Innovative Enforcement of Trademark and Copyright Infringement by LVMH

What to do when the trademarks and copyrights of your luxury products are infringed by Chinese companies that sell these products online to, for example, U.S. consumers. You can go after the source: using Chinese customs, the administrative, criminal or litigation routes. Another innovative way is to go also after the U.S. company that leases packages of server space, bandwidth and IP addresses to the infringing companies for contributory trademark and copyright infringement.


Global Challenge, Local Solutions

Exactly this is what Louis Vuitton Malletier did and confirms once again that this company is one of the most innovative companies in regard to the protection and enforcement of its intellectual property rights. The company takes it zero-tolerance principle and self-sustained protection/enforcement system serious.

Louis Vuitton versus Akanoc Solutions United States Court of Appeals for the Ninth Circuit, filed September 9, 2011, see here. Louis Vuitton Malletier was the plaintiff, and Managed Solutions Group (MSG), Akanoc Solutions and Steven Chen the defendants (San Jose, California, U.S.).

The Ninth Circuit instructs the District Court to award damages of 10,500,000 US dollar for contributory trademark infringement and 300,000 US dollar for contributory copyright infringement, for which Akanoc and Chen shall be jointly and severally liable.

One can question the validity of the decision by the Ninth Circuit to not instruct the District Court to order Managed Solutions Group to pay damages too, because of an alleged lack of "substantial evidence" to the jury. The Ninth Circuit: "We agree with the district court that no evidence presented at trial showed that MSG operated the servers that hosted the direct infringers’ websites. Even assuming that the direct infringers could be construed as MSG’s customers, Louis Vuitton presented no evidence that MSG had reasonable means to withdraw services to the direct infringers."

However, after Louis Vuitton discovered that the websites were using IP addresses assigned to defendants MSG and Akanoc, I am sure that they both received Notices of Infringements. So both had an actual or constructive knowledge about the infringements. Plus Chen managed both MSG and Akanoc. According to the defendants, MSG leased servers, bandwidth, and some IP addresses to Akanoc. So the means to withdraw seem self-evident, because MSG could simply have severed the bandwidth or stopped the functionality of the server, once it knew what was happening on the severs it was leasing to Akanoc.

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The lizard's weekly China news roundup

IP Komodo hears righteous indignation expressed by bosses at Beijing's famous Silk Market on Wednesday at a United States trade report that accuses the mall of being "notorious" for fake goods. A Ms Hu stated to the press “I don't care about what any other media is saying about (the Silk Market). We're doing our best to fight against fake goods." 80 percent of Silk Market patrons are tourists. "The guilt for fake goods is shared between the buyer and the seller," she added. During a crackdown in October 2009, authorities found copies of Gucci, Coach and Adidas ready available and the raid led to the arrest of the mall's then-manager Wang Zili, who was charged with allowing the sale of fake goods and taking bribes. IP Komodo would like to hear from anyone who has visited the market in 2011.

Meanwhile in Guangzhou the sale of counterfeit products thrives: China-Africa Commercial Plaza has been required to close after authorities investigated and seized more than 7,600 products, including watches, garments, bags, sneakers, perfumes, cell phones, notebook computers and small household appliances - fake brand names included Rolex, Rado, Citizen, Swatch, LV, Gucci, Hugo Boss, Dior, Polo, Nokia, Sony, Burberry and Apple. Investigators looked into the sales of the counterfeit products on Feb 20 and 21. Fourteen stores in the plaza were believed to have infringed IPRs.

China's food and drug watchdog Tuesday vowed a "ruthless" crackdown on the production and sales of substandard health foods and cosmetics this year. Bian Zhenjia, deputy director of the State Food and Drug Administration said at a national conference that despite stepped-up supervision on the sector last year, the country's health food and cosmetics markets still faced many quality problems. IP Komodo notes a similar problem in his home in Indonesia where echoing the problem in China a couple of years back, a tainted milk scandal has Indonesian consumers panicking over food safety.

WIPO will be delighted at this: Chinese lawmakers on Wednesday began reviewing a revised draft law on the country's intangible cultural heritage (or to give it an acronym ICH). The draft law was submitted to the Standing Committee of the National People's Congress, China's top legislature, for its third reading. This is the first attempt by China to enact a law that safeguards heritage of historical, literary, artistic or scientific value. IP Komodo senses endless seminar opportunities.

Guest post by IP Komodo Dragon

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What Is the Superlative of Contributory Liability?... Local State Supervision Liability?

Managing IP magazine, had a link to an interesting China Daily article, see here in which a State Administration for Radio Film and Television (SARFT) official was quoted as saying that it is "working on the establishment of an internet audio-visual programs industry association (..)". The application has been submitted and it now waiting approval to the Ministry of Civil Affairs.

Also interesting in the article is that the government intensified supervision over major internet enterprises, a precautionary move to stop piracy spreading. "In 2009, the number websites being supervised by local copyright authorities, reached 3,029. They include Taobao.com, Baidu, Sohu and Youku."

That means that if infringement still took place in that period, it was under local copyright supervision.

Taobao is China's e-commerce platform. And where eBay is sued by trademark holders in the U.S. (Tiffany), France (Hermès and LVHM) and Belgium (Lancôme), in China Taobao was sued for example by Puma; read Lee, Won Hee Elaine. 'Online Auction Sites and Inconsistencies: A Case Study of France, China, and the United States.' American University Intellectual Property Brief, Spring 2010, 50-57, here.

Jesse London (who is the managing editor of Cornell Journal of International Law), wrote an interesting note on China's Approaches to Intellectual Property Infringement on the Internet for the Internet Journal of Rutgers School of Law, volume 38, 2010-2011, read here. Mr London is comparing the IFPI cases against Baidu and Yahoo China and comes to the conclusion that the degree of good faith of the online service provider is crucial, but so is the degree of reasonableness of the demands of the trademark holder by insisting in the measures against infringement.

Youku (the Chinese equivalent of YouTube) had a lot of pirated Hollywood movies. But I checked a few times and they indeed seem to have cleaned up a lot of copyright piracy.

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FEVS: "Mainland China Principal Counterfeiter Wine"

Dominique Schroeder has a good article about counterfeit wine for Agence France-Presse published in the South China Morning Post today.

"The mainland is "the principal counterfeiter", according to Renaud Gaillard, deputy director of the French export trade body, Federation des Exportateurs de Vins et Spriritueux de France (FEVS)."

However, Schroeder points out that unlike luxury goods groups such as LVMH, most vintners do not have the financial resources to fight fake goods. The ones who can pay lawsuits, which cost easily 500,000 euro, they do not want any publicity, because people might associate their products with counterfeit products.

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Recession + E-commerce = Counterfeiting

Robert Klara wrote a very nice article: 'The Fight Against Fakes' for Brandweek.

His article is about:

• the economic crisis and advent of e-commerce that prove to be a fatal mix for brands; trademarks are increasingly being infringed upon; if global dimension of this fatal mix is well described by Mr Klara: "The same Wild West quality of the Internet that makes it so enticing to shoppers is also why it's most terrifying for upscale brands, most of which have little hope of foiling the sale of a fake handbag made in China and bought by a customer in South Carolina from a Web site based in Estonia."
• consumer education campaigns such as FakesAreNeverInFashion.com and Fake Watches Are for Fake People (see picture);
• brands that produce mass-market extensions of their high-end lines in China, so that they are easier to copy;
• ACTA (anti-counterfeiting treaty agreement);
• At the end of the article Mr Klara mentions luxury good firms such as Luis Vuitton and l'Oréal as plaintiffs against eBay about the question who is liable in case of goods offered on eBay that are intellectual property infringements. Mr Klara writes: "Some legal experts predict this latest ruling from London will effectively end suits against eBay." I believe that some legal experts predict this, but I do not agree with them.

Mr Klara interviewed representatives of intellectual property firm Marks & Clerk, fashion magazine Harper's Bazaar, CMO Council (council for chief marketing officers), INTA (International Trademark Association), Luxury Institute, Federation of Swiss Watches, Swiss watchmaker Les Cubeurs and the Fragrance Foundation.

Good article, read here.

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IPR Enforcement in China via Inversed Trojan Horse: LVMH Invites China Investment Corporation to Take An Equity Stake

March 16, Tim LeeMaster wrote for the South China Morning Post, the English language newspaper of Hong Kong, that China Investment Corporation is considering to take an equity stake of 10 percent in the French luxury goods company LVMH. Head tip to the China Economic Review, read here.

Let's speculate what an eventual deal could bring the LVMH group:

1. Cash (the 10 percent equity is valued between 788 million and 3.1 billion US dollar);

2. Better access to the Chinese markets;

3. The intellectual property rights of LVMH, which include trademarks, design-patents and copyrights of the Louis Vuitton brand, are one of the most infringed intellectual property rights in China. To make LVMH partly Chinese, could prove to be master stroke, since it could help improve the enforcement of LVMH's intellectual property rights in China.

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Of IP's Most Important Figures of 2007 Who is Most Relevant to IP in China?

The magazine Managing Intellectual Property announced IP's Most Important Figures of 2007.

Of this group, who deserved this title because of its role regarding IP in China?

Obviously this includes Ms Wu Yi (China's vice-premier and IP-negotiator) and Mr Tian Lipu (commissioner of China's State Intellectual Property Organisation), but also Mr Jack Chang (senior IP counsel Asia GE and chairman of Quality Brand Protection Committee), Mr Dan Glickman (president Motion Picture Association of America and member of the China Copyright Alliance), Ms Nathalie Moullé-Berteaux, director of global IP at LVMH Moët Hennessy Louis Vuitton).

Congratulations to all. However, IP Dragon misses at a few names, especially Mr Joseph Simone of Baker & McKenzie for his role in the innovative landlords case, read more here.

Read Managing IP's article here.

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