Revised Trademark Law issued on October 27 will make it easier for investigators to go after illegal manufacturers that produce copycat versions of brand-name products, but they will also create more competition among investigative companies, said several top executives at leading intellectual property service companies.

The new law imposes stricter punishment on manufacturers who infringe copyrights, provide more protection to registered trademarks and reduce controls over trademark registration agents.

The rules should help the business of investigating trademark fraud to grow, said Raymond Chiu, North China managing director of Pinkerton (China) Ltd., one of the biggest business inquiry and security companies in the world.

Since reports of the new law first surfaced over the last several weeks, Pinkerton has already seen its client base grow by about 10 percent, Chiu noted.

He said he was pleased that people infringing trademarks will have to pay damages based on the market price of genuine products under the new rules. In the past, damages were based on the value of the fake goods.

Wan Zhengfu, an analyst at Kroll Associates (Asia) Ltd.'s Shanghai office, said the law will help protect international brands which haven't registered their trademarks in China.

"Many infringers are making fake products using international brand names and exporting them," Wan said. "In the past we could do nothing to them even though we have caught some red-handed, since those trademarks haven't been registered in China."

The new amendments will help the investigation industry, which started on the mainland in the 1980s when policemen and former government officials from Hong Kong began to hunt trademark infringers in Guangdong Province with the help of local investigators.

"The profit margin of this business has dropped sharply since 1997, as more and more people opened one-man companies and started a price war," said Ringo Leung, chief executive of Square Enigma Inc., who has been in the field for 20 years.

The current price for a market survey to find out whether there are fake products is about US$500. Intelligent property service companies charge their clients US$3,000 to US$5,000 for a raid, which is jointly launched by the victim company, an intelligent property service company and government law enforcement branches.

Pinkerton conducted 673 raids for its client Proctor & Gamble from July 1, 2000, to June 31, 2001. During the raids, they confiscated more than 2 million fake products.

"It used to be easy to find counterfeiters," said Chiu, adding that they could earlier find thousands of fake products in one haul, but now the criminals often store and ship products in smaller batches to protect themselves.

Investigators are still hampered by corruption.

"Many investigators have no ethics at all," said Charles V. Scholz, Kroll's director of operations in China. "As trademark protection companies pay them very low salaries, the investigators will sell the raid information to the infringers."

(eastday.com November 6, 2001)