Posted On 2016/01/30 By In Business, Economics, News, Luxury, Shopping With 569 Views

The long Battle between Brands and Chinese Counterfeits

Luxury Brands have been battling with a growing number of Chinese Counterfeits for a long time. One of the significant cases was brought to theUnited States District Court for the Southern District of New York in 2010. The plaintiffs in the case include GucciAmerica, Inc., Balenciaga America, Inc., Bottega Veneta, Inc., and Yves Saint LaurentAmerica, Inc. Plaintiffs discovered that some Chinese companies and individuals are advertising counterfeits to their brands openly with Google Search results. Defendants are certain individuals doing business as Designer Handbags,, and Therefore, Plaintiffs brought the trademark infringement claims pursuant to 15 U.S.C. § 1051,et seq.

Along with the complaint, Plaintiffs also filed a temporary restraining order on June 25, 2010 asking the Court to freeze Defendants’ assets and enjoin them to continue their counterfeit business. The Court granted the motion and issued a preliminary injunction. Because Defendants wired their proceeds to their bank accounts at the Chinese headquarters of Bank of China, the Injunction covered these accounts.

During discovery, Plaintiffs issued a subpoena to Bank of China’s New York City Branch and required it to produce documents related to Defendants’ bank accounts. Then the case had a series of complications: Bank of China’s New York City Branch claimed that these accounts were not within the Branch’s possession or control; Bank of China argued that the Court did not have personal jurisdiction over it; and Bank of China also argued that China’s bank secrecy laws prohibits disclosure of customer information without Chinese government authorization or customers consent.

After a lengthy process of motions, decisions of the District Court and review by theCourt of Appeals for the Second Circuit, the New York District Court granted Plaintiffs’ motion to compel Bank of America to comply with the subpoena ruling against Bank of America’s above-mentioned arguments. However, Bank of China still did not comply with the order. On November 9, 2015, the District Court issued an order to hold Bank of China in contempt of court and imposed a $50,000 per day fine for non-compliance.

Only on January 20, 2016 did Bank of China hand over the documents requested in the five-year-old subpoena. Thereafter, the District Court relieved Bank of China of its daily fines. Finally, Plaintiffs can proceed to the merits of the case against Defendants.

Luxury brands are expanding their markets globally, and so are counterfeits. This case provides a classic example of the complications involved in such battles between infringers and intellectual property right holders in the global economy. While luxury or large brands and companies may have more resource allocated on enforcement, smaller scale companies probably face greater challenges in enforcing their rights.

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Article: IPBrief / Image: TooN LAURENT

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Stefan (from Austria, Europe) has been living, studying and working in China since 2010. Stefan has worked on several research, publication and consulting projects focusing on the China Travel Market. He holds three Masters degrees and is an expert on China Outbound Tourism, Marketing and Social Media in China. Stefan works with BMG on the Global Ready China Seminars as well as the Global Ready China News and related projects. He also has teaching engagements in the areas of eMarketing and Tourism Strategy.

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