LoYaL to AdiDaS

Adidas beats China piracy

Adidas has found a smarter and cheaper way to combat piracy.

To get an idea of the magnitude of the counterfeiting problem with China, according to the U.S. Congress, the Chinese government estimates that "counterfeits constitute between 15 percent to 20 percent of all products made in China."

And as Law.com reports,

"Counterfeiting in China has simmered on the international back burner since 2001, when the country joined the World Trade Organization after promising to enforce its new IP laws. (The pot boiled over in April, when U.S. trade representative Susan Schwab filed two cases with the WTO challenging China’s failure to follow through).

Now, as China prepares for the Beijing Olympics next summer (Adidas is an official sponsor), IP protection is once again a critical issue."

In 2006, footwear represented 41 percent of the seizures of counterfeits in the U.S., valued at $63 million of the $155 million total, by far the most important industry to suffer.

But Adidas says they’ve found the way to, if not stop, at least limit the counterfeiting problem in China. This doesn’t mean that there are no more fake Adidas shoes in China, but rather that fakes have begun to strongly dwindle in number.

In 2006 the number of counterfeit Adidas shoes seized in China dropped 20 percent, from 480,000 pairs in 2005 to 385,000, despite no change in enforcement efforts.

In comparison, a recent sting operation in Germany recovered 150,000 counterfeit pair of Adidas sneakers and 1.5 million pairs of Nike shoes (which has comparable sales to Adidas in Europe).

Adidas has undergone a three year campaign consisting mainly of:

• Raiding retailers and wholesalers instead of factories

• Making shoes harder to copy by using high-tech labels

• Using outside investigators to build cases and prod government enforcement

• Keeping full-time IP attorneys in China

Their annual budget? Under $1 million, says Ray Tai, head of Adidas’ intellectual property rights enforcement in Asia.