Recently, a news about Dongfang Zhenxuan's alleged sale of counterfeit "Wuchang Rice and Rice Flower Fragrance No. 2" quickly spread on the internet, causing widespread attention. According to media reports, Wang Hai, who played a dummy, revealed that after purchasing "Wuchang Rice and Rice Fragrance No. 2" sold by Dongfang Zhenxuan, he discovered that the product was suspected of being counterfeit. After some investigation, Wang Hai believes that the product does not come from the Wuchang area and there is a behavior of counterfeiting inferior products and deceiving consumers. The mixed online evaluations of this incident have also drawn attention to the controversial "professional anti-counterfeiting" group in recent years.

1、 Professional anti-counterfeiting is becoming increasingly rampant

"Occupational anti-counterfeiting" is an economic term that refers to the professional activities of obtaining punitive compensation according to the law through the purchase or consumption of counterfeit or substandard products or services, and using this as the main source of business income. "Professional anti-counterfeiting" can maintain moral and legal bottom lines in anti-counterfeiting activities, making it an indispensable profession. Its anti-counterfeiting activities can play a positive role in enhancing consumer rights awareness, cracking down on illegal infringement by operators, compensating for insufficient regulatory power, and maintaining market order. [1] However, with the deepening of anti-counterfeiting activities, some anti-counterfeiting individuals, with the purpose of making money and seeking personal gain, intentionally purchase large quantities of goods even when they are aware of defects or problems. They repeatedly complain, maliciously report, and frequently file lawsuits and reviews under the pretext of anti-counterfeiting rights protection. This increases the economic burden on market entities, affects normal business operations, and to some extent, squeezes and wastes administrative and judicial resources, resulting in extortion Behaviors such as counterfeiting and buying fake products seriously disrupt the fair competition order and honest business environment in the market.

The origin of professional anti-counterfeiting originated from the establishment of a punitive compensation system in the system design of the consumer and food safety fields, such as the "refund one compensation three" clause in the Consumer Rights Protection Law and the "refund one compensation ten" clause in the Food Safety Law. The punitive damages stipulated in Article 148 (2) of the Food Safety Law do not require merchants to engage in fraudulent behavior. In addition, Article 3 of the Supreme People's Court's Provisions on Several Issues Concerning the Application of Law in the Trial of Food and Drug Dispute Cases allows for punitive damages to be obtained even in cases of knowing and buying counterfeit goods in the food and drug industry. This has led to a large number of professional anti-counterfeiting cases that have flooded administrative organs, The majority of cases are related to food and drugs, and even the vast majority. Since 2022, occupational claims and occupational reporting have highly focused on issues such as advertising language that does not comply with regulations, operating food beyond the shelf life, operating cold food beyond the scope, and food labeling that does not comply with regulations, accounting for more than 80% of the total. Their common characteristics are "knowing and buying fake products" and purchasing large quantities beyond normal living needs. The issues reflected in occupational reports are generally mild in severity, with minimal social harm, and rarely involve serious illegal activities such as systemic risks or quality and safety. [2]

Professional anti-counterfeiting workers are a group of people who gain economic benefits through "knowing and buying fake products" in the field of consumer goods. They generally have proficient legal knowledge, are familiar with administrative and judicial procedures, and are good at using legal rules in the long-term "anti-counterfeiting" process, forming a series of standardized and standardized "anti-counterfeiting" models. Basically, it can be summarized as one buy, two open, three reports, four reviews, five lawsuits, civil first, administrative later, walking on two legs, and exerting pressure from multiple aspects. According to its organizational form, the operation mode of professional anti-counterfeiting can usually be divided into three categories: first, individual behavior, such as the operation mode of "* * Rights Protection Network"; The second is the enterprise model, which means establishing a dedicated or agency company to combat counterfeits; The third is the joint mode, which means that several professional anti-counterfeiting personnel work together to leverage their respective professional advantages in anti-counterfeiting. [3] With the development of e-commerce, professional anti-counterfeiting activities have shifted from offline "targeted breakthroughs" to online "comprehensive sniping", and professional anti-counterfeiting has emerged in online shopping. Faced with the "combination punch" of professional anti-counterfeiting personnel, enterprises often suffer unbearably.

2、 Judicial practice attitude

In recent years, the self-interest occupational anti-counterfeiting, mainly manifested in occupational claims and reports, has shown characteristics and trends of gang, specialization, scale, and urbanization. [4] Professional anti-counterfeiting workers often make substantial profits through administrative reporting and civil litigation when private claims are obstructed. However, there have been continuous cases of denying professional anti-counterfeiting in some regions, and many beneficial arbitration rules have been established. For example, the Zhuhai court only supports "first case compensation" for professional anti-counterfeiting. The court believes that the purpose of civil anti-counterfeiting should be to notify delisting and eliminate food safety hazards, rather than repeatedly and collectively purchasing for profit. In the White Paper on the Trial of Online Shopping Contract Disputes of Guangzhou Internet Court, Guangzhou Internet Court emphasized that the purchase must be based on living consumption, and strictly distinguish between unsafe food and unqualified food. Ten times compensation is not applicable to safe but unqualified food. In the (2021) Yue 0311 Min Chu 2248 case, the Bao'an District Court in Shenzhen discovered similar cases brought about by counterfeiting through similar case searches, and concluded that professional counterfeiting goes against socialist core values. In addition, some regions even include individual occupational anti-counterfeiting as a criminal offense to crack down on. In cases such as (2020) Jing 0108 Xing Chu 2220, (2020) Su 02 Xing Zhong 284, and (2020) E 0922 Xing Chu 227, the trial courts in Beijing, Jiangsu, and Hubei identified serious circumstances such as buying fake products with knowledge and demanding compensation as intentional possession, constituting the crime of extortion.

1. It is not supported for professional counterfeiters to claim compensation through legal means

In the process of practice, law enforcement agencies and judicial authorities often find it difficult to distinguish whether the buyer is a real consumer and their subjective motives for reporting and complaining. However, applying punitive damages to business entities promotes the arrogance of "professional counterfeiting", undermines the production and operation vitality of market entities, and greatly damages the legal business environment, Therefore, judicial practice increasingly believes that denying the "consumer" status of professional anti-counterfeiting personnel and believing that their behavior of profiting through litigation is not legitimate. In the case of "Dispute over Online Shopping Contract between Dong and Guangzhou Wangming Trading Co., Ltd." [5], the people's court clearly pointed out that if the parties involved engage in professional activities such as "knowing, buying, and claiming fake goods" for the purpose of profit, they cannot be recognized as consumers who "meet the needs of daily consumption" and do not have the identity of consumers, It cannot obtain the rights set by the Consumer Rights Protection Law and relevant judicial interpretations to protect the rights of consumers by claiming rights as consumers. And the court believes that if Dong is in need of cracking down on counterfeit and shoddy goods, he can completely report to the relevant regulatory authorities. However, his behavior of using litigation and the court as a tool, known as anti-counterfeiting, is actually for profit, not only causes a huge waste of judicial resources, but also greatly affects the judicial authority of the court.

2. Professional counterfeiters generally do not constitute criminal offenses

However, the court is also cautious about whether the behavior of professional counterfeiters constitutes the crime of extortion. Professor Zhang Mingkai also stated that "professional counterfeiters or those who knowingly purchase counterfeit goods are different from illegal acts of intentionally fabricating, fabricating false facts, framing, and extorting victims." extortion is based on the premise of an improper purpose, and the perpetrator must have the intention to "illegally occupy finance.". In the case of extortion by Meng Fanye and others, [7] the court believes that when determining whether the act of protecting the rights of professional counterfeiters constitutes the crime of extortion, it should adhere to the principle of "unity of legal order" to examine whether professional counterfeiters have the basic right of claim in the sense of civil law, whether the content of rights protection conforms to social value orientation, and whether it exceeds the scope of general civil disputes. If the defendant does have a basic right of claim, does not constitute a "threat or blackmail in the sense of criminal law", and objectively helps to purify the market environment in the food industry, from the perspective of balancing legal interests and maintaining the modesty of criminal law, it is not necessary for the judicial organs to intervene in such civil disputes, and it is not appropriate to impose penalties on their legitimate rights protection behavior.

3、 Legislative guidance on the introduction of relevant regulations

Taking the Reply of the General Office of the Supreme People's Court to Proposal No. 5990 of the Fifth Session of the Twelfth National People's Congress (Fa Ban Han [2017] No. 181, hereinafter referred to as the "Reply") as a symbol, the legislative level has begun to pay attention to "many new developments and changes in the group of professional counterfeiters and the lawsuits they cause, and their negative effects are increasingly prominent." Moreover, it is explicitly opposed to the profit-making anti-counterfeiting behavior of professional counterfeiters, 3. In the current judicial practice of consumer rights protection, there is a trend towards commercialization of knowing and buying counterfeit goods, and an increasing number of professional counterfeiters and anti-counterfeiting companies (groups) have emerged The motive is not to purify the market, but to use punitive damages for personal gain or to extort merchants. Some even win a lawsuit against a certain product and receive compensation, and then purchase the product in order to profit again. The above behavior seriously violates the principle of integrity, disregards judicial authority, and wastes judicial resources. We do not support this governance model of punishing evil with evil and drinking poison to quench thirst The Supreme Court's response clearly stated that timely use of judicial interpretations, guidance on cases, and other forms will gradually curb the profit-making anti-counterfeiting behavior of professional anti-counterfeiting personnel. [8] And limit the expansion of punitive damages from the food and drug industry to the non food and drug industry. This statement adopts a dual limitation model of "identity" and "behavior", which to some extent reflects the regulatory logic starting from "degree". [9]

A series of relevant regulations and provisions issued by various departments of the country also confirm this guiding concept. For example, the "Opinions of the Central Committee of the Communist Party of China and the State Council on Deepening Reform and Strengthening Food Safety Work" stipulate that complaint and reporting channels should be unblocked, and the reporting reward system should be implemented. However, malicious reporting of illegal profits should be severely punished in accordance with the law. Article 2 of the Consumer Rights and Interests Protection Law: "The rights and interests of consumers who purchase, use goods or receive services for the purpose of daily consumption shall be protected by this Law. If there are no provisions in this Law, they shall be protected by other relevant laws and regulations." Article 2 of the Implementation Regulations of the Consumer Rights and Interests Protection Law of the People's Republic of China (Draft for Review) "Consumers who purchase, use goods or receive services for the purpose of daily consumption shall have their rights protected by this Regulation. However, if natural persons, legal persons or other organizations purchase, use goods or receive services for profit, this Regulation shall not apply." Guiding Opinions of the General Office of the State Council on Promoting the Standardized and Healthy Development of Platform Economy (State Council Office [2019] No. 38) "5. Effectively protect the legitimate rights and interests of platform economy participants, strengthen the legal protection of platform economy development, and crack down on online fraud and extortion under the pretext of" cracking down on counterfeits "in accordance with the law." Article 15 of the Interim Measures for Handling Complaints and Reports in Market Supervision and Administration (Order No. 20 of the State Administration for Market Regulation) states that "if a complaint falls under any of the following circumstances, the market supervision and administration department shall not accept it: (3) if it is not purchased, used, or received for the purpose of daily consumption, or if it cannot be proven that there is a consumer rights dispute with the respondent;" According to the "Knowing Fake and Buying Fake" promulgated by the Supreme People's Law of 2021 Summary of Judgment Rules for Behavioral Nature Determination Cases, further clarifying the concept and scope of "consumers" and excluding malicious professional counterfeiters from the scope of consumers

4、 Suggestions for enterprise response

As mentioned earlier, with the development of professional counterfeiters on a larger scale and in groups, judicial practice and legislation have become increasingly cautious in dealing with them. They will no longer be "responsive" to professional counterfeiters and may even become a tool for their anti-counterfeiting profits. For enterprises facing the risk of malicious claims from professional counterfeiters or being trapped in a quagmire, specific measures can be taken from the following four aspects:

1. Strengthen self-management

Improve the monitoring and control of product quality, reduce quality defects, and fundamentally reduce the risk of administrative penalties. Professional counterfeiters are well versed in legal rules such as the Consumer Rights Protection Law, the Product Quality Law, and the Food Safety Law, as well as administrative and judicial procedures. In their long-term anti-counterfeiting activities, they have formed a series of procedural means. They are often targeted because the products do have certain defects. Once investigated, they will not only be subject to administrative penalties, but also have an impact on the reputation of the enterprise. Therefore, it is suggested to strengthen the full process management of enterprise production, processing, and sales, improve and standardize the internal supervision and management system, and complete self purification updates before being discovered by professional counterfeiters.

2. Standardize the claims process

The goals of professional anti-counterfeiting personnel are generally traffic platforms, supermarkets, etc. In order not to affect the reputation and normal operation of traffic platforms and supermarkets, most people will choose to pay appropriate compensation as soon as possible or seek compensation from suppliers who provide problematic products. In the process of handling cases, the focus is mainly on individual case resolution, which is not standardized. It is recommended that relevant units establish a dedicated working group or personnel to deal with occupational dummies, and establish rules and regulations for the claim process. Regular training should be provided to employees to form an effective response mode.

3. Effective collection of evidence

For malicious claims against professional counterfeiters, whether through administrative, civil, or criminal procedures to safeguard the legitimate rights and interests of enterprises, the prerequisite is the collection and fixation of evidence. For claims, the company should first distinguish between consumers and dummies, establish a file real name registration for tracking the whole claim processing process, clarify the identity information, ID card number, contact information, address, etc. of the claimant, record and monitor the repeated and continuous purchase of defective products, and audio and video recordings of claims, and fix relevant evidence with the help of lawyers to lay a solid foundation for the future rights protection of enterprises.

4. Actively respond to litigation

Many companies are wary of professional counterfeiters mainly because they are concerned about their complaints and reports. Therefore, they often passively respond with the idea of "wasting money and eliminating disasters", which in the long run can only fuel the morale of professional counterfeiters. However, according to the instructions and approvals issued by the Supreme People's Court and the State Administration for Market Regulation on professional anti-counterfeiting behavior, we are vigilant about the commercialization of anti-counterfeiting. Therefore, after fully mastering the evidence, we can send a lawyer's letter of warning to them and effectively respond to the handling of market supervision and management departments. In cases where it is determined that "professional counterfeiters engage in profit-making anti-counterfeiting activities," the people's court will not support their claims. In rare cases where counterfeiters maliciously engage in anti-counterfeiting activities or intentionally engage in illegal possession of property, which constitutes extortion, relevant enterprises can bravely take up legal weapons to protect their own rights and interests.

References and comments (slide down to view)

[1] Yin Xiaojian and Xing Xing: "Correctly Dealing with Occupational Counterfeiting and Occupational Claims", published in China Medical News on March 13, 2020, 3rd edition.
[2] Municipal Supervision Survey: Occupational Crackdown on Counterfeiting Has a Significant Crowding Effect on Other Work of Market Supervision, published on the "Food and Drug Law Garden" WeChat official account, September 2, 2023, https://mp.weixin.qq.com/s/Dx693ZqvDm3aS0cuSOKXeQ .
[3] https://mp.weixin.qq.com/s/3WJss_u4G-Rwg6kTT2lANw .
[4] "A Comprehensive Analysis of the Characteristics and Trends of Occupational Counterfeiting", published in the China Market Supervision Daily on May 18, 2022, https://mp.weixin.qq.com/s/_Xm79rLV3UgKCW84CUGoDA .
[5] (2018) Gan 01 Min Zhong 455 Intermediate People's Court of Nanchang City, Jiangxi Province
[6] Zhang Mingkai: "Properly Dealing with Rights Protection Behavior to Avoid Encouraging Illegal Crimes", published in the 5th issue of the Chinese Journal of Criminal Law in 2020.
[7] Tianjin First Intermediate People's Court (2020) Jin 01 Xing Zhong 78 Criminal Judgment,
[8] Reply of the General Office of the Supreme People's Court to Proposal No. 5990 of the Fifth Session of the Twelfth National People's Congress (Legal Office Letter [2017] No. 181).
[9] Shang Hongming's Judicial Determination of the Profitable Anti Counterfeiting Behavior of Professional Anti Counterfeiting Personnel - Based on the Public Higher Law