Chinese Make Rare Ruling Against Counterfeiting
In a rare case against counterfeit products, a Chinese court recently handed down criminal sentences and monetary fines of unprecedented severity against two companies and their managers for counterfeiting UK-based Hopkinsons valves, which are manufactured and sold worldwide by The Weir Group PLC.
The two Chinese companies, Yangzhou Yikai Machinery and Engineering Co. Ltd. and Shanghai Saimeng Mechatronic Engineering Co. Ltd., had been making and selling counterfeit Hopkinsons-branded valves since 2006. The defective products quickly failed in service at Chinese power stations, causing serious injuries and damage. In 2009, the companies’ managers were arrested by China's Public Security Bureau (PSB) following in-depth investigations.
The case went to criminal trial in the Yangzhou Intermediate People's Court in Jiangsu, China last December, and the prosecution proved that these valve products were counterfeit, failed to comply with compulsory national standards and were of poor quality. In addition, the defendants misrepresented their manufacturing location by telling customers that they were imported from the UK. The total sales generated from this illegal business operation exceeded RMB 11 million (approximately $1.7 million).
The first company, Yangzhou Yikai Machinery and Engineering Co. Ltd., was found guilty of making and selling substandard goods and engaging in illegal business, and has been ordered to pay a fine of approximately $1 million. Yikai's manager was found guilty of the same crimes, sentenced to 15 years and 6 months imprisonment, and ordered to pay approximately $2 million.
The second company, Shanghai Saimeng Mechatronic Engineering Co. Ltd., has been found guilty of similar crimes and ordered to pay a fine of approximately $77,000. Saimeng's manager was found guilty of the crimes of manufacturing and selling substandard goods, engaging in illegal business and counterfeiting trademarks. He has been sentenced to 16 years imprisonment and ordered to pay $2.08 million.
"It has taken us more than a year of perseverance, but the outcome of this case is reassurance to our employees, customers and shareholders that the unauthorized use of our trademarks will not be tolerated,” said Alan Mitchelson, legal and commercial director of The Weir Group. “Such high fines and long criminal jail sentences are very rare in China for intellectual property crimes. The Weir Group greatly appreciates the support of police, prosecutors and Courts in China who have taken resolute enforcement actions against these counterfeiters including the seizure of these defective, counterfeit products.”
Cyril Leung, managing director of Weir China, added, "Counterfeiting not only negatively impacts the economy and innovation, but also puts customers and users at great risk. Time and time again substandard counterfeit products have caused industrial down time and risk to human life. This case again highlights the importance to be placed on quality and safety."