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In the first high-profile piracy dispute between two Western companies in China, a Shanghai court has fined French retailer Carrefour £25,000 for selling fake Louis Vuitton handbags.
At fault was Carrefour's supplier policy, which the company's central management had delegated to individual branch supervisors. The judge blasted the procedure, criticising it for being so lax as to allow counterfeiters to sell products through the supermarket chain.
Carrefour sold the bags for around £3.60 each and claims it only sold three before realising they were fake.
Douglas Clark, a Lovells IP partner in Shanghai, said Carrefour is not the only Western vendor risking litigation in China. "A large number of foreign retailers in China, such as B&Q and WalMart, are all running the risk of purchasing counterfeits unintentionally and then selling them if they don't put in supplier integrity checks," he warned.
The Chinese authorities face increasing international political pressure to crack down on piracy and so treated the case with care.
Chief Judge Shen Zhi Xian presided over the case and issued a rare, non-binding judicial directive along with his judgment. The directive expressed personal views of the judge and requested that Carrefour change its purchasing policy.
No international firms won advisory roles on the case. Fangda Law advised Louis Vuitton and Shanghai firm Jing Hong advised Carrefour.