ip4inno Module 5D Counterfeiting and Piracy

ip4inno Module 5D Counterfeiting and Piracy
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European Commission, DG Enterprise & Industry European Patent Office 19 consortium partners in the first ip4inno project This particular module was written / updated by: Isis Innovation Ltd with funding from the EC and EPO This slide is mandatory. The contractor can, of course, claim credit for their authorship for this module (amend to show if written from scratch or merely updated). For those modules which are merely updated, the institutions responsible for the original (under the first project in 2007) should also be credited. The fact that the EC and EPO are the sole funders of the current activity should be mentioned. For information the partners in the first project ( ) were: European Patent Office Hungarian Patent Office Portuguese Patent & TM Office National Board of Patents and Registration of Finland Spanish Patent Office INPI, France State IP Office of Croatia Turkish Patent Office Danish Patent Office European Business and Innovation Centres Network CRP Henri Tudor, Luxembourg FUNDITEC, Spain IWT - Flanders Fraunhofer TEG IEEPI, Strasbourg METU - Technopolis, Turkey Fundación EOI, Spain Universidad Politécnica de Madrid University of Alicante

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. The need for the disclaimer is obvious. A trainer can add a bit of humour here by saying: "This seminar is not intended to make anyone into an IP expert. We are not training you to become patent attorneys! Rather, please think of this course as "intellectual property First Aid". And what is the purpose of First Aid? - "To keep the patient alive long enough for professional help to arrive." that is what we hope to achieve with you - to make you IP paramedics. When clients come to you with a business issue, we hope you will know enough about IP to be able to spot an IP problem or opportunity which the client has missed, and prevent them from making the situation worse, whilst referring them to appropriate legal advisors.

Schedule Introduction to counterfeiting and piracy Economic Impact
Legal protection Criminal and Civil rights How to protect your business Trademark watching orders 5-8 min for this section, it can be expanded depending on the audience and the addition of the hidden slides.

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. Descriptions for the purpose of illustration: Counterfeiting involves intellectual property theft - examples are infringement of trademarks, trade names, design rights. Piracy is also intellectual property theft - examples are infringement of copyright and trademarks. Broadly: The basic differences between the terms Piracy and Counterfeiting concern whether the exact copy of something is made, for example copying music, software, words, diagrams and films etc. Counterfeiting concerns making an imitation of a product, so that it looks similar, but if you take the example of counterfeit money, one can see that the product is not an exact copy of the original, but has the look and feel of the original. Under English law, the term Counterfeiting only refers to specific cases of trademark infringement, but in practice a broader meaning is applied and is comparable with the German term “Produktpiraterie” and the French term “contrefaçon”, which both cover a broader range of intellectual property right infringement (CLARK, Andrew (1997), Enforcement of Intellectual Property Rights, University of Warwick, United Kingdom.) Specifically: The TRIPS agreement Article 51. Footnote 14 gives the definitions as: “Counterfeit trademark goods” shall mean any goods, including packaging, bearing without authorization a trademark which is identical to the trademark validly registered in respect of such goods, or which cannot be distinguished in this essential aspect from such a trademark, and which thereby infringes the rights of the owner of the trademark in question under the law of the country of importation. “Pirated copyright goods” shall mean any goods which are copies made without the consent of the right holder or person duly authorized by the right holder in the country of production and which are made directly or indirectly from an article where the making of that copy would have constituted an infringement of a copyright or a related right under the law of the country of importation. Common elements of the agreed definition: Use of identity or close similarity to protected IP Unauthorized use of the IP Infringement of the IP in the country of importation International Trade or distribution of the IP. Both Piracy and Counterfeiting are against the law, and there are both civil and criminal actions that can be brought against the infringers.

Sub-Categories of Counterfeiting
Non-deceptive The consumer can distinguish the counterfeit item from branded goods at the time of purchase. Generally the counterfeited item is sold at a significant discount. Deceptive The consumer believes the counterfeit item to be authentic at the time of purchase. Generally the counterfeit item is sold at a similar price as the authentic product. Non-deceptive counterfeiting does not try to pretend that the goods are authentic. They look similar and are sold at a significant discount. Deceptive counterfeiting has to infiltrate the supply chain of the authentic goods. For example – fake auto-parts found in a legitimate garage, or fake pharmaceutical products found in legitimate chemist shops. The supply chain is the system of organisations, people, technology, activities, information and other resources involved in moving a product or service from a supplier to their customer.

Examples of Infringement
Applying a trademark without the authorization of the rights holder to a product that is not manufactured by the company that holds the trademark; Manufacturing a doll or toy that represents a popular television, movie or comic book character without the authorization of the rights holder; or Making copies of a DVD or CD without the authorization of the copyright owner. Over the past ten years the sudden increase in intellectual property crime (counterfeiting and piracy) has created one of the biggest problems facing many businesses around the world. Technology and communications are readily available, which has meant that IP crime has spread from cottage industries producing poor-quality, counterfeit fashion accessories and goods, to massive manufacturing plants that can produce cheap copies of everything from home-entertainment products and electrical appliances to medicines, car parts and household goods. Sometimes, these cheap copies can be very dangerous.

Counterfeiting has become a sophisticated international criminal activity.
Particularly with the advent of the internet, digital scanning, copying and printing. The internet also provides an easier environment for the counterfeiter as the origin of the counterfeit products can be hidden, items can be sent directly to the purchaser with less bulk transport, and the country of origin of the counterfeit items can be diverse. The internet facilitates criminal activity in two ways: File-sharing enables pirated © material (music, video, software) to circulate more freely. On-line retailers can sell counterfeit goods (software, pharmaceuticals) with impunity, often outside of the jurisdiction of enforcement agencies. on-line retailers: A commonly raised question is “Please specify which country’s law is the one applying in case of goods sold through the internet.” e.g. the product is made in a third country, offered through the web operated by a third party host - Right of Origin prevails in most of civil law.

Legal protection Criminal and civil rights How to protect your business Trademark watching orders Depending on whether the full slide set is used, this section will take 8-15 mins. If all of the slides are shown, then the times increase.

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 Reasons for the upsurge in counterfeiting activity. Opening up of new trade borders. Internet makes the whole counterfeiting and piracy industries easier to operate and hide. (see previous hidden slide 7 for longer explanation) Example: If a criminal has 500g of heroin he will go to prison. If a criminal has 500 pairs of fake Nike trainers, he might only get a fine and the trainers might be more profitable (50 € per pair = 25k €).

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 Electrical supplies Personal care products The report, entitled ‘The Counterfeiting Superhighway’, claims that 62% of medicines purchased online are fake or sub-standard, including drugs for heart disease, lung disease, mental health and neurological disorders. Online fakes discovered over the year included aircraft spares. Mark Monitor’s 2008 Brand Jacking Index discovered Counterfeit airline parts on sale at both business-to-business and popular online consumer auction sites. They included valves, gears, flanges, gauges and radar parts. the Norwegian Convair 580 airplane crash that occurred in 1989 due to counterfeited bolts: 50 passengers and 5 crew died as the plane crashed just off the coast of Denmark. Partnair flight 394 – 8th September 1989 – a chartered Convair aircraft was en-route from Oslo Fornebu, Norway, to Hamburg, West Germany. The passengers consisted of many of the head office staff from the shipping company Wilhalmsen Lines. They were flying to Hamburg for the launching ceremony of a new ship. One of the main generators was not working prior to flight, however, the auxiliary power unit (APU) was selected to provide one of the 2 power sources necessary for flight. The pilot did not know that one of the APU mounts was broken, providing a source of vibration. During the flights, the APU mount started to vibrate and with weak counterfeit bolts in the tail of the aircraft resonant vibration occurred. The aeroplane’s rudder then jammed to the left and the shroud doors broke off. The aircraft rolled and the tail broke off, the rest of the aircraft broke up in the air, over the North Sea. It was concluded that 3 out of 4 of the bolts securing the tail section were counterfeit and only 60 % as strong as authentic bolts. As a result of the accident, safeguarding against counterfeiting increased. Reviews into the spare parts for aeroplanes, revealed that up 39 % of the parts were counterfeit mainly due to lack of regulation. The authentication tags on aircraft parts were also counterfeit and in some cases worth more than the parts themselves. Anything that can make money, especially if profit margins are large e.g. razor blades

Counterfeit Counterfeiting is a problem for all companies large and small. Material legal requirements to repackage medicines with safety & usage instructions in the local language, plus re-branding by the manufacturer in different countries, only add to the problem. The same legitimate medicine can appear in a variety of packages in different countries, so enforcement officials can easily be deceived as to what is genuine and what is fake. Counterfeit medicines are part of the broader phenomenon of substandard pharmaceuticals. The difference is that they are deliberately and fraudulently mislabelled with respect to identity and/or source. Counterfeiting can apply to both branded and generic products and counterfeit medicines may include products with the correct ingredients but fake packaging, with the wrong ingredients, without active ingredients or with insufficient active ingredients.

Magnitude EU customs officials carried out 49,331 procedures and intercepted 178 million counterfeited and pirated articles. Increase of 126 % from 2007 Almost double the figures recorded for 2007. OECD (2008), The Economic Impact of Counterfeiting and Piracy, OECD, Paris. Report on EU Customs Enforcement of Intellectual Property Rights 2008 – DG Taxation and Customs Union. (An update on the 2008 report has been produced, but the data concerns digital piracy only.) OECD (2008) The Economic Impact of Counterfeiting and Piracy, OECD, Paris.

Economic costs 2007 – USD 200 billion 2008 – USD 250 billion
This does not include domestic production and consumption, or the volume of pirated digital products being distributed by the internet. OECD – Organisation for economic co-operation and development. This is equivalent to 1.95 % of world trade in 2007. A caveat: Estimating costs for this criminal activity is very hard. A report titled "counting counterfeiters" a decade ago discussed the folly of assuming that a $ 10 fake Rolex watch is worth $ 10,000 in lost sales to Rolex. The person who buys a fake Rolex was never a genuine Rolex customer anyway. OECD (2008) The Economic Impact of Counterfeiting and Piracy, OECD, Paris.

EU Customs Statistics Articles seized by type of product – 2007
Cigarettes, clothes and accessories are the commodities that have the largest seizures by customs within the EU. However, worryingly personal care products and medicine fakes are on the increase. Articles seized by type of product – 2007 OECD (2008)

Origin or provenance of seized goods
By far the largest percentage of seized goods comes from China at nearly 58 % reported in the 2008 OECD report. OECD (2008)

Hubs of counterfeiting
Asia is the largest source of counterfeited and pirated products China accounted for 54 % of infringing articles Indonesia - foodstuffs and beverages United Arab Emirates - Cigarettes India -medicines The Internet has caused the largest increase in pirated and counterfeit goods trade as business is anonymous and the relevant laws and jurisdictions are unclear. Development of effective collaboration with customs in China is a fundamental component of the EU’s commitment towards international cooperation in this field. Agreement was reached with China to develop a customs action plan on IPR enforcement, the terms of which were developed and finalized before the end of – Plan was signed on 30th Jan 2009. The plan concentrates on 4 key areas: Exchange of statistical information Creation of customs experts in key ports Enhancement cooperation with other enforcement administrations Development of partnership with business communities. The internet means that smaller quantities are being shipped directly to the consumer, which makes the identification of the suspect goods more difficult. Cigarettes, CD/DVD and clothing are commodities that are shipped in larger quantities, therefore can be more easily identified and intercepted.

Type of transport used for articles seized
Consistently the largest number of goods were seized from air transport. However, postal and road deliveries pose large problems also. Express delivery is multi-modal. This means that there are links between various modes of transport, rather than a particular mode of delivery. OECD (2008)

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. It is obvious that Industry world-wide loses large amounts of revenue to counterfeiters. This comes in forms other than purely financial. For example, there are reputational considerations, and brand erosion due to loss of confidence from the consumer. The whole industry sector can take a hit if the perception of it is poor, and corrupt. The ultimate victims of unfair competition are the consumers. They receive poor-quality goods at an excessive price and may be exposed to health and safety dangers. Governments also lose out on unpaid tax and incur large costs in enforcing intellectual property rights. There is also an increasing concern that counterfeiting is related to other criminal activities, such as trade in narcotics, money laundering and terrorism. All of these consequences lead to market destabilisation and a decline in investment. There are also wider cultural consequences to the erosion of brand value and consumer confidence, these are a dis-incentive to engage in creative work and a reduction in the innovation environment.

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. It is important for companies to engage in the process of the defence of their intellectual property rights (IPR). The IPR of a company are the tangible intellectual commodity that can be traded and sold, as well as conferring the legal right to hold and protect that asset. IPR has been extended to protect business in the form of not just an idea and product, but also in the protection of brand and design. This in turn adds together to define a company and provide value. As such IPR is a tangible asset of a company that requires vigilant policing. Companies are globally connected particularly due to the internet and other global communications and distribution networks. This benefit is also a weakness, since even as these systems can be used to promote companies and products, bad news can also be spread quickly. Global brands offer a guarantee of quality and the brand itself can confer prestige. All of this creates an incentive for counterfeiting particularly but may also be applied to piracy. There is also the argument that if a company has a reputation for being vigilant with respect to IPR, then it becomes a less obvious target. Therefore it is important to pursue the protection of the company IPR to ensure that the IPR has continued value and that the company is not damaged by lax policing.

Legal protection Criminal and civil rights How to protect your business Trademark watching orders This section should take mins, depending on the audience.

Legal Protection Intellectual property law is the least harmonised at international level There have been significant initiatives to promote cross border compliance and regulation IP laws are territorial in scope. This is relevant to the question of infringement. Not all civil wrongs qualify as criminal offences, there are civil actions that can and should be taken either instead of criminal or as well as. Legal advice should be sought in this regard to bring a lawsuit.

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” Some of the issues concerning counterfeiting and piracy lie in the fact that the magnitude of the issue has not be clearly defined until relatively recently. Until health and safety is affected, the problem may go un-noticed or trivialised. After all, where is the harm of buying a knock-off handbag or watch? People are much more likely to think twice about buying knock-off pharmaceutics, or machine parts, as this involves their health and safety. The ethical dynamic changes as there is a direct threat to the individual of those around them. As the new types of counterfeiting and piracy are discovered, a series of training, public awareness and enforcement needs to take place. For example, of the general public, how many know about the dangers of buying fake products? Probably not that many. As the internet becomes more widely accessible to the general public and perhaps the less aware sectors of society, educational awareness is going to be important to try to control counterfeiting. However, this has to progress hand in hand with criminal enforcement and the development of legislation to keep up with the sophisticated nature of modern counterfeiting. Legislation > Training > Public Awareness > Criminal Enforcement

Policy discourse across borders
Rapid global economic growth of middle income countries – China and India Counterfeiting and piracy perceived to have reached unprecedented levels Concerns about IPR counterfeiting and violations are not new. Two developments have sharpened policy discourse across borders recently. Rapid global economic growth of middle income countries led by China and India. They see counterfeiting as a constraint on their ability to expand sales. As cheap labour countries undergo economic growth, the ability to expand sales through legitimate routes becomes more important to continued growth, i.e. as the country’s engagement matures, their economic growth becomes threatened by the emerging cheaper-labour markets. Hence they become more interested in protecting against counterfeiting. 2) Infringements of intellectual property rights appear to be increasingly linked to organised crime. Increasing use of the Internet enables pirated products to be distributed instantly around the globe. Statistics recorded at the external borders of the EU The latest Customs statistics published by the European Commission show that counterfeiting and piracy continue to be an alarming threat in Europe. Cosmetics, personal care products, medicines and other goods that can seriously damage the health of consumers continue to be faked in large quantities. The high quality of fakes often makes identification impossible without technical expertise. It poses a challenge and threat to: Society: the immediate impact on trade is 1) the loss of sales this then has an impact on employment. 2) A large number of jobs are lost as a result of counterfeiting and this in turn causes a 3) destabilisation of the markets e.g. textile and clothing. 4) A damaging effect on public healthy and safety products may also occur depending on the counterfeit product. 5) An adverse effect on public security when profits from this trade are appropriated by organised crime, which may use them as a means of 6) recycling and laundering the proceeds of other unlawful activities. Industries: 1) Loss of sales, 2) competitive disadvantage against those enterprises that free-ride on the research and development and 3) marketing expenses of legitimate enterprises, 4) possible loss of product liability and loss of goodwill. Enforcement – expensive and difficult to deal with (but you will get a better picture of it here today!), will harm innovative industries and make them think if it is worth working with innovation. Consumers: Risk of not knowing the quality and/or risk of the product your are buying (medicinal products, medical equipment, toys and spare parts for cars and aeroplanes). Both luxury and daily consumer goods are counterfeited. There is a tendency to underestimate the consequences of infringing IP rights. The constant infringement of IPR and weak enforcement thereof may easily devalue assets such as for example a patent. This can lead to a society where the important breakthroughs and discoveries are kept as business secrets instead of using the patent system where the inventor is given an exclusive right in return of making the invention open to the public. There are serious damages and far-reaching consequences to society, industry and consumers. Businesses can change this with a much more intense focus on enforcement. Both the nature of enforcement in itself but also by being active with it. Combating Strategic Counterfeiters in Licit and Illicit supply Chains . (2009) Cho SH, Fang X, Tayur S. Tepper school of Business. Paper 482.

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 "piracy" it is a criminal and civil infringement of copyright (e.g. pirated DVDs). - "counterfeiting" it is a criminal and civil infringement of trade marks (e.g. counterfeit Rolex watches) there are some international conventions and treaties to which all Member States are parties and which also contain provisions on the means of enforcing intellectual property rights. These are in particular: The Paris Convention for the Protection of Industrial Property, (one of the first intellectual property treaties). The convention priority right was also established by this treaty, this means that a party from one contracting state may use the priority filing date for a patent in another contracting state so long as it filed within a set time period. The Berne Convention for the Protection of Literary and Artistic Works, (Oldest international agreement in the field of copyright 1886, although revised regularly.) It covers literary and artistic works and describes that signatories to the treaty recognise and apply copyright law of their own countries to works from other signatory countries. The Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations. Again this international convention provides protection of IPR across member states.

Criminal Sanctions A number of countries have introduced criminal sanctions for piracy and counterfeiting. Article 61 of the TRIPS Agreement requires criminal procedures and penalties for cases of wilful trademark counterfeiting or copyright piracy on a commercial scale. A number of countries provide for both civil remedies and criminal penalties in relation to piracy and counterfeiting, as well as for the seizure, forfeiture and destruction of the infringing goods and of any materials and implements that have been used primarily to commit the offence. The willingness of member states to enforce IPR protection within their borders is an important step forward in trying to protect an important company asset. The harmonisation of the understanding and engagement in this sector helps to protect businesses in the necessary global activities.

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 Remind audience that the Treaty of Rome, 1957, which established the EU, was set-up to guarantee only 3 things: Freedom of movement for workers Freedom of movement for goods Freedom of movement for services Therefore, the EU & the European Parliament are not well-placed to harmonise criminal law. The corrective measures (article 10) show no attempt to specify or harmonise sanctions - these are outside EU competence. European regulations have a direct effect upon national states without the state having to pass national legislation. According to Article 189 of the Treaty of Rome, every country has to accept the same definition. There is no room to allow Member States the freedom to interpret the ruling in different ways. European directives require the member states to alter their laws in harmony with the standard directive. A directive allows Member States the opportunity to adjust legal text to national peculiarities or simply to make sure that it fits the national legislation of Member States. The judicial authorities (article 9 Enforcement Directive 2004/48) - may issue an interlocutory injunction intended to prevent any imminent infringement of an IP right, or to forbid, the continuation of the alleged infringements of that right, or to make such continuation subject to the lodging of guarantees intended to ensure the compensation of the right holder - order the seizure or delivery up of the goods suspected of infringing an IP right so as to prevent their entry into or movement within the channels of commerce. - may order the precautionary seizure of the movable and immovable property of the alleged infringer, including the blocking of his/her bank accounts and other assets. - have the authority to require the applicant to provide any reasonably available evidence in order to satisfy themselves with a sufficient degree of certainty that the applicant is the right holder and that the applicant's right is being infringed, or that such infringement is imminent. Corrective measures (article 10) the competent judicial authorities may order, at the request of the applicant, (i.e. the applicant for the injunction namely the rights owner.) (a) recall from the channels of commerce; (b) definitive removal from the channels of commerce; or (c) destruction. Those measures shall be carried out at the expense of the infringer, unless particular reasons are invoked for not doing so. The need for proportionality between the seriousness of the infringement and the remedies ordered as well as the interests of third parties shall be taken into account. The objective of the directive has been to harmonise the mechanisms for enforcement but it does not harmonise the criminal sanctions. ip4inno

TRIPS Agreement. Trade Related Aspects of Intellectual Property Rights (TRIPs) Agreement sets out minimum levels of standards concerning intellectual property rights. In Europe this means that businesses know across borders what their rights are However, sanctions on criminal activities are not harmonised so businesses need to take advice in different jurisdictions TRIPS – Trade related aspects of intellectual property rights All EU Member States, as well as the Community itself as regards matters within its competence, are bound by The Agreement on trade-related aspects of intellectual property (the TRIPS Agreement) that contains provisions on the means of enforcing intellectual property rights, which are common standards applicable at international level and implemented by all Member States. The main outcome of the TRIPS agreement is that across Europe businesses have a have one set of minimum standards of legal protection, however the sanctions on the criminal activities are not harmonised. Basically this means that companies/individuals are protected concerning their IPR, but the reparation/sentences/consequences will vary across states. More detail about specific provisions below: TRIPS Agreement, approved, as part of the multilateral negotiations of the Uruguay Round, by Council Decision 94/800/EC(3) and concluded in the framework of the World Trade Organisation. The EU has particular provisions for the enforcement of rights and on exceptions in the domain of copyright and related rights set out in the: Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs and in Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society(8). Finally the recent EU enforcement directive which had to be implemented before end of April 2006 covers the civil procedure aspects of enforcement. e.g. E.P.C stops at grant & opposition. No unity for enforcement in national courts. In this connection it has to be mentioned that there are ongoing negotiations in the European Union about drafting a directive on the criminal enforcement of IP rights and common standards for sentences.

UK IPR holder - Customs action at the UK border only – in which case, complete a National Intellectual Property Rights Application or Community Intellectual Property Right holder and you want Customs action in two or more Member States of the EU, complete a Community Intellectual Property Rights Application Slide is optional depending on the audience. In the UK, if you hold an intellectual property (IP) right you can apply for: National Intellectual Property Rights Application, then supply information concerning a description of the goods for recognition, specific information concerning the type or pattern of fraud, and the name and contact details of technical expert appointed. You must also provide proof that you hold the relevant rights, in particular: for registered trade marks or design rights – proof of registration with the relevant office; for copyright, rights in a performance or design rights – evidence of authorship or status as holder; for patents and SPCs – proof that the patent or SPC has been granted and is in force; Evidence of the right to exercise plant variety, designation of origin or geographical indication or geographical designation rights. Community IPR applications list the Member State(s) in which action is required to be taken, as well as contact details for the right-holder in each Member State concerned. Also required are proof of your authority to use the right and proof of your authority to act for the right-holder or authorised user. UK - The following link to the HM Revenue & Customs website provides comprehensive information, which is needed when filing an Application for customs action at a UK border.

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. EU Owners of a Community Intellectual Property Right may use the “Community application”. With this application, the applicant requests assistance by the customs authorities of the Member State in which it is lodged and assistance by the customs authorities of one or more other Member States. The advantage for right holders is that the decision taken in the Member State in which the application is lodged, has the same legal effects in all other requested Member States. For details on the application procedure of Community applications see: This webpage provides a manual for applications for customs action either by way of a national Application in one EU Member State or a Community Application. The manual also provides website details for each of the customs authorities in each EU Member State, should you only wish to file a national Application. The manual is a very comprehensive tool. The website has additional forms for important and urgent matters, red alerts and new trends. The more information you can collect regarding the IPR issues, the better able the border agencies can react. The webpage also provides detailed information concerning who to send the completed form to in each country.

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 EU customs has the power to act ex-officio if there is a suspicion of an IPR infingement. In such cases, customs have to locate the right holder and an application submitted within 3 working days in order for customs to be able to detain or suspend the release of the goods. Despite the constant rise in applications, 20 % of customs actions in 2008 were initiated ex-officio i.e. act on its own initiative rather than at the request of the rights owner. Fake goods may be detected by normal monitoring activities at the border agency. There are constant alerts provided across borders, there is increasing information flow between the rights holder, the manufacturer and the border agencies. There is also monitoring of websites selling the fake goods online. There are updates concerning the correct packaging and what may distinguish the fake from the real article. Even where the goods are coming from can cause a fake to be identified. Once the fake goods are identified, the rights holder is informed and can take the decision concerning any action they wish to take, the goods are then destroyed.

Legal protection Criminal and civil rights How to protect your business Trademark watching orders 15 mins

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-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 Civil/Criminal cases Civil/Criminal sanctions with Trade Marks: if a third party is found to infringe registered Trade Mark rights, the Trade Mark owner can look to take action against the infringer on a civil and criminal basis. The main difference between the types of action is the burden of proof required to show guilt and the remedies available. In a criminal action, you need to prove beyond all reasonable doubt that the infringer is guilty. In a civil action, it is necessary to show on the balance of probabilities that the defendant is guilty of infringement (which is easier than proving beyond all reasonable doubt). please note we are not lawyers giving legal advice, all cases should be assessed on a case by case basis with proper legal representation. Penalties available in a civil case are an account of profit i.e. the profits attributable to the unauthorised use of the Trade Mark are paid over) or damages i.e. compensation for all reasonably foreseeable losses suffered as a result of the infringement. This may be assessed as lost royalty or licence fee and/or lost profits on the sales made by the defendant or lost profits from an enforced price reduction or recover damages for injury to reputation. The general principle is that the Trade Mark owner should be put in the same position as if the infringement had not happened. If the infringer has caused no loss of sales to the IP rights owner, because they were selling into a market where the IP rights owner was not active then it is hard to prove any damage to the rights owner's own sales. In this situation better go for an account of profits.

Counterfeiting Piracy
Offences Registered Trade Mark Copyright Remedies Burden of proof CIVIL LAW or COMMON LAW Private prosecution by IP owner 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 Account of profits Injunctions Balance of probabilities CRIMINAL Public prosecution by the state E.g. Unauthorised application of the Nike ® logo to 1000s of T-shirts for street markets. Counterfeiting E.g. Printing 1000s of DVDs and CDs with illegal copies of movies, games, music & software, for street markets. Piracy Fines Prison Beyond reasonable doubt Trade mark and copyright infringements can be handled under the civil (or common) law, or under criminal law, depending on the nature of the infringement. This slide explains the key differences. Perhaps invite the audience to suggest what sorts of activities fall within the scope of civil infringement, and which others might be subject to criminal sanctions. Once you have collected some examples for each four (perhaps on a flipchart) move on to explain or reinforce in more detail. Please note that they are the same, a rights holder can undertake civil proceedings at the same time as criminal proceedings occur for the same offence. The main reason for choosing one above the other is that Civil proceedings deals with reparation for the company/rights holder, and the criminal case tends to be brought to make an example of the infringer. Companies tend to be more interested in reparation or remedies, government tends to be more interested in prevention . Please note that we are not giving legal advice, and when deciding on any legal action, proper legal advice should be sought! Civil or criminal cases can be brought for similar issues. What needs to be considered are the remedies and the burden of proof required. In the civil case, the burden of proof is a balance of probabilities, whereas for the criminal case, there has to be proof beyond reasonable doubt, therefore the bar is set higher. Balance of probabilities – civil trial, one party’s case need only be more probable than the other. In the rare case where each party is equally probable, the balance tips in favour of the defendant, as it is up to the Plaintiff who initiates the legal proceedings to prove that the defendant has acted improperly. Beyond reasonable doubt – criminal trial, is the highest standard of proof that must be met . This means that the prosecutors evidence shows that no other logical explanation can be derived from the facts presented, except that the defendant committed the crime, hence ‘beyond reasonable doubt’. The higher burden of proof in the criminal case is largely due to the fact the proceedings can result in harsh, personal effects such as loss of liberty. In each case civil or criminal action can be taken depending on the evidence and the Holder’s requirements. Example 1 = Producing goods covered under third party Trade Mark and applying a similar Mark to the goods. Criminal proceedings may be taken particularly if there is a health and safety aspect to the case. For example fake Autoparts. Civil proceedings may be taken by the rights holder to protect reputation and brand and recoup financially. Example 2 = Not having the correct licence to use the copyrighted material in a specified circumstance. It is possible to take civil and criminal proceedings at the same time, there are some risks with this strategy, in that if one case is heard and judged on prior to the other, then the results of that case can be made known. EXAMPLES Example: RTM (civil) = Branding your tyre company "Lotus", when this is an RTM belonging to a car manufacturer, such that your tyre company's name will form a misleading connection in the minds of consumers. The Lotus Car Company would sue, but the Police would not get involved. This is NOT counterfeiting. Example: Copyright (civil) = Using photos supplied by an agency, licensed for use in a brochure, but in a further unlicensed context (e.g. put on the company website) - for this an extra fee must be paid. Another example would be buying some software on CD (e.g. Microsoft Office) for home use, but then installing it on all 50 computers in your business: for this you would need a business licence. Again, in this case the IP owner would sue, the Police would not get involved. This is NOT piracy. Example: RTM (criminal) = Counterfeiting = Falsely branding thousands of T-shirts with the Nike® logo, for sale in street markets, or possibly covertly introducing them into legitimate supply & retail channels. This would be a public prosecution by Police or Customs. Example: Copyright (criminal) = Piracy = Unauthorised printing of thousands of DVDs or CDs with movies, music, computer games or software on them for sale in street markets or over the internet. This would be a public prosecution by Police or Customs. 34

Counterfeiting Piracy
Offences Registered Trade Mark Copyright Remedies Burden of proof CIVIL LAW or COMMON LAW Private prosecution by IP owner 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 Account of profits Injunctions Balance of probabilities CRIMINAL Public prosecution by the state E.g. Unauthorised application of the Nike ® logo to 1000s of T-shirts for street markets. Counterfeiting E.g. Printing 1000s of DVDs and CDs with illegal copies of movies, games, music & software, for street markets. Piracy Fines Prison Beyond reasonable doubt Other key differences are these: Under civil or common law it is the IP owner who must prosecute. There, remedies are injunctions and/or an "account of profits" or damages (compensation for the harm done). The threshold for proving guilt is "balance of probabilities". Under the criminal law it is the State which prosecutes (Police, Customs, Trading Standards Officers get involved). If guilty the offender can be sent to prison and/or fined (a financial penalty, possibly in excess of the real harm done). The burden of proof for a conviction is higher than that for a civil or common law case: guilt must be established "beyond reasonable doubt" - which is a higher threshold than in a civil/common law case. [If an audience struggles with this concept of "Burden of proof" refer them to the celebrated trial of O.J. Simpson for the murder of his wife Nicole Brown Simpson. Although the jury in the criminal murder trial (1995) did not find the evidence so compelling as to convict O.J. Simpson of murder "beyond reasonable doubt", a subsequent (1997) private prosecution (common law) by his wife's family for her "wrongful death" succeeded in establishing guilt "on the balance of probabilities" and so they were able to claim damages for the death of Nicole. 35

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. Law Enforcement Agencies only get involved in criminal enforcement not civil enforcement. Example: One business fails to pay another for goods delivered. This would be a business-to-business dispute, a breach of contract, resolved through the civil courts. The police would not get involved.

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 International level (UN – Initiatives in order to tighten cooperation between law enforcers and private entities, including industry. Promote codes of conduct for relevant professions, in particular lawyers, notaries public, tax consultants and accountants. (WIPO – Specialized agency of UN system which is concerned with the use and protection of intellectual property Inter-Governmental level (WTO – Dealing with rules of trade between nations. Signature and implementation of the TRIPS Agreement is a membership obligation for WTO Member States. Art 69 of the TRIPs Agreement contains agreement on the part of Members that ‘they will cooperate with each other with at view to eliminating international trade in goods infringing intellectual property rights’. (WCO – IPR issues play a considerably and increasing role in the work of Customs Administrations and for customs officers all over the world. Interpol - ( has identified counterfeiting and piracy as an enforcement priority. Training, Best Practices, Information Exchange/databases, Contact Points and Public Awareness. Regional level - European Commission – ( initiatives in 1998 Green Paper on Combating Counterfeiting and Piracy in the Single Market => Action Plan on 30 November 2000 => Directive 2004/48/EC ‘Harmonizing the enforcement of IP rights within the Community‘. National level A number of Member States have established coordinating or taskforce units involving the relevant ministries and agencies, such as the patent and trade mark offices, customs, police, justice and culture. Other stands for associations of right holders, copyright societies, medicine control agencies and trading standard authorities as well as leading manufacturing, retail and consumer organizations. ip4inno

Trade/sector IP enforcement bodies
FACT - Trading Standards - Intellectual Property Awareness Network (IPAN) - Alliance Against IP Theft - Anti-Copying in Design (ACID) - The Anti-Counterfeiting Group (ACG) - Association of the British Pharmaceutical Industry (ABPI) - Bournemouth University: Centre for Intellectual Property & Management - British Brands Group - British Library - British Jewellery and Giftware Federation - British Society of Plant Breeders - Federation Against Software Theft (FAST) - Federation of Small Businesses (FSB) - Ideas Inngot Limited - Innovate Design - International Chamber of Commerce - Own-it - Publishers Licensing Society (PLS) - Royal Society of Chemistry (RSC) - Trevor Baylis Brands plc - The trade/sector IP enforcement bodies too, e.g. the Anti-Counterfeiting Group, the Alliance, FACT, FAST, BSA etc. Also the initiative of "Messe Frankfurt Against copying" etc Protection against brand and product piracy - taken from website above. In 2006, Messe Frankfurt became the first trade fair organiser worldwide to launch an initiative against brand and product piracy: “Messe Frankfurt against Copying”. This initiative aims to ensure that exhibitors and visitors are fully informed about the registration and assertion of intellectual property rights. Messe Frankfurt works in close cooperation with official bodies and private organisations in the field of protection of intellectual property rights for all activities associated with its initiative. Thanks to our partners’ experts, exhibitors and visitors are able to find out at first hand how they can register and assert their intellectual property rights. In urgent cases, Messe Frankfurt arranges for legal support, and an on-site emergency legal service offers exhibitors free initial advice during the fairs. The success of “Messe Frankfurt against Copying” has been striking: more than 15,000 customers have benefited from the information on offer since the initiative was launched. The number of products seized by customs has fallen significantly – by as much as 95 percent at individual fairs. You will find a compact overview of everything you need to know in our brochure “Protection against brand and product piracy”. Also link to European Counterfeiting and Piracy Observatory. To encourage greater collaboration the European Commission has created the European Observatory on Counterfeiting and Piracy which serves as a platform to join forces, to exchange experiences and information and to share best practices on enforcement. The Observatory also functions as a central resource for gathering, monitoring and reporting crucial information that will improve our knowledge about the dangerous phenomenon of counterfeiting and piracy, and will allow us to target our enforcement resources.

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 These are additional sources of information produced by the European Commission and intergovernmental/international organisations. For example the World Health Authority provides information on counterfeit medicines which includes guidelines for the development of measures to combat counterfeit drugs whose use poses a serious threat to health as well as damaging businesses.

Doing Business in China
Trade Mark Registration Trade Fairs Patents Copyright Case Study section Helpdesk publications This website provides fairly comprehensive information concerning what to do to protect your IPR in China. There are case studies and help desk type information as well as newly developed e-modules to help you. The main advice is to prepare well in advance of attending any trade fairs or starting to do business in China. Make sure that you are aware of what is going on at the fair, and make sure that you have all of your rights correctly lodged and recorded. Make sure that you know what is required of you prior to attending. Make sure that you are aware of how to act to safeguard your IPR before starting. Ensure that any information you will need to prove your right to the IPR is up to date and accessible easily. Make sure that you are able to act quickly

Legal protection Criminal and civil rights How to protect your business Trademark watching orders 20 – 30 min.

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 Lenovo (Beijing, China) group was established in 1984 when China started its economic reform. Currently it is the number 1 personal computer company in China, with a 10 % share of the global market. Company rapidly expanded with acquisition of IBM’s PC business and has become one of the fastest growing suppliers of PC’s in the world. End 2009 annual sales reached $16.6 billion. Lenovo’s brand became the focus of counterfeiting attack across a broad range of its products Hard drives, USB flash drives, mouse/keyboards, printer materials and PC bags. Several anti-counterfeiting solutions were implemented, but these were quickly compromised. – security label with colour shifting ink and digital coding. Effects – low quality and potentially dangerous electronic equipment and decreased customer confidence. Lenovo asked DuPont anti-counterfeiting solutions department for a solution. Solution – 3D hologram image with easily identified security features on each side view. However, this kind of measure is best brought in early in the products lifecycle such that it becomes synonymous with the brand and the product. Customers must know what to look out for to ensure they are buying the original genuine product. If this security is brought in later, a campaign of awareness needs to follow for suppliers and consumers.

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. Incorporate your thoughts on counterfeiting into your business strategy and planning Develop knowledge and understanding of any possible weaknesses within your company’s business model. Plans for moving the production and other development activities should involve plans for avoiding counterfeiting of the company’s products. Identify points of risks in production and implement precautionary measures to address these risks. This strategy could benefit from competencies within all departments, gaining support of the strategy throughout the organisation. It is important to consider how to meet the press and the consumers if the products are being counterfeited. Workout a particular strategy for the enforcement of the company’s rights in case of infringement. In this way, the company is prepared to act swiftly. Include clear guidelines in the plan for dealing with counterfeiting and provide for necessary resources for the task. It is impossible to outline the best strategy for dealing with counterfeiting to cover all situations. For one company a zero tolerance approach is the best solution. For others, it is better to follow a strategy of settlement. Some companies choose not to react to counterfeiting at all, e.g. as a result of cost-benefit analyses. This latter approach however, is probably not sustainable in the long-term. It may also be risky for a company to close its eyes and hope the problems will go away by themselves If you fail to take serious action against infringers, then your retailers or licensees may see their own sales harmed. Your inaction would then frustrate them, because they rely upon you to take action. Your retailers or licensees might then abandon your product.

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 Establishing an IP right – by registration or in an unregistered form. Maintaining IP rights – paying annuity fees or maintenance fees. Making business with IP rights – profiting from the IP right itself by for instance selling a protected product or by making licence agreements etc. Enforcement of IP rights – in case of infringement of the IP right; for instance a competitor in the market starts to produce a protected good – a.k.a. Counterfeiting and Piracy. Enforcement of an IP right is an immediate need whenever an infringement occurs if the proprietor wants to uphold his exclusive right and wants damages.

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 An IP champion should - create an up-to-date inventory; review the system of checks for protecting IP; perform risk assessments and prioritise any protection needs they identify; raise and maintain awareness of issues relating to IP; find information about the security of possible business partners, distributors and retailers; build secure working relationships in and outside the business; be the main contact for reporting infringements; make sure there are nominated IP contacts at all business levels; and identify the best ways to give advice about IP. The last point is extremely important. If customs or the police stop a suspicious delivery, they need to be able to contact the rights owner immediately to get them to inspect the goods and confirm them as fake. Without this confirmation the goods must be released after 24 or 48 hours, regardless of how fake they appear.

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. Protection of trade secrets Protecting information and knowledge impedes counterfeiting of your company’s products. It becomes more difficult for counterfeiters to obtain the necessary information about the products. Trade secrets, technical knowledge as well as client information and market analyses, may be leaked through (former) employees and (potential) partners. Therefore, the number of employees and partners with access to such information should be limited. Also be aware of what information is given in marketing materials and on the Internet, because this information may be used as a model for the counterfeit products. Publicly accessible information about the products makes them easier to copy.

Confidential Information
When can confidential information leak ? Venture Partners Consultants Sub-contractors Departing staff Suppliers Marketing Team Customers Slide taken from Module 2B What are the "danger times" when a company's secrets can leak out? The list on this slide is non-exhaustive - Venture Partners - they want to know all about the company before they invest money in it, so they might know some of your secrets. But they might also be investing in other companies in the same market sector, so might tell your secrets to your rivals. - Consultants - they come into a company, learn all about its products and processes and plans - make comments and advice, and then leave... only to then offer the same advice to another company in the same market sector. What confidential information might they disclose to other clients of theirs? - Sub-contractors - they are mercenaries with little loyalty. Brought in to do a specific task, and then they leave. Their expertise in one firm makes them attractive to be recruited by a similar company in the same market - and again confidential information can leak. - Departing staff - they often go to work in similar companies to the ones they leave. They take their general knowledge, for sure, but also very specific confidential information relative to their original employer. See the example of the Renault Formula One Team possession of secret technical data from the McLaren Team which came to them when a former McLaren employee joined Renault. - Suppliers - they are providing raw materials to a company, but also to all their rivals (because they all make the similar products). When one company begins to develop a new product, requiring different raw materials, what is stopping the supplier from gossiping to other companies about the strange new materials which are now being used? This could suggest to others what new products under development, long before they reach the shops. - Marketing Team - Their job is to boast about what new products the company is making. They will shout about all sorts of secret projects which are in planning if it will attract more business to the company. Consequently the Marketing Department should never meet the R&D Department, ever! Do not even let them mix in the canteen! (Joke!) The R&D Department has a duty to make new inventions in secret - this is completely in conflict with the role of the Marketing Department, so keep them apart. - Customers - Many product developments are the result of constructive feedback from customers. When a company is asked by a company to make some improvement to a product, care must be taken not to disclose what future plans the company has, in an attempt to impress the customer, otherwise secrets which might be patentable could be lost. 47

What can it be worth? 13 September the McLaren Formula 1 Racing Team was fined $100 million by the FIA for illegal possession of technical data from rival team Ferrari Slide taken from Module 2B Trying to judge what confidential information is worth can be difficult. But in some high profile cases it can be worth a very great deal - see how much McLaren was fined in 2007 by the FIA for having Ferrari's technical secrets at their disposal. They also lost all the points they has earned in the constructors championship (which at that time they were leading), and the Italian authorities are pursuing a criminal investigation against five people too. When it comes to valuing a patent, one technique (out of several) considers what the technology would cost the company if, instead of owning it, they had to buy it in under a licence. Similarly, in judging what any information might be worth to a company, it is worth estimating what competitive advantage they would lose if the information was in the hands of their rivals. Once an SME begins to see their secrets in these economic terms, they quickly accept that the topics of this module are highly relevant. And on top of that, Soft IP contradict the usual ideas SMEs have against IP, which are that it is complex and is very expensive. Note that in December 2007 the Renault Formula One Team was found guilty for the possession of secret McLaren technical data, this had come to them from a former McLaren employee who went to work for the Renault F1 team. Renault F1 escaped penalty. Source of photo: 48

Using special Marks on the goods or packaging that are difficult to copy
Makes the product more difficult to copy Makes the product more easily identifiable as authentic to the consumer Marking the goods with tracing devices (chips) enables tracking. Using special marks on goods and packaging makes it more difficult for counterfeiters to copy the products. In addition, it becomes easier for the company and the consumers to distinguish counterfeit products from originals. Marking the goods, e.g. with small chips, makes it possible to follow the product all the way to the consumer and makes it easier to identify original products. Features such as holograms, barcodes, or two- or three-dimensional stickers can also be used. Packaging should be strong and distinctive with good quality printing and materials. Match the product, model numbers and equipment details across the packaging where possible. Counterfeiters will often put fake electrical or household products in boxes for clothing or other goods, so they can avoid getting caught or paying tax (duty). • Show the manufacturer’s contact information. • Include ‘safety guarantee’ labels on your products. Almost all products made by legitimate manufacturers should have safety-certificate labels on them. Products should where possible be designed so they cannot be easily copied. This can involve introducing parts that are more complex and hard to copy, although this can increase production costs. To prevent counterfeiting throughout the supply chain, companies are embedding Trade Marks on all key parts of their products and packaging. Parts suppliers thus may potentially be held liable for counterfeiting.

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. November 1st 2010 – In Manilla - National Bureau of Investigation confiscated 11,760 assorted fake Louis Vuitton (LV) products with a value of US$3.5 million. Counterfeiters often send counterfeit goods in plain packaging, or reuse old packaging. Cutting costs on packing and labelling is no longer an option – counterfeiters and pirates often cut their costs in these areas Incorporate Trade marks into the packaging and individual component design. Make it easier to spot the counterfeit.

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 Outsourcing and suppliers The supply chain is the system of organisations, people, technology, activities, information and other resources involved in moving a product or service from a supplier to their customer. Investigate the risks of outsourcing its production to other countries and take steps to prevent possible negative consequences. When entering a final agreement with a supplier, gather as much information as possible about the supplier. If the suppliers are not trustworthy, the company risks the misuse of production secrets. It can be relevant to find out if the supplier has been involved in counterfeiting cases before. A particular risk is unauthorised production over-runs by licensed producer. they make 5000 products according to their contract, but make a further 5000 which they sell "out of the back door" and put on the black market, thereby undercutting the legitimate delivered "out of the front door". A company may also benefit from the experience of other companies, who have worked with the particular supplier. It should also be considered whether to establish legally binding cooperation agreements stipulating terms of secrecy with suppliers. Sometimes it is a good idea to spread production and sub-supplies. This makes it more difficult for counterfeiters to copy the products. In this connection, a company may see to it that parts of products are produced in different places or different countries and only assembled in one place with extra security. Also continuous monitoring of suppliers and the entire chain of commerce is advisable. Ensure that the suppliers and distributer’s know your policies regarding piracy and counterfeiting and what you expect them to do to ensure that your supply chain is secure. Destroy or recycle your waste and damaged products. When you recycle waste, make sure that you deal with legitimate, auditable partners.

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. A product library may be a folder with a copy of all marketing materials and brochures. A store room filled with all promotional material, even T-shirts and company give-aways. The more complete your archives are, the easier it will be for you to prove infringement. The more complete your records are, the better your reputation. You will need to move quickly so make sure that all of the documentation and ‘proof’ are readily available to you. The law-enforcement authorities have limited resources, so take an active role in any investigation. Prepare and prove your case. You will be a witness and will be helping the case for the prosecution. You may need to: • show your status and your authority to act as an expert witness • examine, and give statements about the goods, to prove that they are counterfeit • prove an offence has been committed - You will be asked to prove that your IP rights are registered • Confirm that you have not given the accused person permission to use the rights. The last point is extremely important. If customs or the police stop a suspicious delivery, they need to be able to contact the rights owner immediately to get them to inspect the goods and confirm them as fake. Without this confirmation the goods must be released after 24 or 48 hours, regardless of how fake they appear.

Protect your business Engage with manufacturers and distributors
Be vigilant To combat counterfeiting and piracy you need to move quickly Assess the complexity of your supply chain. Assess the weak point in this chain, from the raw materials, manufacture and distribution. Ensure that you engage with the various businesses along the supply chain to ensure its integrity. This may take the form of tracking, labelling, packaging and other authentication processes. If all along the supply chain are vigilant, then the infiltration of the chain becomes more difficult. Information should flow between the various businesses along your supply chain to inform those involved of the issues and what is being done to address the threat. It may be worthwhile engaging further with the supply chain to trouble shoot the issues together. It is important to keep up to date with all of the issues, and be prepared to move quickly, as there are only a few places where the authorities can act to apprehend goods or find the perpetrator. Once the good have been distributed the opportunity is lost. Customs officials can keep an active watch on your behalf if you have information regarding counterfeiting, however, they require you to prove that you are entitled to act.

Monitoring counterfeiters
Employees Websites Market knowledge Supply chain knowledge Education Use your employees to detect counterfeit products – educate your workforce as to the issues of counterfeiting and the consequences. Colleagues and employees will understand the difference between patents, trade marks, registered designs and other IP rights and why they are so important. Trade secrets will be safer. Colleagues and employees will be better able to recognise when IP laws are being broken. Every employee in a business is responsible for the security of the business and for protecting its IP rights. Monitoring counterfeiters Keeping updated on the counterfeiting of products through the aid of employees in relevant areas, may give you an early warning of counterfeiting. Counterfeit products are often sold on the Internet and hence, it is advisable to monitor relevant web sites or have a professional adviser doing so, thus securing a high level of knowledge about production and distribution of illegal copies of products Make sure you know what is being sold by competitors, make sure that you know the state of the market, make sure you know where the counterfeit or pirated copies of your products or product types are being made and sold. Ensure that you know your supply chain and that you have secured it from ideas, manufacture, assembly, transit to selling and waste management.

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. Establish an anti-counterfeiting function on your company website The website should contain precise information to the consumers about how to avoid copies of your company’s products and a guide to giving information about encountered counterfeits. The website can also contain warnings about dangerous counterfeits. The way that you incentivise this will depend on the kinds of good that your business sells. You do not want to encourage incorrect reporting, some businesses may not deliver to the general public and in some cases the general public may not be able to detect the ‘fraud’ . You don’t want to have to spend a lot of money to sift through incorrect or over enthusiastic reporting. It is probably more useful to make sure the guides on spotting counterfeits is kept up to date and relevant. Be aware that consolidated consumer habit makes changing the packaging difficult. If for example safety marks are not issues on the product from the beginning, it may be hard to introduce later on as customers will not look for it. If the customer is other than the general public, the reporting function could be the first stage in the supply chain update if the business has not tackled the issue more pro-actively.

Contact the appropriate authorities
Counterfeiting is illegal and the company should always consider contacting the police/trading standards/Customs. Keep detailed information about the products for law-enforcement authorities. Apply for Customs protection directly if goods in international trade may infringe your rights. Provide as much information as possible about the products, supply chain and how products are transported. Once infringing goods are in free circulation within the European Community it will be too late for customs to act

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. Contact your Attorney It can be difficult to determine the right approach in a specific situation. Should the company contact the manufacturer of the counterfeit products and risk that they try to remove possible evidence? Should the company initiate injunction proceedings in which evidence is secured and counterfeit copies are seized? Should the company file suit for the purpose of maximizing the preventive effect and possibly achieving compensation for loss of profit? It is important for the company to consider the options and what they hope to achieve.

The Internet Web pages Cybersquatting Domain name
Vero process – This process favours the complainant Case Study – Cybersquatting – using a domain name that capitalises on an established brand See module 1B If you identify a seller on eBay that you believe is selling counterfeit goods, tell eBay and they will shut the seller down. The seller then needs to prove that this is not the case. Case Study – In 2008 eBay, the world’s biggest online auction site, was hit by a massive Euro38.6million fine by a French court. This grabbed world headlines at the beginning of July and caused many to ponder the implications for Internet auction sites. Louis Vuitton & Moët Hennessy, the French luxury goods company in whose favour the award was made, said that eBay had done too little to stop the sale of counterfeit goods over the Internet. In addition, it alleged that even if some of the products bearing its trademark were real they violated its distribution network, which only permitted sales through specialist dealers. In the US on the other hand, things could not have been more different. Soon after the French court’s award, eBay won a four-year legal battle with Tiffany over the leading jeweller’s complaint that the online website amounted to a “rat’s nest” auction of counterfeit watches, bracelets and necklaces. A judge in New York ruled that eBay could not be held responsible for policing the contents of its site, and that it was Tiffany’s role to draw fake designer jewellery to the auctioneer’s attention. The Vero process is where the complainant can petition eBay to close down a seller from their site. The onus is on the seller to prove that they are legitimate.

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. Not counterfeit or infringement as it comes under the label of parallel imports and the legal principle of exhaustion (explained on the next slide).

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. Parallel imports: exhaustion The legal principle here is ‘exhaustion’, the idea that once a party has sold a batch of its goods in one country, its rights are exhausted on that batch and it no longer has any rights over what happens to that batch. The trademark on grey market goods is not counterfeit because it was placed there by or with the consent of the trademark owner, unless the goods were subsequently modified or re-marked.

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 GmbH & Co ("Silhouette") v Hartlauer HGmbH ("Hartlauer") Sebago Inc. And S.A Ancienne Maison Dubois et fils v S.A G-B Unic First case study: The Silhouette case centred around the activities of an Austrian discount chain, Hartlauer that bought a consignment of Silhouette sunglasses from a company in Bulgaria that had purchased the goods from Silhouette International in Austria. For the purposes of this example it must be remembered that BULGARIA WAS NOT PART OF THE EU at the time of the case coming to trial. Silhouette claimed that the sale of the sunglasses (to the Bulgarian company) was on condition that the goods could not be re-imported into Austria. Hartlauer was charged in an Austrian court for Trade Mark infringement on the grounds that Silhouette’s Trade Mark rights had not yet been exhausted in the EEA. Therefore notwithstanding that they were genuine products first placed on the Bulgarian market with the consent of the Trade Mark owner, Silhouette was able to prevent the resale of the same in Austria on the basis that such sale infringed their rights. Had Silhouette sold the goods to a company in Austria (part of the EEA) who had then sold the same to Hartlauer, Silhouette’s rights would be exhausted and they could not prevent Hartlauer’s resale of the same. The Austrian Court applied International exhaustion. The ECJ ruled that the directive does not prescribe international exhaustion, and the directive did not provide for the member states to apply International Exhaustion from article 7. Consequence: Parallel importers cannot continue the importation of trademarked products from third countries without risking litigation. Parallel importation form other member states can, however, continue as usual. Second case study: Sebago owns of a number of trademarks registered for various things including shoes. Grievance - GB-Unic infringed its trademarks by buying shoes in EL Salvador for resale in hypermarkets in Europe. Sebago contended that it had not consented to the marketing of these shoes within the EEA, and that GB-Unic could therefore be prevented from selling the shoes. GB-Unic tried to raise the argument of deemed or implied consent, but was defeated. The principle of exhaustion of rights applies to goods bearing trademarks which are made available within the EEA, as it does to other intellectual property rights; The principle is an automatic legal consequence of having put the goods on the market or having consented to the marketing of the goods in the EEA; Goods marketed outside the EEA do not exhaust the trademark owner's right to prevent exploitation within the EEA; It is not open to EU member states to introduce a principle of international exhaustion for trademarks under domestic law by deeming the owner of the trademark to have consented to the sale and movement of his goods within the EEA, simply because he has consented to their marketing outside the EEA; and Trade mark owners still have the right to consent to the marketing of goods within the EEA, following which they may not prevent the marketing of non-EEA goods within the EEA. In deciding whether consent has been given, all the relevant circumstances must be considered including the nature of the goods, the circumstances under which they were put on the market, the terms of any contract of sale and, in particular, the provisions of any local law.

Legal protection Criminal and civil rights How to protect your business Trademark watching orders 5 min

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. The links provided above provide the required information in this respect. In particular, the manual for applications for customs action (discussed in relation to the EU) provides copies of the Application forms which need to be completed and details of the information required in this respect. Specifically, you will see from the manual that an application can be filed also as a preventive measure or where the applicant has reason to think that his intellectual property right or rights have been or are likely to be infringed. The advice in relation to infringing goods is to always contact your Trade Mark/Patent Attorney who will be able to advise accordingly. With respect to the comments “who to contact at the right owner’s company…”, look on the relevant Intellectual Property database to try and identify a possible contact. If there is an Agent listed as responsible for that particular Intellectual Property right, contact them in the first instance as they should know whom to contact directly within the company and this should avoid any unnecessary delay (which can be fatal if an Application is not made in time and the infringing goods therefore enter the country). This is one of the reasons why it is strongly advocated to use an Attorney for your Intellectual Property matters. Also, the Attorney will be able to assess the situation and when making contact with their client, advise as to the options and timeframes, again to ensure no unnecessary delays. If no Agent is listed, then contact the owner directly and ask to speak with (or address the relevant correspondence to) the party which deals with the company’s Intellectual Property rights. 63

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. - searchable free online. FAQ of the Watch Service. The Office for Harmonization in the Internal Market (Trade Marks and designs) – free EU database of Trade Marks and designs that is searchable free online. Information is updated daily by the IPR offices. The Trade Mark Watch Service - a regular comprehensive search including a Trade Mark Watch Report, which covers both identical and similar newly published trade marks in the respective countries and appropriate classes. The Trade mark Watch Service is intended to allow trade mark owners to protect their trade marks against possible future attempts of infringements and/or dilution of their trade marks. Please indicate for the sake of clarification that Design Watch service is not available. 64

Trade Mark Watching Orders
What ? Watch words, devices, 3D 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) The links I provided above in relation to slide 29 should provide the required information in this respect. In particular, the manual for applications for customs action (discussed in relation to the EU) provides copies of the Application forms which need to be completed and details of the information required in this respect. In particular, you will see from the manual that an application can be filed also as a preventive measure or where the applicant has reason to think that his intellectual property right or rights have been or are likely to be infringed. Our advice in relation to infringing goods is to always contact your Trade Mark/Patent Attorney who will be able to advise accordingly. With respect to the comments “who to contact at the right owner’s company…”, I would suggest that they look on the relevant Intellectual Property database to try and identify a possible contact. If there is an Agent listed as responsible for that particular Intellectual Property right, I would recommend contacting them in the first instance as they should know whom to contact directly within the company and this should avoid any unnecessary delay (which can be fatal if an Application is not made in time and the infringing goods therefore enter the country). This is one of the reasons why we strongly advocate using an Attorney for your Intellectual Property matters. Also, the Attorney will be able to assess the situation and when making contact with their client, advise as to the options and timeframes, again to ensure no unnecessary delays. If no Agent is listed, then I would suggest contacting the owner directly and ask to speak with (or address the relevant correspondence to) the party which deals with the company’s Intellectual Property rights.

Ipeuropeaware project
Brings together two important existing Europe-wide initiatives: InnovAccess, 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. Objectives of the project The main objective of the project is to raise awareness and knowledge of IPR especially for SMEs, with a view to: Raise SMEs’ understanding of the need to integrate IP into their innovation strategies and their business planning; Improve the protection of SMEs’ IP rights through increased registration of rights EU-wide and internationally, and increase the use of non-registered protection methods through the effective promotion of these methods; Improve protection and enforcement by SMEs of their IP rights from infringement, originating from within or outside the EU; Raise SMEs´ ability to fight counterfeiting and increase knowledge of the methodologies available to detect it; Develop actions to promote awareness of IPR protection to educate the fashion and design industries (textiles, leather, footwear and furniture) on the risks counterfeiting poses and on the existing means and procedures to combat it; Promote and support the use of IP rights in international research, development and technology transfer activities, providing an IP rights support service to current and potential beneficiaries of CIP and Research Framework Programme actions, especially high-tech SMEs and Public Research Organisations. Some of the activities that will be developed by the IPeuropAware consortium in this framework are: Development of SME awareness strategies for IPR usage and enforcement at the EU and local levels, bringing together the main existing institutions and services; Development of a toolbox of materials on IPR and enforcement issues, including manuals and training materials; Provision of training for multipliers, in particular to the business and innovation network, a wide range of SME awareness and enforcement actions; and support for SME advice services; Delivery of awareness workshops, especially on counterfeiting and with a particular focus on the design and fashion industries; Development of support services designed for SMEs; Preparation of multilingual manuals, training materials and SME workshops for design industries to raise SME awareness on IPR and enforcement issues, both within and outside the EU; IPR support to potential beneficiaries of CIP and RTD Framework Programme actions (IPR Helpdesk); Capacity building, the creation of national and regional networks and synergies and enhanced European-wide cooperation in the IP and innovation field

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ip4inno Module 5D Counterfeiting and Piracy

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