| 6406
Wonder Scammers 2021 .jpg "01(3).jpg") Johnny Chan explores the kind of fake stores that goes beyond
selling counterfeits, the kind that mimics the entire shopping experience a
legitimate brand offers — from employee apparel to store layout and more. In countries
such as India, fake stores selling counterfeits with registered brand names and
livery are common both on- and offline, says Rachna Bakhru, a partner at RNA,
Technology and IP Attorneys, in Gurugram. .jpg "02(4).jpg") Scammers online create phony websites
with infringing logos, content and URLs that can confuse customers. “Customers
receive e-mail and text invitations to visit their websites with attractive
offers,” Bakhru says. “Scammers generally offer popular clothing brands, luxury
goods and electronics. Online shopping is becoming more popular with Covid-19,
which has caused an upsurge in such scam.” For brick and mortar copycats, they
often create identical looks and feel of authorized stores with prominent use
of famous brand names, logos and slogans. “On their signboards, the colour
scheme, layout and design give customers an impression that they are shopping
from an authorized retailer,” she says. “Usually, such stores offer a mix of
original and counterfeit products that are not limited to a single brand. The
ultimate goal is to confuse customers with the origin of products. Puma
recently targeted one such store in Northern India.” The Delhi High
Court recently passed a restraining order against a third party using the name
Facebake for a pastry hub in a similar colour and font as Facebook. The shop
offers bakery products as well as gifts such as flowers and watches on its
site, facebake.in, she adds. “This is a typical case of trademark infringement,
which the use of a similar mark, font, colour scheme and URL of the shop is
used to deceive customers into believing that there is some association between
Facebook and the bakery.” .jpg "03(5).jpg") Another case involved a 19-year old who, after failing to secure
employment at the State Bank of India, established a bank in the same name
running from his own residence. “The team printed cheque books, withdrawal and
deposit slips, and made a fake rubberstamp – imitating the look and feel of the
original bank. The arrests came soon after the SBI Panruti branch manager
complained,” Bakhru says. “This is a classic example of using brand name and
image to make profits and deceive customers.” Besides online shopping frauds, job scams are quite prevalent
where scammers offer jobs at multinational companies using names of popular
brands and charge application fees. “They are successful in trapping job
seekers through imposter websites using URLs containing well-known brands. I
have personally handled several such cases, including one in which someone
copied the entire content of the client’s website (a solar company) involving
names, profiles and pictures of its management team. This fake company
advertised jobs on its website and collected application fees,” she adds. “We
have also handled two scams in the hotel industry where money was being sought
in the name of medical assessment and visa for jobs overseas.” Below is an
example of an employment letter issued by the scammers.” .jpg "04(1).jpg") In another case, the scammer created a website using a domain
name containing the name of a popular search engine, registered a company in
the same name, and opened a bank account that was sufficient to deceive the
trade and public they were dealing with the original company. The fake company
collected a good sum of money from the job seekers in the name of the
well-known company, which was then approached by the job seekers for refunds.  “As there are no checks and balances or due diligence required (by the domain
registrar) when registering a domain name, the scammers can exploit the
internet’s anonymity to run these frauds,” she says. In jurisdictions like Malaysia, fake stores providing the full
experience of well-known brands are few and far between. “Counterfeits are sold in shops or night market stalls in areas
that are notorious for specific types of fakes,” says Jin Nee Wong, a partner
at Wong Jin Nee & Teo in Kuala Lumpur. “Their quality varies depending on
where they are sold. Night markets or stalls usually offer lower quality. Counterfeit
IT products are found in relevant malls located within the Kuala Lumpur city
centre and a nearby satellite city, Petaling Jaya. On the other hand,
counterfeit clothing is mostly sold at night markets or ‘fashion malls’
scattered throughout most major Malaysian cities and shopping malls do offer
higher quality. Temporary fairs or sales events would also dupe consumers into
believing the branded counterfeit clothing, bags or other fashion accessories
are factory overruns, parallel imports or excess stocks. Yet, their prices are
too good to be true.”
Counterfeit food products, liquor, engine oil, cosmetics and personal protective equipment in the wake of Covid-19 are also prevalent in Malaysia, which could cause irreversible economic and health damage to consumers, says Wong. ▶ LoopholeSo, are stores selling genuine goods
illegal if they only mimic the vibe (i.e., the sound and smell) of a famous
brand? “Not
necessarily,” says Xia Zheng, president at AFD China in Beijing. “But if such
imitation is sufficient to mislead the relevant public into believing that it
is selling the goods of others or has a specific connection with others, it may
very well constitute a confusing act prohibited by Article 6 of the Unfair
Competition Law.” In addition,
sounds can be registered as trademarks in China. “So, if stores use sounds
which are similar to others’ registered sound marks to build atmosphere without
authorization, they may constitute trademark infringement,” Zheng says.
“Odours, by contrast, are currently unaccepted for trademark registrations.”  ▶ Social media is a hotbed for crimeThere has been a major shift in the advertising and sales of
counterfeits from conventional mediums to social media and e-commerce platforms
in Malaysia, says Wai Hoong Loo, a senior associate at Wong Jin Nee & Teo.
“For example, many counterfeit luxury products such as handbags and perfumes
are now regularly advertised via video recordings which are only viewable for
24 hours or on temporary live streams on various social media platforms. It
seems that infringers have adopted these guerrvhilla marketing tactics to
quickly remove any trace or evidence of counterfeits from their accounts.”
Many online merchants remain anonymous or use fictitious personal particulars, and insufficient information on infringers has posed significant enforcement challenges for brands, Loo says. “As a result, brands are compelled to incur additional costs to identify and gather evidence against such elusive infringers. When approached, some of the platforms refuse to provide the merchants’ details by claiming that they are complying with the Personal Data Protection Act 2010, making it extremely frustrating for brands. This is notwithstanding the fact that there are specific regulations, namely the Consumer Protection (Electronic Trade Transactions) Regulations 2012 that require merchants to disclose their identities when trading online.”
Online maps and reviews which are either manipulated by
infringers to give the impression or based on the reviewers’ mistaken belief
that the counterfeits that they had purchased are genuine may mislead consumers
who rely on the reviews while deciding to unknowingly purchase counterfeits
from infringers, he says. ▶ Laws & orderBesides improving and adding laws, enforcement must be conducted
and reported. The Enforcement Division of the Ministry of Domestic Trade and
Consumer Affairs (MDTCA) is the law enforcement authority which predominantly
conducts IP enforcement actions in Malaysia. “The existing legal regime had
been recently revamped and enhanced by the introduction of new provisions
governing counterfeiting-related offences in the Trademarks Act 2019. Pursuant
to the 2019 Act coming into force, we have seen an increase of enforcement
actions and prosecution of infringers based on the more stringent provisions,”
Wong says. “There are also existing provisions and penalties provided for by,
among others, the Trade Descriptions Act 2011, Copyright Act 1987 and Consumer
Protection Act 1999 which empower the MDTCA and other authorities to conduct
investigations and raids.” To enhance brands’ effort in combating infringement, she
recommends adopting the practices below: ▷ Brands should
identify their key products which are being copied and hawked by counterfeiters
while reallocating their resources to the online space and enforcing their
rights over those key products. ▷ Brands should
utilize data mining and intelligence gathering exercises by conducting focused
online sweeps on major e-commerce platforms and websites to identify the
markets and product listings where counterfeits of their key products are seen. ▷ Brands should
foster close collaborations with their IP counsel, investigators, fellow brands
and other industry peers to conduct joint-industry enforcement programmes as
well as collectively engaging with authorities and e-commerce platforms. .JPG "13(1).JPG") An express penalty in the Consumer Protection (Electronic Trade
Transactions) Regulations 2012 for the online merchants’ failure to disclose
their personal details on e-commerce stores is long overdue, Wong says. “As
many of the online platforms have used the Personal Data Protection Act 2010 as
an excuse not sharing the identities of the merchants trading on their
platforms, we believe the PDPA should be clarified that no such protection will
be given to personal data used as business contact information in conducting
their trade.” Provisions requiring e-commerce platforms to seek brands’ prior
confirmation of authenticity and consent in relation to the use of their
trademarks, copyrighted works and other IPRs before being allowed to advertise
and/or sell products bearing the brands’ trademarks and listings comprising the
brands’ IP would also thwart infringers, she adds. Media must continue reporting high-scale seizures and
high-profile civil IP suits to raise public awareness as well. “It shows that
brands are constantly monitoring and taking actions,” she says. “If necessary,
brands could make infringers publish apology statements to disassociate them
from their brands.” Internally, brands need to closely monitor domain names that
might conflict with their registered marks, Dishita Shah, a partner at Y.J.
Trivedi & Co. in Ahmedabad, weighs in: “It is wise to secure domain names
using variations of your brand name with all of the most common extensions.
Brands must also keep up with technologies such as radio frequency
identification, security holograms, barcodes, QR codes, AI and blockchain.” Market surveys and routine modification of design and packaging
would make counterfeiters difficult to catch up. “Brands must consistently
increase consumer awareness of their products, policies, trademarks and pricing
over the fake ones. They can leverage social and mass media to help with that,”
Shah says. “It is also important for big brands to partner with trade
associations that have set mechanisms toconduct periodic checks on these
branded products of their members. Last but not least, working closely with
regulatory and enforcement agencies will go a long way through raids.”  ▶ A fine line between similarity and dissimilarityIn the biggest fake store case ever in Japan, the infringer
initially applied to join the Komeda Coffee franchise but was refused. It then
opened a store very similar to Komeda in terms of appearance, interior décor
and dishware, and called it Masaki Coffee. In 2014, Komeda was the third largest coffee chain in Japan with
628 stores nationwide and had an annual number of visitors reaching 79.95
million. The exterior and interior as well as the menu and coffee cups were all
standardized across stores. Based on the facts, Komeda was very well-known. The Tokyo District Court announced that while there was a
difference in the store names, consumers could have misunderstood that the two
were in some kind of business relationship, so Komeda’s proceedings were
accepted under the Unfair Competition Prevention Act.  “In Japan, the appearance and interior of a
store are protected by the Unfair Competition Prevention Act if (1) it is
well-known; (2) the infringer’s indications are similar; and (3) confusion
occurs,” says Takenori Hiroe, chairman at Hiroe and Associates in Gifu City.
“Furthermore, the Design Act has been amended and become effective since April
2020, so the exterior and interior of a store can now be registered as designs,
if registration requirements (i.e., novelty) are met. In fact, within the half
a year since its enforcement, approximately 300 design applications have been
filed.” .jpg "10(1).jpg") In South Korea, one of the most famous counterfeit cases in 2020
was Hermes
v. Playnomore, in which Playnomore allegedly copied the designs of
Hermes’ Kelly and Birkin bags. Playnomore argued that it was only a parody
without malice or intention to free ride over Hermes’ reputation.
Playnomore actually printed eyeballs on its bags for people to
tell the difference between theirs at the original Hermes products. The company
also argued that, depending on the style, a Hermes bag can cost from US$30,000
to US$100,000, while a Playnomore bag is only around US$100 to US$300. .jpg "11(2).jpg") .jpg "12(1).jpg") “It is therefore hard to say there could be real confusion in source of origins for the two brands,” says Yung Joon Kwon, managing partner at Kwon & Kim Patent & Trademark Attorneys in Seoul. Nonetheless, a district court ruled in favour of Hermes for the
first time that there could be free riding, while the intermediate court
decided later on a contrary ruling that the eyeball bag contained its own
originality and creativity, which could lead people to buy instead of causing
confusion. The Supreme Court remanded the intermediate court’s decision
ruling that Playnomore infringed Hermes’ interest by conducting unfair
competition activities, which “possibly” took Hermes’ market shares illicitly
and diluted its reputation. “Again, it is unlikely people would be misled or confused between
a hundred thousand dollar bag and one that is 1/1000 cheaper – it just shows
Korean courts are reluctant to allow trademark or design parody,” Kwon says.
“Sadly, it is also hard to reproach court rulings that protect famous designs
or trademark owners’ interests.”
|
|||
| List |
| prev | Interview with Asia IP law: Intellectual Property Financial matters during the pandemic |
|---|---|
| next | Interview with Asia IP law: Updates to trademark enforcement in Asia-Pacific |
