China court hands down 4.5-year prison sentence and large fine to Disney counterfeiters
Trio sold over 830,000 pieces of fake Disney clothing | Prosecutor in Shanghai, home of China’s first mainland Disneyland details hefty sentences and fines.
A Shanghai court has sentenced three people to between two-and-a-half and four-and-a-half years in prison and fined them up to $770k after they were found to have sold over $2.3 million worth of fake Disney clothing.
According to information released by the Shanghai Pudong Procuratorate on Tuesday, January 9, the trio had sold some 830,000 pieces of counterfeit Disney clothing, having claimed to have bought a Disney license for $5,600.
Shanghai is home to Disney’s first theme park in mainland China, which is 57% owned by China state entity Shanghai Shendi Group. In the lead-up to the park’s opening in 2016, Chinese regulators announced a 12-month campaign to crack down on fake Disney merchandise and help protect the company’s trademarks.
The prosecutor’s office said that the three defendants’ illegal activity had been discovered when a customer in Pudong New Area bought some children’s Disney clothes on a well-known online shopping platform and alerted the police that they were fake, China IP Law Update reported.
The clothes were described online as ‘Disney IP model’ and included the ‘Disney’ trademark. However, the customer reported that they were poor quality and appeared to be fake.
Following an investigation, a three-storey warehouse was located in Henan containing over 200,000 pieces of counterfeit Disney clothing worth approximately RMB 1.8 million ($250,000).
‘False letter’ from Disney
In August 2021, two of the defendants purportedly obtained an ‘authorisation letter’ from Disney to sell its branded goods after signing an authorisation agreement with a third party, for a fee of RMB 40,000 ($5,600).
The prosecutor office said that the pair had been in the clothing industry for many years and “knew such a price could not buy Disney brand authorisation”.
The defendants used this to register a company that claimed to be able to sell Disney trademarked clothes. A friend, who became the third defendant, later joined the business.
According to China IP Law Update, an audit revealed that the company had sold over 830,000 pieces of clothing, with an actual sales amount of more than $2.3 million.
For their varying roles in the operation, the defendants received sentences of between two years and six months, suspended for three years, and four years and six months, with fines between $28,000 and $770,000.
In an article written for WIPR last year, Alice Hou of Lusheng Law Firm detailed the multiple approaches companies are taking to deter counterfeiters in China.
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