans to Share Information

The EU and China unveiled plans for an intelligence network to share information among ports to crackdown on counterfeiting. Source WIPO Magazine (February 2008, no.1).

"Despite the increased efforts of the Chinese authorities to crackdown on counterfeiting, EU Customs Commissioner Laszlo Kovacs said that China is currently the main source of counterfeit goods seized in European ports. The intelligence network will help to tighten enforcement, resulting in greater controls in both European and Chinese ports."

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Customs Auction Notice To Prevent Infringing Goods Reentering Channels of Commerce

Just before the US made two formal complaints against China at the WTO on April 10, 2007 (the WTO cases are: China – Measures affecting the protection and enforcement of intellectual property rights, Request for Consultations by the United States, WT/DS362/1 and China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products - Request for Consultations by the United States, WT/DS363/1), China came out with the following measures, probably to avert a WTO dispute settlement case:

• A new judicial interpretation that lowers the numerical thresholds and increases the scope of crime by clarifying the term “reproduction and distribution” in Article 217 Criminal Law, to mean “reproduction and/or distribution” Respectively, articles 1 and 2 Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues in the Concrete Application of the Law in Handling Criminal Cases of Intellectual Property Infringement, adopted at the 1422nd meeting of the Adjudication Commission of the Supreme People’s Court and 75th meeting of the Supreme People’s Procuratorate, April 4, 2007; effective April 5, 2007, draft version, see here.
  
• A comprehensive new action plan on IPR protection. These measures were possibly promulgated in an attempt to avert formal WTO complaints by the US. Action Plan on IPR protection 2007, April 6, 2007, see here.

However, China promulgated another measure IP Dragon had overlooked, hereby meeting those wishes that asked China to amend its ways in respect to infringing products that are often not destroyed in China and find their way back into the channels of commerce, which conflicts with article 46 TRIPs.

Competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles as set out in article 46 TRIPs, thus to dispose the infringing goods outside the channels of commerce, without compensation to the infringer. Article 30 (1) Implementation Regulation 2004 states, however, that customs are permitted to donate infringing goods to public welfare organizations or the right holder can purchase the goods. According to article 30 (2) Implementation Regulation 2004 if the goods cannot disposed of in a way they can be used by a public welfare organization, they shall be auctioned after eliminating the infringing character of the goods. The income of the auction goes to the state treasury. Article 30 (3) Implementation Regulation 2004 states that only if donating to a charitable organisation and auctioning is not possible, the infringing products shall be destroyed. The equivalent of article 30 Customs Implementation Regulation 2004 could already be found in article 27 Regulations 2003.

However,

• April 2, 2007, the General Administration of Customs issued Several Issues on the Auction of Confiscated Goods that Infringe Intellectual Property Rights [Customs Auction Notice] (2007 – No. 16) which became effective the same day (which is not so usual, and gives rise to the thought that China was in a hurry).

I found the Customs auction notice as published at the site of Managing IP in an article of Emma Barraclough, called The end of the beginning, see here, which gives an overview of the events that lead to the WTO case against China. The customs notice was translated by Baker & McKenzie. I have looked for their translation at their own site but have not found it yet. If you have seen it, please let me know, so I can link to it in the laws & regulations part of my blogroll. To let you see which customs auction notice I mean, here is it, thanks to MIP and Baker & McKenzie.

"Pursuant to Article 27 [Regulations 2003], if confiscated goods that infringe upon intellectual property rights ("infringing goods") cannot be used for public welfare projects and the holder of the intellectual property rights has no interest in purchasing the same, Customs may auction off the goods in accordance with law after removing their infringing features. In order to regulate the auction of infringing goods by Customs, to increase transparency in law enforcement by Customs and protect the right of intellectual property owners to information, relevant issues are addressed as follows:

Article 1. [Customs auction notice] When the Customs auction confiscated infringing goods, the infringing features of such goods and their packages should be removed completely, including removal of trade marks and other infringing features that infringe upon copyright, patents and other intellectual property rights. Where the infringing features of goods cannot be removed completely, such goods should be destroyed and be prohibited from being auctioned.

Article 2. [Customs auction notice] The opinions of the intellectual property owners should be sought by Customs before auctions."

All three measures might help improve IP enforcement in China, but they have not averted a WTO dispute settlement case against China.

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Guyana's Court Granted Injunction Against Alleged Counterfeit Lux Soaps from Guangdong

Stabroek News of Guyana reports in a very detailled way about how Unilever sought and was granted judicial relief via its law firm Cameron & Shepherd against an importer of a container of alleged counterfeit soap marked Lux from a port in Guangdong using the customs enforcement route.

Read this excellent article here.

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The Fifty Days Time-limit in China's Customs Regulations Is Compliant With Article 55 TRIPs

Article 55 TRIPs [1] is the border protection equivalent of article 50 (6) TRIPs. Article 55 TRIPs states that after 10 days the goods in detention shall be released if the applicant was noticed of the suspension and the customs have not been informed that another party than the defendant, has been initiating proceedings leading to a decision on the merits of the case; or that the court has taken provisional measures prolonging the suspension of the release of the goods. In appropriate cases, this time-limit may be extended by another 10 working days. So the duration of suspension has a limit of a maximum of twenty working days.

China’s customs regulations prescribe that customs shall release the goods, within 20 working days, if the right holder has applied for this suspension, pursuant to article 15 (1) Regulations 2003 [2], and the court has not been informed that another party than the defendant has initiated proceedings leading to a decision on the merits of the case, pursuant to article 24 (1) Regulations 2003 [3]. So this is compliant to article 55 TRIPs.

Article 20 Regulations 2003 [4] states that the goods that are suspended upon the right holder’s request shall be released within thirty days if they have not been found to infringe intellectual property rights. It is TRIPs compliant, because it is implied here that the court has been informed that another party than the defendant has initiated proceedings leading to a decision on the merits of the case.

First I thought that the fifty day time-limit of article 55 TRIPs was not compliant with TRIPs, but I was astray:

Article 50 (6) TRIPs which states that after provisional measures were taken proceedings leading to a decision on the merits of the case shall be initiated within 30 days (in fact 31 days), followed by twenty days before the party other than the defendant has initiated proceedings leading to a decision on the merits of the case, before customs will release the suspended goods if no infringement was found.



Notes:
[1] Article 55 TRIPs explicitly refers to other conditions for importation or exportation, making it applicable to export.
[2] Article 15 Regulations 2003: Where the right owner applies to detain the suspected goods in accordance with Article 13 of these Regulations and submit the guarantee according to Article 14 of these Regulations, Customs shall detain the suspected goods, notify the right owner in writing and send the detention receipt to the consignees or consignors.
[3] Article 24 (1) Regulations where Customs have detained the suspected goods according to Article 15 of these Regulations and have not received a notice of assistance on execution from the People's Court within twenty business days from the date of detention;
[4] Article 20 Regulations 2003: Where the right owner requests customs to detain the suspected goods after customs find the imported or exported goods infringing recorded intellectual property right and notify the right owner, the customs shall initiate the investigation and confirmation on the goods whether to infringe intellectual property rights or not within thirty business days from the date of their detention. Where it cannot be confirmed, customs shall notify the right owner in writing immediately.

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Jail Time For Exporters Of Phones That Are Genuine Inside, Counterfeited Outside

Interfax China reports about four people that were found guilty in October by a people's court in Guangzhou of infringing trademark rights because they were exporting counterfeit phones. Zhang and Xu were sentenced to nine months and two persons both named Lin were sentenced eight months in prison

The inside of the phones consisted out of second hand components and the outside were new shells branded as Motorola or Philips.

Customs of Huangpu, a city 15 kilometers from Guangzhou, "captured 17,893 counterfeit Motorola and Philips phones at the port and the factories valued at approximately RMB 730,000 ($93,590), along with a large number of second-hand mobile phones, phone components and tools used in the reassembly. In April, the Huangpu Customs transferred the captured phones to the local police department and provided the police the exporting company's customs clearance record since December 2004."

After much criticism China committed itself to transferring more cases from customs or other administrative authorities to the Public Security Bureau (police) or the people's procuratorate for criminal enforcement.

Read the Infofax China article here.

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