Burger Wars, China Edition: In-N-Out v. Cali-Burger

China’s piracy of Western goods is hardly a new story – unfortunately,  probably the most well-known fact about China is that the country is replete with fake designer brands for cheap. From my first trip to China to my most recent, the quality of the copies has skyrocketed. Previously misspelled labels and cheap cotton material gave way to near perfect copies of leather goods. It’s hard to deny the true expertise in knock-offs exhibited by many Chinese manufacturers.

What you might not expect is now Americans are getting in on the game. No, not (just) purchasing a fake Louis Vuitton or Chanel on their trip through Shenzhen. As the LA Times reported last week, California’s own In-N-Out is the latest brand to be copied in China. In-N-Out’s crave-worthy Double-Double is available to Shanghai diners despite the restaurant’s lack of a Shanghai chain. Here’s the twist – the party copying them isn’t a Chinese company, they are headquartered in California.

Cali-Burger offers double-stacked hamburgers, the add-on of onions with special sauce, and lettuce wrapped burgers right of the menu of In-N-Out. Until In-N-Out filed a lawsuit against Cali-Burger in US District Court of Santa Ana in September 2011, Cali-Burger used the identical names coined by In-N-Out, such as“Double-Double” and “Animal-style.” The lawsuit included claims for trademark infringement and counterfeiting, and was recently settled outside of court.

Source: flickr.com via Courtney on Pinterest

Why this wave of American-on-American piracy? Foreign businesses and individuals often think they can escape anything in China. The Chinese legal system is difficult for a foreign party to navigate, and it’s true that US judgments are generally not enforceable against Chinese parties. As a result, business and individuals may feel insulated from the risk of legal action for illegal acts, including intellectual property violations.

If you’re going to take that approach, however, you better be sure you don’t have any assets in a jurisdiction outside China. Companies enforcing their rights may try to seize assets in the US as well any other jurisdiction outside of China that an infringing company or individual may maintain bank accounts or property. Relatives or children of executives that are living abroad may also be sued if potentially involved in the infraction. 

In the case of Cali-Burger, it's puzzling why the company thought it could so flagrantly infringe In-N-Out's rights and maintain assets in California. Perhaps Cali-Burger thought In-N-Out wouldn't learn of the infringement in China since their operations are limited to a few states in the US. It would seem impossible for such information not to be carried over the internet from China to In-N-Out, but then again, I have personally eaten at other restaurants in China that "borrow" heavily from established US chains without consequence.  Then again, those eateries may simply not have any assets accessible in the US for a lawsuit to be effective.

(Author's note: Cali-Burger didn't copy In-N-Out exactly. One of Cali-Burger's most popular features, the Cali-Burger Girls, was a marketing idea all their own…)

Comments

[Sam Reeves]

Your story kind of reminds me about many videos illegally hosted on youku.com that foreign companies certainly don't mind putting short ads at the beginning of. Companies like 'Loreal', for example.

Interestingly, youku.com cannot be accessed outside of China's mainland.

I guess it comes down to the fact that they think 'if you can't get caught, you might as well do it'. The lure of the Chinese market it just too great for most companies.

[Courtney Gould Miller]

ABSOLUTELY Sam. Thanks for the comment and the great example. Youku.com is the ultimate piracy, perhaps. (An illegality I nonetheless miss when I'm in the States).