Beijing Court Holds Market Landlord Liable for Tenants' Sales of Counterfeit Goods

The Beijing Second Intermediate People's Court found the corporate landlord of the Xiushui Market in Beijing liable for trademark infringement on December 20, 2005, due to sales of counterfeit goods by five tenants within the market, according to a January 4 Bloomberg article and a January 6 Voice of America story (in Chinese). In September 2005, Chanel SA, Prada Holding NV, Burberry Group Plc, LVMH Moet Hennessy, Louis Vuitton SA, and PPR SA's Gucci unit, all luxury goods makers based outside China, brought the suit against Beijing Xiushui Haosen Clothing Market Co., the landlord of the Xiushui Market, as well as five tenants. The court found both the landlord and tenants liable for infringement. This ruling marks the first time a Chinese court has extended liability for intellectual property rights (IPR) infringement to a market's landlord because of its tenants' sale of fake goods, according to an IPR lawyer quoted in the Bloomberg article. Xiushui Haosen appealed the court's judgment on January 4.

The court assessed a relatively small penalty against Xiushui Haosen, but the case is important because market landlords will bear responsibility for infringement discovered within their markets, according to one of the plaintiffs' lawyers quoted in a 21st Century Business Herald article. The plaintiffs' lawyer also noted that, if followed elsewhere in China, this court decision should permit IPR owners to use civil litigation more effectively.