Brand Protection

How to Recover Revenue From Counterfeiters in China

Image about recovering revenue from Chinese counterfeiters

While the world is witnessing an era of creativity and innovation, IP owners face the challenge of protecting their creations from unlawful exploitation. 

Winning financial restitution from counterfeiters has always been extremely difficult, particularly in the very heart of global counterfeiting - China. But improvements in technology, legislation, and professional expertise has now laid the foundation for brands to take back the money that’s been illegally stolen from them.

Here, revenue recovery comes into play, offering a path to reclaim lost profits and safeguard the interests of IP owners. 

In this article, we’ll cover the steps taken in the revenue recovery process - from investigation to litigation, along with successful real-world case examples.

Step 1 - Online Investigation

Revenue recovery against Chinese counterfeiters begins with a meticulous online investigation. This investigative phase is pivotal in understanding the nature and scale of infringement and in helping to gather further intelligence. 

This step is also critical in choosing and validating the selected target for revenue recovery. The target needs to have a clear case against them and the potential to return significant revenue back to the original brand. 

The process starts with identifying the infringing entities. IP protection specialists delve deep into the digital realm to find key information about high-risk counterfeiters.

Affiliate Investigation: In many cases, counterfeiters operate through unauthorized brand resellers. Unraveling these connections is crucial to cutting off the counterfeit supply chain.

Financial Capability Investigation: Understanding the financial capacity of infringing entities is essential. This data informs the recovery strategy in terms of prioritizing which counterfeiters to focus on and establishing the possibility of returned revenue.

Asset Status Investigation: Discovering the assets of counterfeiters is instrumental in potential recovery efforts. Finding sellers with large volumes of transactions and stock is essential, particularly if a manufacturing facility is involved. These assets, if seized, could greatly facilitate claiming substantial damage to the brand and strengthen the case for revenue recovery.

Step 2 - Sample Purchase & Verification

To build a strong case against a counterfeiter in China, verification is a must. This is achieved through sample purchases and notarized purchases, which provide the evidence necessary to prove that the items being sold are, in fact, counterfeits. 

Without this step, it would be too easy for a counterfeiter to make a claim that the products they sell are legitimate, for example, as if they had been acquired through a wholesale purchase.

Even if the seller isn’t an authorized partner of the infringed brand, launching a legal case needs more concrete evidence, and so this test purchase provides that evidence.

Step 3 - On-Site Investigation

Sometimes, online investigations alone might not provide enough evidence by themselves, and so on-site investigations become useful supporting procedures. Visiting the physical locations of a counterfeiting network’s operations, ideally with the support of local police, provides more supporting evidence of the crimes being committed. 

Manufacturing, distribution, and sales centers are all viable locations to perform an on-site investigation, as they would each hold vital evidence to support the case. Collect and notarize every piece of relevant evidence possible in order to strengthen the case.

Step 4 - Litigation & Prosecution

Once the evidence has been collected, the legal process begins. There are two paths available at this stage: civil litigation and criminal prosecution.

Civil Litigation: In cases of civil infringement, a lawsuit is filed in a court of law. Legal proceedings are initiated to seek financial restitution for the brand against the counterfeiters. Damages are awarded through court judgments or settlement agreements. These agreements are legally binding, and they aim to recover lost profits, making IP owners whole once again.

Criminal Prosecution: When the infringement reaches a criminal level, the matter is reported to the police, who step in to investigate and take necessary action. While this option does little to make the brand financially whole again, it acts as a major deterrent, proving to other counterfeiters that the brand refuses to accept illegal infringements of its IP. 

Collaboration with local law enforcement is highly recommended through this process. Such cooperation helps to legitimize the actions of collecting evidence, retrieving additional data, and collecting more evidence concerning the distribution channels and financial data.

As the legal proceedings begin, it’s highly recommended to communicate with the online platforms through which the counterfeiters have been operating. They may provide additional information regarding the volume of sales and revenue figures for the counterfeiters. This information will make it easier to prove a financial amount to be restored to the brand.

MarqVision’s Keys to Successful Revenue Recovery in China

In the ever-evolving landscape of intellectual property protection, an effective counterfeit enforcement program is essential. As we delve deeper into the mechanisms that drive this successful endeavor, here are the key factors that play a pivotal role in its triumph.

1. AI-Based Data Analysis

The first and perhaps most crucial step in any counterfeit enforcement program is the identification of potential targets. This is where MarqVision’s cutting-edge technology, specifically AI-based data analysis, comes into play. Here's how it works:

Analyzing Counterfeit Indicators and Seller Data: In a digital marketplace teeming with countless online sellers, sifting through the masses can be overwhelming. AI systems are adept at sifting through vast troves of data to pinpoint real proof of a product’s counterfeit status online, from the keywords and images used in the listing, to more sophisticated pattern recognition within data.

Effective Target Identification: Through the analysis of various counterfeit indicators and seller data, the most effective enforcement targets among tens of millions of online sellers are identified. This data-driven approach significantly improves the decision of which counterfeiter to target for a revenue recovery program.

2. Strategic Partnerships with Law Firms

Recovering revenue from Chinese counterfeiters is by no means a simple process, and there are countless legal pitfalls and loopholes to be aware of. The strategic partnerships between MarqVision and with high-profile law firms makes all the difference. 

Brands’ ability to have their money returned from counterfeiters is still very new in relative terms, and there is a high chance of failure if not performed properly. Working with local legal experts will help brands navigate through Chinese laws, language, and customs with ease. Local legal professionals will also have experience in succeeding in recovering revenue, providing brands with a proven roadmap to success.

Finding specialized counterfeit investigators to partner with will further facilitate the recovery of revenue for brands. They will be able to identify most viable targets for actions, avoid inconclusive raids, and may improve the final dollar amount returned to the brand.

3. Effective Communication and Collaboration

Enforcing intellectual property rights often requires seamless coordination with various stakeholders, including online platforms and local authorities. MarqVision’s collaborations ensures a successful counterfeit enforcement program

Chinese Online Platforms: Building a collaborative relationship with Chinese online platforms is essential. This partnership allows the enforcement team to access additional data before and during legal proceedings. Online platforms can also assist with case referrals, streamlining the process and ensuring that potential infringement cases are brought to the forefront.

Local Law Enforcement: Effective communication with local enforcement authorities in China is vital. Maintaining close ties with these authorities enhances the chances of a successful litigation process. This coordination ensures that enforcement efforts are not just isolated endeavors but part of a broader strategy to uphold intellectual property rights.

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