Counterfeiting and trademark infringement in fashion and luxury industry: a Fendi Case Study

Abstract

This thesis aims at studying the phenomena of trademark infringement and counterfeiting in China, trying to highlight the progress made by the country in improving the enforcement and protection of intellectual property rights, with particular regard to the legislation on trademarks. The process of modernization of the Chinese law, started after Mao Zedong’s death, was characterised by a deep interaction with foreign legal systems and by huge imports of techniques, institutes, and languages that belonged to the Western legal tradition. This kind of import not only was aimed at providing modern rules to the socialist market and to the post-Maoist society, but also it was the result of a gradual ratification of international agreements, which led to the adaptation of the law of PRC to global legal standards. Certainly, the Chinese social and political organization, as well as its ideological and cultural substratum are totally different compared to those of Western countries. Therefore, the prevailing rules of industrialised countries have been introduced into the legal system through a process of selective adaptation to national socio-political characteristics. For this reason, the import of Western law was a phenomenon of utmost importance in Chinese contemporary history. Nowadays, China, despite huge changes and more increasing stringent controls, is still considered as the "realm of the fake products", in terms of counterfeiting and trademark infringement. For this reason, China is taking the path towards making its trademark regime not only compliant with international standards, but also is trying provide the kind of domestic market protections necessary for sustained economic growth. My thesis brings on focus a case study that has recently been at the center of attention and has as its main subject a very well-known and well-established Italian brand in fashion and luxury industry panorama: Fendi. Fendi is a fashion label that is pretty much synonymous with luxury. The Italian brand is known for its daring handbags that are made with impeccable precision, not to mention its signature double “F” logo. For almost 100 years, the fashion house has been pushing forward, inspiring its creative minds to do newer, more innovative things, all while keeping the collections inspiring and accessible for their loyal customers. This legal case began back in 2016, when Fendi discovered Capital Outlets and Shanghai Yilang International Trade were selling grey market Fendi goods they had parallel-imported into China from France out of stores with Fendi signage and packaging, which Fendi said misled consumers into believing they were buying directly from a brand-run outlet. For this reason, in 2016 Fendi brought a lawsuit against YI LANG and Capital Outlets before the Pudong District Court of Shanghai, alleging trademark infringement and unfair competition. The issue in dispute was whether the use of the FENDI mark on the signboard constituted trademark infringement and unfair competition or whether such use fell within the scope of fair use. Shanghai Yilang International Trade, which has been registering “Fendi”-related trademarks in China since the 1980s, argued that they were selling legitimate products under their legally obtained trademarks. In 2018, the Shanghai Higher People’s Court found in favour of Fendi, agreeing that the use of the Fendi signage on stores and packaging was misleading to consumers. The verdict of this judgement represents a huge step forward in Chinese trademark protection law. Not only it is considered as a victory for the manufacturing industry and for the image of a brand symbol of the quality of Made in Italy abroad, but it can also be seen as a victory for the image that China is acquiring internationally, as a country in which it is possible to invest in a safe way and that wants to take off its reputation as a "fake country".