LVMH wins China trademark battle
Luxury goods group LVMH has scored a US$1.5 billion judgment in China for trademark violation, suggesting a significant shift in the People’s Republic’s attitude to protecting intellectual property. Will this mean a crackdown on counterfeit bottles?
If borne out, the judgement, linked to LVMH’s Louis Vuitton trademark, would add notable protection to alcohol categories such as Cognac and fine wines (notable Treasury Wine Estates’ Penfolds range) which have been hit by counterfeiting and faking in China.
The dispute started when LVHM sued a Chinese milk tea brand for aping its iconic Louis Vuitton symbol on its products.
Last week, in a ruling which fundamentally redraws the boundaries of global intellectual property protection, a Chinese judicial authority ordered the perpetrators to pay US$1.5 billion for systemic trademark infringement.
Domestic piracy
That is one of the largest intellectual property judgments in Asian corporate history and, many believe, signals a fundamental shift in China’s legal apparatus, moving from historical tolerance of domestic piracy to rigorous enforcement of international brand standards as Chinese firms seek reciprocal protections abroad.
The significance of the US$1.5 billion penalty is that it exceeds compensation for lost sales but includes massive punitive damages designed to deter other fakers.
The decision immediately triggered widespread discourse across Chinese social media platforms, with domestic analysts interpreting the ruling as a harsh warning from Beijing that it will crack down on fakers as China seeks to build its trade relations, and brand names, internationally.
Counterfeit bottles
Alcohol groups have been prime targets of the fakers who counterfeit expensive bottles and sell them for considerable profits through local networks.
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Production of virtually identical bottles, capsules, labels and other packaging is rife throughout Asia. In many instances a crime is not committed until all the elements in a fake are brought together and filled with local moonshine.
However, the LVMH ruling underlines a state crackdown.
Earlier this year, Treasury announced that it had been awarded more than US$10 million in damages after a years-long fight against a wine brand accused of mimicking its iconic Penfolds label.
On appeal, a Chinese court ordered the defendants behind a brand called “Rush Rich” to pay US$10.2 million in damages. The first two Chinese characters in the name aped the Penfolds name while the rest of the packaging was deliberately designed to confuse consumers.
Last month db reported that Chinese authorities had dismantled several criminal networks involved in the production and sale of counterfeit spirits marketed as exclusive government and military products. The nationwide crackdown resulted in more than 75,000 cases of illicit alcohol being seized and dozens of arrests.
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