By Helen Sloan
June 19 2012
While Marques is often thought of as a European organization, it has an international outlook, and last week the association held its first ever meeting in China. In-house counsel from Chinese and European brands gathered in Shanghai to share experience and best practice of trademarks work in China, internationally, and online.
Starting the day was a session on intermediary liability, which offered an interesting comparison between physical and online platforms. Wenli Hu, general manager of Beijing’s Silk Market, explained how it is making significant strides in escaping its reputation as a destination for buying fake goods. Initiatives to improve the situation include frequent floor checks and encouragement of genuine Chinese brands. However, she explained that the management of the market is limited because they do not have the power to shut down offending sellers, and she acknowledged that they still have some way to go in overcoming the problem.
But while physical markets try to clean up, many counterfeiters have moved online. “The IP environment we are facing is more complex than in the EU or the US,” explained Ricky Shen, senior legal counsel at e-commerce platform Taobao. “Consumers are willing to buy knock-offs and sellers have not got strong IP awareness.” He gave the example of a seller using a brand’s publicity shot to illustrate a second-hand item - through naivety about IP laws rather than any attempt to deceive the buyer.
Although Taobao is not yet a household name outside of China, it is certainly on the radar of international brand owners, evidenced by the fact that Shen was highly in demand when it came to questions from the audience. He explained some of Taobao’s methods for dealing with infringers, which include a graduated penalty system which removed the offending sites from Taobao’s search results for a certain time, and ultimately resulting in a ban from the site. Some brand owners said that they would prefer a ‘two-strikes’ policy which would see infringers banned after an initial warning: Shen explained that being removed from search results even for a short time is actually a harsh penalty, and that the number of takedowns has increased fourfold from 2010 to 2011.
But as Guido Baumgartner from Coty pointed out, infringement is a problem on many e-commerce sites, not just those in China. A further issue is that litigation against infringers is costly and time-consuming; brand owners would welcome a quicker resolution from the platform - wherever it is based.
The next session dealt with preliminary injunctions: a relatively new development for China, with the first case only taking place in 2005, as Lian Yuntze from Hylands law firm in Beijing explained. This initial case was a success for the paint company that initiated the action, and since then a high percentage of requests for preliminary injunctions have been granted. Usage, however, has remained low. This may be because there are a number of restrictions - a security bond is required to be paid, the trademark must not be in dispute, and the trademark owner must prove that their brand would sufferable irreparable repair. Bernie Hung from Gucci’s Asia Pacific team explained that international brand owners would like more information on some of these requirements. “If there could be a little bit more clarity on the calculating of the amount of security bond, brand owners would welcome this,” she said, and also pointed out that gathering evidence to show loss of market share can be costly and time consuming.
Brand protection in the age of social media was another topic up for discussion. As Baumgartner summarized: “It is very good to get the mood of consumers, but social media has added a lot of problems that we hadn’t had before.” Brands are no longer in sole control of their message, and a misjudged advert can go viral very quickly, as Cindy Zhen from Diageo explained. However, she also gave an illustration of how social media can be successfully harnessed. Diageo’s Bundaberg rum - one of the most popular home-grown spirits in Australia - is made in the Queensland town of Bundaberg which was devastated by floods in 2010/11.
The company launched a new product called Watermark with all proceeds going to flood relief, and also organized a series of free concerts for affected communities – the success of this campaign depended on support expressed through social media. But while the company clearly knows how to engage with its customers via social media, it remains remain vigilant and supports frequent monitoring of its social media platforms.
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