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Petzl and Chinese IP law October 21, 2011

Posted by Brandon in Technique Forum - the Training.
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Counterfeit products from China are notorious, but a recent turn towards an insular and specialized outdoor sport is putting athlete’s lives at risk.  Earlier this year, the climbing manufacturer Petzl discovered counterfeit safety equipment was being tracked to China.  These products included handle ascenders, pulleys and carabiners, i.e. products used to save climber’s lives in a deadly sport.  The counterfeits were so thorough that in some cases, fake serial numbers were engraved on the components.  However, the quality of the materials and workmanship was clear.  Normally, counterfeit products are associated with clothing and electronics, but as Petzl now realizes, these untested and cheaply made products are doing more than just diluting their brand.

Climbing equipment is predominately designed and manufactured by Petzl and Black Diamond.  These companies have built a reputation for quality in the climbing community over decades of use in the outdoors.  Petzl claims their products are built and safe tested in the United State and France with durable components and comprehensive design.  However over the last few years, Petzl noticed Chinese counterfeits of their headlamps appearing, presumably in an attempt to capitalize on the loyal customer base who value the Petzl brand.  The counterfeit climbing equipment was nearly identical in color, design, markings, packaging and batch numbering.  While Petzl is pursuing legal action against the Chinese manufacturer, presumably for patent infringement and trademark dilution, the only remedial action they have suggested for end users is to ensure you purchase Petzl products from an authorized reseller.  This is likely due to the fact that to date Petzl has been unable to specifically identify or distinguish the counterfeited products from their own.

While intellectual property protection in China is widely considered to be poor, the legal structure and organization of IP laws in China is quite strong.  Independent offices administer trademark, patent and copyrighted articles, and the government is a member of World Trade Organization and has adopted significant international agreements on IP such as TRIPS.  The Chinese Trademark Office is the most active trademark office in the world.  While registration is required and can take up to three years to complete, foreign owners of “well known” marks can challenge Chinese domestic applications.  Although patent rights are territorial, meaning that an inventor must register in China for protection, China has adopted the international standard of “first to file” for patents.  What is more, China’s copyright laws are very liberal, granting protection for tangible products without requiring registration.  This is ideal for software owners, as source code does not need to be disclosed in order to gain rights under copyright.

Despite these protections, IP enforcement is difficult and infringement is rampant.  This is likely in part a result of a booming economy and growing socioeconomic diversity.  China has the world’s second highest number of internet users, and their economy has tripled in the last ten years.  This dramatically affects enforcement and the ability to regulate technology.  Potentially more significant, the Chinese government heavily regulates imports, creating an exaggerated demand for foreign goods and technology that feeds the black market.

The consequences are severe for foreign IP owners.  The US Customs Office, now part of the Department of Homeland Security, notes that China is the single largest source of seizures at our borders.  Outside the US, chinese counterfeiters can not only sell their products locally, but easily export to foreign markets.  In fact, counterfeit products have been found at trade shows in the United States, which are further introduced to the US market through sales to customers and suppliers.  Unsurprisingly, this has led to some counterfeited products having been found within the original IP holder’s own supply chain.

To combat counterfeits, there are many precautions available to IP holders.  For example, one could make efforts to register IP, particularly where it is required (patents), record the development and investigate customers, as well as enforce rights whenever infringement is discovered.  More important, register your IP in China in Chinese, to avoid inconsistencies or graft in translation disputes, and do thorough prior art searches.  Finally, to assist policing, the US Customs office offers a program to register copyrights and trademarks with the department, which is then used to actively monitor imports coming into the country.

Chinese counterfeits are not going to disappear, so domestic IP holders need to consider where they can to protect their brand and monitor their industry.  Rock climbing is a beautiful but dangerous sport, and litigious if you run a guide or touring company.  Adding the possibility of indistinguishable fake equipment is not a risk we can take.  Hopefully Petzl will make sure this is the last time we have to worry about it.

I want to thank my friend and prolific climber G Johnson for suggesting this topic, cheers bud.

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