Slaying The Counterfeit Trade Beast In China
Apr. 22, 2016 (Mimesis Law) — You’re not alone in strutting your Fouis Fuitton, Folex and Foakleys this spring, as trade in fake goods seems to be on the rise. The Organisation for Economic Co-operation and Development (OECD) recently found that fake, counterfeit goods now make up about 2.5% of global trade (up from 1.9% in 2005), an amount comparable to Austria’s GDP. Furthermore, up to 5% of goods imported into the EU are fake, which is quite staggering. The study did not include online piracy, file sharing and unlawful downloads, finding that footwear, clothing and leather goods account for the majority of seized counterfeits in 2013.
The major culprit in this story is China, accounting for over 63% of seized counterfeit goods in 2013, with Turkey following in second place accounting for a relatively measly 3.3%. On the flipside, the US, Italy, France and Switzerland were hit hardest by the counterfeit trade, with 20% of seized goods covered by the OECD study infringing the IP rights of US companies.
I am by no means attempt to provide a solution to this, as I’m sure, like online piracy, we’re faced with a Hydra-type situation; chop off one head and the beast grows two more. But, it is interesting to see that in 2015 the amount of IP infringement claims brought in China increased nearly 127% from 2014, and that one in six claims were brought by non-Chinese claimants, including Louis Vuitton, Burberry, Microsoft and General Electric. Li Shulan, Vice President of the almost two-year old Shanghai Intellectual Property Court, says “the court will impose heavier compensation according to the law on violations of intellectual property as a stronger deterrent, and will increase the intensity of punishment for repeat violators and those who ignore court verdicts”.
The Shanghai IP Court is one of three Chinese specialist courts that have been tasked with bolstering the quality of IP litigation and enforcement in China. The Courts are ambitious in their efforts, and have introduced initiatives such as a database of university experts to advise on highly technical cases, and an English website to provide information on current cases and the Chinese litigation process generally (although this doesn’t seem to be up and running yet).
Research suggests that the increase in counterfeit trade is due to online retail platforms that allow counterfeit goods to be shipped directly to a customer, allowing for a reduced risk of detection. Alibaba for one, seems to be stepping up to the plate with regard to takedowns, removing 80 million product listings between January and August 2015. This is certainly a step in the right direction by Alibaba, and combined with the commendable efforts to increase quality and effectiveness of IP litigation in China, the beast may well be tamed, if not slayed.