Charting the New Frontiers of Intellectual

Property Protection of Luxury Goods

Wednesday 20 June, ECTA Palermo

Blue Lotus: Pernod Ricard’s structure to

fight against counterfeiting in China

Cyril Sayag, Vice President, Legal & Public Affairs

Pernod Ricard Asia

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Premium and Prestige Spirits

Wine & Spirits

Annual turnover in 2010-2011

PERNOD RICARD: KEY FIGURES

7,081M€

Co-leader

Number 1

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PERNOD RICARD: ICONIC PRODUCTS

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AND MANY OTHER BRANDS…

Entrer

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PERNOD RICARD IN ASIA

Asian markets leader

1/3 of group activity

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Number 1 in China, India, Japan

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COUNTERFEITING IS A MAJOR CHALLENGE

Risk to brand equity

Consumer confidence

Loss of revenue

Serious health concerns

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WHY ARE WE SPECIAL?

Counterfeit products destined for human consumption, must be treated

more seriously than any other type of IP infringement

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WHAT WE NEED TO PROTECT

Absolut

Chivas

Martell

Swedish

Scottish

Cognac

Vodka

Whisky

Brandy

Trademark

Geographical

indication

Product

category

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WHY DOES COUNTERFEITING OF ALCOHOL OCCUR?

PROFIT

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PERNOD RICARD RESPONSE

An organisation and a motto

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A COMPREHENSIVE REGISTRATION STRAGEGY

Portfolio of rights regulary expanded and audited

Martell and Chivas recognised as well known trademarks

GI registrations of Champagne, Scotch Whisky, Cognac, etc

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WHAT DO YOU NEED TO DO FIRST?

… Be local

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2 major national Chinese law firms

18 local law firms

We cover the whole territory…

Beijing SinoUnited

Shandong Xi Zheng Law Firm

Zhejiang Yueren

Jiangsu Binhai Fanji

Guangzhou

TransCathay

Guangdong Yangcheng

Anhui Jinsheng

Heilongjiang Zhengkai

Fujian Huada

Sichuan Jinling

Guangxi Chuangxiang Shanghai

AIAL

Hunan Bo’ao Wuhan Dacheng

Jiangxi Kangrun

Shanxi Fengwei

He’nan Guochuan

Wanqi

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WHAT DO YOU NEED TO DO?

… Don’t do it alone

A common investigation structure to lower costs and raises efficiency by

pooling financial resources

4,000 raids conducted in the past 12 months

170+ training seminars in 130 cities 14

7 industry players federated

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TACKLE THE WHOLE VALUE CHAIN

BOTTLE

ALCOHOL LABELS

CLOSURE

Dry goods Manufacturing Distribution

& retail

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… Make it difficult

WHAT DO YOU NEED TO DO?

First mover in industry to develop a highly reliable

authentication system

Closing systems, labeling

Traceability

Authentication system

Consumer devices

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MAKING USE OF THE FULL RANGE OF LEGAL MEANS

Criminal code: Articles 213 (using identical trademark on identical goods ), 214

(selling merchandise bearing counterfeit trademark) and 215 (forging registered

trademarks)

Doping or adulterating products, replacing genuine items with fake items, selling

seconds at best quality prices or passing off sub-standard products as up-to-

standard products (Article 140 of the Criminal Law)

Trademark law, civil law, food safety law, product quality law…

“Serious

Circumstances”

(0 to < 3 years

imprisonment)

“Exceptionally Serious

Circumstances”

(> 3 years but < 7

years imprisonment)

“Serious” and 2 or

more marks

involved**

“Exceptionally

Serious” and 2 or more

marks involved**

Illegal turnover* RMB

50,000 and above

Illegal turnover RMB

250,000 and above

Illegal turnover RMB

30,000 and above

Illegal turnover RMB

150,000 and above

Illegal income RMB

30,000 and above

Illegal income RMB

150,000 and above

Illegal income RMB

20,000 and above

Illegal income RMB

100,000 and above

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HOW TO GET A GOOD RETURN ON THE INVESTMENT?

Prosecute the producers

- Launch criminal action (45 criminals in the past 12 months)

- Push for civil action on top of criminal (1st successful case in Chengdu)

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RMB 150,000

4 years

KEY CRIMINAL CASE: DAXING CASE

June 2010: first major criminal case for PR

• 6 lobbying missions in total

• Criminal sentenced for the crime of Trademark

Infringement

• Case ranked among ‘Top ten 2010 Intellectual

Property cases’ by China Supreme People’s Court

• Case reported in the press and on Beijing TV

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KEY CRIMINAL + CIVIL CASE: CHENGDU

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January 2011: destruction of fake spirits by Chengdu Municipal Bureau of

Commerce jointly with Chengdu Municipal PSB

RMB 28,000

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offenders 2008: a successful criminal case for PR

- First a successful criminal case

- Civil action to cripple the main offender’s

criminal enterprise 8 years

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RMB 300,000

March 2012: a landmark civil case for PR

- Offender to pay RMB 300,000 after signature of a

settlement with Brand Owners

- Criminal sentenced for the crime of Trademark

Infringement

- Publication of a notice of public apology in local

media 1 offender

KEY CRIMINAL + CIVIL CASE: CHENGDU

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HOW TO GET A GOOD RETURN ON THE INVESTMENT?

Prosecute the retailers

- Launch administrative actions

- Launch criminal action for big retailers (Wuhan case)

- Civil action on top of criminal action when possible

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KEY CASE: WUHAN CASE AGAINST

RMB 610,000

5 years

February 2012: a breakthrough case against a retailer for

PR

• Wuhan is rather notorious for local protectionism and

Wuhan the Wuhan PSB was initially very reluctant to

proceed with a criminal action

• 5 people convicted – no probation

• Very high illegal value of crime: RMB 1.1 million

• Up to this case, Wuhan’s courts had always imposed

suspended sentences on attempted IP crimes in the past

• Case awarded "Top 10 Consumer Goods Cases of

Wuhan" by local government

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Major provincial seminar organized in Guangzhou, Chongqing and Xiamen with various authorities like

Wine Monopoly Bureau, PBB

6 Visits by Brand Owners to China in 2011/12

Local missions organized by Brand Owners and PRC to visits to local AIC, prosecutors, judges

Of raids conducted on manufacturing or storage sites led to potential criminal cases

95%

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Co chair

Number of PR brands submitted by Brand Owners to State Administration of Industry & Commerce guidebook

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60+

SUPPORTING OUR ACTIONS: LOBBY IN 2011/12

Pernod Ricard China was co-chair of the IP working group

of the European Union Chamber of Commerce

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THE WAY AHEAD

Continue to expand to new battlegrounds

- Fight counterfeiters on the Internet

One voice for a united industry

- Together with domestic and foreign brand owners

- Hand in hand with our producing countries authorities

- With the Chinese authorities

A sustained engagement

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