⾹港與台灣的奢侈品商標保護之比較研究 - 政大學術集成

全文

(1)國⽴政治⼤學亞太研究英語博⼠學位學程 International Doctoral Program in Asia Pacific Studies College of Social Sciences National Chengchi University. !. 博⼠論⽂治政大 Doctoral Dissertation. ! ! ! !. 學. ‧ 國. 立. ‧. ⾹港與台灣的奢侈品商標保護之比較研究. y. sit. io. ! ! al ! iv n ! Ch e n g! c h i U. n. er. Nat. The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Student: PhD candidate: Fanny GUINOT Advisor: Pr. Tzung-Wen CHEN. ! ! ! !! !! !. 中華民國110年01⽉ January 2021 DOI:10.6814/NCCU202100385.

(2) ⾹港與台灣的奢侈品商標保護之比較研究. The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. !. 研究⽣：薛芬妮 Student: Fanny Guinot 指導教授：陳宗⽂ Advisor: Chen Tzung-Wen. ! !. 國⽴政治⼤學. 政治大. 亞太研究英語博⼠學位學程博⼠論⽂. ‧. ! ! !. 學. ‧ 國. 立. y. sit. Nat. A Dissertation. er. io. Submitted to International Doctoral Program in Asia Pacific Studies. n. a. v. l C Chengchi University National ni. hengchi U I. ! ! !. 中華民國110年01⽉ January 2021. !. !. DOI:10.6814/NCCU202100385.

(3) !. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. DOI:10.6814/NCCU202100385.

(4) TABLE OF CONTENTS. ! !. List of Figures List of Tables List of Abbreviations Abstract Acknowledgement. 8 10 11 12 13. CHAPTER 1 A GENERAL INTRODUCTION 1. Introduction, a general background 1.1. From counterfeit to fake trademark, a global issue for luxury goods 1.1.1. Definition 1.1.2. The international trademark system 1.1.3. counterfeit as a global issue 1.2. The origin of counterfeit 1.3. From local news items to a regional analysis - a bottom-up approach 2. Literature review 2.1. Luxury counterfeiting 2.2. Defining illicit trade 2.3. Legal issues and legislative concerns 2.4. Possible alternative to avert counterfeit trade 2.5. A lack in political science approach 3. Theoretical framework 3.1. Reviewing the conceptual framework 3.1.1. trademark counterfeits theories 3.1.2. organization vs institution 3.1.3. Institutions and counterfeits 3.2. Theorizing the current existing framework 3.2.1. Comparing the governments’ institutions 3.2.2. The current juridicial framework 3.2.3. IPR enforcement as an organization 3.3. Additional remarks and notions 4. Research questions and research hypotheses 5. Methodology 5.1. A Comparison between places and events 5.1.1. Why these two cases? 5.1.2. Why are they comparable and to what extent? 5.2. Two comparable places? 5.3. How to compare them? 5.4. How to choose them? 6. Significance of the research and limitations of the study. 14 14 14 14 15 15 17 19 22 23 25 28 30 31 33 33 33 35 40 42 42 43 44 48 52 53 54 54 55 56 58 59 60. !. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. !4. i n U. v. DOI:10.6814/NCCU202100385.

(5) !. 6.1. Significance of the research 6.2 Limitations of the study. 60 62. CHAPTER 2 WHAT IS TRADEMARK COUNTERFEITING AND WHY SUCH AN ISSUE? 64 1. What is luxury trademark counterfeit? 65 1.1. From illicit trade to brand imitation 66 1.2. Luxury trademark infringed goods 68 1.3. Luxury trademark counterfeit, an institutionalized issue? 69 1.4. Intellectual Property in China: a rather new legal frame 72 1.5. Concluding remarks 75 2. Why the success of counterfeiting? 78 2.1. Powerful Worldwide Brands 80 2.1.1. Weak Enforcement at every level 81 2.1.2. Taiwan and Hong Kong institutional counterfeit organization 84 2.1.3. Low Cost Luxury with Low Investment 88 2.2. The customers' behavior: is the purchaser accomplice? 88 2.3. High Profits 89 2.4. Globalization and lower trade barriers leading counterfeiting 92 2.5. Concluding remarks 94 3. counterfeiting in Asia : a complex itinerary 94 3.1. Asia, the main culprit? 95 3.1.1. The cultural aspect 96 3.1.2. The growth of the Chinese economy 99 3.1.3. Estimating the Size of the Chinese Counterfeit Market 101 3.2. Provenance: China, the main supplier 102 3.3. Route: Taiwan and Hong Kong, two important retailers 104 3.4. Hong Kong and Taiwan, but not only 107 3.5. Concluding remarks 108 4. The counterfeit market 108 4.1. The weight of luxury counterfeit industry on global luxury economy 109 4.2. The market growth 113 4.2.1. The Luxury market growth 113 4.2.2. The Counterfeit Luxury market growth 115 4.3. Who buys luxury counterfeits? 116 4.3.1. Deceptive counterfeit 118 4.3.2. Non-deceptive counterfeit 118 4.3.3. Up to dating the distinction 119 4.4. The pirates' retailing strategies 121 4.4.1. Physical stores or the 2015 seize in Hong Kong 122 4.4.2. The virtual market of Counterfeits, the 2018 Taiwan case 123 4.4.3. Retailing strategies conclusions, causes and consequences 124 4.5. Concluding remarks 125. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. !5. i n U. v. DOI:10.6814/NCCU202100385.

(6) !. 5. Findings 5.1 Empirical findings 5.2 Theoretical findings. 126 126 130. CHAPTER 3 INTELLECTUAL PROPERTY RIGHTS: AN INSUFFICIENT FRAMEWORK? 1. Intergovernmental organizations governing IPR 1.1. The theory of organization – an appropriate model? 1.2. An institutionalized and organized phenomenon 1.3. Multilateral organizations 1.3.1. World Trade Organization: TRIPS 1.3.2. World Intellectual Property Organization 1.3.3. Organization for Economic Cooperation and Development 1.3.4. The International Criminal Police Organization 1.3.5. Industry associations that Govern IPR: The IACC 1.4. concluding remarks 2. Introduction of a multi-level protection 2.1. The government organizations in Hong Kong and Taiwan 2.1.1. Actors 2.1.2. Places and things 2.1.3. Rules and regulations 2.2. Concluding remarks - a lack of cooperation? 3. How society shapes individuals- An individual perspective 3.1.The importance of the society on individuals - interpersonal aspects 3.1.1. Social status 3.1.2. Social acceptance 3.2. The weight of society on shaping individuals in their personal aspects 3.2.1. Self-esteem 3.2.2. Self-fulfillment 3.3. Concluding remarks 4. The firm and their products 4.1. The product level 4.1.1. The conception of the product 4.1.2. The production 4.1.3. The distribution channels 4.1.4. Managerial Insights Regarding the IPR Environment 4.2. Concerns the Industry as a whole 4.3. Concluding remarks 5. Findings 5.1 Empirical findings 5.2 Theoretical findings. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. !. i n U. v. 132 134 135 136 144 145 146 148 149 151 152 152 154 156 165 170 178 178 182 182 184 185 186 186 188 189 190 191 192 193 195 197 200 201 201 203. CHAPTER 4 IPR ENFORCEMENT, A GLOBAL ORGANIZATION WITH LIMITS !6. DOI:10.6814/NCCU202100385.

(7) WHAT ALTERNATIVE FOR A MORE EFFICIENT STRATEGY? 205 1. Level layered alternatives 205 1.1. Anti-piracy marketing techniques to educate the consumer 206 1.1.1. Educating the customer: Anti-Counterfeiting Advertisements 207 1.1.2. Peer Pressure 208 1.1.3. Fear 209 1.1.4. Quality of the Product 210 1.1.5. Negative Association with Suppliers 214 1.2. Firms Level - Must be proactive to Protect Their IPR 216 1.3. Towards more cooperation: China – Taiwan – Hong Kong, new allies? 220 1.3.1. Towards an alignment of the legal framework 221 1.3.2. Cooperative and comprehensive intergovernmental strategies222 1.3.3. Hong Kong and Taiwan, newcomers in OI? 224 1.4. Findings on IPR enforcement 225 2. The transverse EU model for the protection of IPR, an effective model? 227 2.1. EU IPR Enforcement Initiatives and strategies 229 2.1.1. Directive in the EU to Pursue Counterfeiters 231 2.1.2. Seeking Retribution: The European Commission 233 2.1.3. The EU a team strategy with its allies 233 3. Findings on alternatives for the Asian reality 237 3.1. pre-existing measures to be improved 239 3.1.1. Targeted marketing techniques to educate the consumer 240 3.1.2. The firms and the public private partnerships 241 3.1.3. Towards more communication, cooperation in the region? 242 3.1.4. Supra-national level 243 3.2. Measures to implement 244 3.2.1.Individual level 245 3.2.2.Firm level 246 3.2.3.State Level 247 3.2.4.Transnational level 248 4. General findings on the alternatives to implement 250. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. !. i n U. v. CHAPTER 5 GENERAL FINDINGS AND LIMITATIONS 1. General findings 1.1. Field report 1.2. Considered alternatives 1.3. Theoretical contribution 2. Limitations 2.1. Methodology 2.2. Political brakes. 254 254 254 256 259 260 260 261. References Appendix. 263 277 . !. !7. DOI:10.6814/NCCU202100385.

(8) List of Figures. !. Figure. 立. 政治大. 學. ‧. n. al. er. io. sit. y. Nat. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37.. Seizures of counterfeit goods in 2013 per country…………………………………………17 Seizures of counterfeit goods in 2016 per country………………………………...……….17 Seizures of pirated or counterfeit in 2014 per product……………..………………………18 Percentage of counterfeit seizures in 2014 in the US……………..………….…………….18 Counterfeits seized by the US authority……………………………………………………18 Value of seizures from country in 2005….…………………………………………………18 US IPR enforcement seizures per type of products in 2012 and 2013……………………..24 Classification scheme of counterfeiting and related terms…………………………………26 Breakdown by type of infringed right per seized articles…………………………………..27 Counterfeiting-related publications in academic and practitioner journals (1976-2006).….60 Facets of counterfeiting research along the supply chain…………………………………..62 Brand contribution measures the role brand plays in driving earnings on a scale of 1 to 5 Brand momentum measures the prospects for future earnings on a scale from 1 to 10……68 Number of cases seized in 2013 per brand in the world……………………………………69 Upstairs showroom in Causeway Bay……………………………………………………...77 Counterfeit retail on e-commerce platform…………………………………………………78 General description of the phenomena…………………………………….………………..81 Top 10 websites with the most counterfeit merchandise………………..….………………90 Alibaba’s revenue growth……….….………………………………………………………90 Average direct and indirect sales lost due to counterfeit ……………….…………….……91 The five stage spread of luxury model……………………………………….………..……97 Seizures of counterfeit and pirated goods: top provenance economies (2013)…….……..101 Top 15 provenance economies in terms of their propensity to export counterfeit products103 Map, main producers and transit points for fake goods………………………..………….103 Conveyance methods (2011-2013, average)………………………………………………104 Map, geographical distribution of factories in China per area of production…….……….106 Top 15 industries with respect to their propensities to suffer from counterfeiting…..…….110 Seizures of counterfeit and pirated goods……………….…………………………………112 Luxury-goods market by consumer nationality……………………………………………113 The counterfeit luxury market growth for the US market for containerized goods………..116 Frequencies of values of counterfeit Nike, RayBan, Louis Vuitton and Rolex……………121 Findings on the reasons for the counterfeiting issue in Hong Kong and Taiwan……….…127 Counterfeiting steps along the supply chain……………………………………………….136 Louis Vuitton store in Luxembourg…………………………………………………….….140 Counterfeit store in Hong Kong……………………………………………..……………..140 New Louis Vuitton store in Brussels…………………………………….…………………140 Counterfeit store in Hong Kong………………………………………..…………………..140 Louis Vuitton website in Google………………………………………………………..…141. ‧ 國. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.. Ch. engchi. !8. i n U. v. DOI:10.6814/NCCU202100385.

(9) 立. 政治大. ‧ 國. ‧. !. n. al. er. io. sit. y. Nat. ! ! ! ! ! ! ! ! ! ! ! !. Louis Vuitton counterfeit on DhGate website in Google………………………………….141 Online shopping experience at Louis Vuitton……………………………..……………….142 Online shopping experience on DhGate…………………………………..……………….143 IPR Cases handled by Taiwanese Customs, 2002–2005…………………………………..169 Conceptual model of consumer complicity………………………………………………..181 Brand conspicuousness……………………………………………….……………………187 General description of the phenomena (same as Figure 16)……………………………….190 The counterfeit prevention task force organization………………………………………..192 Conceptual framework of the IPR environment………………………………………..….196 Findings on the current IPR environment in Hong Kong and Taiwan………………….…202 Distinguishing real from fake - The date…………………..………………………………211 Distinguishing real from fake - The typography…………………………………..……….212 Distinguishing real from fake - the engraving of case..……………………………………212 Distinguishing real from fake - The case……..……………………………………………213 Distinguishing real from fake - The weight………………………………………………..214 Monogram coated canvas………………………………………………………………….216 Findings on the current IPR enforcement in Hong Kong and Taiwan…………………..…226 Findings on the EU model……………………………………………………………..…..238 Improvements to the current strategies in Hong Kong and Taiwan…………………….….240 Poster campaign against counterfeiting 2009……………………………………..……….245 Findings on implementing new measures in Hong Kong and Taiwan……………………..250. 學. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58.. Ch. engchi. i n U. v. ! ! !9. DOI:10.6814/NCCU202100385.

(10) List of Tables. !. Table. 立. 政治大. 學 ‧ y. Nat. io. sit. !. IPR Classification………………………………..…………………………………………34 Overview of the counterfeit concepts……………………………………………...……….35 General overview on institutionalization…………………...………………………………36. n. al. er. 1. 2. 3.. ‧ 國. !. Ch. engchi. !10. i n U. v. DOI:10.6814/NCCU202100385.

(11) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. List of Abbreviations. ! EIC Economic Impact Counterfeiting EU European Union GTRIC general trade-related indices of counterfeiting IACC International Anti-Counterfeiting Coalition ICC International Chamber of Commerce IP Intellectual Property IPR Intellectual Property Right. 政治大. OECD Organization for Economic Co-operation and Development. 立. R&D Research and Development. ‧ 國. 學. SEA South East Asia. SIPO State Intellectual Property Office. ‧. TCA Trademark Counterfeit Act. TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights. sit. y. Nat. UN United Nations. WIPO World Intellectual Property Organization. n. al. WTO World Trade Organization. ! ! ! ! ! ! ! ! !. Ch. engchi. !11. er. io. USTR United States Trade Representative. i n U. v. DOI:10.6814/NCCU202100385.

(12) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Abstract. ! ! Copies are legion and there is a growing success for these fake products, no matter where. However, Asia is particularly affected. Indeed, China is undoubtedly the workshop of fakes and Hong Kong an important transit zone for products, before they reach their final destination, such as Taiwan. This will be an in-depth examination of the region through a comparison of the phenomenon in Taiwan and Hong Kong. Counterfeiting is a global problem, both in terms of actors, levels of action and policies; it is therefore essential to exa-. 政治大 terfeiting in order to consider 立the possible alternatives for a better understanding of the is-. mine the different strategies developed by these different parties in the fight against coun-. ‧ 國. 學. sue. We will propose here a holistic approach to the phenomenon and the policies to be put in place, as well as a study of the European case as a basis for approaching these strategies. . ‧. . 贗品無處不在，無論在哪裡，這些假冒產品都獲得了越來越多的成功。但. Nat. sit. y. 是，亞洲尤其受影響。確實，中國無疑是假貨的⽣產地，⽽⾹港在產品到達最終⽬. er. io. 的地（例如台灣）無疑是重要的商品過境地。通過對台灣和⾹港的現象進⾏比較，. al. iv n C hengchi U 球性問題。因此，有必要檢驗這些不同政黨在反恐⾾爭中製定的不同策略，以便考 n. 這是對該地區的深入研究。針對是從⾏為者，⾏動⽔平還是在政策上，假冒都是全. 慮可能的替代⽅案，以便更好地理解問題。在這裡，我們將針對這種現象和將要採取的政策提出整體⽅法，並對歐洲案例進⾏研究，以此作為採取這些策略的基礎。. ! !. !12. DOI:10.6814/NCCU202100385.

(13) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Acknowledgement. ! ! Firstly, I would like to express my sincere gratitude to my advisor Professor Chen for the continuous support of my Ph.D study, for his patience, kindness, and advice. His guidance helped me in the writing of this thesis.. ! Besides my advisor, I would like to thank the rest of my thesis committee: Prof. Kuan, Prof. Cheng, Prof. Hsieh and Prof. Wang, for their insightful comments and encoura-. 政治大. gement, but also for the hard question which pushed me to widen my research from various. 立. perspectives.. ‧ 國. 學. !. I thank my fellow classmates and my students for their kind help on the proofrea-. !. ‧. ding, especially Charlene Tu, Emily Lo and Ricardo Sebastiano.. Nat. sit. y. Last but not the least, I would like to thank my family: my husband fro his conti-. al. er. io. nuous help and motivation, my parents and to my brother for supporting me throughout wri-. n. ting this thesis and my my life in general.. Ch. engchi. !13. i n U. v. DOI:10.6814/NCCU202100385.

(14) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. CHAPTER 1 A GENERAL INTRODUCTION. ! Counterfeiting has existed for almost as long as commerce. Even during the Roman Empire, one could find counterfeit amphorae, copies of famous craftsmen intended for resale. The problem is therefore neither new nor easy to deal with. As a Frenchwoman based in Asia, I see first-hand the power of European brands and the counterfeits based on their designs. Here, we shall focus on counterfeit luxury products in Taiwan and Hong Kong.. 政治大. !. 立. 1. Introduction, a general background. ‧ 國. 學. 1.1. From counterfeit to fake trademark, a global issue for luxury goods 1.1.1. Definition. ‧. Since counterfeit is our core issue, we will first and foremost try to briefly review what is. y. Nat. sit. meant by counterfeit products and distinguish the terms "replica" and "knockoff". Then, we will. n. al. er. io. explore the issue of trademark.. i n U. v. Counterfeit goods are illegal, low-priced, and often lower quality replicas of products that typi-. Ch. engchi. cally possess high brand value (Nia and Zaichkowsky 2000). From there, we understand "replica" as "an exact copy or model of something"1, "a duplicate of an original (…) work"2. What, then, is the difference between replicas, knockoffs, and counterfeits? Counterfeit is the exact duplicate of another product: it infringes the trademark – the brand – of that product’s mark. By contrast, a knockoff only resembles the original product and therefore does not fall afoul of the law. Since the logo or the brand is nowhere to be found, it is not seen as an exact replica. In other words, all knockoffs are copies or duplicates of an original product, but not all the replicas are knockoffs since some go further and become counterfeits. Such replicas 1 2. Oxford dictionary, lexico.com, accessed June 4, 2020, https://www.lexico.com/definition/replica. Idem. !14. DOI:10.6814/NCCU202100385.

(15) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. use the trademark of the original goods in order to dupe the customers into what they believe – or not – to be an authentic item. Consequently, a fake trademark is an unauthorized copy of the brand taken from the initial product and applied to its replica.. ! 1.1.2. The international trademark system For the most part, luxury goods are registered under their brand through a trademark. "The term ‘trademark’ includes any word, name, symbol or device or any combination thereof. 治政 plies to register on the principal register established by this act, 大to identify and distinguish his or 立 from those manufactured or sold by others and to indicate her goods, including a unique product, (1) used by a person, or (2) which a person has a bona fide intention to use in commerce and ap-. ‧ 國. 學. the source of the goods, even if that source is unknown" (Kitch and Perlman 2009, 5). The latter are nowadays protected under the international trademark system. This protection, also called the. ‧. Madrid System, is a "convenient and cost-effective solution for registering and managing trademarks worldwide. (Companies have to) File a single application and pay one set of fees to apply. y. Nat. sit. for protection in up to 117 countries which have ratified WIPO. (They can also) Modify, renew. !. er. al. n. cy.. io. or expand (their) global trademark portfolio through one centralized system"3 for more efficien-. Ch. engchi. i n U. v. 1.1.3. counterfeit as a global issue The global market for counterfeits today is estimated to exceed $600 billion, accounting for approximately 7% of world trade.4 The International Chamber of Commerce (ICC, 2015) estimates that the industry loses as much as $12 billion every year to counterfeiting (Nia et al. 2008). Therefore, it seems essential to slow down the global taste for counterfeits in order for. 3. “Inside WIPO,” accessed December 11, 2020, https://www.wipo.int/about-wipo/en/. “World Customs Organization,” accessed December 11, 2020, http://www.wcoomd.org/en/media/newsroom/2006/august/the-first-review-customs-and-counterfeiting-2004.aspx. 4. !15. DOI:10.6814/NCCU202100385.

(16) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. brands to prevail over copied goods (Bloch, Bush, and Campbell 1993). Ethical problems aside, counterfeits are also responsible for job losses at industries connected to legitimate manufacture and is usually linked to international smuggling and illegal trafficking networks.5 This transnational crime is a global issue that impacts national and international economics and politics. It is therefore unsurprising that the international community and companies leagued themselves and their resources to tackle this global issue. In 1967, the World Intellectual Property Organization (WIPO) was established, and it now counts 191 states as members. This self-funded agency of the United Nations (UN) focuses on intellectual property services, policy, information and cooperation.6 Its mission is to lead the development of a balanced and effective international Intel-. 政治大 mandate, governing bodies, and procedures are set out in the WIPO Convention. A similar inter立. lectual Property (IP) system that enables innovation and creativity for the benefit of all. Their. national body, the International Anti-Counterfeiting Coalition (IACC), was founded in 2006. Be-. ‧ 國. 學. sides these initiatives, various other actions marshalling a wide range of resources, organizations, associations, and institutions operating on national or global scales have also emerged over the. ‧. years.. Nat. sit. y. However, all these organizations do not seem effective enough in the fight against coun-. al. er. io. terfeiting and especially in luxury goods where consumers often knowingly purchase counterfeits. n. despite the efforts of most luxury brand marketers (ICC 2015). Therefore, the key issue is the. Ch. i n U. v. demand: indeed, supply exists to meet demand. The question of why consumers are attracted to. engchi. purchase such products remains uncertain (Zaichkowsky 2006, 320), but it seems quite obvious that a parallel can be drawn with why people buy luxury brands in the first place. Nevertheless, although we will briefly come back to this element, this work will focus more on institutional response to such issue rather than the motives of those that demand counterfeits. . ! 5. Dana Thomas, “The Fight Against Fakes,” Harper’s BAZAAR, January 9, 2009, accessed December 11, 2020, https://www.harpersbazaar.com/ culture/features/the-fight-against-fakes-0109_. 6 “Inside WIPO,” accessed December 11, 2020, https://www.wipo.int/about-wipo/en/.. !16. DOI:10.6814/NCCU202100385.

(17) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. 1.2. The origin of counterfeit Now more than ever, counterfeit appears to be a pervasive and growing problem for most countries. Luxury brands, mostly from developed countries, appear obvious victims, yet other countries with strong purchasing power and huge potential markets also suffer. It is also an issue for emerging countries, which usually produce and export these fake products. Therefore, victims abound at all points of the manufacture and distribution of counterfeits. While counterfeit manufacture generates economic activity, it does so at the cost of strengthened organized crime and exploitative labor conditions. It is also worth mentioning that, in many cases, these countries are. 政治大. treated as rogue states by others when their governments fail to curb counterfeits. Among these countries, China is notable as both victim and perpetrator. It is nearly the world’s largest econo-. 立. my, with a huge market for luxury goods and a middle class with strong and growing purchasing. ‧ 國. 學. power in recent years. It is also the dominant manufacturing force in the global economy with an advanced export infrastructure. Various analyses over the years sources show that the majority of. ‧. the world’s counterfeit goods are exported from China.7. n. er. io. sit. y. Nat. al. Ch. engchi. Figure 1 Seizures of counterfeit goods in 2013 per country Source: The Economist. i n U. v. Figure 2 Seizures of counterfeit goods in 2016 per country Source: Promomarketing. 7. Figure 1: “Stamping It Out,” The Economist, April 23, 2016, accessed December 11, 2020, https://www.economist.com/international/ 2016/04/23/stamping-it-out. Figure 2: Brendan Menapace, “Apparel, Wearables Top ICE Counterfeit Seizures for 2016,” Promo Marketing, accessed December 11, 2020, https://magazine.promomarketing.com/article/apparel-wearables-top-ice-counterfeit-seizures-2016/. Figure 3: “Stamping It Out,” The Economist, April 23, 2016, accessed December 11, 2020, https://www.economist.com/international/2016/04/23/ stamping-it-out. Figure 4: Brendan Menapace, “Apparel, Wearables Top ICE Counterfeit Seizures for 2016,” Promo Marketing, accessed December 11, 2020, https://magazine.promomarketing.com/article/apparel-wearables-top-ice-counterfeit-seizures-2016/. Figure 5: University of North California, 2010, accessed June 4, 2020, https://www.unc.edu/courses/2010spring/law/357c/001/ACG/stats.html Figure 6: “In the Fight Against Counterfeits, Even the Raids Can Be Fake”, The Wall Street Journal, December 3, 2015, accessed June 4, 2020, https://www.wsj.com/articles/in-the-fight-against-counterfeits-even-the-raids-,can-be- fake-1449171005.. !17. DOI:10.6814/NCCU202100385.

(18) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Figure 3 Seizures of pirated or counterfeit goods in 2014 per product Source: The Economist. Figure 4 Percentage of counterfeit seizures in 2014 in the US Source : Promomarketing. 政治大. 立. ‧. ‧ 國. 學. Figure 5 Counterfeits seized by the US authority Source: The Wall Street Journal . sit. n. er. io. al. y. Nat. Figure 6 Value of seizures from Country in 2005 Source: The Anti-Counterfeiting Group. Ch. engchi. i n U. v. Such sustained counterfeit manufacture undermines the competitiveness of many western companies in markets around the world. South East Asia (SEA) is a region of growing economic importance both globally and to western companies. Yet, the majority of counterfeits in SEA are imported from China (Intellectual Property Office 2015), and often transit through Hong Kong and Taiwan. Geographically, economically, and politically, these places are at the core of the problem, but they remain more or less under China’s influence. They are both under China’s yoke even though they maintain a high degree of autonomy when it comes to customs and law enforcement. Their special status thus invites deeper analysis. Also, their geographic proximity as well as their relative comparable population, politics, and economics strengthens this logic. As key transit points in the international flow of counterfeit goods, it is worth examining the strate!18. DOI:10.6814/NCCU202100385.

(19) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. gies and policies implemented by their governmental organizations to tackle the issue. . 1.3. From local news items to a regional analysis - a bottom-up approach To explain and tackle this global phenomenon, we chose to focus on a specific core region. Even though the goods usually come from Mainland China, we shall focus ourselves on their first destination: Hong Kong and Taiwan.8 Our analysis will use a bottom-up approach, where we explore local factors first. Consequently, we work upwards through national factors to regional interactions. Given the illegal and shadowy nature of the activities that we intend to stu-. 政治大 reporting of catches, and then extrapolate to local, national, and finally regional levels. We begin 立 dy, accurate local data is difficult to acquire. We can nonetheless rely on news articles and local. here with two press articles relating to two seizures as indicators of the extent of counterfeiting.. ‧ 國. 學. In other words, this allows the least erroneous information to be collected on a subject that remains a gray area and where data collection is complex. We will also cross-check these samples. ‧. against official estimates and reports by the various actors involved. Throughout, we must keep. y. Nat. in mind that the information available on this subject depends on what governments know and. io. sit. want to communicate, what the media choose to report, and what various actors can actually tell. n. al. er. from what they know. Finally, even though local seizures provide insight at specific points in. i n U. v. time,9 and although they may appear to be isolated, counterfeiting is an organized crime that re-. Ch. engchi. lies on international and regional networks with national and then local relays. Our analysis will attempt to highlight the different levels of action both in terms of the product distribution network and the public response to it. Two specific cases will therefore be studied as entry points to the two places that we propose to highlight. Each case therefore refers to a seizure of products in the territories of Taiwan and Hong Kong, respectively. We chose two cases we believe to be emblematic of the issue and that will serve as reference for further analysis. Moreover, we choose these individual cases over a. 8 9. We will come to this comparison and the choices of the cases later in the methodology. Hong Kong case -seizure of goods on a back clandestine shop.. !19. DOI:10.6814/NCCU202100385.

(20) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. broader, multi-case analysis in order to highlight similarities and parallels between the territories and their actions to combat counterfeiting. Finally, these cases shall serve as illustrations and examples of territorial policies. The real subject of study remains the history of public policies and responses by each territory as well as possible improvements of the measures already in place.. ! Hong Kong We first examine a seizure carried out in Hong Kong in the first week of December in. 政治大. 2015. The article, from the South China Morning Post, was published a week later on December. 立. 17.. ‧ 國. 學. "More than 600 counterfeit products worth more than Hong Kong$ 1 million were confiscated inside (a) shop’s secret storeroom, reported the commander of the intellectual property general investigation division. Apparently, a 200 sq. ft storeroom was situated behind the shop’s cashier. ‧. counter and was displaying more than 20 brands of counterfeit items – mainly women’s leather handbags, shoes and accessories – for regular clients only. Walk-in customers were not allowed. Nat. sit. y. access. The fake products were sold at 30 to 60 percent of the original prices of the genuine goods (…) and the shop bought the goods for a few hundred to thousands of dollars each but sold. io. n. al. er. them for thousands of dollars up to more than Hong Kong$ 10,000."10. Ch. i n U. v. The apparent target for these products was the female office worker in the district, and the seized. engchi. goods were smuggled into Hong Kong from the mainland. The article also notes how in the past 11 months of that year, customs officers seized about Hong Kong$85 million worth of counterfeit items, representing a 20 percent rise in seizures over the same period the previous year. This rise is undoubtedly due to the enforcement action against counterfeit activities at street level and at border checkpoints. Finally, the end of the article recalls that "Under the Trade Descriptions Ordinance, the maximum penalty for selling or possessing for sale counterfeit goods is a Hong Kong$ 500,000 fine and five years’ jail.".11. 10 Article 11. relating our first case from Hong Kong: (Lo 2015). Idem. !20. DOI:10.6814/NCCU202100385.

(21) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Taiwan The second article12 relates a similar event in Taiwan. It was published on January 11, 2018 and relates the arrest of three people suspected of being connected with the alleged production of counterfeit luxury goods. The Taichung police raided a warehouse in Taichung’s Beitun District and found 1,400 counterfeit items, including handbags and clothing. The company at fault was allegedly selling fake luxury goods online. "The confiscated items have an estimated value of NT$ 10 million (US$ 337,826), and the business generated revenue of about NT$ 2 million each month. (…) The counterfeited goods included clothing, shoes and backpacks that copied popular Chanel, Givenchy, Louis Vuitton, Gucci,. 政治大. Burberry, Calvin Klein, Kenzo, Nike, Adidas and other well-known brands’ designs.". 立. Following the vein of the previous Hong Kong case, the Taiwanese suspects were in contact with. ‧ 國. 學. Chinese factories, which helped them produce counterfeits of famous international brands, which they imported to Taiwan through the company. After that, they resold the goods online through. ‧. five online channels, including Yahoo, Shopee, Taobao, and Facebook. Customers could purchase the goods with discounts between 20 percent and 50 percent from (original) retail prices.. y. Nat. io. sit. Even though these two news articles are comparable in time, geography, nature as well as. n. al. er. the origin and the nature of the goods and their retail price, a few elements still differentiate. i n U. v. them. First of all, the Hong Kong retailer maintained that he did not mislead the customers with. Ch. engchi. seemingly genuine goods; by contrast, the Taiwanese company claimed it had access to "brand-name companies’ outlet distributors, factory-direct goods with only slight damage, or engaging in ‘parallel imports’ of the genuine product lines".13. Whether the customer did or did not believe the retailer is beside the point: both merchants provided misleading information. Also, they used different retailing strategies: the Hong Kong seller sold quietly from a storeroom at the back of a shop, whereas the Taiwanese retailer chose to resell products openly online from an intermediate local warehouse. Various factors affect counter-. 12 Article 13. relating our second case from Taiwan: (Pan 2018). Idem. !21. DOI:10.6814/NCCU202100385.

(22) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. feit retailing choices; customers’ behaviors matter, but so do the local strategies used by the government to counter counterfeit sales. This is the crux of our inquiry: to what extent are these differences informed by the different strategies put in place by the different governmental organizations of the two countries, which then force sellers to adapt their retailing processes? Are the policies implemented by the Hong Kong and Taiwan’s institutions efficient? What other alternatives and improvements could be considered in order to counter the counterfeiting industry? . ! 2. Literature review. 政治大 thin two specific regions: Taiwan and Hong Kong. Let us therefore examine the history of public 立 policies towards luxury and counterfeit goods in Taiwan and Hong Kong. The subjects at stake here are counterfeit luxury goods and the political response to it wi-. ‧ 國. 學. Most research regarding luxury goods has been conducted in France by locals and publi-. ‧. shed in French. It is a niche subject which has not yet been dealt with on a global scale. This is not surprising given we consider that most of the major luxury brands and the large luxury. sit. y. Nat. groups originated in France, or, as in the case of watchmaking brands, Switzerland.14 Unfortuna-. io. er. tely, even these French-language studies are still relatively sparse, recent, and confidential. Our study is therefore all the more essential as it sheds light on these works and places them in. al. n. context.. Ch. engchi. i n U. v. Even though the first publications date from the late 1970s, counterfeiting is still regarded as a rather young field of research. This is why counterfeiting research has not yet established itself as an autonomous research stream (Staake, Thiesse and Fleischean 2009). Instead, it is distributed across different strands of management research, including strategic management, marketing, and logistics, and generally treated as pieces of economic and business research. Therefore, our literature review relies based on journals in the areas of management and economics. Indeed, it is important to keep in mind that this topic of research has been poorly documented in political science, lending extra importance to this research. Because of our subject and our entry 14. The big names in watchmaking are most often stamped with Geneva and have their manufacturing workshops in Switzerland in the Joux Valley - a French-speaking part of Switzerland.. !22. DOI:10.6814/NCCU202100385.

(23) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. point to the field through our case study, we will concentrate first on defining the key concepts at stake, then we will go through the academic and legal frameworks already in place, and then elaborate new strategies. Finally, we will connect to current issues of IPR enforcement in Asia and especially in China to explain our choices of Taiwan and Hong Kong for study. . ! 2.1. Luxury counterfeiting Per published statistics, luxury goods are clearly commonly and frequently counterfeited. In the following charts,15 the products under the headings "handbags/wallets", "Watches/. 治政大down, we find that leather goods, not the largest, share of affected products. If we go one level 立 jewelry (including watches), fashionable apparel, and luxury are the types of luxury products that Jewelry", "Wearing Apparel/Accessories", "Footwear" and "Labels/Tags", represent a major, if. ‧ 國. 學. are most frequently found during seizures. In addition, they fall under the same type of legislation: the trademark system because they belong to a mark which is, by itself, the origin of the. ‧. will to copy. In the case of watches and jewelry, however, we should be cautious. Watches and fine jewelry are sometimes subject to patents in addition to their trademark protection. Even if. y. Nat. sit. the brand remains the main object of copy, some workshops also try to replicate manufacturing. er. io. techniques. They therefore reproduce at lower cost with often lower-quality materials, mecha-. al. iv n C in these cases, only a professional watchmaker the watch, might see the difference. h e n gbycopening hi U n. nisms, tolerances, and stones – say, synthetic stones instead of their precious versions. However,. Therefore, we have chosen examples of seizures that focus on fashion and leather goods which generally do not have these double trademark and patent protections.. ! Figure 7: “Intellectual Property Rights & Wrongs: CBP Counterfeit Seizures,” Datamyne, April 21, 2014, accessed December 11, 2020, https://www.datamyne.com/blog/resources/intellectual-property-rights-wrongs-cbp-counterfeit-seizures/. 15. !23. DOI:10.6814/NCCU202100385.

(24) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Figure 7 US IPR Enforcement seizures per type of products in 2012 and 2013 Source: Descartes Datamyne. 政治大. Within the last century, much research explored the world of luxury, its perceptions, and. 立. consumers’ behaviors. However, fake luxury or the imitations of these luxury products is a new. ‧ 國. 學. field, so the literature remains patchy and contributions are rather recent. Also, counterfeit luxury goods is usually taken separately when it comes to academic literature and the research fields.. ‧. Here again, it mostly concerns physical distribution channels, production, and supply-demand factors (Sharma and Chan 2017). A few studies also explore the effects on the brands themselves. sit. y. Nat. (Nia and Zaichkowsky 2000), but little work traces the counterstrategies. Here, we will not pro-. io. terms and concepts we will expand on later in Chapters 2 and 3.. al. er. vide a comprehensive and exhaustive review of what has been done, but shall define the main. n. iv n C First, luxury brands are defined as h “those e n gpurchased c h i Uby consumers more for their psycho-. logical, hedonic and/or symbolic value, rather than because of their functional or economic va-. lue" (Cesareo, Pastore and Williams 2017, 193). Jean-Noël Kapferer, one of the main scholars who worked on luxury, (Kapferer 2015, 228) points out that rather than being just about a product, people purchase luxury goods as a lifestyle. He explains that luxury brands have several characteristics: "an exceptional level of quality; rarity (both physical and virtual) and exclusivity; scarcity (both real and artificial); symbolic power; ostentation and conspicuousness; history, heritage and tradition; high level of craftsmanship; and of course, high price.” The overall luxurious industry represents more than 1 trillion dollars and is significantly threatened by the trademark counterfeiting.. !24. DOI:10.6814/NCCU202100385.

(25) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. The classification from Grossman and Shapiro on deceptive and non-deceptive counterfeit also appears crucial in the case of luxury goods. Indeed, in many cases, the customer purchases a fake article fully aware of its illicit state. The customer wants to be part of the luxurious lifestyle even though he or she doesn't have the corresponding financial means or interest in spending the money demanded. Phau and Teah (Phau and Teah 2009) go even further explaining that this predominant phenomenon in luxury brand makes the customer a willing participant and an accomplice of the counterfeiters. As previously explained by Nia and Zaichkowsky (Nia and Zaichkowsky 2000), the consumers can clearly distinguish the fake from the original thanks to the price, distribution channel, and the inferior quality of the counterfeit itself. Going further, we agree with. 政治大 tive. In fact, more and more, the frontier between fake and original becomes porous and we can 立 Gentry and al. (Gentry et al. 2001) in questioning this dichotomy of deceptive and non-decep-. encounter a spectrum from extremely deceptive to extremely non-deceptive. Cesareo, Pastore. ‧ 國. 學. and Williams elaborated and provided a comprehensive graph on this new scale. It seems very accurate to point out that nowadays the perception of the authenticity of an item is not as clear as. ‧. it used to be. Again, the price, distribution channel, and the quality are all clues that seem ob-. y. Nat. vious when buying. However, the proliferation legitimates channels for primary and secondary. io. sit. sales of luxury goods shows that we should not oversimplify the problem. Our objective here is. n. al. er. not the full and comprehensive study of consumer behavior regarding luxury counterfeit, but. i n U. . more using luxury counterfeit as the object of our case study.. Ch. engchi. v. 2.2. Defining illicit trade As Thorsten Staake, Frédéric Thiesse, and Elgar Fleisch (Staake, Thiesse and Fleisch 2009) relate, most publications group piracy and the counterfeit trade together along with other forms of illicit trade. However, it seems undeniable that we should define distinct terms for a better understanding of the key concepts at stake here. As shown in the previous figure, illicit trade and intellectual property cover three very specific domains which do not necessarily cover the same kind of products: trademarks, copyrights, and patents.. !25. DOI:10.6814/NCCU202100385.

(26) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Understanding counterfeiting as "the infringement of intellectual property rights (IPR)" and "therefore (being) a form of illicit trade,"16 we will first try to differentiate "counterfeit trademark goods", from "pirated copyright goods" and "infringed patent goods". According to the "Agreement on Trade-related Aspects on Intellectual Property Rights (TRIPS), counterfeit trademark goods "include(s) any goods bearing, without authorization, a trademark which cannot be distinguished in its essential aspects from the trademark registered for such goods," while, according to the World Trade Organization,17 “ ‘pirated copyright goods’ refers to infringements of copyright and related intellectual property rights” (Staake, Thiesse and Fleisch 2009). These two areas, however, very often overlap since one product is typically registered under both laws.. 政治大. Finally, according to the WIPO definition a patent is "an exclusive right granted for an invention,. 立. ‧. ‧ 國. 學. io. sit. y. Nat. n. al. er. Figure 8 Classification scheme of counterfeiting and related terms Source: from Staake, Thiesse and Fleisch. Ch. engchi. i n U. v. which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. To get a patent, technical information about the invention must be disclosed to the public in a patent application."18 As previously mentioned, in our field, this would mostly concern certain types of watches and jewelry. Therefore, these products will voluntarily be left aside. Let us then use the classification from Staake, Thiesse, and Fleisch to better clarify our area of interest.. 16. Quarles & Brady, “Anti-Counterfeiting and Brand Protection Strategies for China,” accessed December 12, 2020, https://fr.slideshare.net/Quarles/anticounterfeiting-and-brand-protection-strategies-for-china. 17 “World Trade Organization - Home Page - Global Trade,” accessed June 4, 2020, https://www.wto.org/. 18“Patents,” accessed December 11, 2020, https://www.wipo.int/patents/en/.. !26. DOI:10.6814/NCCU202100385.

(27) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. This clarification clearly shows the path from illicit trade to IPR infringement to counterfeiting to finally, the physical goods at stake. Even though it is not our main point of focus, it seems relevant to add that deceptive counterfeiting stands for buyers purchasing fake articles without being fully aware of the intellectual property infringement; whereas non-deceptive counterfeiting depicts customers who buy copies knowingly and and well-aware of the "illicit nature of the product" (Staake, Thiesse and Fleisch 2009). Most publications offer deep insight on patents and numerous significant inputs have been made in the area of copyright. However, and even though trademarks are mostly copied, the trademark protection domain seems still rather new and poorly documented.19 . 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. eFigure n g9 c h i. i n U. v. Breakdown by type of infringed right per seized articles Source: European commission, 2007. Taking the founding texts dealing with counterfeits, it is clear that most of the information collected is descriptive rather than comprehensive. Analyses provide overview rather than examining the issue in greater detail. Moreover, and as previously mentioned, most studies focus on the production chains and supply-demand dynamics, ignoring entirely institutional response and counterstrategies. Let us nonetheless use these sources to better define the concepts of imitations, wholesale 19. Figure 9: Cademan, Henriksson and Nyqvist 2012, 1. !27. DOI:10.6814/NCCU202100385.

(28) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. piracy, and outright piracy (Kaikati and LaGarce 1980). The first publications emerge in the late 1970s with the works of Hansen (Hansen 1978, 69) which mostly describe the intentions of purchasing counterfeit articles. Later Kaikaiti and LaGarce (Kaikati and LaGarce 1980) defined the different forms of brand piracy, strategies to prevent counterfeiting and an outline of international laws to protect trademarks. However, the article seems a bit outdated since it does not take into sufficient consideration the current capabilities of the counterfeit pirates. Grossman and Shapiro (Grossman and Shapiro 1988b) then discussed the price-demand curves of deceptive counterfeit products and genuine articles. They also characterized non-deceptive counterfeits as a slow gangrene on both the brand and the product. Later on, Nill and Shultz (Nill and Shultz. 政治大 tions. Hilton (Hilton, Choi and Chen 2004), in 2004, came out with a very useful typology of 立 1996) explained the ethical decision-making and the moral reasoning behind the purchase inten-. counterfeiting that occurs in the clothing industry in addition to discussing the ethical bases of. ‧ 國. 學. the Intellectual Property. Finally, a few years ago in 2006, Bosworth (Bosworth 2006) gave and studied statistical evidence on the counterfeit industry, its scope, causes and consequences.. ‧. From this general overview, we distinguish a few authors such as Kaikaiti and LaGarce, Hilton,. Nat. sit. y. and Borthworth who will be very useful for a general outline on counterfeit as they directly. io. a deeper insight of the luxury counterfeits in the subject region.. n. al. !. Ch. engchi. er. concern our subject. Again, these terms and ideas will be reviewed in our second chapter to give. i n U. v. 2.3. Legal issues and legislative concerns IPR is undoubtedly the key field for any issue touching counterfeit goods and trademark protection. For the purposes of this analysis, we chose to only focus on the authors summing up the concepts that are relevant for us. Globerman (Globerman 1988) briefly discusses the cost of trade protection. He recommends a policy approach that emphasizes the “private” efforts of brand owners to protect their products rather than strengthening retaliatory trade legislation. Taking a global perspective, Jain (Jain 1996) investigates the conflict between the industrialized and developing countries, which favor. !28. DOI:10.6814/NCCU202100385.

(29) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. a high and a low level of protection, respectively. This highlights a preponderant element for our study: the relatively low levels of protection instituted in Hong Kong and Taiwan, especially as compared to industrialized peers.. Because most globally-recognized luxury brands are from. Western countries, they might expect the strong IPR protections of their home countries to have spread to other wealthy regions. However, because of the relocation of the production to lowercost countries, among other reasons, they must now contend with the poor IPR protection these countries have and the attendant flood of counterfeits. Nevertheless, let's keep in mind that we cannot conflate Taiwan, Hong Kong, and China. The latter produces the goods whereas Taiwan and Hong Kong seem to be victims rather than the origin of the problem. Shultz and Nill (Shultz. 政治大 violations of IPR within the context of social dilemmas. Following the same logic, Javorcik (Ja立. and Nill 2002) further elaborate on this issue by introducing a theoretical perspective to examine. vorcik 2004) explores the relationship of the degree of enforcement of IPR on the composition of. ‧ 國. 學. foreign direct investment. The data from these studies indicate that investors relying heavily on the protection of IP are deterred by weak IPR regimes are deterred from undertaking local pro-. ‧. duction but encouraged instead to focus on distribution of imported products. This dynamic is. y. Nat. present also in sectors that do not heavily rely on IPR protection. It is all the more curious that. n. al. er. io. weak IPR protections.. sit. luxury brands invest so much in Asian regions, such as mainland China, which have apparently. Ch. i n U. v. This literature review highlights a crucial point in our project. Certain works examine the. engchi. development of counterfeiting through the lens of differences in protective systems between the countries that create these brands and the countries that manufacture their products. Others point out the weaknesses of existing frameworks in producing countries and the distribution chains that follow. However, no one highlights problems that may arise from the interactions between protection regimes and the distribution chains that span across them. In other words, many authors examine specific elements, yet it seems that no one tried a more holistic approach. In this work, we will consider a combination of factors and weaknesses as stimulating to the counterfeit trade. Finally, and especially in light of the creation of multinational institutions like WIPO, although there is a trend towards more uniform applications of existing frameworks, these rules are. !29. DOI:10.6814/NCCU202100385.

(30) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. only as strong as the mutual enforcement and coordination between the member states. In other words, what if the real problem was not only the existing framework or the countries producing counterfeits, but rather the lack of cooperation or complementarity between these frameworks?. ! 2.4. Possible alternative to avert counterfeit trade Most researchers have focused on managerial countermeasures as possible improvements to thwart this illicit trade. Yet this places the onus on the firms and the companies rather than the. 治政 ver, we believe this is but one part of the overall whole. We大 think that not only must companies 立governmental organizations at various levels implement effimake efforts, but so, too, should governments. It may reflect industry demand for effective anti-counterfeiting strategies. Howe-. ‧ 國. 學. cient strategies. Some of the existing reports have been ordered by big companies or brands by contracted IPR services or consulting agencies. It is therefore not surprising that these reports. ‧. focus on company operations: they want to change and improve what can control. Nevertheless, their strategies have already made great strides and we believe that the current efforts should now. sit. y. Nat. target another level. . er. io. For instance, Michael Harvey (Harvey 1988) identified strategies that companies could or should. al. use to combat counterfeit trade – hand-off, prosecution, withdrawal, and warning – but he does. n. iv n C not elaborate at all on any public governance Chaudhry h e nstrategy. i U (Cesareo, Pastore and Williams h c g 2017, 193) went further and addressed the questions of how managers can conceptualize the intellectual property environment, how such environments affect market entry decisions, what anticounterfeiting strategies are frequently used, and how efficient each tactic is in the host country market. Following, Hung (Hung 2003) observes that not many companies are able to oppose counterfeit trade on a managerial and legal basis. He supports this with the example of the Chinese environment where the response strategies recommended in business literature only show limited effect. He concludes that foreign companies may have to wait until China becomes enough of a victim instead of a beneficiary of product counterfeiting before they can rely on better protection of their intellectual property. The idea is echoed in recent work by young scholars. !30. DOI:10.6814/NCCU202100385.

(31) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. such as Aisha Farraj (Farraj 2015) in her article "The Third-Shift Problem in China: The First Step is Admitting You Have a Problem". This also shows how, slowly, beliefs are shifting: greater attention is being paid to government works. Other perspectives yield interesting insights. In particular, Olsen and Granzin (Olsen and Granzin 1992) investigate licit supply chain participants instead of brand owners with respect to actions towards illicit trade. Their study is undoubtedly important when assessing the acceptance of anti-counterfeiting strategies, though it neglects the role of public institutions. As previously explained, while the existing literature provides practical guidance for activities prior to and during production, recommendations are mainly based on observations of established practice and are. 政治大. only rarely directly derived from the characteristics of the counterfeit market or on state-level. 立. ‧ 國. 學. . public decision making.. 2.5. A lack in the sociological approach. ‧. Most scholars, such as Bloch, Bush, and Tom, divided counterfeiting research into the. y. Nat. investigation of supply chains on the one side and the demand dynamics on the other. In both. io. sit. cases, the main analytic focus is on how production arises to meet expected consumer demand.. n. al. er. Clearly, the role of government policy and practice is omitted. The fact that most publications on. i n U. v. the subject are mainly economic or business-related neglect a whole field to study: the strategies. Ch. engchi. enacted by governmental organizations to tackle the issue. Indeed, there is an opportunity to approach the problem from a different angle: what public policies are implemented by the governments to eliminate fake goods? What about the evolution of law and jurisprudence in response to reality? What strategies have been deemed effective through available evidence, and where and how could improvements be made to institutions and organizations on state and regional levels? For our study, we will base ourselves on the sociology of organizations and the theory of institutions. The goal here is to highlight existing strategies to counteract the counterfeiting of luxury products and then to analyze the positive and negative effects of the existing framework in order to finally propose a more efficient alternative in this struggle.. !31. DOI:10.6814/NCCU202100385.

(32) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. Our work will therefore first lay the conceptual foundations for the counterfeiting of luxury product brands in Chapter 2, and then we will update the legal and institutional framework that regulates the fight against forgery in Chapter 3. We will anchor the existing strategies in the theory of institutions. We will return to, among others, Emile Durkheim, for whom the institution has a proper existence outside the individuals; Michel Foucault’s theory that the institution normalizes through a constraint on formality; and Erving Goffman, who sees the institution as a means of imposing standards to which individuals adjust or oppose. We will use these theories to describe the various existing national institutions, customs regulations, and the control of goods on the soils of Hong Kong and Taiwan. We will see that the institution is an organ which emanates from. 政治大 the intentions of individuals (Valade 1998, 121) – especially in the case of international institu立. the interactions between individuals (Paquot 2012), and that it is the product of an aggregation of. tions such as WIPO or IACC – in order to organize resources for a common purpose. Following. ‧ 國. 學. these analyses, it will be clear that in Taiwan, as well as in Hong Kong, there are already legislative frameworks and institutions with varying degrees of clarity to govern IPR stemming from. ‧. each region’s relative sovereignty. As we will explore in greater depth in Chapter 4, brands also. y. Nat. have several international organizations and institutions to help strengthen IPR protection. Ove-. io. sit. rall, it is a collective action, or at least a concerted and convergent action led by a plurality of ac-. er. tors – states, companies, institutions, organizations – that is required to fight unauthorized co-. al. n. iv n C h e n g cthath collective synchronization, because it is on these foundations i U action rests.. pies. It is therefore a question of understanding and analyzing the existing mechanisms and their Indeed, coopera-. tion is not, as we will see later, natural. It is built and strengthened as a social construct. Only then do IPR protections and the fight against counterfeiting become better organized both in terms of quality and quantity. Businesses, intellectual property as a whole, customs, institutions, and organizations, both national and international increasingly coordinate planning and execution. They also become increasingly interdependent in their functioning and activities, increasingly governed and regulated by a common framework such as the WIPO or the IACC, and subject to international laws and agreements such as the TCA or TRIPS.. !32. DOI:10.6814/NCCU202100385.

(33) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. 3. Theoretical framework As mentioned above, in our work, we will mainly base ourselves on the theory of institutions as well as the sociology of organizations. It is therefore necessary to analyze the different existing institutions and then to question and understand their roles in the fight against counterfeiting. Before that, let us first discuss the different terms and concepts at stake, distinguishing institutions from organizations. It is easy to conflate the concepts and attribute a common sense to them, so we will identify distinct characteristics so that we can better understand and use them. 治政 ting, and then apply the theories of Emile Durkheim and Mary 大 Douglas. how these two domains interact 立 to produce a new reading of the concepts.. later. We shall therefore review the authors and concepts related to trademarks and counterfeiFinally, we will see. ‧ 國. 學. After that, we will scrutinize the Taiwanese and Hong Kong institutions through this analytics framework. We will examine in detail their government, juridical structure, IPR enforce-. ‧. ment, and general organization with respect to the matter.. io. 3.1. Reviewing the conceptual framework. n. al. i n U. 3.1.1. trademark counterfeits theories. Ch. engchi. er. sit. y. Nat. !. v. In the case of trademarks and their copies, publications on the subject have highlighted that terms have malleable definitions. Therefore, we offer a summary table of our key concepts and their definitions to better highlight the terms that interest us here. We have chosen the distinctions of Lai and Zaichkowsky, completed by Cordell et al, as they allow a simple, effective, and comprehensive vocabulary for the large category of counterfeiting. We can then distinguish counterfeiting, piracy, imitation of brands, and finally what they rightly qualify as gray zone. We fully agree that counterfeiting is actually a rather generic term that deserves clarification from the start.. !33. DOI:10.6814/NCCU202100385.

(34) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. Table 1 IPR Classification Source: definitions from WIPO. ! ! ! ! ! ! ! !. !34. DOI:10.6814/NCCU202100385.

(35) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. 立. Table 2 Overview of the counterfeit concepts Source: from Lai and Zaichkowsky and Cordell and al.. ‧ 國. 學. !. 政治大. definitions presented above for our focus on trademarks.. Nat. y. ‧. Then, within the domain of counterfeit we will adopt the distinctions of WIPO and the. sit. We will therefore assert that the infringement of a trademark is in fact a direct copy, often. er. io. of inferior quality, of an original brand product which is distinguished in a precise manner and. al. n. iv n C U of said product intend to dehe often reproduces the label and packaging identically. n g c hThei resellers. protected by intellectual property. This copy is often extremely similar to the original and also. ceive the consumer.. ! 3.1.2. organization vs institution Many terms – system, structure, function, organization, and institution – deserve special attention here since they will be the foundations of the framework of our study. Therefore, we have chosen to refer to the Durkheimian conception of institutions as well as further developments made by Douglas and Groffman. To sum up, the institution has its own existence: it exists outside of individuals (Durkheim), it brings together symbolic structures (Douglas), and imposes !35. DOI:10.6814/NCCU202100385.

(36) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. standards to which individuals adjust or can even oppose (Goffman). Below is a table of definitions by various authors that will be relevant to this work.. 立. 政治大. y. Nat. !. ‧. ‧ 國. 學 Table 3 General overview on institutionalization Source: from Virginie Tournay (2011). io. sit. We include also the postulate20 that each part or each organ of the society is arti-. n. al. er. culated with others, and so the resulting system and functions are an organization. Thus, we dis-. i n U. v. tinguish the system and its functions (organization) separately from the structural components (institutions).. Ch. engchi. Despite the fact that evolutionists confuse the organization as both the whole and the part, here we took the decision to dissociate the two and take the organization as the result, the sum of the institutions, their exchanges, and their actors. Thus, we take the Durkheimian (Durkheim 1983) acceptance of the term which considers an organization as a general structure with more or less elaborate order. For our work, this definition means that institutions and organization are not interchangeable: the former, through practice and action, gives rise to the latter. Unlike more recent schools of thought, we choose to maintain this distinction because it allows a wider scope. 20. This postulate comes from our own French School of Sociology background.. !36. DOI:10.6814/NCCU202100385.

(37) The Institutional Issues of Luxury Counterfeits: The Cases of Hong Kong and Taiwan. and more features for our analysis. We will not ignore other, more liberal, founding fathers like Spencer, Weber, or de Tarde, but we have chosen a conception which assigns more natural and institutionalist definition of these terms, along with a more global understanding of organization and more organic notion of institution. We believe in the interdependence of institutions and organization such that the former conditions and participates in the making of the latter. In this sense, we challenge the idea that the organization must be studied autonomously and independently (Bernoux 1985). For Durkheim, an organization is more or less perfected, that is to say the natural sum of its past and contributing factors. However, unlike natural organisms, whose internal functions. 政治大 in societies (Durkheim 2013, 367). We will here also recognize the contributions of Marcel 立. operate mechanically, the institution of classes is cultural and arises from struggles and conflicts. Mauss (Ledent 2004, 36) who adds that the organization is a general arrangement used to coor-. ‧ 國. 學. dinate parts of society and not an elementary grouping related to social structure and action. Therefore, it makes sense to study the institutions at stake and try to compensate for weaknesses to. ‧. then conceive of a better and more efficient global institution. . y. Nat. However, we will not apply Durkheim's definition of the institution, as it appears to. io. sit. contradict his notion of organization, but we will rather follow the idea that the institution is the. er. product of a social history marked by symbolism, a social form specific to humans and guarantor. al. n. iv n C h e nofgthe examples of institutions which are the product i Uhistory of a society, holding the moc hsocial. of cohesion. As a result, a law, a government organization such as customs and the police are all. nopoly of symbolic power in that they guarantee the cohesion of individuals. Mauss thus ex-. plains the institutions and the social structure: "We therefore understand by this word both uses and fashions, prejudices and superstitions as well as political constitutions and essential legal organizations; […] True institutions live, that is to say change constantly: the rules of action are neither understood nor applied in the same way at successive moments, even though the formulas which express them literally remain the same. […] There are two main orders of social phenomena: the facts of social structure, that is to say the forms of the group, the way in which the elements are arranged there; and the collective representations in which the institutions are given" (Mauss and Fauconnet 1901, 150-151 and 162). Institutions will therefore here, as with. !37. DOI:10.6814/NCCU202100385.