Trade mark protection managers are not interested in raiding factories in China. On the face of it, that's an extraordinary statement to make about the counterfeiting problem international brand owners face there. Depending on which statistics you believe, China is either the world leader or one of the leaders in the production of unauthorized versions of items such as DVDs, CDs, electrical and electronic goods, household products and pharmaceuticals. Why wouldn't they be interested in entering premises and confiscating goods?
The statement that trade mark protection managers have never been interested in raiding factories in China needs some clarification. What they are not interested in is measuring their success against counterfeiting by the number of raids they carry out on suspected factories.
The realization that raids can only be one part of the solution to stopping counterfeiting in China is why 83, at the last count, international brand owners have come together in the Quality Brands Protection Committee (QBPC) to lobby the government and educate the public and officials. The members realize the solution has to incorporate administrative actions; legislation which provides for civil and criminal penalties which will really deter any counterfeiter who thinks of re-offending and a justice system which will impose those punishments. None of this can happen without support from every level of the Chinese government.
Ministerial meeting
The QBPC is organized in China under the auspices of the China Association of Enterprises with Foreign Investment (CAEFI). The anti-counterfeiting group, with CAEFI's help, landed a meeting in September 2003 with Wu Yi, a vice-premier in the Chinese government and the most senior female Chinese politician. Wu, the QBPC's leaders felt, was genuinely interested in their member companies' problems with counterfeiting in China and sought guidance from the QBPC delegation about how the Chinese government could effectively help the organization's members. A quarterly meeting between the QBPC and the ministry of commerce has now been arranged. Though it's not clear if Wu will attend each one, the meetings represent perfect opportunities for the IP owners to keep the Chinese government briefed concerning the counterfeiting situation in China.
Other Chinese leaders, such as Zhu Rongji, the former premier, have spoken over the years about the harm counterfeiting has been doing to the country's international image. Now the QBPC believes Wu will be an important ally as it continues to take the fight to the counterfeiters. "Wu Yi is a candid and straightforward person," says Jack Chang, chairman of the QBPC. "She wants to listen to real problems and not just down and have a diplomatic opportunity."
No antagonism towards government
The brand owners' policy of engagement with the government is one of encouragement and support, rather than criticism of its efforts. They attempt to blend putting pressure on the authorities to act with praising them when they do take effective action. The balance is not easy to strike in China. "Complaining will not get the job done," says Chang. "Only building mutual trust and working together will beat the counterfeiters." The ministry of public security, the General Administration of Customs, the Supreme People's Court and the Supreme People's Procuratorate, the body which ensures the enforcement of state laws, all seem to be interested in working with the QBPC, believes Chang.
Part of the QBPC's approach to helping the government understand the serious infringement problems its members face, includes encouraging the Chinese government to learn from other national administrations about how they have tackled counterfeiting. As the problem has gone international, this has become an increasing focus for the QBPC. It wants all governments to face up to the problems of counterfeiting, not just China's. "It seems counterfeiting has become an international problem," says Chang. Organized crime is more involved. Governments and non-governmental organizations should work more closely together. With similar groups to the QBPC beginning in India, Vietnam and Indonesia recently, encouraging government cooperation is becoming easier.
Watching the borders
The results of two recent QBPC studies reflect the connection between China and counterfeiting outside its borders. An internal survey of border protection in 2001 revealed that 30% of the respondents had seen counterfeit examples of their products either imported into or exported from China. The figure in July 2003 had risen to 79%. Border protection is now a top priority for the QBPC, according to Chang.
The brand owners will continue a multi-strand approach to trying to eliminate counterfeiting. In 2004, the group plans to assist further with legislative development through producing a position paper on the draft Customs IP rights regulation. A QBPC member took part in drawing up the draft and submitted recommendations, some of which were accepted. The draft is now with the legislative affairs department of the State Council. The organization will also be following the Supreme People's Court work on a draft Judicial Interpretation of IP Crime. The group also intends to strengthen its links with the National People's Congress, China's parliament.
Status of well-known marks unclear
Another area where the QBPC will continue to press for action is in the area of well-known marks. The Chinese government has addressed the issue at various stages over the years, beginning with interim rules in 1996, but the problems with protection for well-known marks relate to the distinction between same and dissimilar goods. Inconsistencies exist between what different authorities in China have said on the topic.
The Economic Crime Prosecution Guidelines issued in 2001 allow for the prosecution of a counterfeiter of a well-known, registered trade mark. According to Chinese criminal law, counterfeiting means the unauthorized use, on the same goods, of a trade mark identical to a registered mark. The Well-Known Trade Mark Recognition Regulation, which the State Administration of Industry & Commerce published in April 2003, tried to deal with the illegal use of a registered trade mark on dissimilar goods by requiring the trade mark authorities to determine whether a counterfeited trade mark is entitled to well-known status or not. However, the trade mark authorities allow the protection of a registered trade mark without determining if it is well-known or not. This makes the well-known mark criteria under the Prosecution Guidelines unenforceable, says the QBPC.
Depth of experience required
As for the future of the QBPC itself, Chang is hoping the membership will expand to include others with anti-counterfeiting experience, not just trade mark specialists. "We need more members with lots of different experiences," he says. "Now we are having more and more lawyers, government affairs people and brand protection managers in the QBPC, who can help us better understand the market and logistics and help us stop the counterfeits from penetrating the supply and demand chain."
China continues to supply the counterfeit market in a significant way around the world. The size of the country means that closing down every factory is probably unrealistic and ultimately not as effective as combining such administrative action with anti-counterfeiting campaigns on many levels.
Awards night To encourage officials to take counterfeiting seriously, the QBPC holds an annual award ceremony to highlight the best cases of IP rights protection. At the 2003 event held in March, 19 separate teams of officials won awards, ranging from division 9 of the economic crime investigation unit of the ministry of public security, which won an award for a special contribution to IP rights protection, to the social order team of the Fujian Provincial Public Security Bureau, which won one of the awards given for the best cases of IP rights protection. |
| How counterfeiting hurts the economy The development research centre of the State Council unveiled its research into the economic impact of counterfeiting at a symposium in Beijing in July 2003. The symposium, entitled Defending Corporate Brands and Maintaining Fair Competition in China, was organized by the China Association of Enterprises with Foreign Investment. The research pointed to significant successes by the authorities against counterfeiting, such as more criminal enforcement and more counterfeit goods seized, since the State Council launched its market disorder rectification campaign in 2001, but said the value of counterfeits, between Rmb160 million ($19.3 million) and Rmb200 million ($24.15 million) in 2001, had grown between 1999 and 2001, even though the number of counterfeit items had remained the same. The report also highlighted the ways counterfeiting was changing, including its growth in the coastal areas and areas in the south and west of the country. The authors of the study made a number of recommendations to improve anti-counterfeiting, including the strengthening of the Criminal Code and of trade mark and product quality legislation; the elimination of protectionism; more protection for well-known brands and increased coordination and cooperation between the different groups of officials tackling counterfeiting. |
