Dubai United Arab Emirates - November 11, 2019: Shanghai, China: In an unprecedented court ruling in Shanghai, FOREO, a Swedish skintech brand was awarded a judgement of 3 million RMB - thought to be the largest counterfeit-related payout for design infringement in Shanghai Intellectual Property Court history according to public data.
The court ruling sided with the Swedish beauty tech company FOREO, following a 24-month IP court proceeding and a trial of 12 months, finding the defendant, Kingdom Zhuhai Company guilty of infringing FOREO's LUNA design patent with its own KD308 product.
The courts ruled in favor of FOREO and made history as it awarded a compensation payout for economic losses and reasonable expenses of 3,000,000 RMB (around 450,000 USD) - the largest court ruled payout for design infringement in a Shanghai Court's history.
The defendant, Kingdom Zhuhai Company, was thought to have made in excess of 35 million RMB from online e-commerce sales mainly on Alibaba and Tianmao platforms.
The court had to distinguish whether the defendant's KD308 product was infringing the design patent of the LUNA range as well as how to calculate the damages.
On both points, the defendant was ordered to pay the compensation and immediately stop infringing FOREO's design patent after concluding that while KD308 had some deliberate changes, such as an extra bulge and wavy lines, it was still considered to be in infringement of the LUNA design patent
Talking of the proceedings, FOREO's Global Legal Director, Kelsay Tang comments, “The court issued a warrant which enabled us to get relatively object figures from Tianmao and Alibaba platforms. With network platform technologies, we found that 358,074 pieces of KD308 had been sold, and the sales volume was RMB 35,262,990. “Taking the retail price, reasonable profit, and design patent contribution of our LUNA into consideration, the court concluded that our claim of RMB 3,000,000 was solid. Given that IP protection is a relatively new concept in China, not to be confused with patent law, which was created in 1984, we are seeing major progress on IP protection over the past years and this case bucks the trend.
“Within FOREO, we have many cases in China where counterfeiters making fake FOREO products have been incarcerated, a feat we could not achieve without the support of the domestic China legal framework,” added Tang.
According to the 2018 Global Brand Counterfeiting Report, the worldwide losses incurred due to counterfeiting amounted to more than 320 billion in 2017, with 80% of the world's counterfeiting coming from China.
On 1 January 2019, China's new e-commerce law came into operation and could have been the first signs of change for counterfeiting in China. The new law applies to three types of operators; e-commerce platform operators like Taobao, third-party merchants who sell goods and services on the e-commerce platform of others, and online vendors operating their own websites or which do business via other network channels, such as social media sites.
The new law brought with it increased pressure to online retailers to encourage a fight for the sale of counterfeiting and copycat merchandise on their sites. As well as covering the requirement for registration and licensing of e-commerce operators, taxation, electronic payment and e-commerce dispute resolution, the new law also gives protection of intellectual property, according to a post by Hong Kong-based law firm Deacons.
Affecting China's e-commerce players, the new law now makes all e-commerce platform operators jointly liable with the merchants for selling any counterfeit or copycat merchandise goods on their website under some necessary legal conditions. Previously, individual merchants were solely liable when caught selling fake or knock-off goods and now e-commerce players can be fined up to 2 million RMB.
FOREO's Founder, Filip Sedic says that fighting counterfeiters on the ground in China is becoming far more efficient than in the United States and Europe, which is somewhat opposite to Western belief, with this current case being testament to that. “While this judgement is a great victory for FOREO, the important fact remains that Chinese courts are waging war on counterfeiting in its own backyard and it's working. We are truly grateful for the great support of the China legal system, not solely in Shanghai and this case exclusively, but all over China where the legal system is supporting change and traps the reason for trade war in China generally.
“Retailers and marketplaces, not only in China but across the world, need to place a higher regard on IP protection for brands. Working together with China's newest e-commerce legislation, and standing up to counterfeiting by engaging legal teams, we have every trust in the ongoing war on counterfeiting with the support of the Chinese legal system. At FOREO we have a dedicated legal team working round the clock in our own personal fight against counterfeiting with sometimes as many as 30 plus cases ongoing at any one time. Global counterfeiting is worth in excess of 460 billion USD and that makes up for around 2.5% of trade worldwide which is very confronting,” adds Sedic.
Despite the counterfeit, FOREO's stance in China remains strong as it heads into the busiest retail period of the year with sales expected to reach the 100s of millions by end of year. Such is demand and awareness of the LUNA range, FOREO was second to iPhone only in Singles Day sales last year, generating sales of 100 million RMB in one day.
FOREO was founded in 2013 with the iconic LUNA facial cleansing device and has since grown at record speed, with one LUNA device sold every three minutes around the world. The beauty powerhouse is now in 77 countries around the globe, dominating the travel retail space and can be found in more than 10,000 retailers and marketplaces globally. The brand is known for pushing the boundaries of technologically advanced beauty and skintech and has become a major force in the beauty industry in less than six years, winning over 160 design and product awards to date.
To protect its 20 million customers, every FOREO produced has a unique serial number that can be confirmed with the brand directly by registering on its warranty pages via FOREO.com.