The authority makes inspects the company’s fake goods. — Photo congthuong.vn

HCM CITY — A counterfeit ring suspected of manufacturing shoes bearing the Nike brand in Việt Nam for export to the US has been smashed by the Agency for Domestic Market Surveillance and Development (DMS) under the Ministry of Industry and Trade.

The DMS received initial information about the illegal activity last month via a professional-exchange channel with the US Homeland Security Investigations (HSI).

The DMS worked with HSI to draw up an inspection plan, ensuring secrecy in order to prevent the risk of evidence being removed.

The verification process showed the case was much larger than the initial information.

From about 12,000 suspected pairs of shoes, the authorities determined the total number of related items reached nearly 50,000 pairs of shoes being manufactured at the production facility. To the naked eye they could not be distinguished from genuine goods.

The authentication code of each pair had also been copied from authentic legitimate products.

Most seriously, a portion of the goods had already been exported to the US market.

Assessing that the remaining goods were at risk of being completed for export, on July 16, the DMS issued a decision to inspect compliance with the law in the production and trading of goods at the MP Company, based in HCM City.

The inspection was carried out in coordination with the Ministry of Public Security and local police.

At the time of the inspection, the inspectors found the enterprise was producing and storing a large quantity of finished and semi-finished shoes bearing the marks 'Nike', 'Nike Air' and 'Air Jordan'.

The inspection team recorded more than 25,300 pairs of finished shoes bearing the Nike and Air Jordan marks, with a total value of more than VNĐ12.3 billion (US$467,200).

It also discovered an additional more than 20,800 shoe uppers and 10,800 shoe soles bearing signs of Nike that were in the process of completion, with a total value of more than VNĐ11.2 billion ($425,400).

By market price, the total value of the goods is over VNĐ100 billion ($3.7 million).

When working with the inspection team, the company’s representative said all the goods were produced under a subcontracting agreement signed with the F.C.T Company.

Raw materials were supplied by a foreign partner, and the enterprise undertook processing according to orders and returned the products to the partner for export.

The enterprise presented documents, including the subcontracting agreement, email exchanges with the partner, documents said to be a licence to use the Nike trademark together with export dossiers to explain the origin of the shipment.

According to the documents provided by the enterprise, from early this year until the time of inspection, the enterprise had successfully exported 11 containers of finished shoes bearing the Nike and Air Jordan brands to the US market, with a total declared value of more than VNĐ25.46 billion ($967,200).

However, according to a confirmation letter from Nike Việt Nam and a letter from the Senior Director of Global Licensing at Nike Inc., Nike affirmed it had never granted any licence, licensing contract or authorisation document to the MP Company; nor had it permitted those organisations or individuals to represent or act in the name of Nike in commercial activities.

Based on actual inspection, the documents provided by the enterprise, the rights-holder’s confirmation and the information exchanged by HSI, the inspection team concluded the above goods showed signs of counterfeiting trademarks that are protected in Việt Nam.

This is one of the large-scale, complex intellectual property infringement cases that the DMS has discovered in recent years. The case not only involves a very large quantity of goods but also has cross-border elements, with the participation of organisations and enterprises in the US, China, and Việt Nam.

Notably, the case not only involves a large quantity of goods but also reflects the method of abusing international subcontracting activities and apparently legitimate documents being forged to introduce counterfeit goods into cross-border supply chains.

According to Trần Hữu Linh, director general of the DMS, the preliminary results of the case confirm the determination to enforce intellectual property rights and to combat counterfeit goods as well as infringements of industrial and intellectual property rights.

They also demonstrate the effectiveness of the international coordination mechanism in detecting, sharing information and handling cases with cross-border elements.

“The discovery is significant not only in terms of addressing an act of infringement, but has uncovered a method of violation that may still exist widely in the market, involving many parties and possibly collusion,” Linh emphasised.

The DMS drew up an inspection record, applied preventive measures in accordance with regulations, and is continuing to consolidate the file, widen the scope of the origin and provenance of materials and the importing partners.

It plans to transfer the case to the investigative agency for strict handling, dismantling the infringing ring. — VNS