The Thirst of the Dragon: An Introduction to the Growth of Popularity & Counterfeiting of Wine in the Middle Kingdom

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Pouring_a_glass_of_red_wine.tiff“Wine is one of the most civilized things in the world . . . it offers a greater range for enjoyment and appreciation than, possibly, any other purely sensory thing.” 

― Ernest Hemingway 

Wine. The Greeks honoured this sacred beverage with its own deity, the Christian faith honour it as part of the sacred rite of Eucharist, and today, the history and quality of less ancient vintages has created a thriving trade around the world. 

Making up the majority of what the wine industry now calls the “Old World”, Europe combines a rich history of viticulture and winemaking with modern technological innovation. In recent years, Europe’s love of wine has proved especially infectious to developing palettes in East Asia, and over the last few decades Chinese consumption has surged, overtaking France as the largest consumer of red wine worldwide. This being said, room for growth in China remains as the Chinese continue to lag behind other nations in terms of individual consumption; in 2014, France’s 51.9 litre per capita consumption dwarfed China’s mere 1.5 litres.  

Europe’s old guard wineries seem well-poised to capitalise on this growth. They have spent hundreds of years perfecting their craft, and European ‘old world’ wines are sought after around the world. As a result, Chinese consumers primarily turn to Europe to slake their thirst for foreign wines— with the Middle Kingdom relying on European imports for 65% of its foreign wine trade. French reds are in particular favour, with 48% of China’s imported wines starting life on French vines, although wine produced in Germany, Spain, and Italy also enjoys considerable popularity amongst Chinese consumers1. 

However, in spite of Europe’s advantages, Chinese consumers still show a preference for domestically produced wines and more than 80% of wine consumed within China is produced domestically. According to independent critic and wine expert Jancis Robinson (MW)2, quality alone does not account for this disparity. Robinson, widely held in high regard for her independent critique and support of new industry and independent wineries, has routinely visited China over the last decade to sample the country’s developing vintages. As such Jancis is uniquely qualified to comment on the development of Chinese wines, and tells us that though Chinese winemaking has improved greatly in recent years, most producers still lag behind the established vines and vintners of Europe in terms of quality. 

There is of course something to be said for the effect of price on consumption. However, whilst historically, European wines have been more expensive than their Chinese competitors due to import taxes and shipping costs, these prices are now falling in line with many Chinese brands. With this barrier removed, the simple truth is that European wine brands are suffering irreparable damage to the reputation of their products amongst the developing palates of Chinese consumers, inflicted by rampant acts of counterfeiting.  

In vino veritas? 

Silently, over the last few decades, the Chinese wine market has become awash with fakes. Counterfeit investigations specialist and attorney Nick Bartman has had over 25 years’ experience in investigating counterfeiting and shutting down infringers and has spent the last 6 years tracking down wine counterfeiting in China. His investigations have turned up an astonishing volume of counterfeit wines ranging from cheap knockoffs sporting absurd claims (such as a French Bordeaux purportedly produced by a chateau in Luxembourg) to far more sophisticated fakery which even the original wine’s producers have trouble detecting3.  

Bartman and other experts in the field estimate that as many as one in three bottles of purportedly ‘foreign’ wine in China is fake4. Inevitably, even the best fakes fall far below the standards of quality which would be expected of European wines, severely damaging the reputation of European producers amongst Chinese consumers.  

Due to a historical lack of understanding of Chinese IP rights, and resultant failure to act early to counter this tsunami of illicit labelling, the wine industry now faces the daunting task of tackling an established and sophisticated web of infringers, or risk losing valuable ground in a rapidly developing market. 

A framework for action 

Despite the seemingly grim state of counterfeiting in the Chinese wine market, European producers are not without recourse. Over the past few decades, Chinese legislators have built a comprehensive legal framework around IPR protection and enforcement. Despite the western media’s negative outlook on Chinese IP protection, the mechanisms for registration, protection and enforcement of intellectual property are more accessible to European wine makers than many believe. 

Furthermore, Chinese authorities themselves are especially keen to crack down on counterfeiting of wine, motivated by both IP as well as health concerns. Much of the liquid found within counterfeit bottles is of substandard quality or has been found to be “Frankenwine” produced entirely by chemical and laboratory methods, never seeing a grape, let alone a French vineyard5.  

Despite the ready ally present in the Chinese government and Chinese wineries6, the European winemaking industry must band together and act promptly on this issue. Our sources in the European wine trade have all reported a reluctant acceptance of Chinese piracy in the European wine industry. With Chinese counterfeit wines now leaking to the West however, it is crucial that producers act to stem the flow. The IP framework is established in China, and protection and enforcement of rights are not only available, but also more accessible than ever before. All that remains is for European producers to take the fight to the infringers and work with the local authorities to assert their rights on Chinese soil. 

© AleBayntun-Lees
China IPR SME Helpdesk 

China IPR - latest

The China IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to China, Hong Kong, Macao and Taiwan, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (question@china-iprhelpdesk.eu) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days. 

The China IPR SME Helpdesk is co-funded by the European Union.  

To learn more about the China IPR SME Helpdesk and any aspect of intellectual property rights in China, please visit our online portal at http://www.ipr-hub.eu/. 

Thailand Joins Madrid Protocol

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On August 7, 2017, the Thai government officially deposited the instrument of accession to the Madrid Protocol with the WIPO, marking the starting date of the three-month period before the Protocol becomes effective in Thailand. Consequently, the Madrid System will come into effect for Thailand (the 99th member) as from November 7, 2017.

In its instrument, the government makes declarations on three issues. Firstly, a period to issue provisional refusal will be extended to eighteen months, with further extension possible in case of an opposition. Secondly, an individual fee to be specified in Ministerial Regulations to be issued by virtue of the accession will apply to international applications/registrations designating Thailand. Thirdly, recordal of a license agreements with the International Bureau will not be effective with regard to Thai applications/registrations.

After this deposition, the next step is to issue Ministerial Regulations to elaborate on the process. It is anticipated that the Regulations will contain the following details:

  • All documents submitted through the Thai Trademark Office to the International Bureau must be in English. If the Thai Office finds an international application incorrect or incomplete, the applicant will have to remedy it within 15 days upon receipt of a notice. Otherwise, the Thai Office may not be able to forward the application to the International Bureau within 120 days and the date of filing with the Thai Office will not be considered as the filing date of the international application. If the applicant does not comply with the Thai Office’s notice within 120 days, the application will be deemed abandoned.
  • For an international application designating Thailand, the Thai Trademark Office will translate the necessary content into Thai. In case of provisional refusal, the applicant is required to appoint an agent in Thailand to deal with it.  The response may have to be in Thai. In case of failure to respond, the Thai Office may partially accept the application for the goods/services in relation to which the refusal does not apply.
  • For certification marks and collective marks, the applicant is required to submit a rule on use and a list of authorized users in Thai.
  • The relevant forms, e.g. the application form and forms for various notices, will be prescribed by the Director-General of the Department of Intellectual Property. In addition, the DIP establishes a specialized unit to handle both inbound and outbound applications under the Madrid System.

© Mr Nathapong TongkaewPartner at Domnern Somgiat & Boonma Law Office Limited

Bio of IPR Expert Mr. Nathapong Tongkaew

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Email: nathapong@dsb.co.th

Mr. Tongkaew graduated from Thammasat University’s Faculty of Law in 2003 and was admitted to the Thai Bar in 2004. He also holds a Master’s Degree in law from Harvard University. He joined DS&B in October 2004 and became the firm’s newest partner on 1 January 2017. He handles contentious and non-contentious trademark prosecution matters, IP enforcement matters and a number of non-IP matters.

Enforcing IP Rights with the Customs in Vietnam: A Case Study

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shutterstock_118547785Border control can be an effective means for European SMEs for enforcing their IP rights in Vietnam, and it serves the purpose of preempting and suppressing IP counterfeits of SMEs’ products at Vietnam’s borders. Border control has gained more attention over the past few years from business owners wishing to protect their IP in Vietnam as the Vietnamese government recently granted the Customs more powers, making it more efficient.

Even though, Vietnamese Customs are actively looking for possible infringing products crossing the border of the country, it is advisable for the European SMEs to actively cooperate with the Customs authorities by recording their IP with the Customs and by actively monitoring the market and letting the Customs know of suspected infringing shipments, to fully benefit from the Customs protection.

How does Customs Protection Work

Vietnamese customs laws prohibit the importation of goods that infringe IP Rights, and Vietnamese Customs has the authority to impose fines on infringers and confiscate infringing goods for import. However, infringing goods for export are not subject to any penalties imposed by the Vietnamese authorities so far. If the infringement of IP Rights exceeds a certain threshold, the Customs authorities can also arrange criminal proceedings to be brought against the infringing party.

In order to fully benefit from the Customs protection, it is advisable for the SMEs to record their IP (trade marks and copyrights mostly) with the Vietnamese Customs. To seek customs recordal, SMEs must file an application with the Department of Customs Control and Supervision under the General Department of Customs. No later than 20 days from the receipt of the request, the Department of Customs Control and Supervision should notify the SMEs whether the application is accepted or not. The effective period of the recordal is two years from the date of the acceptance notice by the Department. The period may be extended for two more years upon request. After the extension period expires, companies must re-file a new application if they wish to pursue the customs recordal.

Although registering with Vietnamese Customs is not mandatory, it is advisable to be included to their database, as it will help the customs authorities to recognize counterfeit versions of SMEs’ product, and improve the chances of such suspect items being blocked at the border. If SMEs are aware of a suspected illegal shipment of their products, they can also work together with Vietnamese customs to detain such shipments.

It is particularly advisable for the SMEs to be vigilant and to report suspected infringements of their products to the Vietnamese Customs authorities because Infringers are demonstrating increasingly sophisticated counterfeiting methods, and are finding new ways to try to outwit the Customs and other IP enforcement authorities.

Case Study

This case study demonstrates the importance of cooperating with the Vietnamese customs to best protect company’s IP. It is particularly important because the Customs are generally looking out for identical products that are obviously infringing IP rights and could sometimes miss products that could be possibly infringing the original goods.

Background

A power supply company (Company A) has registered its mark ”SANTAK” in Vietnam since 1995 for “Uninterruptible Power Systems – UPS”. Further, ”SANTAK” is a well-known trade mark which has a large portion of the Asian market. Company A had information of a shipment of products bearing the sign ”SANTAKUPS” being imported from China by a Vietnamese company.

Advice

Company A was advised to register its mark ”SANTAK” with Customs and cooperate with the IP Enforcement and Anti-Counterfeiting Department within the General Customs Office and the Haiphong Customs Office to investigate and detect the shipment of products bearing the sign ”SANTAKUPS”.

Outcome

After the discovery of the shipment of 162 products bearing the sign ”SANTAKUPS” imported from China by a Vietnamese company, Company A’s representative requested the competent authorities to suspend the import procedures of the shipment. Haiphong Department of Custom issued a Decision to keep the shipment under custody according to administrative procedures. “SANTAKUPS” was written as one word, but the intent was to make a customer think that this was a combination of the words Santak and UPS. In this context, UPS is an abbreviation of uninterruptible power supply, so UPS did not create a distinction. Because of this, a comparison was only made with the word ”SANTAK” which was identical to the protected trade mark. Upon consideration of these findings, the competent Authority issued a Decision to apply sanctions under regulations of relevant Law: imposition of a high monetary fine and removal of “SANTAKUPS” from all infringing goods.

Lessons Learned

Through the registration of the mark with Customs as well as cooperation between Company A and Customs, Company A timely prevented the risk of infringement of trade mark in Vietnam by not only protecting their own interests in the market but also their reputation for the trade mark “SANTAK”.

South-East Asia IPR SME Helpdesk Team

 

SEA IPR

 

The South-East Asia IPR SME Helpdesk supports small and medium sized enterprises (SMEs) from European Union (EU) member states to protect and enforce their Intellectual Property Rights (IPR) in or relating to South-East Asian countries, through the provision of free information and services. The Helpdesk provides jargon-free, first-line, confidential advice on intellectual property and related issues, along with training events, materials and online resources. Individual SMEs and SME intermediaries can submit their IPR queries via email (question@southeastasia-iprhelpdesk.eu) and gain access to a panel of experts, in order to receive free and confidential first-line advice within 3 working days.

The South-East Asia IPR SME Helpdesk is co-funded by the European Union.

To learn more about the South-East Asia IPR SME Helpdesk and any aspect of intellectual property rights in South-East Asia, please visit our online portal at http://www.ipr-hub.eu/.

China’s New Ecommerce Law: What this will mean for Consumers, Operators and Providers

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shutterstock_167099189Today’s blog post has been kindly drafted for us by our China IPR SME Helpdesk expert Mr. Daniel Albrecht from Starke Beijing. In this article, Mr. Albrecht gives a comprehensive overview on the latest changes in China’s new e-commerce law that will inevitably effect the activities of consumers, operators as well as providers. 

China’s Ecommerce Market 

In accordance to analysis by digital marketing researcher eMarketer, cross-border Ecommerce in China was due to hit USD 85.76 billion in 2016, up from USD 57.13 billion in 2015. Furthermore the China Internet Network Information Center (CNNIC) reported 710 million Internet users in June 2016. Notably, 40 per cent of China’s online consumers are buying foreign goods and eMarketer estimated the amount of money that each of them would have spent an average of USD 473.26 in 2016. 

If the projection that cross-border Ecommerce will have a compound annual growth rate of 18 percent through to the end of the decade — reaching an estimated USD 222.3 billion — will come true, the consequence would be that China’s Ecommerce market will catch up with those of the US, Britain, Japan, Germany and France combined by 2020. 

China’s New Ecommerce Law 

As the Ecommerce market is constantly changing and undoubtedly its major impact on social life and the current economy cannot be denied, it seems to be necessary to provide a legal framework to give answers to upcoming questions within the scope of Ecommerce. 

Hence a new Ecommerce law is in progress and drafts are waiting to be adopted. The new law shall remedy the current situation by promoting the Ecommerce market’s development, putting things straight and satisfying all the parties’ interests. These central ideas are laid out in Article 1 of the recent draft law and shall summarize simultaneously the political objectives pursued by this law. 

Continue reading “China’s New Ecommerce Law: What this will mean for Consumers, Operators and Providers” »

Indonesia’s New Trademark Law – An Overview of the Changes

trademarkToday’s blog post has been kindly drafted for us by our South-East Asia IPR SME Helpdesk expert Mr.  Somboon Earterasarun from Tilleke & Gibbins. In this article, Mr. Earterasarun gives a comprehensive overview on the latest changes in Indonesia’s Trade Mark Law that came to force in November  last year. 

The Indonesian Parliament approved amendments to the country’s Trademark Law on October 27, updating the Trademark Law No. 15, which had been in force since 2001. The amended Trademark Law has now entered into force—it took effect on November 28, 2016—introducing a number of significant changes that refine current practices, add new features, and clarify certain provisions.

Some of the major changes include provisions designed to speed up the examination process. The new law also increases criminal penalties and provides more clarity on preliminary injunctions, both of which may help lead to better enforcement. Another change relating to the transfer of ‘‘associated marks’’ may be particularly important to international rights holders who need to transfer registrations to business partners.

Publication and Substantive Examination

Under the new Trademark Law, the publication stage—during which oppositions can be made—must now take place before the examiner conducts the substantive examination stage (i.e., the stage in which the distinctiveness and similarity to prior-registered marks are examined). The publication stage now lasts for two months, instead of three months. It is also the only opportunity for trademark owners to oppose third-party applications prior to registration. Continue reading “Indonesia’s New Trademark Law – An Overview of the Changes” »