Intellectual Property

Limited IPR relief for Nike, Adidas and Hollywood studios

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Movie title or next step on IPR enforcement?
The past two weeks have seen an interesting assortment of IPR developments. In a fresh installment of what seems to be the never-ending saga of the Silk Street market, enforcement authorities raided the shoe department this past weekend and confiscated every counterfeit Nike and Adidas product they found.

The Beijing Administration of Industry and Commerce's (AIC) trademark office claims to have adopted a new methodology, in that it conducted the raid on its own initiative, without waiting for a formal complaint from the trademark owners. If that's the case, it's worth asking why the raid exclusively targeted Nike and Adidas products.

In any event, by targeting only one or two brands, the AIC hasn't broken new ground. The Chinese government has consistently proved itself able to purge counterfeits of specific trademarks (for example, the Olympic rings), but remains incapable of tackling the problem of counterfeiting as a whole.

And despite the limitations of the Chinese government's "one at a time" approach, the American movie industry seems to have adopted it. As Caijing observed, American IPR rights holders have switched tactics, from pressuring the Chinese government to do their bidding on IPR, to suing individual infringers.

In Beijing, five Hollywood movie studios have sued two stores for having sold a total of sixteen counterfeit copies of War of the Worlds. Although the two stores lost the suit, neither complied with the court's judgment. The studios went back to court last week for an enforcement order.

Meanwhile, in Shanghai, seven Hollywood studios have filed their third consecutive suit against the same proprietor of counterfeit DVDs.

What these developments suggest is that enforcement efforts targeted only to one trademark or to one sales outlet are a waste. The gains from the periodic raids on Silk Street are temporary at best. As the Beijing Youth Daily pointed out, counterfeit goods disappear during the raids and reappear after a short hiatus. And the utility of private lawsuits against individual vendors is questionable. An operational court system — in a society that respects and abides by the court's judgments — is a prerequisite for the success of IPR enforcement through private litigation. The movie companies won't find that in China.

A meaningful anti-counterfeiting campaign in China must go up the supply chain and shut down the factories producing the counterfeits and/or throttle the distribution channels through which counterfeits move. The odds of such an approach being implemented in China are exceedingly small. Local protectionism, corruption and the inefficiencies inherent in any large-scale inter-agency enforcement effort make unlikely any attack on the supply chains for counterfeit goods.

So what's left? Counterfeiting might disappear from China if manufacturers valued the production of original work over copying and product quality over profits-at-any-cost. But on the question of IPR-related values, China and the US are still worlds apart.

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There are currently 4 Comments for Limited IPR relief for Nike, Adidas and Hollywood studios.

Comments on Limited IPR relief for Nike, Adidas and Hollywood studios

I agree that they have to attack the supply chain at its source, but in my opinion, that's the people. I really think if Western interests wish to change IPR attitudes in China, they're going to have to adjust the opinions of the people buying the products and give them a suitable alternative. The studios refuse to re-examine their business model, because it's made them a fortune over the last century.

But things have changed. People (particularly in Asia) don't have the Cinema-wait six months-DVD paradigm that has allowed the studios to exploit their product for as much revenue potential as they possibly can. Until the studios produce faster and more affordable releases, people are always going to find a way to get pirated copies - online or in the shops.

"Until the studios produce faster and more affordable releases, people are always going to find a way to get pirated copies - online or in the shops."----THE HUMANAUGHT

How in your opinion are the studios going to produce anything if a significant portion of revenue is lost due to these unauthorized sales? The bottom line like any business is to make as much money for the investors as possible...if anything all these loses means that creativity suffers because studios will only invest in "safe" money-makers...the pirated nonsense has to stop. So the burden rests on the audience (or consumer) to change these practices.

Not specifically speaking on China---because portions are edited out of theatrical releases and sometimes overdubbed in my opinion destroying the integrity of a film's sound track altogether---but movies in theaters are so much better than on DVD. The experience is so much more involved.

The studios shouldn't have to re-examine their model...it should be the individual honest consumer that re-examines their own conscience. This will not only makes better movies come out...it will also subsequently improve and make more popular movie theaters in China. The studios get more money and potentially the audience (consumers) get a better product (movies, paraphernalia, etc.).

The problem with civil suits is not so much that the court system does not work, it is that so many of the IP violators are essentially judgment proof. My firm has, on many occassions, advised our clients not to bother with lawsuits because the Chinese defendant's assests simply do not warrant it.

"The studios shouldn't have to re-examine their model...it should be the individual honest consumer that re-examines their own conscience." - FRITZ

You missed my point Fritz. It took the recording industry how long to finally understand that people wanted to download music, not just because it was free, but because it was convenient? How much revenue was lost in Napster battles and trying to keep the status quo?

Now look at iTunes, and the 100 other services just like it. It's a big industry and big money.

For some reason, the motion picture industry refuses to learn from that example and is still chasing down Zhang-blow on a Hangzhou street corner thinking that it's going to stop piracy.

Good business isn't about maximizing profits, it's about listening to your customers - and in so doing creating a sustainable business model that in turn maximizes profits - but not at the cost of customer satisfaction.

As it stands, few Chinese are going to go dish out $15-30 USD for a DVD. It's just not going to happen. The studios can either re-evaluate how to do business in China, or they can continue to throw money down the toilet in hopes that it will do some good.

I agree, movies in the cinema kick ass. I'll make you a deal - you get me a cinema here that shows movies in English, and I'll not go out and buy Transformers on DVD later this week.

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