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Manage your Intellectual Property in South-East Asia

Case Study 3 - Discovery of counterfeit versions of a European product in Southeast Asia

Background

A small British company produces a very successful line of clothing under the brand name SHO.

The British company distributes its clothing locally in ASEAN through a dealer. The dealer reported to their British partner that they had become aware of cheaper ‘fake’ SHO branded clothing becoming available on the local market. The British company hired investigators to look into this.

Upon carrying out a market survey, the investigators discovered that several shops were actually selling counterfeit SHO clothing.

Determined to find the source of the 'fakes', the CEO of the British company initiated a long investigation where the importer was eventually found. By the time the importer was identified and located, it soon became apparent that the stock of 'fake' clothing was exhausted and the next shipment was not due for a further four months. The British company was forced to wait that length of time in order to conduct a large 'seizure'.

So as not to alert the counterfeit importer, the counterfeit retailers were allowed to continue selling the fake merchandise in the interim period.

Outcome

A police raid was eventually carried out against counterfeit importer six months after the first reports of suspected counterfeit merchandise. In the meantime, the British company came under pressure from the local market to reduce the price of its products. In this time, they also realized that there were also sources of counterfeit products produced locally.

IP Lessons

  • The investment made on seeking out a particular target proved to be expensive. A more cost effective strategy might have been to send warning letters to the retailers because they are the source of demand for counterfeit importers. Such retailers will usually not wish to defy such a warning which might put them at risk of legal action and high costs associated with such legal entanglements.
  • The British company may have been well advised that it would not be possible to eradicate trade mark piracy completely and that it would have been better to decide on a more cost effective strategy to deal with the problem.
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