A week and a half ago, experienced IP barrister Ashley Roughton posed the question "Is counterfeiting a real problem -- or a fake one?" (here). While very few comments were posted by readers, this Kat received a number of emails from people who felt that some sort of response was called for. One such response has been received by Roy Crozier, a partner in the Manchester office of Clarke Willmott LLP. This is what Roy writes:
"No one can seriously doubt that counterfeiting is a major issue for some brands, though it tends to be premium brands in certain industries such as the wider fashion industry (in which I would include perfumery and in-demand electrical products) which face the greatest impact. While reliable figures on the extent of the trade in counterfeit goods are hard to come by, the figure is generally put at somewhere between 5-10% of world trade – for example the International Chamber of Commerce puts the figure at 5-7%. Indeed the EU reports that the number of products seized at the EU border in 2012 was 40 million units (see Report on EU customs enforcement of IPR – 2012). Given that most consignments are not detected (I know this from both liaising with Customs Officers and from cases which I have worked on) this demonstrates the scale of the issue. Indeed, in raids in Manchester last week on various premises 50 tonnes of counterfeit goods were seized, as well as drugs and firearms.Well, wonders the IPKat, whose reality is the more real -- Ashley's or Roy's? as before, readers' comments and responses are warmly welcomed.
I work with a number of brands which are regularly notified by Customs across Europe of the detention of large consignments of suspected counterfeit goods. One seizure this week was of products which, if genuine, would retail for around £600,000 but would probably have been sold for nearer £100,000. Further, we deal with very large numbers of enquiries from the police and other enforcement agencies about seizures of suspected counterfeit products. Added to this are daily reports which brands can obtain, from agencies such as MarkMonitor, of large numbers of specific identified traders on eBay, other marketplace and social media sites selling counterfeit products and it is clear to such brands that the problems which they face are not illusory. In some rare cases the scale of the issue is such that retailers are reluctant to stock the genuine product due to the proliferation of poor quality counterfeit items being sold at a fraction of price of the genuine item – in simple terms, the retailers do not think they can compete with traders selling counterfeit versions of the product.
The issue of the safety of counterfeit goods is an interesting one. Certain types of counterfeit goods clearly pose a safety concern such as pharmaceutical and electrical goods. Indeed I have seen test reports on numerous counterfeit products (in particular electrical products) and, while many pose no safety issue whatsoever, others -- for example electrical products containing counterfeit and poorly made fuses -- do. As such, I do not think that we should be dismissive of the safety issue.
The question of the Trading Standards Authorities (TSAs) authenticating product also poses problems. TSAs have a multitude of duties outside of dealing with the sale of counterfeit goods. This is in an era of great strain on their budgets. Good training on behalf of brand owners will assist TSAs in deciding whether or products being offered for sale are suspicious. Once suspicions are aroused, the best course of action for any TSA is to ask the brand owner itself to confirm whether they believe the products to be genuine. This is what regularly happens and brand owners who provide prompt and efficient support to TSAs reap the benefit of doing so.
On the issue of taxes, at the higher end of the counterfeiting trade are sophisticated criminals who will often use a number of front companies to import and distribute counterfeit goods. Often these companies fail to submit accounts to Companies House and are struck off. I have my doubts that those with a cavalier attitude to the criminal law would be interested in ensuring their tax affairs are in order -- and that is certainly my understanding from speaking to law enforcement on the issue and working alongside them in investigations".