In October 2023, the Asia-Pacific intellectual property team of a renowned global footwear brand suggested that Cantoop should pay attention to clues regarding the domestic sale of counterfeit sports shoes on an e-commerce platform in China. Cantoop investigators promptly identified close connections between multiple online sellers and the cross-border platform Pandabuy, which is notorious for its global trade in counterfeit sports shoes, luxury items, and other products.
Acting on behalf of the rights holder, Cantoop officially reported the case to the Changning Branch of the Shanghai Public Security Bureau in early November 2023 and deployed 70 investigators to assist the local authorities in conducting an in-depth investigation into Pandabuy.
After more than six months of concerted effort, it was discovered that Pandabuy’s infringing activities had expanded to over 20 cities across China, including Putian and Xiamen in Fujian, Huizhou in Guangdong, Wenzhou and Hangzhou in Zhejiang, and Harbin in Heilongjiang, with more than 20 types of infringement targets. The company involved over 2,200 employees, with a warehouse area of over 100,000 square metres in Huizhou, equivalent to 20 football pitches.
In early April 2024, the Changning police in Shanghai had essentially unravelled Pandabuy’s entire counterfeit network, deemed it ready for enforcement action, and decided to conduct the operation on April 11 2024. On that day, a law enforcement team comprising approximately 200 personnel from various levels of public security in Shanghai, with assistance from local enforcement agencies, simultaneously raided Pandabuy’s operating premises. Pandabuy was promptly brought under police control, and over 30 key suspects were subjected to criminal coercive measures on the same day.
During the inspection of Pandabuy’s warehouses, law enforcement officers discovered millions of pre-packaged parcels containing products from over 200 brands, with well-known brand sports shoes constituting over 90% of the total. The destinations of these parcels were all overseas consumers. There were over 1,700 associated employees engaged in warehouse management and cross-border transportation on-site.
At the time of writing, Cantoop has deployed nearly 100 employees daily to assist law enforcement agencies in clearing and identifying infringing products. It has taken over two weeks to clean and appraise the infringing products, and it is estimated that it will take several more months to complete the inventory of all infringing products on-site. All infringing products will be confiscated and stored in warehouses designated by law enforcement agencies.
According to police investigations, from 2021 until the time of the raid, Pandabuy – an inverse buying agent platform (intended for overseas consumers to purchase domestic Chinese products) that promoted itself through overseas social media channels such as YouTube, Facebook, Instagram, and TikTok – directed millions of overseas customers to its platform. The company's staff then induced overseas consumers to purchase counterfeit footwear from dozens of domestic online stores.
Pandabuy also has control of over 20 ‘third-party’ purchasing and logistics companies, completing its infringement chain from counterfeit purchasing to cross-border shipping, profiting immensely from these illegal activities.
A preliminary audit by law enforcement revealed that in 2023 alone, Pandabuy's revenue from operating counterfeit businesses overseas amounted to a staggering RMB 39.6 billion, involving over 50 million pairs (pieces) of counterfeit goods. At the time of writing, criminal coercive measures have been taken against 40 key suspects, with more suspects expected to be apprehended. Law enforcement authorities have seized over 200,000 pairs of counterfeit well-known brand sports shoes in target warehouses and frozen assets totalling RMB 230 million belonging to Pandabuy and its affiliates.
The enforcement action by the Changning police in Shanghai has not only shocked practitioners in China's intellectual property industry but also garnered widespread attention from overseas countries and regions. Many owners of well-known brands have stated that this is the largest online and offline cross-border infringement of intellectual property case handled by Chinese law enforcement agencies in recent years.
Cantoop is proud to have played an active role in this case, while sincerely thanking the brands and rights holders, law enforcement agencies at all levels, intellectual property media, and all relevant practitioners for their valuable contributions.
