With counterfeiting and infringement being significant issues for foreign luxury brands, especially in China, companies in the industry are always on the lookout for the latest insights on how best to protect their iconic marks. The Italian luxury brand Moncler won recently an important legal battle in China against three infringers thanks to a broad strategy to combat counterfeiting.
The Hangzhou Intermediate People's Court awarded Moncler a compensation of RMB 4.7 million (US$ 640,000) for violation of trademark laws by 3 companies: Quanzhou Yuan Lai Yu Li Internet Tec, owner of the trademark, Meng Kou Yu Huang, manufacturer, and Shishi City Yi Cong E-Commerce, operator of an online shop.
The verdict shows the Chinese government’s commitment to improve the business environment in the country and reinforce intellectual property protection of foreign companies.
The case history
The three companies in this case were marketing counterfeit Moncler products and were discovered by the Italian brand in 2018. The items were sold online under the trademark 'Mengking', with a similar logo to Moncler, which features the 'M' on zips and the use of the distinctive blue and red colors of the brand.
The Italian company filed a lawsuit with the China National Intellectual Property Administration (CNIPA) to invalidate the counterfeit brands of the infringing sellers.
Later, Moncler took the case to the civil court and sued the companies for copyright infringement. The court awarded Moncler RMB 3.5 million in damages from the brand owner and manufacturer, and RMB 1.2 million from the online shop operator.
Last November, the Zhejiang High Court upheld the decision on appeal.
Strategy against counterfeiting
The Moncler Group launched last year a broad strategy to combat counterfeiting, focusing on controlling online channels.
Since then, the Italian brand intercepted almost 81,000 online auctions of counterfeit products, closed almost 300 sites where counterfeit garments were offered for sale, delisted from search engines about 23,000 pages that referred to non-authentic products, and removed about 87,000 sponsored posts, accounts, and ads from social networks.
Moncler also managed approximately 3,000 seizures, which led to the removal from the market of approximately 145,000 finished products and over 130,000 counterfeit accessories and branded items.
In 2016, Moncler won a groundbreaking trademark case in China. The judgment was the first in which maximum statutory damages were awarded under the country’s then-new Trademark Law. China is a notoriously difficult forum. The Italian company had been fighting the case for over two years, before winning.
Part of the company’s strategy to protect its intellectual property was to do internal work and dedicate more than 500 hours to training its different departments on anti-counterfeiting and supply-chain issues.
The luxury sector
The luxury goods market is characterized by the counterfeiting of brands and products.
The Moncler Group has made significant investments in the adoption of innovative technologies that enable tracking of products throughout the value chain to prevent and mitigate the effects of counterfeiting of its brands and products and to protect its intellectual property rights in the countries where it operates.
For luxury brands, the presence on the market of significant quantities of counterfeit products could adversely affect their image, with a negative impact on sales and financial performance.
The luxury goods sector is influenced by changing consumer tastes, preferences, and lifestyles in the various regions in which it operates.
Almost 90% of the top 50 fashion and luxury trademark filers originate from Europe and the United States, but nearly 50% prioritize Chinese filings above all others.
Fashion and luxury brands around the world are adopting a more comprehensive IP protection strategy that encompasses copyrights, patents, and unfair competition law in addition to traditional trademark rights.
Adidas, Bottega, Christian Louboutin, Hermès and Manolo Blahnik are among the big-name brands driving case law in evolving areas such as NFTs, 3D marks, platform liability and unregistered rights.
Fashion brand owners need to expand their online enforcement focus beyond global e-commerce platforms to incorporate regional resale sites, social media networks and shopping agents in line with the latest consumer trends.
The COVID-19 pandemic saw the peddling of counterfeit goods at physical markets move online, causing a rapid change in the enforcement landscape.
Many of the principles that apply to offline enforcement apply online and, in December 2022, the Christian Louboutin team secured a remarkable victory that ruled that Amazon may be liable for trademark infringement where it promotes counterfeit goods on its platforms.
Although the ruling applies only in specific circumstances, pursuing online marketplaces liable for trademark infringement is a new and important part of a successful enforcement strategy.
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