European Luxury Brands Challenge Chinese Pirates

Burberry, Chanel, Gucci, Prada and Louis Vuitton have fired a legal broadside against Beijing's Silk Market, the reputed flagship of trademark piracy in China, according to local media.

Normally commercial rivals, the five luxury European brands have taken the unusual step of joining forces to file a lawsuit against the sprawling shopping emporium, which is immensely popular among foreign tourists because of its reputation for offering high quality counterfeit goods at a fraction of the price of the genuine article.

According to the Beijing Times, the companies are demanding 2.5m yuan (£1.7m) from the operator Xiushui Haosen Clothing Market and five of its stallholders. Although the sum involved is relatively small, the high-profile case is likely to be a test of China's global commitment to protect intellectual property rights.

Foreign businesses and trade officials, particularly from the United States and Europe, have repeatedly complained to Beijing about the rampant piracy in China, which - by some estimates - is the source of 70% of the world's counterfeit goods. American entertainment industry groups claim that as many as 95% of the DVDs manufactured in China are illegal.

The Silk Market is usually cited as the prime example of the lack of enforcement. When the first few stalls appeared in an alley next to the US embassy in 1985 they were initially welcomed as a sign of China's nascent embrace of capitalism. But the traders quickly realised there was more money to be made from fake brand name goods than the traditional silk products that gave the market its name.

With a little haggling, fake Nike trainers, North Face jackets, Gucci bras and Rolex watches could be had for less than a twentieth of the price of the genuine article. Most of the buyers come from the countries that complain the loudest. Few locals are interested, but for millions of western tourists the market has become almost as well-trodden a part of the sightseeing and shopping trail as the Forbidden City and the Great Wall.

The Beijing government insists the stallholders have cleaned up their act. Earlier this year the market was moved indoors from the cramped alley to a new purpose-built five-storey mall with space for 1,600 stalls.

The authorities said they would severely punish any outlet that offered pirated products, but the plaintiffs in the latest lawsuit claim to have six large boxes filled with evidence in the form of fake bags and clothes.

"Though the market operator had promised to weed out counterfeit goods in the market, it failed to keep these knock-offs out," the plaintiff's lawyer Gao Hualin was quoted as saying in the China Daily.

"The company takes no measures to fight against counterfeiting, and facilitates stalls in selling fake brands."

In the first hearing on Tuesday the operating company, Xiushui Haosen Clothing Market, pleaded not guilty. It said it had made every effort to prevent the sale of pirated products and terminated the contracts of the five stalls named as co-respondents in the case brought by the luxury brands.

Past lawsuits to halt the marketing of fake goods in China have met with little success, but the government has promised to crack down harder on the counterfeiters. Earlier this year China's top court made it easier for prosecutors to file criminal cases against suspected pirates and jail those convicted for up to seven years.

In the past most transgressors faced no more than a small fine.

Prada, Gucci, Burberry, Louis Vuitton, Chanel and Xiushui Haosen Clothing Market were all unavailable for comment.