Technology has given China’s lightning-fast copycats the ability to make convincing fake products while the Internet has made it easier to sell counterfeit products. China remains the hub for counterfeits, manufacturing and exporting the vast majority of counterfeits that flood the U.S. and European markets.
The most frequent complaint that China lawyers receive from their clients is the problem a foreign company faces with its China manufacturer. The entire problem becomes even more severe when a China based manufacturer starts producing the product of the foreign company and giving them competition in their home market. The counterfeits and the risks they pose will ruin any company’s reputation, damage its goodwill, and cause potentially costly litigation.
How counterfeit products are produced in China?
It is an interesting fact that most of the fake products come from the entities and people you work with in China. Primarily in most cases it is the manufacturer but it could also be your retailer, distributor, your existing or previous employee or the company with whom you are doing business. Knock-offs tend to be made in either a registered factory that makes them on the “third shift” after the legitimate product is made, shipping the counterfeits out the back door when no one is looking. Or then there’s the purely clandestine factory that has no relation to the original product.
China lawyers suggest two possible remedies to tackle this situation-
Remedy 1- Make an arrangement in your manufacturing agreement that may prevent the China based manufacturing company from producing and selling your product and from using your trade name or your logos.
Remedy 2- Register your brand name as a trademark in China and wherever you sell your products. It will keep the China manufacturer away from counterfeiting your product and selling them anywhere.
When it comes to anti-counterfeiting actions, registration is much more than a check-the-box exercise. As a general rule, if a trademark, patent, or design has not been registered in China with the proper agency, any anti-counterfeiting program, no matter how sophisticated, will come to naught as there is very little chance that Chinese enforcement agencies will be willing to conduct raids or prosecutions. Qualify one factory before communicating your product information. Check their references if possible. Audit their production facilities. Check their design & engineering capabilities if you need custom development.
Because fakes are getting better sometimes even coming in lookalike packaging it’s a good idea to include secret features that distinguish your products from Knock-offs, especially if you’re worried about liability suits resulting from counterfeits.