Hermes counterfeiter gets life sentence in China

2012/09/13

A Chinese court has sentenced the alleged leader of a counterfeiting ring that made fake French luxury Hermes handbags to life in prison, an unusually harsh sentence that legal experts say was meant to highlight intellectual-property protection.

The Heyuan Intermediate People’s Court in China’s southern province of Guangdong sentenced Xiao Zhenjiang to life in prison earlier this month after public security officials last year raided his factory in the small city of Heyuan, according to a statement on the court’s website. Officials found 100 million yuan (about $15.7 million) worth of fake Hermes purses, the statement said. Three accomplices were sentenced to seven to 10 years in prison and were handed fines of 500,000 yuan to 800,000 yuan ($79,000 to $126,000).

Mr. Xiao couldn’t be reached for comment. A spokeswoman for Herms International SCA and Heyuan officials didn’t respond to requests for comment Thursday. News of the sentence didn’t spread until recent days, when the local government posted a photo on its website of what it said was a congratulatory banner from Hermes.

Legal advisers said that the sentence is unusually severe, as the average criminal sentence handed to counterfeiters is three to seven years in prison. “Every year, thousands of people have been handed sentences for counterfeiting, but seldom is the sentence this harsh,” said Benjamin Bai, head of law firm Allen & Overy’s China intellectual property practice.

The harshest sentences are typically reserved for pharmaceutical and health-related counterfeiting, Mr. Bai said, adding that courts have the power to impose harsher punishments if they feel the crime justifies them.

The sentence is related to a broader regional crackdown launched in February to fight market manipulation, counterfeit products and bribery. Guangdong authorities have said the crackdown is aimed at increasing market innovation and social stability.

The Communist Party chief of Guangdong province, Wang Yang, has strengthened protection of intellectual-property rights this year in what many say is political jockeying to gain favor with China’s central government ahead of the once-a-decade leadership transition this fall. “If it was foreigners demanding that we protect IPR [intellectual-property rights] five to 10 years ago, now we are demanding this ourselves,” he said at a discussion on political reform in March. “If there isn’t a comprehensive system for protecting IPR, and a serious attack on [violations], our own economic transformation and upgrading will fail.”

Enforcement of intellectual-property-rights protections is typically a problem in China, but in recent months public-security officials in Guangzhou, the epicenter of China’s counterfeit production, have stringently carried out raids, said Horace Lam, a Beijing-based intellectual-property partner of law firm Jones Day.

(Source: Market Watch)