November 14, 2006 KNOCK IT OFF! American Apparel & Footwear Association Brands And The Counterfeiting Quandary Fashion Institute of Technology, New York China: An Overview Harley I. Lewin Greenberg Traurig LLP. An International Law Firm
Perspective: More Profitable than Narcotics Less Risk (Partners don’t kill you; little jail; low fines) Example: Cartier fake watch imported into USA for USD$1.82 Sells on Canal Street for $25-50 Sells on Internet for $150 One Ring: $8,000,000 per month $50,000,000 in profits since 1997
Chose an approach: stop present infringement; sufficient deterrence; operate within predetermined budget
Be careful: while it may not be urgent today, it will become urgent tomorrow
To determine which alternatives to use: must have solid understanding of the legal system; the powers and their conflicts, the Chinese culture and mentality and the way business is conducted in the PRC
Cease and desist letter: most economical, personal delivery (coerce compliance), often ignored
Negotiations: especially with service businesses: stores, schools, agencies; threaten action, follow through if necessary.
Administrative actions: AIC or QTSB; most commonly used, speedy, inexpensive; sometimes obeyed; can seize, order dissolution, confiscate dyes, machinery etc. Unfortunately, most time punishment is not harsh enough. Subject to local pressures. Potential civil damages if wrongly seize.
Court Action: civil lawsuit to seek injunction and damages; potentially stronger than administrative action; drawback is limited injunction, low legal learning, expense and time. No discovery. Procedures lacking. Few Rules of evidence. Private meetings.
Criminal Action: Peoples Procutorate Bureau is supposed to file but you can yourself if refused by PPB. Very low number of cases are prosecuted; work load is an issue, need to catch red handed with police, no real undercover work
Use of Media: Television and newspapers. Radio doesn’t count. Be careful as truth is not always what is printed. Media must be used with great care as view is different in PRC.
Customs: Import and Export. Worth doing. Changes underway. Registration Required.
U.S. Government Assistance
Conclusion: Biggest problem is to wait. China represents the largest consumer market in the World and the largest exporter in the World. The earlier you deal with a problem, the less expensive and more manageable it is. You will not eradicate counterfeit goods but you can manage the problem. Thank You. Harley Lewin