Online sellers of counterfeit goods given severe sentences

China
In a case involving the sale of fake adidas products online, the Shanghai Putuo District People’s Court, when calculating the criminal threshold, has added the value of the unsold fake goods seized on the spot to that of the fake goods that were actually sold, which resulted in severe sentences. 
 
Three shop owners had been selling fake adidas products on Taobao.com (the largest consumer-to-consumer portal in China) since 2009. The fake brand did not appear on their homepage and was concealed in the photos and texts that advertised the merchandise. It was impossible to detect any transaction involving the infringing goods by merely accessing the defendant's homepage or searching for the infringed trademark on Taobao.com’s homepage: it was necessary to click through to the homepage of the cybershops to access the information about the infringing goods hidden in the second-tier pages.

After spotting the infringement, adidas investigated the case. It was discovered that, up to September 2009, the three defendants had sold over Rmb4.8 million worth of infringing goods online. In addition, over Rmb2.5 million worth of goods bearing various counterfeit trademarks were seized on the defendants' premises.

Based on the aggregate value of the sold and unsold goods, the Shanghai Putuo District People’s Court condemned:
  • the first defendant to four years' imprisonment and a fine of Rmb120,000;
  • the second defendant to a suspended sentence of three years' imprisonment; and
  • the third defendant to three years' imprisonment and a fine of Rmb100,000.
A four-year prison sentence is rarely seen in IP cases - the fact that the infringement was uncovered during the national campaign against IP infringement and counterfeiting must have had an influence on the outcome. Moreover, the fact that the court took into account the value of both the sold and unsold goods was in line with the Joint Opinion of the Supreme People’s Court, the Ministry of Public Security and the Supreme People’s Procuratorate on Several Issues Concerning the Application of the Law to the Handling of Criminal IP Cases (for further details please see "Opinion on handling of criminal IP infringement cases issued").

Liu Yushen, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing

Wan Hui Da Law Firm & Intellectual Property Agency acted for adidas in this case

Get unlimited access to all WTR content