Jun 2024

China

Law Over Borders Comparative Guide:

Luxury Law

Sections

Scroll down to read the full chapter or click on the headings below to jump to the relevant section.

Contributing Firm

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1 . Trademark

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1.1. Sources of law

The principal sources of national law and regulation relating to trademarks in China include the Trademark Law and its Implementing Regulations, and other laws, regulations, administrative rules, judicial interpretations, administrative interpretations, as well as local regulations, judicial replies, administrative replies, and so on. There are also several international treaties related to trademarks, such as the Paris Convention, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the Madrid Agreement and the Madrid Protocol, the Nice Agreement concerning the International Classification of Goods and Services, and the Trademark Law Treaty. 

In the event of a conflict, the provisions of the international treaty prevail over the national laws, except those on which China has announced reservation; the law in force supersedes the regulations, rules, judicial interpretations and administrative interpretations. Judicial and administrative interpretations are of parallel legal force, but implemented by the courts and administrations respectively. 

Generally, China does not recognize use as a source of trademark rights. The registration principle is the source of trademark rights. Although China practices first-to-file principle, well-known unregistered trademarks and unregistered trademarks with certain impact are also protected.

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1.2. Substantive law

The Trademark Law distinguishes well-known trademarks and trademarks with a reputation. The term “famous trademarks” is not a legally recognized term.

For the proprietor of a registered trademark with a reputation, the protection scope is almost the same as that of a common registered trademark, but when determining whether or not two marks have constituted similar marks on similar goods or services, the authorities will consider the reputation of the mark seeking protection and tend to give a broader protection.

For the proprietor of a well-known trademark that has been registered in China, it could prohibit third parties from registering or using a trademark which is a replication, an imitation or a translation of the well-known mark, in relation to non-identical or non-similar goods or services.

For the unregistered well-known trademarks, the proprietor could prohibit third parties from registering or using a trademark which is a replication, imitation or translation of the well-known trademark, in respect of identical or similar goods or services. The protection scope is limited to the goods or services that are identical or similar to ones on which the unregistered marks are used. The reputation shall be constant and formed before the filing date of other third parties’ marks.

In China the trademarks belonging to the “luxury industry” do not enjoy a broader range of protection than other trademarks and there is no rule protecting the “aura of luxury” surrounding them in a way that differs from that of a trademark with a reputation belonging to another industry.

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1.3. Enforcement

The proprietor of a trademark which is well known by the relevant public may request protection for well-known trademark recognition when it is of the view that its rights are infringed. The request for recognition could be filed, together with the relevant petition, before the National Intellectual Property Administration (CNIPA), courts and the Administration for Market Regulation. 

The fame of the mark must be established in order to have it recognized as a well-known trademark. The following factors will be taken into account for recognizing a well-known mark:

  • the extent of the relevant public’s familiarity with the said trademark;
  • the duration of continued use of the said trademark;
  • the duration, extent and geographical scope of any promotional campaign for the said trademark;
  • the record of the said trademark being protected as a well-known trademark; and
  • any other factors for the said trademark’s fame.

The proprietor should provide as much evidence as possible to prove that the mark is well known by a substantial portion of the relevant public in China. The following information is usually required as proof of reputation: 

  • Statistics demonstrating the general sales, revenue, income, net profit, tax amount, sales area, market share, and advertising expenditure for at least five years preceding the petition or prior to the application date of the disputed/opposed trademark, preferably issued or published by an authoritative organization or guild. Normally, auditing reports concerning advertisements and sales of the products bearing the trademark and market share data issued by a local authoritative organization or guild would be very helpful. 
  • Sales materials including contracts, invoices, packing lists, certificates of origin, bills of lading, certificates of quarantine, customs clearance document, order list, etc. 
  • Promotional materials including contracts, invoices, payment documents as agreed with local advertisement companies as well as copies of the advertisements and promotional materials (for example, TV programs, newspapers, periodicals, internet, outdoor signboards, posters, brochures and advertising leaflets). 
  • Documents and materials relating to promotional or sponsored events and activities. 
  • Official support such as official decisions and court judgments indicating that the mark has been protected as a well-known mark, and report on assessment of the value of the mark as an intangible asset issued by qualified assessment organization in China.
  • Honors and awards the trademark has obtained in China. 

Oral testimony, affidavit or expert evidences do not have high probative force in comparison with the above evidences.

When there is a conflict between different types of rights, like trademark right, domain name right and trade name right, the basic principle is to protect the prior right. And the protection of a trademark is stronger than any other rights, such as domain name right and trade name right. 

A registered trademark can be enforced against a domain name on condition that the domain name is identical or similar to the registered trademark, which is likely to cause confusion among the relevant public, and that the owner of the domain name does not enjoy any rights over the domain name or the distinctive part of the domain name, but has bad faith in registering or using the domain name. 

Pursuant to Article 58 of the Trademark Law, the use of others’ registered trademark or an unregistered well-known trademark as an enterprise name to mislead the public which constitutes unfair competition shall be dealt with under the Anti-Unfair Competition Law.

There are no specific regulations regarding whether or not a trademark could be enforced against its unauthorized use in social media. However, if such use has constituted use of the trademark in respect of identical or similar goods or services or such use has caused confusion or harmed the interests of the owner of the trademark, the owner of the registered trademark or well-known unregistered trademark could stop such use based on the Trademark Law. 

There are no specific regulations regarding whether or not a trademark could be enforced against its unauthorized use in comparative advertising. However, if the comparative advertising does not reflect the facts or it has constituted an unfair completion deed, the owner of the registered trademark or well-known unregistered trademark could stop such use according to the Advertising Law and Anti-Unfair Competition Law. 

There are no specific provisions clearly indicating whether or not a trademark could be enforced against its unauthorized use in parody. But if such parody is made by the competitors, the owner of the trademark could stop such use according to the Anti-Unfair Competition Law. 

A trademark owner is entitled to choose to take action claiming either trademark infringement or unfair competition for the same set of facts, but not both.

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2 . Copyright

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2.1. Sources of law

The principal sources of copyright related law and regulation in China include the Copyright Law and its Implementing Regulations, and other laws, regulations, administrative rules, judicial interpretations, administrative interpretations, as well as local regulations, judicial replies, administrative replies, and so on. China is also a member country of several international treaties such as the Berne Convention for the Protection of Literary and Artistic Works, Universal Copyright Convention, the International Convention for the Protection of Performers, Producers or Phonograms and Broadcasting Organizations, the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty. 

In the event of a conflict, the provision of the international treaty prevails over the national laws except those on which China has announced reservation; and the law in force supersedes the regulations, rules, judicial interpretations and administrative interpretations. Judicial and administrative interpretations are of parallel legal force, but implemented by the courts and administrations respectively.

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2.2. Substantive law

An open list of the copyrightable works is provided, which includes written works, oral works, musical, dramatic, quyi (ancient Chinese performing art), choreographic and acrobatic works, works of fine art and architecture, photographic works, audiovisual works, graphic works and model works such as engineering design drawings, product design drawings, maps and schematic diagrams, computer software and other intellectual achievements that conform to the characteristics of the work.

Objects of industrial design, fashion or accessory design are copyrightable if they meet the requirements of copyrightable works on original, reproducible, and artistic characters, such as works of applied art.

The rights covered by copyright include both personal rights (or moral rights) and property rights, which include the rights of publication, authorship, alteration, integrity, reproduction, distribution, lease, exhibition, performance, projection, broadcast, information network dissemination, production, adaptation, translation, compilation and other rights which shall be enjoyed by the copyright owner. Among these rights, moral rights include the rights of publication, authorship, alteration and integrity. 

Regarding the work created in the course of employment, the copyright shall be enjoyed by the author, but the legal entity or other organization shall have the right to give priority to the use within the scope of its business. But the following situations are exceptions, and in such case, the author shall enjoy the right of authorship, and other rights of copyright shall be enjoyed by the legal entity or other organization: 

  • A work created mainly by using the material and technical conditions of a legal entity or other organization and for which the legal entity or other organization is responsible.
  • A work created by staff of newspapers, periodicals, news agencies, radio stations and television stations.
  • A work created in the course of duty for which the copyright is enjoyed by a legal entity or other organization as stipulated in laws, administrative regulations or contracts. 

As to other kinds of works, excluding the works created in the course of employment as mentioned above, the copyright belongs to the author, which could be a citizen who creates the work, or a legal entity or other organization, if the work is created under its auspices, on behalf of its will, and with the said legal entity or other organization assuming the responsibility. 

The ownership of copyright in a commissioned work shall be agreed upon by the principal and the trustee through a contract. If there is no explicit agreement or contract, the copyright belongs to the trustee. 

The copyright owner can assign the rights in whole or in part, except for the moral rights, and the parties should sign an assignment agreement in writing. The author cannot transfer or waive their moral rights. 

No time limit is set on the term of protection for an author’s rights of authorship, alteration and the right to protect the integrity of the work. 

With respect to the work of a citizen, the term of protection of the right of publication and the rights of reproduction and other rights to be enjoyed by the copyright owner is the lifetime of the author and 50 years after death, expiring on 31 December of the 50th year after death. In the case of a work of joint authorship, the term shall expire on 31 December of the 50th year after the death of the last surviving author. 

As for a work of a legal entity or other organization, or a work created in the course of duty, whose copyright (except the right of authorship) is owned by a legal entity or other organization, the term of protection of the right of publication and the right of reproduction and other rights to be enjoyed by the copyright owner shall be 50 years, expiring on 31 December of the 50th year after the first publication of such work. However, any such work that has not been published within 50 years after the completion of its creation shall no longer be protected by the Copyright Law. 

As for audiovisual works, the term of protection of the right of publication is 50 years, ending on 31 December of the 50th year after the completion of the creation of the works; the term of protection of other rights except for moral rights shall be 50 years, ending on 31 December of the 50th year after the first publication of the work. However, if the work has not been published within 50 years after the completion of the creation, it shall no longer be protected by the Copyright Law.

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2.3. Enforcement

Copyright registration is not compulsory in China, but it is possible and normally recommended to do so as early as possible. A Copyright Registration Certificate is considered as prima facie evidence to prove ownership of copyright. Further solid evidence may also be required to prove the creation date, publication date, and so on, especially if the copyright registration date is later than the contested objective or if the ownership of copyright is questioned by the contested party, and normally such solid evidence occurring outside China should be notarized and legalized. Neither copyright deposit nor notice is required. 

To have industrial designs protected by copyright, it should be proven that the industrial designs belong to the works under the Copyright Law, which means that the designs should be original and artistic. Evidence such as judgment and a copyright registration certificate proving the industrial designs have already been protected as copyrighted works in other member countries of the Berne Convention is helpful. Acceptance of oral testimony, affidavit and expert evidence is at the judge’s discretion. 

Substantial similarity and contacts are necessary and sufficient to establish copyright infringement. 

Copyright can be enforced against a trademark, registered design patent and other distinctive signs.

Copyright can be enforced against its unauthorized use in social media, comparative advertising and parody unless the use could be considered as “fair use”. 

The defenses available to an alleged infringer are fair use, expiration of the term of protection and statutory license. 

The following ways of use are considered as “fair use”; however, the name of the author or the name of the work shall be specified, and the normal use of the work shall not be affected, nor shall the legitimate rights and interests of the copyright owner be reasonably damaged: 

  • use of others’ published works for the purpose of the user’s own personal study, research or appreciation; 
  • appropriate quotation from others’ published works in one’s own work for the purpose of introducing or commenting on a work or explaining an issue; 
  • inevitable reappearance or quotation of published works in newspapers, periodicals, radio stations, television stations or other media for the purpose of reporting news; and
  • in addition to the above circumstances, there are further other circumstances considered as “fair use”.

A valid copyright that is unenforceable is mainly due to the following reasons:

  • a work with weak original creation; or
  • other fair uses of such work as mentioned above.

For the same set of facts, a copyright holder is not allowed to take action claiming both copyright infringement and design infringement and/or unfair competition. The copyright holder is entitled to choose either copyright infringement or design patent infringement or unfair competition claim. 

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3 . Design

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3.1. Sources of law

The principal sources of law relating to designs include the Patent Law and its Implementing Regulations, the Guidelines for Patent Examination, and other relevant laws, regulations, administrative rules, judicial interpretations, administrative interpretations, as well as local regulations, judicial replies, administrative replies, and so on.

China is a member country of some international treaties relating to patents, such as the WIPO Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty, the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the Locarno Agreement, and the Hague Agreement.

In the event of a conflict, the provision of the international treaty prevails over the national laws except those on which China has announced reservation; and the law in force supersedes the regulations, rules, judicial interpretations and administrative interpretations. Judicial and administrative interpretations are of parallel legal force, but implemented by the courts and administrations respectively.

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3.2. Substantive law

All industrial products, as long as their appearance is a new design, could be protected by way of registered design in China. An unregistered design is not protected under Chinese law. 

To be granted for patent design, the design shall not belong to the existing design; no entity or individual has filed an application with the CNIPA for the same design before the application date and recorded it in the patent documents announced after the application date; the design shall be obviously different from the existing design or the combination of existing design features; the design should not conflict with the legal rights already obtained by others before the date of application.

To file an application for a patent for design, besides a written request, pictures or photographs as well as a brief description of the design shall be submitted. The relevant pictures or photographs submitted by the applicant shall clearly show the design of the product. 

Regarding designs created by employees, shareholders or directors in the course of performing a duty or by using the material and technical resources of an entity employer, the right to apply for a design patent registration belongs to the entity. After the application is approved, the entity shall be the patentee.

As for designs which are not created in the performance of the task of any entity, the right to apply for a design patent registration belongs to the inventor or designer. After the application is approved, the inventor or designer shall be the patentee.

For designs created by employees, shareholders or directors, using the material and technical resources of an entity employer, if the entity has entered into an agreement with the inventor or designer on the right to apply for a design patent registration and the ownership of the patent right, such agreement shall prevail.

If a design is completed jointly by two or more entities or individuals, or by an entity or individual entrusted by another unit or individual, unless otherwise agreed, the right to apply for a design patent registration and the ownership of the patent right shall belong to the entity or individual who completed or jointly completed the design. 

The patent assignment agreement will be effective once it is signed by both parties, but the assignment shall take effect only after the assignment request is registered before the CNIPA. 

To exploit another’s patent, an exploitation license contract should be signed with the patentee. The licensee has no right to allow any entity or individual other than those specified in the contract to exploit the patent. 

The designer could waive their moral rights in the design. The term of the patent right for design is 15 years, which shall be calculated from the application date of the design.

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3.3. New technologies

Non-fungible tokens (NFTs) have an impact on the protection of the rights of luxury brands and goods. However, their impact is not seen in every field of trademark protection: for instance, trademarks cannot be registered on virtual products.

The rise of sophisticated artificial intelligence (AI) has had an impact on the luxury market and laws and regulations have been made and revised to address such challenges. Regulation for the Generative Artificial Intelligence Services was made and became effective on 15 August 2023. This Regulation was made based on the following laws:

  • Network Security Law (1 June 2017).
  • Data Security Law (1 September 2021).
  • Personal Information Protection Law (1 November 2021).
  • Law for Science and Technology Progress (revised on 1 January 2022). 

There are further regulations relating to AI, made by various industries and in different cities.

Regarding cryptocurrency, it was restricted in China from 2013. However, in 2023, the government began to provide certain support for cryptocurrency transactions. With the gradual relaxation of restrictions, the cryptocurrency market also began to flourish, and cryptocurrency transactions have gradually become legal. 

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3.4. Enforcement

The scope of protection of the patent right for design shall be subject to the design of the patented product shown in pictures or photos. The brief description of the design and its major design features, the patentee’s opinion statement in the invalidation procedure and the litigation procedure, etc., can be used to understand the scope of protection of the patent right for design.

The overall comparison principle is adopted. When determining the scope of protection of a design, comprehensive consideration shall be given to the complete design content composed of all design elements such as the shape, pattern and color displayed in the picture or photograph representing the design in the grant publication, and all design features displayed in each view in the picture or photograph shall be taken into account. It is not acceptable to only consider some design features and ignore others.

To establish design infringement, first of all, the alleged infringing product and the design product should belong to the same or similar types of products, and to determine whether the types of products are the same or similar, comparison should be made based on the function, purpose and use environment of the design product. Whether designs are the same or similar shall be judged according to the overall visual effect in the eyes of the general consumers with general knowledge and cognitive ability, rather than the observation ability of the general designer of the design product or the actual buyer of the product. And the design features determined by the product function shall not be considered when judging whether two designs are the same or similar.

A registered design can be enforced against a trademark. It could be the basis to oppose a trademark application, invalidate a trademark registration, and to invalidate a later registered design patent. 

The common defenses available to an alleged infringer are non-infringement, that the design should be invalidated, prior use and prior art. Infringement proceedings must be brought within three years of the date on which a patentee knew or should have known of the infringement. 

For the same set of acts, a design holder is not allowed to take action claiming design infringement and copyright infringement and/or unfair competition. The design holder is entitled to choose design infringement or copyright infringement or unfair competition claim.

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4 . Right of privacy, publicity and personal endorsement

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4.1. Sources of law

Under the Civil Code, individuals have the right to their names, images, reputations and honors, and they have the right to make, use, publicly disclose or permit others to use their names and images for commercial purposes.

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4.2. Substantive law

Individuals have personality rights, including the right to life, body, health, name, image, reputation, honor, privacy, etc. Personality rights shall not be waived, transferred or inherited. However, if the name, image, reputation, honor, privacy or body of the deceased is infringed, their spouse, children or parents have the right to request the infringer to stop infringement and bear civil liability.

Individuals have publicity rights and they cannot assign their publicity rights in whole or in part. However, they can authorize others to use their names and images exclusively or non-exclusively.

If an agreement for the assignment/license of the publicity right becomes valid, under Article 143 of the Civil Code, the agreement must meet the following requirements: 

  • The parties have civil capacity. 
  • The expression of intention in the agreement is true. 
  • The agreement does not violate laws and public order and good customs.

The licensor can withdraw the consent to its use under the following circumstances: 

  • There is a misunderstanding in the agreement. 
  • The agreement is unfair. 
  • The agreement is signed through fraudulent, coercive means or taking advantage of the perilous state of the licensor.

If the licensors die while the license agreement is still in force the agreement shall terminate if their images are based on their living. If the promotion materials of their images have already been created, the agreement shall not terminate. The successors can request the licensees to continue the agreement. 

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4.3. Enforcement

The right of publicity can be enforced not only against a commercial use of their names, images, likeness or other unequivocal aspects of their identity, but also against non-commercial infringement. They can claim for cessation of infringement, compensation of damages and restoration of reputation and apology. It is not necessary to prove that their names, images, likeness, or other unequivocal aspects of their identity have a commercial value to obtain an injunction or other remedies for the unauthorized use.

In the infringement of their names and images, there are some defenses for the alleged infringers. If news reporting, public opinion supervision and other activities are made for the public interest, their names and images can be reasonably used. Under the following circumstances, their images can be used without their consent:

  • to use publicly available images for personal learning, artistic appreciation, classroom teaching or scientific research;
  • to report news;
  • where state organs need to make, use and publicly disclose images to perform their duties;
  • to show a specific public environment; or
  • for the protection of public interests or the rights and interests of the image owners. 

Regarding reputation and honor, if news reporting, public opinion supervision or other activities for the public interest affects their reputation, the alleged infringer shall not bear civil liability.

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5 . Product placement

There are no laws or regulations prohibiting product placement in China. In practice, it is common to have product placement in TV drama or movies. Product placement is considered as a kind of advertisement which should be applied to the Advertisement Law. The limits applicable to other advertisements are also applicable to product placement.

Under the Advertisement Law, advertisements shall be true, lawful and expressed in a healthy form. They shall not contain false or misleading content and shall not deceive or mislead consumers. They shall not harm the physical and mental health of minors and persons with disabilities. They shall not belittle the goods or services of other producers or operators.

The following advertisements are prohibited:

  • advertisements published in the form of news reports;
  • advertisements of drugs such as anesthetic drugs, psychotropic drugs, radioactive drugs, etc.; and
  • advertising of tobacco products.

Radio stations and television stations shall not indirectly publish advertisements for medical, pharmaceutical, medical equipment and health food in the form of introducing health and wellness knowledge.

Some remedies are available to the brand owners in the event the other party fails to perform the agreement, such as:

  • terminating the agreement or requesting the other party to continue the performance;
  • requesting the other party to take remedial measures to reduce the damages;
  • requesting compensation of damages suffered; and
  • requesting payment for breach of agreement damages, if it is mentioned in the agreement.

The unique concerns for product placement faced by luxury brands are false advertisements. Many luxury brand advertisements use extreme phrases, like “luxury, supreme, top, best”. These advertisements are considered as false advertisement, misleading consumers and fines will be imposed. The amount of the fine is three to five times the amount of the advertisement fee, or an amount of RMB 200,000 – 1,000,000. There have been many globally well-known luxury brands who have incurred fines for false advertisement through the use of extreme phrases when advertising their products in China.

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6 . Protection of corporate image and reputation

Right of publicity extends to legal entities/corporates. Under the Civil Code, corporates have rights to their names, images, reputations and honors. They have the right to decide, use, change and transfer their names and images as well as to license others to use their names and images. No organization or individual shall infringe their names, images, reputations and honors. To enjoy the publicity right, corporates must register their trade names with the Administration for Market Regulations.

For the purposes of protecting the corporate name, image, reputation and honor, it is good to include clauses in the agreement for such protection, for example, prohibiting the other party to sell the product to re-sellers whose image is below a certain defined standard, prohibiting sales below a certain price or to do so outside of specific time periods, prohibiting the purchase of non-original (but otherwise legitimate) spare parts and components. However, the agreement should avoid violating Articles 17 and 18 of the Anti-monopoly Law, which prohibits competitive operators from concluding the following monopoly agreements: on fixing or changing commodity prices; limiting the production or sales quantity of commodities; or splitting the sales market. The law also prohibits an operator and its trading counterparty from concluding the monopoly agreements on fixing the prices of commodities resold to a third party, or limiting the minimum prices for commodities resold to a third party.

Agreements should include clauses of liquidated damages if one party breaches any provisions protecting corporate names, images and reputation. Article 585 of Civil Code states: “The parties may agree that when one party breaches the contract, they shall pay a certain amount of liquidated damages to the other party based on the circumstances of the breach. If the agreed amount for breach of contract is lower than the damages, the court or arbitration institution may increase it at the request of the parties. If the agreed amount is excessively higher than the damages, the court or arbitration institution may decrease it appropriately at the request of the parties.” 

The unique concerns of luxury brands in the secondary market are the parallel imported genuine products and second-hand products. In China, the selling of parallel imported genuine products is not considered to be infringement, therefore brands cannot prohibit others from selling such products. This is a very big concern for luxury brand owners.

Under Article 57 of the Trademark Law, if other people change the trademarks of the luxury products without the consent of the trademark owner, and then sell the changed products, it is considered to be an infringement of the luxury brand.

EXPERT ANALYSIS

Chapters

Australia

Belinda Breakspear
Harriet Young

Germany

Dr Wiebke Baars

India

Dhruv Anand
Nimrat Singh
Sampurnaa Sanyal
Udita Patro
Pravin Anand

Italy

Fabrizio Jacobacci

Japan

Masaki Mikami

Lebanon

Julien Khoury
Nisrine El Haddad
Patricia Seaiby
Rany Sader

Mexico

Ricardo R. Díaz Cisneros

Netherlands

Herwin Roerdink
Tjeerd Overdijk

South Korea

Clare Ryeojin Park
Dae Hyun Seo
Won Joong Kim

Spain

Eleonora Carrillo
Ignacio Martínez
Rafael Linage

Sweden

Helena Brännvall
Karin Crafoord
Magnus Henning

Thailand

Adele Marchal
Chanapa Thussanasumrit
Munif Chaipanya
Orranat Suvarnasuddhi
Pawat Varapirom

Ukraine

Dmytro Stefanovych
Ganna Prokhorova
Ilona Boliubash

United Kingdom

Simon Miles

United States

Alan Behr
Tod Melgar

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