Dermcare-Vet is a family owned Australian veterinary pharmaceutical company dedicated to creating innovative, research-based products for animal skin care. Specialising in medicated and non-medicated shampoos, conditioners, and skin treatments, Dermcare-Vet has built an international reputation for reliable products that treat various skin conditions in pets. One of their top products, Malaseb® medicated shampoo, is well known for its success in treating skin issues in pets, making it a target for counterfeiters.
The challenge
Trade mark squatting became a major issue for Dermcare-Vet in 2019. Trade mark squatting involves a registered trade mark that is identical, or similar, to a well-known brand, taking advantage of the original company’s reputation, and selling fake products under that name. Sales, which had been growing steadily in China, began to decline. Dermcare-Vet and their Chinese distributors found that counterfeit Malaseb® products were being sold online through various platforms.
Dermcare-Vet invests heavily in research to understand animal diseases and develop scientifically backed products. Crystal emphasised the importance of using genuine, registered products, that are safe and effective.
“You don’t want people using a medicated shampoo to treat a fungal or bacterial infection without proper veterinary diagnosis or using a product that won’t work because it’s counterfeit.”
To combat counterfeiting, Dermcare-Vet conducted trap purchases and discovered a network of trade mark squatters linked to counterfeit goods who had registered over 170 trade marks, including a similar brand name, Malaxi, the Chinese transliteration of Malaseb®.
Their first steps were to gather evidence and authorise a Chinese distributor to file complaints with the authorities. They also took legal action to oppose and remove bad-faith filings, expanded their trade mark registrations, and registered copyrights.
Dermcare-Vet faced several challenges, including navigating Chinese culture, managing legal complexities, and enduring time-consuming enforcement procedures. The organised counterfeiting network proved tough to dismantle, even with ongoing enforcement actions.
Dermcare-Vet successfully linked counterfeit products to trade mark squatters, supported by substantial evidence and assistance from Chinese authorities and affiliated distributors. However, even after a successful police raid, the fight against trade mark squatting continued, consuming significant resources over 2 years.
IP strategy developments
The counterfeit experience had a significant impact on Dermcare-Vet’s IP strategy. They adopted a proactive approach, investing heavily in trade mark opposition, expanded their goods and service classes, and refined their registration processes.
The company recognises the importance of continuous investment in IP protection to ensure brand survival and value in China. Their story is also a lesson in understanding the international market any business may be entering. For example, customers in China often rely on online shopping platforms to purchase products, the perfect breeding ground for counterfeit goods, making it more challenging to protect IP.
"If you have an interest in a certain market, one of your first steps should be understanding the customers of that market and their typical behaviours before deciding on your IP strategy."
Educating customers about counterfeit products and monitoring online platforms for offending listings became a crucial part of their strategy. Customers were buying the product online without the benefit of veterinary guidance. This direct sales approach meant that customers were not getting the necessary education on why to use the product and for how long, leading to misuse and dissatisfaction.
“It becomes an ethical animal health welfare problem - animals could be subject to medication they don’t need. We take this issue seriously which is why educating the veterinary sector on skin diseases using our research findings, is at the heart of our purpose.”
Quality control testing of the counterfeit products were conducted in Dermcare-Vet in-house chemistry laboratories, confirming that the counterfeit products lacked the correct dosage of active materials to effectively treat pets. As a result, an anticounterfeiting sticker was then implemented. Developed by a French company Cypheme, this sticker acts like a unique fingerprint providing customers with confirmation that the goods are genuine.
Advice for other businesses looking to go global
Dermcare-Vet re-evaluated their goods and service classes and expanded them to cover related areas. This made sure they had broader protection for their products. This included registering trade marks not only for their existing products but also for potential future products and variations, reducing the risk of counterfeiters exploiting any gaps in their IP coverage.
“Trade mark registration doesn’t guarantee you coverage for life. You need to manage it all the way through its lifecycle to make sure it’s valuable. By managing the use of a trade mark you can enforce it whenever you need to.”
Based on their experience, Crystal encourages Australian businesses to understand the international environment they may enter and the value of IP rights. She also stresses the importance of early investment in IP protection, even if the market potential is initially uncertain.
“Understand the market and the people you want to distribute your products to. Get them invested in the importance of IP by helping them to understand that it supports them too – it’s not just about brand owners’ rights. When customers trust your brand, you’ll get valuable buy-in from them.”
Engage with experts for advice on the jurisdiction you are wanting to cover. Dermcare-Vet uses a team of Attorneys and Solicitors in Australia, as well as various overseas teams in countries they trade. In terms of China, understanding and utilising the sub-class system, and authorised use management, allowed them to get ahead of the game and come back out on top.
In the beginning, they were at risk of losing their trade mark, and in some instances risked infringing their own trade mark. Crystal hopes that by sharing this story it serves to save other Australian businesses the pain of dealing with counterfeiters riding the wave of your established reputation.
Dermcare-Vet's IP journey highlights the complexities and challenges of international IP protection. They continue to safeguard their brand in a competitive and evolving market. Their experience serves as a valuable lesson for other businesses on the importance of IP strategies and the need for continuous research and monitoring in international markets.
Learn more on how to protect your IP in China.
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Learn more about Dermcare-Vet by visiting their website.