Why Silk Street Trapped in Astronomical Infringement Suit?

Customers patronizing the Silk Street Market may still be struck by its imposing banner "Safeguard IPR", they have no idea the market is right in the middle of a series of trademark infringement disputes. 

Silk Street Market is sued again

On February 7, Beijing No.2 Intermediate People's Court accepted an infringement case concerning 56 trademarks filed by five foreign luxury goods manufacturers including Louis Vuitton, Chanel, Burberry, Gucci and Prada. Joining the market at the defense table are Beijing Xin Ya Sheng Hong Real Estate Development Company and some 10 shops in the market. The five designer brands seek 28 million yuan in damages.

The five plaintiffs based their lawsuit on the  notarized counterfeit goods respectively bought in the market from 2008 to 2010. The 10 shops were specifically accused of infringing their trademarks on the ground of distributing counterfeit goods in the market.

Both sides give their story

The five right holders assert, as the manager of the market, the Silk Street Market Company has the right and duty to oversee the business activities within the premises, which it apparently failed to oblige on top of facilitating the infringement activities of the shops. The landlord, Beijing Xin Ya Sheng Hong Company is accused of condoning the sale of counterfeit goods. Both of them shall assume indirect liability for their intentional act.

"The dispute between five right holders asserts and Silk Street Market has been existing since 2005. For the 56 suits, each plaintiff seek 500,000 yuan in damages for each suit", said Luo Zhenghong, the agent of above five manufactures. For the detail of the case, however, she refused to disclose citing she was not authorized.

"Since the operation of the new Silk Street Market in 2005, it has been proactively sweeping away trademark infringement and taking measures to safeguard the interests of brand owner by establishing IPR protection fund, providing free-of-charge International Consumption Ticket for brand owners, and trying to filing a '1＋5' IPR protection cooperation mode to brand owners like the above 5 manufactures, so in no sense it provides convenience for trademark infringement", said Zhang Yongping, the president of Silk Street Market.

Prior to the lawsuit, the five manufactures sent several warning letters to the market through their attorneys and informed on the existence of trademark infringement activities between 2008 and 2010. The market then launched surprise raids on the shops in question and found nothing as in the warning letter. The market then responded and requested substantial evidences from the plaintiffs, who never replied, also according to Zhang Yongping.

Age-old disputes

Actually, the Silk Street Market is no stranger in such case. Since 2005, the market has made several trips to the defense stand.

In September 2005, the five foreign luxury-brand manufacturers Louis Vuitton, Chanel, Burberry, Gucci and Prada brought Silk Street Market Company to the court. It was the first time that the market was accused of infringement since its operation in 1985. In April 2006, Beijing High Court rendered its final decision and order Silk Street Market and several shops in the market to indemnify 100,000 in damages.

From April to August 2008, the above 5 manufacturers filed a series of 24 suits against the market and several shops for distributing  goods counterfeiting their brands, and requested the court to order the two defendants to assume  joint liability. On December 2, 2008, under the auspices of Beijing No.2 People's Court, the five manufactures concluded a reconciliation agreement with the Silk Street Market, including such terms like urging Silk Street Market Company to perform its management and supervision responsibilities.

Establishing long-term IPR protection mechanism

"As this case shows us, we could see that Silk Street Market is an influential market in China and aboard, and intensify IPR protection is of great significance to safeguard its fame and image. On the other hand, it also suggests a need for building a long-term IPR protection mechanism", said Li Shunde, the director of Law and IP Institute of China Academy of Sciences.

On the one hand, the Silk Street Market has been making great efforts to protect IPRs for years, including establishing IPR protection fund, giving international consumption ticket, shutting down suspected stalls for selling counterfeits. On the other hand, the problem of infringement did exist, which can not be solved by launching IP enforcement campaign once or twice, it need a long-term and unremitting efforts. From 2010 to 2011, China launched a special campaign on cracking down IP infringement and selling and distributing counterfeit goods, and it delivers. So Silk Street Market must do more and take measures to translate IPR protection into its daily business operation. Only in this way can Silk Street Market pass the tests and advance.