ip 4 inno Module 5 D Counterfeiting and

ip 4 inno Module 5 D Counterfeiting and Piracy www. ip 4 inno. eu

ip 4 inno is brought to you by: • European Commission, DG Enterprise & Industry • European Patent Office • 19 consortium partners in the first ip 4 inno project This particular module was written / updated by: Isis Innovation Ltd www. isis-innovation. com with funding from the EC and EPO www. ip 4 inno. eu

The Disclaimer! This training material concerns intellectual property and business strategies only in general terms. This training material should not be relied upon when taking specific business or legal decisions. Rather, professional advice should be obtained which suits the circumstances in question. www. ip 4 inno. eu

Schedule • • • Introduction to counterfeiting and piracy Economic Impact Legal protection Criminal and Civil rights How to protect your business Trademark watching orders www. ip 4 inno. eu

Counterfeiting and Piracy • A counterfeit good is an unauthorised imitation of a branded good • Piracy consists of making an unauthorised exact copy and not a simple imitation-of an item covered by an intellectual property right • Counterfeiting and Piracy are illegal and punishable by civil and criminal laws. www. ip 4 inno. eu

Schedule • • • Introduction to counterfeiting and piracy Economic Impact Legal protection Criminal and civil rights How to protect your business Trademark watching orders www. ip 4 inno. eu

Upsurge in counterfeiting activity • High profitability, lower risks and lower sanctions • Consumers treat it as a non-issue as they benefit from lower prices • Difficult to recognise counterfeits • Low ethical standards in the trade • Law enforcement agencies are not equipped to deal with the issue • Manufacturing moved to cheaper labour markets with weaker laws and market environment regulations www. ip 4 inno. eu

What items are being Counterfeited? • • • Sports wear Jewellery and watches Pharmaceuticals and pesticides Foodstuffs and beverages Children’s toys Cars, car parts, pool parts Electronics Anything that can make money, especially if profit margins are large Electrical supplies e. g. razor blades Personal care products www. ip 4 inno. eu

Magnitude • 2008 - EU customs officials carried out 49, 331 procedures and intercepted 178 million counterfeited and pirated articles. • Increase of 126 % from 2007 OECD (2008) The Economic Impact of Counterfeiting and Piracy, OECD, Paris. www. oedc. org/sti/counterfeiting www. ip 4 inno. eu

Origin or provenance of seized goods OECD (2008) www. ip 4 inno. eu

Multiple forms of economic pain • • • Loss of sales revenue Loss of tax revenue Loss of employment Market destabilisation Decline in investment Cultural consequences – dis-incentive to engage in creative work • Destruction of the environment for invention and cultural output. www. ip 4 inno. eu

Why Engage? • Intellectual Property Rights represent the most valuable assets of many firms. • Global brands are popular because they offer a guarantee of quality and their intrinsic value can confer prestige • All of this creates an incentive for counterfeiting. www. ip 4 inno. eu

Schedule • • • Introduction to counterfeiting and piracy Economic Impact Legal protection Criminal and civil rights How to protect your business Trademark watching orders www. ip 4 inno. eu

Legal Protection • Intellectual property law is the least harmonised at international level • There have been significant initiatives to promote cross border compliance and regulation www. ip 4 inno. eu

Issues • Judges reluctant to enforce penalties • Low public awareness regarding hazards of counterfeiting • Lack of available deterrent penalties as civil penalties regarded as merely a “cost of doing business” Legislation > Training > Public Awareness > Criminal Enforcement www. ip 4 inno. eu

Counterfeiting • Keep in mind that majority of enforcement is civil and criminal remedies are only available for most serious form of trademark infringement • Criminalization seen as serving four important purposes: – – Protecting IP from theft or dilution Protecting consumers from fraud Protecting the safety of non-purchasing users Enforcing market rules www. ip 4 inno. eu

The EU Framework • • • Provisional and Precautionary Measures Prevent imminent infringement of IP right Forbid continuation of the alleged infringement Seizure or delivery up of the goods that constitutes an infringement Precautionary seizure of the movable and immovable property Require the IP rights holder to provide any reasonably available evidence • There is no harmonization of criminal sanctions across the EU ip 4 inno www. ip 4 inno. eu 27

EU – What you can do • Owner of Community IPR – can request assistance by the customs authorities of the Member State in which it is lodged. • Can also request assistance of one or more other Member States. • The decision taken in the Member State in which the application is lodged has the same legal effects in all other requested Member States. • http: //ec. europa. eu/taxation_customs/customs_controls /counterfeit_piracy/right_holders/index_en. htm www. ip 4 inno. eu

Customs and IPR Enforcement EU • Regulation 1383/2003 provides customs authorities to detain shipments that are suspected of infringing intellectual property rights. • Close cooperation between right holder and customs • Right holder applications for action requested on a national or community basis. • EU customs has the power to act ex-officio www. ip 4 inno. eu

Schedule • • • Introduction to counterfeiting and piracy Economic Impact Legal protection Criminal and civil rights How to protect your business Trademark watching orders www. ip 4 inno. eu

Civil and Criminal action • If a third party is found to infringe a registered Trade Mark the owner can take civil action or rely on a response from the authorities through criminal action • Criminal action is not an option in cases of business dispute e. g. when one business fails to pay another this is a civil matter • There are differences in the burden of proof and remedies www. ip 4 inno. eu

Offences CIVIL LAW or COMMON LAW Private prosecution by IP owner CRIMINAL LAW Public prosecution by the state Registered Trade Mark Copyright E. g. Branding your tyre-making company "LOTUS" when not affiliated to the LOTUS car company E. g. Taking photos from a brochure for use on a website without the photographer's permission Damages E. g. Unauthorised application of the Nike ® logo to 1000 s of T-shirts for street markets. E. g. Printing 1000 s of DVDs and CDs with illegal copies of movies, games, music & software, for street markets. Piracy Fines Counterfeiting www. ip 4 inno. eu Remedies Burden of proof Balance of probabilities Account of profits Injunctions Prison Beyond reasonable doubt

Role of Law Enforcement Agencies • Border Services Agencies/ National Customs Authorities - play a role only with respect to Copyright or Trademark Goods • They do not usually act on any other IPR infringements such as patents or industrial designs • Police and Serious Crime Agencies. www. ip 4 inno. eu

Organisations concerned with IPR Enforcement • International level – United Nations (UN) – World Intellectual Property Organization (WIPO) • Inter-Governmental level – World Trade Organization (WTO) – World Customs Organization (WCO) – INTERnational POLice Organization (INTERPOL) • Regional level - European Commission – Relevant General Directorates such as DG Trade, DG Taxation and Customs Union, DG Internal Market, DG Enterprise and Industry, DG Justice Freedom and Security, DG Development, DG External Relations and DG Agriculture • National level – Interagency cooperation – Other fora ip 4 inno www. ip 4 inno. eu 37

Trade/sector IP enforcement bodies • • • • • • FACT - http: //www. fact-uk. org. uk/ Trading Standards - http: //www. tradingstandards. gov. uk/ Intellectual Property Awareness Network (IPAN) - http: //www. ipaware. net. Alliance Against IP Theft - http: //www. allianceagainstiptheft. co. uk/ Anti-Copying in Design (ACID) - http: //acid. eu. com The Anti-Counterfeiting Group (ACG) - http: //www. a-cg. org/ Association of the British Pharmaceutical Industry (ABPI) - http: //www. abpi. org. uk/ Bournemouth University: Centre for Intellectual Property & Management - http: //www. cippm. org. uk/ British Brands Group - http: //www. britishbrandsgroup. org. uk/ British Library - http: //www. bl. uk/bipc British Jewellery and Giftware Federation - http: //www. ga-uk. org/. British Society of Plant Breeders - http: //www. bspb. co. uk/ Federation Against Software Theft (FAST) - http: //www. fastiis. org Federation of Small Businesses (FSB) - http: //www. fsb. org. uk/ Ideas 21 - www. ideas 21. co. uk Inngot Limited - http: //www. inngot. com/ Innovate Design - http: //www. innovate-design. co. uk/ International Chamber of Commerce - http: //www. iccuk. net/ Own-it - http: //www. own-it. org/ Publishers Licensing Society (PLS) - http: //www. pls. org. uk/default. aspx Royal Society of Chemistry (RSC) - http: //www. rsc. org/ Trevor Baylis Brands plc - http: //www. trevorbaylisbrands. com/ www. ip 4 inno. eu

Useful links • • European Commission – Enterprise and Industry: Intellectual property rights – Trade: Intellectual property – Taxation and Customs: Counterfeit and Piracy – Agriculture and Rural Development: Geographical indications and traditional specialities – Education and Culture (Sport): The economic dimension of sport – Justice, Freedom and Security: Financial crime Information Society and Media Inter-Governmental and International Organisations – World Intellectual Property Organization (WIPO): Advisory Committee on Enforcement of Industrial Property Rights – World Trade Organization (WTO): Intellectual property: protection and enforcement – World Health Organisation (WHO IMPACT): Counterfeit medicines – World Customs Organisation (WCO): Protection of Intellectual Property Rights – Organisation for Economic Cooperation and Development (OECD): Counterfeiting and Piracy – Interpol: Intellectual property (IP) crime www. ip 4 inno. eu

Doing Business in China • • http: //www. china-iprhelpdesk. eu/ Trade Mark Registration Trade Fairs Patents Copyright Case Study section Helpdesk publications www. ip 4 inno. eu

Schedule • • • Introduction to counterfeiting and piracy Economic Impact Legal protection Criminal and civil rights How to protect your business Trademark watching orders www. ip 4 inno. eu

Business threat – case study • • • Lenovo Computers Number 1 personal computer company in China 10 % share of global market 2009 annual sales $16. 6 billion Lenovo’s brand came under attack from counterfeiters • Security compromised with loss of credibility • Solution – Sophisticated labelling www. ip 4 inno. eu

Protecting your business Risk Identification and management • Incorporate your thoughts on counterfeiting into your business strategy and planning • Identify the risks and weaknesses • Develop precautionary measures to address them • Respond quickly and effectively • Effective engagement with enforcement resources when counterfeiting is detected. www. ip 4 inno. eu

Protect your IP • Register the IPR of your company in the markets where they are being produced and marketed, but also in areas of transit. • Register IPR in places where counterfeits are expected to be produced or sold. • Maintain IP rights www. ip 4 inno. eu

Appoint an IP champion • Create an up-to-date inventory • Regular review of the system and procedures • Risk assessment • Build secure working relationships in/outside the business • Single point of contact for reporting infringements www. ip 4 inno. eu

Protection of trade secrets • Trade secrets, technical knowledge and know-how, client information and market analysis need to be protected within your company to make counterfeiting more difficult. • Information may come from employees, partners, marketing material and publications. www. ip 4 inno. eu

Confidential Information When can confidential information leak ? • • Venture Partners Consultants Sub-contractors Departing staff Suppliers Marketing Team Customers www. ip 4 inno. eu

What can it be worth? http: //www. felipemassa. us/wallpaper/ 13 September 2007 - the Mc. Laren Formula 1 Racing Team was fined $100 million by the FIA for illegal possession of technical data from rival team Ferrari www. ip 4 inno. eu

Using special Marks on the goods or packaging that are difficult to copy • Makes the product more easily identifiable as authentic to the consumer • Marking the goods with tracing devices (chips) enables tracking. www. ip 4 inno. eu

Counterfeit • Louis Vuitton shoulder bag was delivered in a recycled box that once shipped batteries. • Warnings printed on the inside of the box read: "Danger Contains Sulfuric Acid" and "Poison Causes Severe Burns” • But the product looked real. It was dark brown, sported a braided strap with brass fittings and the Louis Vuitton monogram stamped across the bag. www. ip 4 inno. eu

Keep track of distribution • Assess the risks of outsourcing production • Investigate with whom you are doing business • Has the other party been involved in counterfeiting previously • How easy is it to infiltrate your supply chain • Can you make the process less easy to infiltrate • Monitor your supply chain – including waste disposal www. ip 4 inno. eu

Keep a product library • Keep a complete archive of marketing materials and products, including products that are no longer on the market. • This is invaluable in future infringement cases on several levels. www. ip 4 inno. eu

Protect your business • Engage with manufacturers and distributors • Be vigilant • To combat counterfeiting and piracy you need to move quickly www. ip 4 inno. eu

Monitoring counterfeiters • • Employees Websites Market knowledge Supply chain knowledge www. ip 4 inno. eu

Reporting ability • Establish an anti-counterfeiting function on your company website • Include guides about what to do if a customer encounters counterfeit goods • Include warnings about the dangers of using the counterfeit goods. www. ip 4 inno. eu

Contact the appropriate authorities • Counterfeiting is illegal and the company should always consider contacting the police/trading standards/Customs. www. ip 4 inno. eu

Contact your attorney • Make sure that you know what action the company will take if counterfeit goods are identified • Make sure you know your rights • Make sure you understand the consequences of any action. www. ip 4 inno. eu

The Internet • • Web pages Cybersquatting Domain name Vero process – This process favours the complainant – Case Study – www. ip 4 inno. eu

However… Glaxo v Dowelhurst • Glaxo sold HIV/AIDS pharmaceuticals, bearing its Trade mark, at low prices on the understanding that they were for use in Africa. • Instead of being utilised for this humanitarian purpose the goods were fraudulently diverted to Europe. • The Defendant imported them into the UK and sold them to hospitals. • This was not an infringement of the registered trademarks. www. ip 4 inno. eu

Parallel imports • Excluded from the definition of counterfeit mark are so-called “parallel imports” or “grey market” goods, which are trademarked goods legitimately manufactured and sold in another country, and then imported into the local jurisdiction without the trademark owner’s consent. www. ip 4 inno. eu

However…. • This only applies to the European Economic Area (EEA) • EEA – Europe, Iceland, Norway and Lichtenstein • Trade Mark Directive provides only for EEA-wide exhaustion, rather than providing for international exhaustion • Silhouette International Schmied Gmb. H & Co ("Silhouette") v Hartlauer HGmb. H ("Hartlauer") • Sebago Inc. And S. A Ancienne Maison Dubois et fils v S. A G-B Unic www. ip 4 inno. eu

Schedule • • • Introduction to counterfeiting and piracy Economic Impact Legal protection Criminal and civil rights How to protect your business Trademark watching orders www. ip 4 inno. eu

Watching Applications with Customs • Rights holder places a watch notice with the customs Authority along with a description of goods. • National Application in one EU Member State or a Community Application across Member States. • Once goods are detained there is a very short period to complete the process. • http: //ec. europa. eu/taxation_customs/customs_ controls/counterfeit_piracy/right_holders/index_en. htm www. ip 4 inno. eu

Trade Mark Monitoring • After registering your mark, ensure that your rights do not become diluted as a result of others also registering and using marks that are the same or similar. • A Watching Service identifies filings of potential concern. Place your mark on a Watch List, you will be informed when anyone else files an application for a mark that is the same or similar to yours. • http: //oami. europa. eu/ows/rw/pages/QPLUS/databases/search. CT M. en. do - searchable free online. • http: //oami. europa. eu/ows/rw/pages/CTM/FAQ/CTM 13. en. do#3001 FAQ of the Watch Service. www. ip 4 inno. eu

Trade Mark Watching Orders What ? • Watch words, devices, 3 D marks, colours, packaging, shapes, sounds and gestures. Every aspect of a trademark found in the published form. Where? • Global - comprehensive and cost effective • European Union • International Registrations (Madrid system) • Individual country or any group of countries • Europe (the whole continent) www. ip 4 inno. eu

Ipeuropeaware project • Brings together two important existing Europe-wide initiatives: • Innov. Access, a Web portal created by the National Patent Offices to provide information on their services for the end user; and • IPR-Helpdesk, Helpline and training mechanism for current and potential contractors in EC-funded Framework Programme projects. • http: //www. ipeuropaware. eu/ipeuropaware. html www. ip 4 inno. eu

Thank you for your attention! Over 50 teaching hours of material, case studies, exercises, links and more can be found on www. ip 4 inno. eu