5-Year Chinese Prison Sentence and 2 Million RMB Fine for Burberry Counterfeiter

On April 27, 2024, the Shanghai Jingan Procuratorate (静安区检察院) announced the successful prosecution of defendant Gong XX for counterfeiting registered trademarks of Burberry. On February 23, 2024, the Shanghai No. 3 Intermediate People’s Court upheld an earlier judgment sentencing Gong to 5 years in prison and a 2 million RMB fine.  Shanghai seems to be becoming a preferred venue for foreign rights holders for enforcement of criminal IP laws.  This same Court also recently affirmed a 9-year prison sentence for criminal copyright infringement.

As explained by the Procuratorate, in November 2022, the consumer Mr. Cao purchased a windbreaker of the Burberry brand from an online store of  for 2,870 RMB. The store claimed that the clothing was authentic and purchased from an overseas country. After receiving the goods, Mr. Cao found that the workmanship of the windbreaker was rough and suspected it was a fake, so he sent the windbreaker to Burberry for identification. It was finally confirmed that the “Burberry Black Label” windbreaker was counterfeit, and he immediately reported the case to the police.

After investigation, it was found that the criminal suspect Gong XX, in order to make profits, counterfeited Burberry brand windbreakers, shirts and other clothing, and sold them as “authentic products” from “overseas purchasing agents.” On May 5, 2023, investigators arrested Gong at his residence and seized more than 50 pieces of finished clothing counterfeiting the Burberry brand, a large number of hangers, zippers, buttons, logo and other accessories bearing the word Burberry and the design of equestrian knights. Upon authentication, the aforesaid seized articles were counterfeit commodities which infringed upon the exclusive right of Burberry to use a registered trademark.

On July 4, 2023, this case was transferred to the Jing’an District Procuratorate for review and prosecution. The procuratorial organ immediately sent a notice of litigation rights and obligations of the right holder in the intellectual property criminal case to the right holder’s company and interrogated the criminal suspect Gong XX. According to Gong’s account, “XX Overseas Purchasing” was jointly established by him and his friends when they were engaged in the purchasing clothing business. Later, the two parties broke up the partnership due to disagreement over their concepts and the store stopped operating. However, he still has the customer resources from the previous purchasing agents so he thought of counterfeiting well-known brand clothing and selling it to others for profit. These buttons and tags with the Burberry logo were purchased through the wholesale market. Later, he found Song XX, and asked him to make windbreakers and shirts of the same brand according to the style pictures and materials provided by him.  The cost of a garment ranges from 420 to 480 RMB, but is sold for about 2,800 RMB.

The defendant argued that the trademark counterfeited  was “BURBERRY BLACK LABLE,” (sic) which was not the same as the wordmark BURBERRY registered by the rights holder and was not the same trademark. At the same time, the literal trademark “BURBERRY BLACK LABLE” was never actually used in the domestic market, and the use of the trademark in a foreign country ceased for three years or more, and the trademark right holder has no actual losses, and so does not constitute a criminal offense.

The Procuratorate verified that “BURBERRY,” “BURBERRY BLACK LABLE” and the design of equestrian horseback were registered trademarks of the company, and the company enjoyed the exclusive right to use the trademark. Although the “BURBERRY BLACK LABLE” trademark was no longer used in an overseas country, the equestrian design trademark, which was also registered at that time, is still used in domestic clothing products.

The Procuratorate , through on-site investigation of all trademark varieties, quantities and characteristics attached to the infringing commodities, found that Gong’s counterfeit apparel had the logo of “BURBERRY BLACK LABLE” on the neckline, chest and tags of the apparel, as well as the pattern of equestrian horseback. After a comprehensive and detailed comparison with the genuine clothes, it was confirmed that there was basically no difference between the knight trademark “BURBERRY BLACK LABLE” and the “knight” design trademark of the right holder. “BLACK LABEL” is a refinement of the “BURBERRY” model or series of the registered trademark of the right holder, and is not a core element of that trademark. Whether or not such a word is added does not affect the distinctive features of the knight graphic and the words “BURBERRY” in the registered trademark of the right holder as well as the trademark combination thereof.

The lower court held that whether the criminal suspect Gong counterfeiting a word trademark of “BURBERRY BLACK LABLE” or using the trademark of “Black Knight” in combination, there were no basic difference in graphic elements, arrangement and combination between the registered trademark and the trademark logo of the right holder, BURBERRY, which was sufficient to mislead the public, and Gong’s sales amount reached more than 4 million RMB  and the pending sales amount reached more than 100,000 RMB, which was especially serious.

Accordingly, the Jingan District Court made a first-instance judgment on November 16, 2023, sentencing Gong to five years in prison and a fine of 2 million RMB. Gong XX appealed. On February 23, 2024, the Shanghai No. 3 Intermediate People’s Court ruled to reject the appeal and uphold the original judgment.

The original text from the Jingan Procuratorate is available here (Chinese only).

 

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