A woman in China has been jailed for four years and fined £50,000 for selling fake Scotch whisky, the first criminal conviction under the SCOTCH WHISKY collective trade mark.
It was reported in the press in January that Chinese authorities prosecuted Li Cuihong, a wholesaler selling a range of fake alcoholic drinks, in Urumqi, in the west of the country for selling un-aged Chinese spirits, with artificial flavouring, labelled as Scotch whisky.
In 2008, following an application from the Scotch Whisky Association (SWA), the Chinese authorities granted the registration of a collective trade mark for SCOTCH WHISKY, together with its Chinese equivalent.
Collective trade marks are used to identify the goods or services of the members of a trade association, such as the SWA. The collective mark belongs not to the trader who uses it but to the association, whose members use it to declare their membership of the association and therefore their adherence to certain standards.
The SWA has since secured further protection in East Asia with SCOTCH WHISKY recognised as a “geographical indication” in Malaysia, Vietnam and Thailand, essentially recognising that Scotch Whisky can only be produced in Scotland; and, in 2010, it also secured a geographical indication for the term in China.
A geographical indication is an intellectual property right that protects geographical names used as signs to identify goods originating in a specific territory, such as Scotland, where a given quality, reputation or other characteristic of the goods is essentially attributable to their geographical origin.
Infringement of either collective trade marks or protected geographical indications occurs where there is commercial use of the name for products which are not authentic, use of an imitation of the name, or other false or misleading indications as to the provenance or nature of the products.
It has recently been reported that the production of Scotch whisky is worth more than £4 billion per annum to the Scottish economy, generating more productivity than the City of London. China is one of the fastest growing markets for Scotch whisky, with direct and indirect exports reaching an estimated £100 million in Customs value alone in 2012.
The Chinese market is now among the industry’s top 20 worldwide in terms of direct exports according to SWA and remains one of the priority markets for Scotland’s national drink.
Following the increase in popularity of the “water of life” in China, locally produced spirits falsely labelled and sold as SCOTCH WHISKY have cashed in on this success, which has become a major issue both for the reputation of the product and Chinese consumers. The SWA works very closely with the Chinese authorities on the issue of fakes and protecting Chinese consumers.
Although the bottles sold by Li Cuihong bore the words SCOTCH WHISKY, it was argued in defence that they did not resemble any international brands on the market. However, the Chinese judge rejected this argument and made it clear that misuse of the words SCOTCH WHISKY alone constituted a serious criminal offence.
Having recently celebrated its centenary, the SWA, together with the industry and Chinese whisky enthusiasts, will be raising a glass or two to welcome the criminal sanctions taken by the Chinese authorities. Such enforcement action sends out a clear message that counterfeits will not be tolerated, thus protecting the reputation of Scotch whisky.