The Busan District Prosecutors’ Office has been proactive in its investigations into violations of intellectual property laws, more specifically the Trademark Act, and into violations of the Unfair Competition Prevention and Trade Secret Protection Act.
On April 2nd, a high-level delegation from EUCCK visited the Busan District Prosecutors’ Office (article in EUCCK News section), to thank the officials and present them with an appreciation plaque for outstanding results pertaining to a recent large-scale counterfeit smuggling case. On this occasion, we took the opportunity to interview Dr. Seok Dong-hyeon, Chief Prosecutor, BDPO, on the specifics of the investigations and his priorities.
The EUCCK members greatly appreciate the Busan District Prosecutors’ Office for the outstanding results pertaining to the recent counterfeit smuggling case you investigated. Could you summarize for us this case and its specificities, its current status and foreseeable developments?
The details of the crime mentioned above are as follows. The ring leader behind the smuggling from China collected the Korea-bound counterfeit luxury goods from Korean wholesalers. The logistics provider (in charge of overseas shipping) disguised the shipment as if it were socks headed for Hong Kong from Shanghai, filed false papers stating that the goods would be transshipped in Korea, and actually stored the goods in bonded warehouses in Korea. The employees working at the bonded warehouses brought containers with the “declared socks” into the bonded warehouse to replace the containers with the counterfeit goods that were released illegally. The entity in charge of delivery inside Korea sent the goods to the Korean wholesalers for distribution in the domestic market. The head of the bonded warehouse, head of a trading company and member(s) of a customs service firm were all involved in this form of smuggling for 20 months, having perpetrated the crime on 29 occasions to smuggle 440,000 items of counterfeit luxury bags (worth 650 billion won in market value if genuine) without ever being subject to customs inspection.
As background to this case, we were investigating into the distribution of counterfeit luxury goods and analyzed past cases involving distribution of such counterfeits that were made in China. In the process, we identified the existence of organized traffickers that shipped counterfeit luxury goods from China to locations in Korea at 500,000-800,000 won per box after the goods were purchased by Korean wholesalers who personally traveled to and from China. We then pursued further investigation by tracking the delivery company up to the ring leader to ultimately fully uncover the crime.
Such crimes taking advantage of the loopholes in law enforcement regarding international distribution channels are expected to become more frequent with the growing volume of international trade today. The BDPO will carry out more thorough investigations through the command structure and cooperation system set up with the police, coast guard, customs offices, etc.
Could you give us an indication of your priority areas of investigation, present and to come, as well as any plans you might have to sustain and increase efficiency?
BDPO’s crackdown and investigation on counterfeiting are carried out as part of the investigations into violations of intellectual property laws, more specifically the Trademark Act, and into violations of the Unfair Competition Prevention and Trade Secret Protection Act. Although such crimes are often exposed at retail outlets found inside markets and small-sized shopping centers, the BDPO has been investigating manufacturers and large-scale distributors, hoping to put an end to the structural problem of counterfeiting. This will continue to be our goal in the future. The investigation that was conducted on an offense that involved switching more than 650 billion won worth of transshipment cargo is a case in point that demonstrates our level of commitment toward ending this structural violation.
The EUCCK IP Centre has long been advocating for a stronger enforcement of Brand owners’ IPR in Korea, to bring it in line with international standards. With regard to combating sentencing leniency, could you please explain to our members your position on this issue?
There is no particular basis for applying “sentencing leniency” to counterfeiting per se. The level of punishment is determined on a case-by-case basis depending on the crime, upon taking into account factors such as past criminal record, size of the counterfeit operation, likelihood of repeat violations, and degree of repentance in accordance with legal procedures governing violators of criminal laws.
In situation of cross-border trafficking of counterfeits, how does the BDPO deal with the extraterritorial aspect of the case? What kind of cooperation is there at the international level to deal with cross-border cases, for example involving transshipment?
Korea currently utilizes international cooperation arrangements for not only big international issues such as crimes involving narcotics and illegal weapons trade, but also general violations of criminal laws, pursuant to the Treaty on Mutual Legal Assistance in Criminal Matters signed with many countries. We also actively cooperate with the request for assistance coming from other countries.
Regarding the case involving switching of transshipment cargo, the leads were not obtained through international cooperation but rather through investigations into domestic shipping and delivery companies which generated clues and evidence. However, if and when international cooperation is required in the future, we plan to fully utilize such arrangements.
Is there any communication channel in place between your office and foreign or domestic investors in order to monitor counterfeiting? In case there isn’t, could you think of any efficient way to achieve this goal?
Currently, there are no regular communication channels. We receive assistance from the companies in the form of advice or tips on collecting data on counterfeit luxury goods and expert identification methods. We plan to maintain arrangements for mutual assistance while remaining committed to fairness in investigations and law enforcement.
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