In China, Fame Is Fleeting (And Corrupt)

From the China Compliance Digest (Issue No. 26: July 30, 2012):

In the stiff competition for consumer attention in China’s retail market, the power of “fame” can provide a distinct advantage.

More than 1,600 brands have been declared officially “famous” by Chinese authorities.

The designation brings not just bragging rights but also a license to use special packaging that lends products extra cachet and credibility with consumers left skeptical by China’s frequent counterfeiting and food-safety scandals.

In addition, “famous” brands get advantageous positioning in the quest for government support, as well as a potential leg up in intellectual property disputes.

To be declared “famous,” companies must get approval from both local and national trademark authorities, a laborious process that can take up to three years.

But courts in China also have the power to bestow official fame on brands. This has allegedly led to a spate of fake trademark-infringement lawsuits, in which lawyers, judges, and companies colluded to produce favorable results for corporate plaintiffs.

In one case, a Taiwanese soy milk maker filed a lawsuit where the defendant was paid to parrot the company’s claim that its trademark had been violated. As part of the courtroom victory, the Taiwan company won “famous” designation.

At least six judges and three lawyers have been arrested in Henan Province in connection with “famous” brand scams. Attorney Zheng Lifang, the first arrest, reportedly confessed to taking $156,986 from her clients, some of which went to bribe judges.

Zheng’s confession steered authorities to three judges who specialized in intellectual property rights cases at Luoyang Intermediate People’s Court.

Insiders in the local judicial system say they expect more attorneys and judges to be implicated in the scandal.

Source: Caixin Online (财新网)

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