Tackling China’s counterfeit trade

Novagraaf

The production and trade of counterfeit goods in China is the thorn in the side of most well-known brands, but it’s not only the global giants that are affected. From rip-offs of fashion and beauty products to fake spirits and medicine, nearly every business could be impacted; particularly, those that manufacture their goods in the country. Is there anything that they can do?

It’s said that if a business wishes to see if its products are being counterfeited, it just needs to run a search on Alibaba. The Chinese auction site dwarfs equivalents such as eBay in terms both of its product range and revenue, and also acts as a major channel for the sale of fake goods, much to the frustration of brand owners.

Kering, the company behind luxury brands Gucci and Yves Saint Laurent, is currently suing the Chinese ecommerce group for encouraging and profiting from the sale of counterfeit goods on its platform. Like many brand owners, Kering is angry at what it considers to be Alibaba’s slow response to counterfeit allegations and what it perceives as ‘complicity’ in the sale of those items.

“My experience of Alibaba is that it has been slow to react in the past and well behind other sites, such as eBay,” agrees Tom Farrand, Managing Director, Trademarks, at Novagraaf in the UK. “This can be partly explained by the sheer volume of Chinese-originating counterfeit goods, and also the market for them. One of the problems shared by Alibaba and brand owners is that, at present, many customers are on the site not looking for real products.”

Farrand expects the case to lead to some improvements at the platform, but says that “there is still much to do and a long way to go”.

Taking action
If you do find your products after running a search on Alibaba, what should you do? The platform’s complaint process is still the best place to start before starting a more expensive legal action. “The company’s rate of response to counterfeit action is starting to getting quicker, the complaint process has been improved and follow-up is better,” says Farrand. Online monitoring will help you to build up evidence of counterfeit activity that should make it possible to ensure the website removes the goods or seller.

Of course, brand owners are advised to tackle the source of the counterfeit goods, not just the channels in which they are sold. Where a problematic seller is identified on Alibaba, for example, additional investigation will help you to find out more about the product’s manufacturers and distribution channels in order to stamp them out at source.

Here, levels of IP coverage, as well as techniques to prevent and identify activity, will be important. This includes, for example:

  • registering key brand and product names as trademarks, and innovative design features as design rights, so that you can seek legal redress for any unauthorised use of those trademark or design rights (e.g. for the manufacture, distribution and sale of trademarked goods);
  • raising awareness of the issues within your business by educating your staff, business partners and customers;
  • actively monitoring the online and offline market, recording, reporting and carefully analysing the findings;
  • working closely with law enforcement authorities such as the Border Force (Customs) and local Trading Standards offices that have a statutory duty to enforce the criminal provisions of Trademarks Act; and
  • taking enforcement action where appropriate.

If the manufacture of the fake goods is taking place in China, you will need to liaise with local agents or investigators and involve local police and authorities in order to target the manufacturer at source. This is not a simple task. Novagraaf provides anti-counterfeiting services to a number of brand names in the country, from online trademark monitoring to investigation, trap purchases, trademark training, trademark recordals and legal representation in customs seizure proceedings.

For more advice on developing an anti-counterfeiting strategy, read our frequently asked questions.

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