Courts chip away at knockoff heaven
The Silk Street shopping mall in Beijing, formerly known as Silk Alley and reknowned for selling counterfeit merchandise.
JOCELYN FORD: A ten minute drive down the street from President Hu Jintao's office is the Silk Market shopping center. It's knock-off heaven, and a favorite stop for foreign tourists.
So Prada, Burberry, Chanel, Luis Vuitton and Gucci decided to sue the landlord. It's a new tactic in the war on piracy.
The idea is to get the landlord to boot out tenants who sell fakes. But a lower court judgment last December saying the same thing only pushed sales under the table.A few days ago, I accompanied the legal advisor to the five foreign brands, Joseph Simone of Baker McKenzie, on an undercover shopping trip.
As soon as we entered, we were surrounded by fakes.
JOSEPH SIMONE: Oh, Max Mara, that's Italian. I see you got Burberry here, huh?
SALESWOMAN: I bring for you Burberry.
JOSEPH SIMONE: You have Burberry?
SALESWOMAN: Yes I have. Which color do you like?
JOCELYN FORD: She disappeared to fetch one
JOSEPH SIMONE: So this woman is going to bring a sample, and if she gets caught, $6,000 fine. Two months rent.
JOCELYN FORD: Around the corner, Simone spots a shop he thinks has reformed its ways.
JOSEPH SIMONE: This is a shop selling a Chinese brand. This is a new phenomenon. People realize a lot of consumers . . . sometimes they don't want to just buy fakes.
JOCELYN FORD: But before he could finish his sentence, the sales lady offered something stashed away.
SALESWOMAN: I have Armani.
JOSEPH SIMONE: Oh, you also sell Armani here?
SALESWOMAN: Yes, which color?
JOCELYN FORD: One salesman told us police patrol every day. But that didn't worry the vendors who approached us. It's a game of cat and mouse and, Simone admits, at the moment the mouse is outsmarting the cat.
JOSEPH SIMONE: Instead of a cat, you know, you need an exterminator.
JOCELYN FORD: Luxury brands have been prodding the Chinese government to fight fakes for years. And this week's court ruling is an important victory. But it's just one battle.
JOSEPH SIMONE: It's symbolic, partly. To send a message to the landlords throughout China that they might bear some consequences for the counterfeiting in their markets that's taking place at an extreme scale.
JOCELYN FORD: Simone is under no illusion that the fakes will be gone tomorrow. He expects the war to drag on.
JOSEPH SIMONE: Hopefully, these markets will just transition into other types of businesses. In fact, that's one of the things we've already seen in the silk market. You have more and more companies coming into the market that aren't selling fakes. And it could turn into a normal mall in five years.
JOCELYN FORD: Simone and others say recently the Chinese government has become more serious about punishing piracy. It's a higher priority now that more Chinese companies have their own brands to protect.