Cablegate: A Herbicide by Any Other Name Kills Just As Sweet:

DE RUEHBP #1205/01 2951506
R 221506Z OCT 07





E.O. 12958: N/A

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.

© Scoop Media

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