[5] Professional Anti-Counterfeiting Activists: Acts of Justice or Pursuit of Ill-Gotten Gains?

[2] Compiled from: The Paper, Lianjie Weibai

Today is March 15, International Consumer Rights Day, and terms such as "consumer rights" and "anti-counterfeiting" have trended on social media. Speaking of anti-counterfeiting, one cannot help but recall the beginning of this year, when renowned professional anti-counterfeiting activist Wang Hai first exposed that the bird's nest sold by Kuaishou streamer Xinba was actually sugar water, and later reported that the "Pierre Cardin wool sweater" sold by Luo Yonghao was counterfeit. This not only left Xinba facing over 60 million yuan in compensation, but also prompted Luo Yonghao to admit that the wool sweater was indeed fake, making it one of the most sensational incidents of the year's start.

Professional anti-counterfeiting claimants are an occupation that has long been shrouded in controversy. Today, the author will analyze through a case whether knowingly buying counterfeit goods constitutes an act of justice or a pursuit of ill-gotten gains.

Case Review

1. Four individuals "knowingly bought counterfeit goods" and were sentenced in the first instance.

Meng Qing, Li Jin, Liu Jiao, Cao Min, and others, after learning that they could claim compensation from supermarkets for purchasing “problematic” food, began to divide the work and cooperate, searching for expired food in some supermarkets in Tianjin. Once they found expired food, they would immediately purchase it and then seek compensation from the supermarkets by means such as reporting to the Market Supervision Administration or filing lawsuits in court.

On May 31, 2019, four individuals including Meng Qing engaged in "knowingly buying counterfeit goods" and then sought compensation from a supermarket. After the supermarket reported them, Tianjin police criminally detained the four on suspicion of extortion. After the case was transferred to the procuratorial authorities, the People's Court of Xiqing District, Tianjin Municipality initiated a public prosecution against Meng Qing, Li Jin, Liu Jiao, and Cao Min at the People's Court of Xiqing District, Tianjin Municipality on suspicion of extortion.

On November 15, 2019, the Xiqing District People's Court issued a first-instance judgment in this case. The court held that Meng Qing and three others, for the purpose of illegal possession, repeatedly extorted property from others, and the amounts involved were relatively large, and their acts all constituted the crime of extortion. Meng Qing and the three others were convicted of extortion and were respectively sentenced to fixed-term imprisonment ranging from one year and six months to six months. At the same time, the court ordered the four to compensate the victimized merchants for the claimed amounts, and also imposed fines ranging from 50,000 yuan to 10,000 yuan.

2. Acquitted on appeal

After the first-instance verdict, Meng Qing appealed to the Tianjin First Intermediate People's Court, arguing that his actions did not constitute a crime.

Meng Qing stated that consumers reporting expired food to market regulatory authorities or filing lawsuits in court to defend their rights is a statutory right granted by the Consumer Rights Protection Law. Professional anti-counterfeiting claimants who buy fake goods knowingly are also consumers, and claims for compensation within the statutory ten times the price or a maximum of 1,000 yuan per order as stipulated by the Consumer Rights Protection Law should be supported and should not be characterized as criminal means of extortion.

After the second-instance trial, the Tianjin First Intermediate People's Court held that Meng Qing, Li Jin, Liu Jiao, and Cao Min, with the intent of profit, knowingly bought counterfeit goods and sought compensation from supermarkets. Their actions did not meet the elements of the crime of extortion. Although improper, they could not be considered criminal. The original judgment correctly established the facts of their compensation from supermarkets but applied the law incorrectly. The Tianjin First Intermediate People's Court acquitted Meng Qing and the original defendants Li Jin, Liu Jiao, and Cao Min.

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Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Disputes over Food and Drug Cases

Article 3

Where a dispute arises due to quality issues of food or drugs, and the purchaser asserts rights against the producer or seller, if the producer or seller defends on the ground that the purchaser knowingly purchased the food or drug despite being aware of its quality issues, the people's court shall not support such defense.

[4] Author's Opinion

From the above legal provisions and relevant judicial principles, it can be seen that in the current stage, acts of knowingly purchasing counterfeit goods or professional anti-counterfeiting practices in the fields of food and drugs are not prohibited by law. That is to say, in these two fields, professional anti-counterfeiters are also considered consumers.

However, different situations still exist in trials across various regions.

1. A judgment by the Guangdong High People's Court held that a consumer is a concept relative to sellers and producers. Only when goods are purchased or used, or services are accepted, in market transactions for the needs of personal or family life, rather than for production and business activities or professional activities, can the person be recognized as a consumer "for the needs of daily life" and be protected by the Law of the People's Republic of China on the Protection of Consumer Rights and Interests.

2. A judgment by the Henan Provincial Higher People's Court states that a “professional anti-counterfeiting claimant” who knows the product in question has issues, purchases it not for consumption purposes, and subsequently files a lawsuit using litigation as a means to profit, does not qualify as a consumer under Article 2 of the Law of the People's Republic of China on the Protection of Consumer Rights and Interests, which defines a consumer as one who “purchases or uses goods or receives services for daily living consumption needs.”

3. A judgment by the Hefei Intermediate People's Court in Anhui Province held that Article 6 of the Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Food and Drug Dispute Cases stipulates that food producers and sellers shall bear the burden of proof that the food meets quality standards. A certain seafood company in Qingdao failed to adduce evidence to prove that the food involved met quality standards, and could not prove that the absence of food labels did not affect food safety and would not mislead consumers. Accordingly, Zhao's claim that the Qingdao seafood company pay compensation of ten times the price had factual and legal basis, and the court supported it.

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4. In summary, although professional counterfeit fighters use the method of knowingly purchasing counterfeit goods to gain profits, their status remains in an awkward position, with courts across regions delivering completely opposite judgments. Therefore, the author believes that legislation should be enacted as soon as possible to determine the status and legality of professional counterfeit fighters, which is not only to better protect market development but also to ensure the accuracy of judicial rulings.

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