L'Oreal takes MyDollarStore to High Court over illegal imports [India]

French cosmetics and toiletries giant L’Oreal has hauled discount retailer MyDollarStore to court over issues relating to intellectual property rights (IPR) and illegal imports, it is learnt. The company has filed a case against MyDollarStore in the Delhi High Court recently.

In recent times, MNCs have been upset over the move by retailers to import top global brands, claiming that this leads to loss of business opportunity, unfair competition and product cannibalisation. However, sources said hectic parleys are on between the two parties and the talks could lead to an out-of-court settlement.

MyDollarStore is a discount store chain which set up shop in 2004 and now has 47 stores across several cities. Most of the stores are located in malls and near Big Bazaar outlets. The chain plans to scale up presence across most Big Bazaar outlets. The discount store is associated with basement bargains in the US. MyDollarStore formats price products at Rs 99 and above in India, and are perceived as expensive by bargain seekers. While products are priced at $1 (approximately Rs 48.9) at a MyDollarStore outlet in the US, the same products sell at a higher rate in India owing to transportation costs and import tariffs. L’Oreal source said the company was concerned about protecting the properties of its brands, which include quality and consumer perception. “We distribute the brand in a way that ensures a certain value around it. An unplanned distribution creates confusion or leads to an unpleasant consumer experience which may work against our brand,” the source said. L’Oreal India has recorded an attractive growth rate of over 40% plus in the country, and globally it has identified India as one of its top five markets. Sources said the company fiercely guards its right to market and distribute its brands in India.

Several MNCs have invoked the Intellectual Property Rights (Imported Goods) Enforcement Rules 2007 Act to stop retailers from importing their foreign brands. Companies like Hindustan Unilever, L’Oreal, Lancome Perfumes, Oakley, Nivea and Mico have already registered several brands under notification No.47/2007 of the IPR Act with the Customs. Recently, Future Capital picked up 28% in Sankalp Retail Value Stores, a franchisee of the US-based discount format MyDollarStore. The format is expected to help scale up profit margins at Big Bazaar and is being set up as a ‘shop-in-shop’ concept. MyDollarStore outlets usually stock limited top brands like Coke and generally sell other lesser-known brands. But lately they have been stocking well-known brands, including that of L’Oreal like Garnier, etc. Big Bazaar & Food Bazaar, Reliance Retail, Spencer’s and MyDollarStore import sizeable consignments of top consumer brands and their variants from markets like Taiwan, Thailand, Gulf and the US. L’Oreal operates in India through its wholly-owned subsidiary L’Oreal India and has four divisions—consumer products, professional products, active cosmetics and luxury products.

Ebay Ordered to Pay Damages for fakes [International]

Online auctioneer eBay has been ordered by a French court to pay over $61 million to fashion label - LVMH Moet Hennessy Louis Vuitton SA for selling counterfeit goods on its site. LVMH Moet Hennessy Louis Vuitton SA is home to prestigious brands such as Louis Vuitton, Givenchy, Fendi, Emilio Pucci, and Marc Jacobs. Allegedly, eBay had a sale of Louis Vuitton fakes; LVMH questioned whether the Internet is a free-for-all for the 'most hateful, parasitic practices'. eBay countered saying that LVMH's actions had more to do with protecting uncompetitive commercial practices at the costs of consumer choice and the livelihood of law-abiding sellers empowered by eBay than protesting against counterfeits.

A spokesperson for eBay said the auctioneer plans to appeal the ruling. All said, this isn't the first such instance of eBay having been sued by a luxury brand; past plaintiffs against the online auctioneer include the likes of Tiffany and Company (USA), Montres Rolex SA (Germany), and L'Oreal SA (Europe). eBay is like a magnet for counterfeiters mainly because of the sheer volume of products sold through its auction system as also the difficulty in patrolling fast-moving transactions. And like Google, eBay too relies on intellectual-property (IP) owners to alert the company about suspicious postings/products on its site. Nevertheless, the auctioneer maintains it spends millions of dollars every year trying to clean up fakes from its site.

U.S. Attorney General: Piracy Funds Terror [International]

Piracy funds terrorism, says U.S. Attorney General Michael Mukasey, and the Department of Justice is going to do something about it.

“While we celebrate the positive contributions of technology, we can't forget that there's a dark side to almost every innovation,” said Mukasey at the Tech Museum of Innovation in San Jose, “Every new technology we create can be abused – whether it's a common identity thief looking for a new way to steal your bank account information, or an international terrorist looking to advance a murderous plot.”

The Justice Department is committed to protecting the USA’s valuable intellectual property rights, said Mukasey, who promoted Deputy Attorney General and department official “number two” Mark Filip to the head of its IP Task Force, which is stepping up efforts in worldwide collaboration.

“International borders pose little hindrance to criminals, so we’ve been working to make sure those borders don’t pose an obstacle to effective enforcement,” he said.

Originally the domain of organized crime, terrorists are finding piracy – with its supposedly low level of risk – to be a tempting way to finance other, less aboveboard activities. “A primary goal of our IP enforcement mission is to show these criminals that they’re wrong.”

Those involved in piracy, counterfeiting, and identity theft certainly have something to worry about: 2007 saw a 33 percent increase in IP cases filed over 2005, a product of the Department’s ever-increasing international network, which now includes satellite offices in Bulgaria and Thailand to coordinate and train local enforcement efforts.

“One ongoing case resulted from years of diplomatic work with law enforcement in China, and an extensive investigation involving Chinese authorities and the FBI,” said Mukasey. “Last July, China’s Ministry of Public Security arrested 25 Chinese nationals and seized more than half a billion dollars worth of counterfeit software in the largest joint investigation ever conducted by the FBI and the People’s Republic of China.”

Historically, the Justice Department generally pursues criminal charges for IP theft where money changes hands, leaving file-sharing and the world of P2P to the graces of the content industry and its ongoing campaign of civil litigation. This comes despite frequent political efforts from content industry lobbyists, who have been trying for years to enact legislation that would essentially force the DoJ to pursue all forms of piracy – lumping Russian handbag counterfeiters and 15-year-old top-40 aficionados in the same boat.

Prior to the speech, Mukasey said he met privately with representatives from Hollywood, Adobe and Apple, but declined to say what was discussed.

Tips and Tricks of Counterfeit LItigation

In "Tips and Tricks of Counterfeit Litigation," Emily Burns and Grant P. Fondo explain for PLI why you ahould

• Conduct your preliminary investigation quickly, quietly and accurately
• Notify the U.S. Attorney (for ex parte authority)
• Consider involving other governmental agencies (e.g., Postal Service, Homeland Security or Customs Enforcement)
• Ensure all your evidence is properly before the court
• Know the local bond requirements (in case the goods turn out to be real) and
• Coordinate with the U.S. Marshals