Fighting fakes: protecting brands against the counterfeit threat
How to build a frontline defence against fake goods - our key guidance for paralegals.
If you were asked to name the biggest criminal enterprise in the world, you might think of international drug cartels or human trafficking; but, for brand owners, the answer is much closer to home.
Counterfeit goods represent an incredible 3.3% of global trade, valued at $4.5 trillion per year, making it the tenth largest economy in the world, ahead of Canada. Furthermore, fake products make up 5% of all goods imported to the EU.
Brand Protection Associate Counsel Zlatka Koleva-Minkov of FMCG company Reckitt recently delivered a powerful CITMA Paralegal webinar on the impact of counterfeit goods and how brands can defend against them.
This issue of counterfeits is likely to escalate as economic conditions worsen and consumers become more vulnerable to “too good to be true” deals, making this a very timely session.
What are counterfeit goods and what damages do they cause?
Counterfeit goods are defined in the trade-related aspects of Intellectual Property Rights (TRIPS agreement) as, “any goods, including packaging, bearing without authorisation a trade mark which is identical to the trade mark validly registered in respect of such goods, or which cannot be distinguished in its essential aspects from such a trade mark and which thereby infringes the rights of the owners of the trade mark in question under the law of importation.”
This definition underlines the importance of brands ensuring they have registered all their trade marks and designs in every relevant jurisdiction.
Without valid rights registrations, there are not sufficient legal grounds for acting against infringing goods.
Counterfeit goods are found in all industries from cars and medication to shoes, designer bags, gloves and more. As Zlatka put it: “Anything that can be manufactured can be counterfeited.”
The damages counterfeit trade causes to consumers and society are extensive and include:
- Direct danger to consumers from products manufactured in unregulated conditions that don’t meet safety standards.
- Environmental impact from unregulated manufacturing resulting in pollution.
- Poor conditions for workers in counterfeit production facilities.
- Organised crime activities surrounding counterfeiting.
- Brand tarnishment and the erosion of IP rights.
Tips for spotting counterfeit products
There are several ‘red flags’ to look out for when evaluating product authenticity. These include obvious spelling errors on packaging and in product information leaflets.
A suspiciously low selling price should always prompt a closer look to find evidence of counterfeiting.
Zlatka also advised avoiding buying products from unofficial or unverified stores – both on and offline.
Combating counterfeits: three complementary tactics
Brand owners must be proactive about identifying and taking down counterfeit products. There are various tactics brand protection specialists can use to achieve this:
Work closely with customs authorities
Registering valid trade marks and designs with customs authorities provides a reference for officials to check against when products cross borders.
Brands can also deploy devices such as on-pack verification in the form of jurisdiction-specific codes or watermarks.
By using an app containing a register of all valid codes for that market, officials can easily scan to check that the product is genuine.
Where counterfeits are suspected, a dedicated customs contact will share images of suspected counterfeit products with the brand owner.
Zlatka recommends brands undertake regular product training with customer officers and provides genuine product samples for ease of reference.
She also underlines the importance of responding promptly to officers’ requests for verification, as there is a statutory time frame within which brand owners must respond.
Conduct in-market enforcement activities
Once counterfeit products have crossed the border, focus shifts to in-market enforcement. Here, brands have a number of tools at their disposal including:
- Working closely with enforcement authorities such as trading standards and the Police Intellectual Property Crime Unit (PIPCU) to carry out enforcement such as raids when counterfeits are identified.
- Monitoring customer feedback for unexpected product quality issues that may indicate goods are not genuine.
- Conducting targeted investigations into suspected suppliers to determine their reach and activity level.
- Carrying out market surveys and test buys of products to identify the level of counterfeits in the market.
- Supporting regulatory authorities if they report products not meeting regulations that could be counterfeit.
- Working with official retailers who report suspicions that the products they have received for sale are not genuine
Be rigorous about online enforcement
Today’s multichannel consumer world means brands must monitor and protect their brand online as well as off. This may seem like a herculean undertaking, but Zlatka recommends making full use of the brand protection portals and AI-powered software that aim to make the job easier.
- Ensure you are familiar with all the platforms where your products may be sold and use the brand protection software and AI tools they offer to help identify, report, and take down infringing content.
- Upload examples of your current trade marks and registered designs to the relevant platform protection systems so that reports of infringing content can be automatically verified and the listings taken down without human intervention.
- Consider the impact of cross-border online trade in your brand protection strategy. A product that is popular (and protected by IP rights) in one jurisdiction may end up being counterfeited and sold in another jurisdiction, but if you haven’t registered your trade mark in that jurisdiction you will have no grounds to claim infringement.
- Always stay current with emerging platforms and sales techniques – such as Instagram and TikTok live sales – that may be harder to track for counterfeits.
Zlatka concluded by underlining that all these protection efforts are underpinned by having valid registered trade marks and designs in the relevant jurisdictions.
Without these brands have fewer grounds on which to base counterfeiting claims.
Paralegals play an essential role in ensuring that IP rights are robustly maintained so they can act as a bastion against criminal counterfeiting and its damaging effects on society.