A HERBICIDE BY ANY OTHER NAME KILLS JUST AS SWEET:

UNCLAS SECTION 01 OF 02 BAMAKO 001205 SIPDIS SIPDIS PARIS FOR AFRICA WATCHER E.O. 12958: N/A TAGS: ECON EIND ETRD EINT EAGR ML SUBJECT: A HERBICIDE BY ANY OTHER NAME KILLS JUST AS SWEET: CHINESE COPY PUSHES DOW OUT OF THE MARKET ¶1. SUMMARY: An ongoing legal case brought by U.S. based Dow Chemical Company against a Chinese competitor demonstrates the difficulties posed by trademark infringement and corrupt judicial practices to Western importers in Mali. Dow's product, a herbicide labeled Gallant Super, found itself up against Super Gallant, a Chinese copy that used similar labels, contained the same active ingredient, sold for a cut-rate price, and was backed by a compliant local judicial system. Dow lost over 10 million dollars in sales in one growing season alone (2005). The case continues to drag along, with Dow already losing several rounds at the local and appellate courts; meanwhile, the Chinese company filed a nearly identical case against a Malian competitor that was settled in China's favor in less than a week. The legal double standard and how it may have come about explains in large part why Chinese products dominate the local market, but ironically also demonstrates why legitimate Chinese companies ought to have an interest in promoting a functioning judicial system in Africa. -------------- Gallant Super v. Super Gallant -------------- ¶2. In 2005 Dow Chemicals sued the Chinese company Datong Trading Enterprise (DTE) in Malian and Burkinabe courts for infringing on Dow's trademark of "Gallant" chemical herbicides. Dow claimed losses of USD 10.75 million, 10.25 million of it in Mali, during the 2005 growing season alone, after DTE marketed copies of Dow's Gallant Super chemical herbicide under the label Super Gallant. Dow's Gallant Super controls the growth of grass weeds in cotton crops and was sold to local farmers' associations through private distributors until Dow was forced to pull out of the Malian market. DTE's Super Gallant contains the same active ingredient and is packaged with bottles and labels that copy the look of Dow's Gallant Super. According to Salif Cissoko, the director of Mali's cotton parastatal (CMDT) in the Sikasso region, a Chinese company distributed the DTE copy at a cut-rate price to Malian cotton farmers. ¶3. The Malian government's lead investigator for the case was charged with seizing DTE's products in October 2005, but confiscated only a few samples as most of the product had already been distributed to the farmers. The lower court's decision was then delayed for over a year, allegedly because the plaintiff failed to pay fees for the investigation and seizure process. Dow's lawyer noted, however, that the court never provided the invoice for such costs. The court finally rendered a ruling against Dow on procedural grounds, but the case technically remains open as it awaits a court decision on the substance of Dow's allegations. ¶4. Following the procedural ruling, DTE sued Dow in the appellate court, which fined the American company 150 million FCFA (approximately $300,000) for illegally seizing DTE's products and tarnishing its reputation. Dow's lawyer, Abdoul Wahab Berthe (recently named the Minister of Labor),asserts that the case should never have advanced to the appellate court without first having a judgment made by the lower court on the substance of the case. Berthe said it appeared the appellate court went even further, deciding on the case without even considering or reviewing the case file from the lower court. Officials close to the case surmise that China's power in the region allowed them to circumvent normal judiciary procedure; other observers openly accused the Chinese of paying bribes to sway the courts. Dow plans to appeal the procedural and the defamation decisions to the Supreme Court. -------------- Super Gallant v. Gallant Regular -------------- ¶5. Ironically, at the same time it was defending itself against Dow, DTE pursued a nearly identical case, albeit in the other direction, against a local Malian businessman. The Sikasso resident made a counterfeit copy of the Chinese copy of the Dow herbicide. The local Malian version was called Super Gallant, like the Chinese copy. Unlike the Dow case, DTE's complaint against the Malian company resulted in instantaneous results. Within twenty-four hours, the Malian was thrown in jail by the local police and bail was set at 10 million FCFA (about 20,000 dollars). The counterfeit products were seized and destroyed within days. -------------- BAMAKO 00001205 002 OF 002 Chinese Trademark Infringement in Mali -------------- ¶6. Both CMDT and judiciary officials in Sikasso admitted to the rampant number of Chinese counterfeit goods flooding the region (and elsewhere in Mali). Sekou Thiam, Chief of Production at the CMDT Sikasso branch, said that DTE had introduced other counterfeit goods in Sikasso. Interestingly enough, Thiam's office wall sported a DTE wall calendar. Locals were quick to note that around the time the case was tried, the Chinese donated a number of tractors to communities in the region. -------------- -------------- Tipping the Scales of Justice One Tractor at a Time -------------- -------------- ¶7. Comment: Malians see China as a very important commercial partner regardless of whether Chinese follow fair trade rules. Even members of the Malian judicial system conceded weaknesses in this area. Accusations that bribes were distributed, or that the tractors were donated to influence the case in DTE's favor, are only anecdotal. Nonetheless, the accusations seem credible, especially when considering they come from officials working within the Justice Ministry. At the very least, Berthe, now a senior member of the Malian government, and other officials conceded that the decisions reached by the courts do not seem to have a basis in Malian law. ¶8. Comment Continued: Dow's case may eventually be favorably resolved through a careful mix of legal and diplomatic pressure, but the case points to a wider need for all companies to promote the rule of law. Just as DTE took advantage of Mali's legal system (unfortunately to protect its own pirated product),legitimate Chinese importers will need a reliable legal system to protect their markets from illegitimate goods. Chinese companies are already in direct competition with each other in textiles and tea. Balancing their demands, and those of others seeking to enter Malian markets, may ultimately convince the Chinese to re-balance to scales of justice as well. LEONARD