SAIC releases statistics on free-riding

The State Administration for Industry and Commerce (SAIC)’s campaign against free-riding, which was launched in the second quarter of this year, has been prolonged until November 2013. The campaign aims to crack down on companies free-riding on well-known trademarks in the food and general merchandise industries.

On February 27 2013 SAIC promulgated the “Notice Launching a Special Law Enforcement Campaign to Crack Down on Free-Riding on Famous Brands”, which was to be conducted from April 1 to June 30 2013. On May 10 2013 SAIC announced in a complementary notice that the campaign would be prolonged for five months, until November 2013.

The latest statistics released by SAIC indicate that administrative departments for industry and commerce nationwide have investigated and sanctioned 16,100 cases of free-riding on famous brands, with a total case value of Rmb34.8 million and a forfeit of Rmb14.2 million. Among the total caseload, 236 cases have been transferred to the public security agency for criminal prosecution.

Further analysis of the statistics shows that cases involving the counterfeiting of well-known trademarks constitute the majority of cases, accounting for 67% of the total caseload and 62% of the total case value, followed by:

• cases where the name or packaging (or trade dress) of famous commodities was copied (20%; 14%);
• unfair competition cases where the defendant sought to free-ride on famous brands by creating market confusion (8%; 12%);
• cases of where the defendant imitated the name of a corporation (4%; 10%); and
• internet-related cases (1%; 2%).

In terms of the goods involved, food-related cases made up the biggest portion (31%) of the caseload, while cases involving other merchandise accounted for the largest slice (31%) of the case value. The detailed proportions of the caseload and case value for the different types of goods are as follows:       

The counterfeiting of well-known trademarks is the main form of free-riding, with the related caseload, case value and amount of forfeit making up over 60% of the total numbers. Famous brands in the fast-moving consumer goods industry are frequently targeted by free-riders.

Sources from SAIC have stated that the agency intends to focus on the food and general merchandise industries, reinforce the crackdown on source manufacturers, and enhance the inspection and supervision of key products. These key products, according to the SAIC notice, are household electronics and electrical appliances, general merchandises, food, construction or decoration materials and agriculture-related products, as well as other commodities associated with people’s livelihood.

Jiang Nan, Wan Hui Da Law Firm & Intellectual Property Agency, Beijing