Unfortunately, IP crime is on the rise, particularly during these unprecedented times. A 2019 report found that the trade of counterfeit goods around the world now generates income of $509 billion annually. In Europe, around 7% of goods have been found to be counterfeit, which equates to approximately €121 billion in counterfeit goods per year. In the UK alone, IP crime is thought to cost the economy over £9 billion in lost revenue each year, which equates to £4 billion per year in unpaid taxes and causes the loss of almost 60,000 jobs. Concerningly, customs determined that 37% of the counterfeit goods it obtained at EU borders were dangerous and harmful to consumers.
In light of these staggering statistics, it is imperative that brands develop innovation strategies to tackle the fight against counterfeiting in the EU and UK markets.
What are considered counterfeit goods in the EU/UK?
As defined in EU Regulation 608/2013, "counterfeit goods" in the EU and UK are:
(a) goods which are the subject of an act infringing a trade mark in the Member State where they are found and bear without authorisation a sign which is identical to the trade mark validly registered in respect of the same type of goods, or which cannot be distinguished in its essential aspects from such a trade mark;
(b) goods which are the subject of an act infringing a geographical indication in the Member State where they are found and, bear or are described by, a name or term protected in respect of that geographical indication; or
(c) any packaging, label, sticker, brochure, operating instructions, warranty document or other similar item, even if presented separately, which is the subject of an act infringing a trade mark or a geographical indication, which includes a sign, name or term which is identical to a validly registered trade mark or protected geographical indication, or which cannot be distinguished in its essential aspects from such a trade mark or geographical indication, and which can be used for the same type of goods as that for which the trade mark or geographical indication has been registered.
What goods are not protected under the EU Regulation?
Some goods, including what are known as "grey market" goods, are not protected under the EU Regulation. Grey market goods are usually one of two types: either the goods were manufactured with the consent of the IP rights holder, but marketed without that consent, or the goods were excess goods that the manufacturer produced without the IP rights holder's consent. But while these goods are not protected under the EU Regulation, it is possible to take action against them on a UK national level under section 89 of the Trade Marks Act of 1994.
Goods that are for non-commercial purposes found within travelers' luggage and goods that are in free circulation between EU member states are also not protected under the EU Regulation.
How can I work with customs to prevent counterfeit goods from entering the EU/UK market?
It is possible to submit an Application for Action (AFA) either at the UK or EU level (for customs action in two or more member states), which allows customs to identify potentially infringing goods. IP rights holders are able to provide technical data found on authentic goods, such as descriptions of the labels and bar codes found on those goods, which can be used by customs to help identify and prevent potentially infringing goods from entering the market. There is no fee for submitting an AFA, although rights holders are asked to reimburse the costs incurred by customs if infringing or counterfeit goods are detained and/or destroyed.
Moreover, IP rights holders can submit further information about their products via the New Trends form once an AFA form has been submitted to customs. And it is also possible to notify customs of urgent intelligence regarding counterfeit goods via the Red Alert form.
What action will customs take?
When customs detains potentially counterfeit goods, it will notify the IP rights holder, who has ten working days from the date of the goods' detainment to inspect the goods and advise customs whether they are actually counterfeit. When what is involved are perishable goods such as food, customs will only detain the goods for up to three working days. But in that situation, customs will also notify the party who brought the goods into the EU or UK (confusingly called the "holder of the goods" in the regulation) and give it up to ten working days to either object to their detainment or provide consent for their destruction. Further, if the holder objects to the detainment of its goods, customs will continue to detain them if the IP rights holder can demonstrate that it has commenced legal proceedings against the holder to determine if the goods are in fact infringing.
It is also possible for the rights holder to be notified of potentially infringing or counterfeit goods even where an AFA was not previously submitted, although this is fairly uncommon.
What other bodies are available to help prevent counterfeits on the EU/UK market?
There are other resources that can assist with an anti-counterfeiting strategy at IP rights holder's disposal. The Police Intellectual Property Crime Unit (PIPCU) investigates serious IP crime in the UK and will take on cases that aren't already being handled by other government enforcement departments.
UK Trading Standards is another government body that can be used by IP rights holders to assist with the brand's fight against counterfeit. Trading Standards have investigative powers and can order search warrants to be used in a case against the infringers.
What other anti-counterfeiting strategies might be effective?
The best way to ensure that customs will take action at the border is to submit an AFA form containing all the necessary information on how best to identify genuine products. Ensuring that customs is kept up to date with any product or label chances is critical to the enforcement of your rights, as is notifying customs of recent counterfeit trends in the market via the New Trends procedure.
Brands are finding new ways to educate consumers and staff on how to identify fake products on the UK or EU market through the use of social media and other online tools. For example, some companies have run competitions in which they've offered prizes to consumers who provide information on counterfeit operations, and other companies have offered discounts to consumers who provide that information. These are powerful ways to build brand awareness and foster consumer loyalty.
Additionally, building strong relationships with suppliers, distributors, and other business partners is a crucial way to prevent counterfeits or grey market goods from entering the EU or UK market. And it is imperative that all of the contracts with your business partners include language that expressly protects your intellectual property rights and also sets out the way in which any disputes over those rights will be resolved.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.