By Doris Li, China IP
On February 1, 2009, the first working day after the Spring Festival, Beijing’s famous Silk Street attracted the attention of both Chinese and foreign media. Owners of seven shops clashed with the market management that attempted to shut the lid on their businesses for “selling counterfeit goods.” Subsequently, on the 8th, 15th and 22nd of the month, 22 stalls were closed for similar reasons. These incidents have revealed a succession of problems in the enforcement of intellectual property rights.
Agreement behind the shutdown
Behind the crackdown is a reconciliation agreement between Beijing Silk Street and IntellecPro, an IP firm representing Louis Vuiton, Chanel, Burberry, Gucci, and Prada, which was signed at the end of 2008 under the supervision of Chaoyang District People’s Court. Accordingly, once trademark holders provide information on infringement, the market must act timely against the vendors. Stalls selling pirated goods will be slapped with a seven day suspension; however, the time can be reduced to three days if violators pay 5,000 Yuan to the rights holders.
The “stall shutdown”, upon notice of notarized documents and related information provided by IntellecPro, met strong resistance from vendors, who questioned the validity of the evidence, and also the right of the management to close their businesses. As a result, they took the Silk Street Market management and IntellecPro (Beijing) to court.
Problems behind the “counterfeit crackdown”
Pirated goods are sold under the counter. According to Wang Zili, general manager of the Silk Street Market, pirated goods are sold under the counter. There is only bargaining at the market while transactions are done elsewhere. The marketplace can merely prohibit “open deals” and punish those that are discovered. There are also unregistered “hawkers”, who carry bogus models of product. When caught by vendors or management, the hawkers only can be confiscated the individual samples.
It is difficult to collect evidence in counterfeit selling. According to an anonymous official at the Trademark Division of the Beijing Administration for Industry and Commerce, only the trademark holder is qualified to verify the validity of a product, and produce evidence on which the local authorities can act. Collecting proof is now considerably more difficult as deals are concealed and “goods” are usually stored in vendor’s warehouses or residences which neither the Market nor the Administration is authorised to search.
Moreover, the cancellation of qualification control over intellectual property agencies has led to irregularities and ill practices by these illicit businesses.
There are no procedures in law for the collection of evidence. Besides intellectual property agencies, survey companies and law firms in Beijing can also conduct intellectual property investigations. Their qualifications are questionable and some use illegal means to obtain evidence. The lack of regulations also exists in the notary business which may favor one side because of their own commercial interests. Thus, laws are needed to regulate the conduct of evidence collection as well.
(Translated by Li Heng)
