Posted by Jeremy Goldkorn on Tuesday, January 30, 2007 at 10:42 PM
by Maya Alexandri
China’s venerable tradition of playing the barbarians against each other looks alive and thriving in the latest round of legal wrangling between Beijing’s Silk Street and the various international brands that object to the shopping mall's profiteering from sales of counterfeit goods. In its dealings with two separate sets of plaintiffs, Silk Street reveals a divide-and-conquer strategy designed to protect business as usual, while garnering accolades for its purported anti-counterfeiting efforts.
Silk Street counter-sued after the luxury brand coalition's trademark agent sent several cease-and-desist letters containing minor errors. According to Joseph Simone of Baker & McKenzie, who represents the coalition of twenty-three brands involved, one of the letters complained of counterfeit items being sold by an outlet that didn’t exist; two others misidentified the goods bearing the counterfeit trademarks. The coalition had won their case against Silk Street in Beijing’s Higher Court, which held that landlords have responsibility to stop infringing activity by tenants. But don’t call Silk Street’s counter-suit sour grapes. It’s obviously standing on principle: in compensation for the harm it sustained from the error-laden letters, Silk Street sought — and won — nominal damages of three yuan.
IPR protection awards for Silk Street vendors
Ranjard then presented flags to various vendors. Press coverage of the event included the following headline: “EUCCC Awards Dealers In Silk Street Beijing.” Ranjard doesn’t speak Chinese and admits that he doesn’t know if the vendors to whom he presented flags were, in fact, worthy of any honors.
Silk Street’s efforts to tarnish the coalition of twenty-three plaintiffs as “bad brands,” while giving Lacoste and Samonite the “good brand” treatment, no doubt relates to how the different groups want Silk Street to respond to counterfeiting. The coalition of brands proposed a “two strike” standard that would require Silk Street to terminate the lease of any vendor caught peddling counterfeits a second time.
Lacoste and Samsonite, by contrast, agreed that vendors caught selling counterfeits would be temporarily suspended from sales at Silk Street for a number of weeks corresponding to the number of times they’d been caught (i.e. one week for the first offense, two weeks for the second, etc.). Not only is this a less aggressive way of policing Silk Street's tenants, it's also a lot less work patrolling vendors for two brands rather than twenty-three.
But Silk Street’s game-playing is about more than laziness — indeed, at this point, the proliferation of lawsuits, counter-suits, and attendant appeals is so complicated that if laziness were a consideration, Silk Street would just comply with the law. Rather, Silk Street’s response reflects the continuing irrelevancy of legal enforcement measures in China and the susceptibility to manipulation of the foreign companies that run to the Chinese court system with Western expectations of redress.
Naturally, recent surveys conducted by the coalition of twenty-three brand owners show that sales of counterfeit goods at Silk Street have continued unabated, legal action notwithstanding.
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