Copycats Hurt Trade

Counterfeit Chocolate Forces Lawsuit

FERRERO ROCHER chocolates with their gold-foil covers and hazel-nut centers have often been counterfeited. Then a Chinese copycat got bold… really bold…

In 1982 Italian chocolate maker FERRARO ROCHER initially began selling its products in China under the Chinese characters for the word JINSHA through a state-owned import company. Four years later, FERRERO registered its name plus its trademark graphic label (an oval shape with lace) with the Chinese Trademark Office.

FERRERO did not register the JINSHA brand name, a big mistake. Chinese copycat Zhangjiagang Dairy Factory One soon started to produce chocolates under the name JINSHA and boldly applied for its trademark in 1990. That’s right, the copycat submitted an application to trademark the name of the brand that they counterfeited.

It wasn’t until Factory One applied to register a combination of both the JINSHA name and the oval graphic did FERRERO file a protest. The Chinese Trademark Office refused Factory One’s application for the combo trademark because the graphical features and visual effects were too similar to FERRERO’s trademark graphics and labeling.

Undaunted, Factory One kept using the oval label on its packaging.

Over the next decade, counterfeit JINSHA chocolate won many awards and trophies in international, national and local competitions. In fact, Factory One’s JINSHA products became more popular in China than the authentic FERRERO ROCHER chocolates.

Part of the reason for Factory One’s success is that in 2002 it obtained a trademark for the JINSHA TRESOR DORE brand which was sold with packaging and labeling that mimicked that of FERRERO ROCHER chocolates.

And instead of focusing on lower-level retail outlets in China’s smaller cities, as most copycats do, Factory One sold JINSHA TRESOR DORE as a high-end product but with a lower price tag than FERRERO ROCHER sweets. Because of the copycat’s careful target-market distribution, International travelers would often find JINSHA chocolates on the shelves of China’s airport duty-free shops.

FERRERO decided that it had to take action and launched a lawsuit against the aggressive copycat. Because it had not registered the JINSHA trademark, FERRERO was compelled to sue under China’s Anti-Unfair Competition Law – with a much harder burden of proof that would have been required under trademark legislation.

And The Winners Are

After an initially unfavorable ruling, FERRERO won its case when China’s Higher People’s Court of Tianjin ruled that Factory One had copied FERRERO’s special packaging without authorization. Factory One’s joint venture company Montresor was ordered to pay US$87,000 to FERRERO as compensation.

Montresor has yet to pay the $87,000 to FERRERO which may force the Italian company to launch yet another lawsuit.

When one considers that FERRERO has spent some US$100,000 to defend its rights in China, perhaps the real winners are the international trademark lawyers in China who earn fat fees for representing the companies embroiled in the battle for trademark rights.