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FAKES
Fighting Against Brand Counterfeiting in Three Key
European Member States. Towards a More
Comprehensive Strategy
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June 2011
With the financial support from the Prevention of and Fight against Crime Programme of the
European Union
European Commission - Directorate-General Home Affairs
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This publication reflects the views of the authors only, and the European Commission cannot
be held responsible for any use which may be made of the information contained therein
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ABBREVIATIONS
(ACG)
Anti-Counterfeiting Group
(ADB/OECD)
Asian Development Bank/OECD Anti-Corruption Initiative for Asia
and the Pacific
(AEP)
Automated Entry Processing
(AFSSAPS)
Agence Française de Sécurité Sanitaire des Produits de Santé
(French Agency for Sanitary Safety of Health Products)
(APCO)
Association of Public Safety Communications Officials
(ARIPO)
African Regional Industrial Property Organization
(ASEM)
Asia-Europe Meeting
(BASCAP)
Business Action to Stop Counterfeiting and Piracy
(CBP)
Customs & Border Protection
(CCIAA)
Camera di Commercio, Industria, Artigianato ed Agricoltura
(Chamber of Commerce, Industry, Handicraft and Agriculture)
(CD)
Compact Disc
(CEIPI)
Centre d’Études Internationales de la Propriété Intellectuelle
(CEN)
Customs Enforcement Network System
(CIB)
Counterfeiting Intelligence Bureau
(COI)
Czech Commercial Inspections
(CPU)
Czech Anti-Piracy Union
(DEA)
Drug Enforcement Administration
(DGLC)
Direzione Generale per la Lotta alla Contraffazione (General
Directorate for Combating Counterfeiting)
(DIIP)
INTERPOL Database on International Intellectual Property
(DNRED)
Direction Nationale du Renseignement et des Enquêtes Douanières
(National Directorate of Customs Intelligence and Investigation)
(DVD)
Digital Video Disc
(EAPO)
Eurasian Patent Office
(EC)
European Commission
(EMEA)
European Medicines Agency
(EPO)
European Patent Office
(ESPACENET)
Europe’s Network of Patent Database
(EU)
European Union
(EUCD)
EU Copyright Directive
(EUROJUST)
European Union’s Judicial Cooperation Unit
(EUROPOL)
European Police Office
(FALSTAFF)
Fully Automated Logistical System Against Forgery and Fraud
(FBI)
U.S. Federal Bureau of Investigation
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(FDA)
U.S. Food and Drug Administration
(FPs)
Free Ports
(FTZs)
Free Trade Zones
(GACG)
Global Anti-Counterfeiting Group
(GATS)
General Agreement on Trade in Services
(GATT)
General Agreement on Tariffs and Trade
(GdF)
Guardia di Finanza
(GICO)
Gruppo d’Investigazione sulla Criminalità Organizzata (Investigation
Group on Organized Crime)
(GPO)
General Prosecutors Office
(HP)
Hewlett Packard
(ICAR)
International Centre for Asset Recovery
(ICC)
International Chamber of Commerce
(ICE)
U.S. Immigration and Customs Enforcement
(IFPI)
International Federation of the Phonographic Industry
(INDICAM)
Istituto di Centromarca per la lotta alla contraffazione (Institue for
combating counterfeiting)
(INTA)
International Trademark Association
(INTERPOL)
International Criminal Police Organisation
(IP)
Intellectual Property
(Ip)
Internet protocol
(IPC)
Intellectual Property Crime
(IPO)
Intellectual Property Office
(IPRs)
Intellectual Property Rights
(IPT)
Intellectual Property Theft
(ISA)
International Searching Authority
(IT)
Information Technology
(ITU)
International Telecommunications Union
(LDCs)
Less Developed Countries
(LEAs)
Law Enforcement Agencies
(LPs)
Legal Practitioners
(MDTCA)
Ministry of Domestic Trade and Consumer Affairs
(MERCE)
Monitoraggio e Rappresentazione Commercio Estero (Monitoring
and Representation of Foreign Trade)
(MHRA)
Medicines and Healthcare Products Regulatory Agency
(MMECC)
Mainstreaming Methodology for Estimating Costs of Crime Project
(MoJ)
Ministry of Justice
(NAC)
National Authority of Customs
(NCA)
National Copyright Administration
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(NIPLECC)
U.S. National Intellectual Property Law Enforcement Coordination
Council
(OAPI)
African Intellectual Property Organization
(OECD)
Organisation for Economic Cooperation and Development
(OPOs)
Other Public Officials
(P2P)
Peer-to-Peer
(PCT)
Patent Cooperation Treaty
(POAHCCJ)
Public Ministry – Prosecutor’s Office attached to the High Court of
Cassation and Justice
(PoCA)
Proceed of Crime Act
(QA)
Quality Assurance
(R&D)
Research and Development
(RCO)
Rapport sur la Contrefaçon et la Criminalité Organisée
(RILO/WE)
Regional Intelligence Liaison Office for Western Europe
(SCICO)
Servizio Centrale Investigativo Criminalità Organizzata (Central
Investigation Service on Organized Crime)
(SCT)
Standing Committee on the Law of Trademarks, Industrial Designs
and Geographical Indications
(SDI)
Sistema di Indagine Investigation System
(SECI)
Southeast Cooperative Initiative
(SIRENE)
Supplementary Information Request at the National Entries
(SIRO)
Supporto Informativo Ricerche Operative
(SIS)
Schengen Information System
(SISTER)
Sistema Inter Scambio Territtorio (Interchange Territory System)
(StAR)
Stolen Asset Recovery Initiative
(TAXUD)
EU Taxation and Customs Union
(TLT)
Trademark Law Treaty
(TRANSCRIME)
Joint Research Centre on Transnational Crimes
(TRIPS)
Trade-Related Aspects of Intellectual Property Rights Agreement
(TRP)
Tamper Resistant Packaging
(UAE)
United Arab Emirates
(UK)
United Kingdom
(UKBA)
UK Border Agency
(UN)
United Nations
(UNICRI)
United Nations Interregional Crime and Justice Research Institute
(UNIFAB)
Union des Fabricants
(URL)
Uniform Resource Locator
(USA)
United States of America
(USD)
United States Dollar
(VoIP)
Voice over Internet Protocol
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(WCO)
World Customs Organization
(WCT)
WIPO Copyright Treaty
(WHO)
World Health Organisation
(WIPO)
World Intellectual Property Organisation
(WTO)
World Trade Organisation
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SECTION 1
Basic Definitions of IPRs and International Treaties, Agreements,
Conventions
A. BASIC IPRS DEFINITIONS
The definitions of Intellectual Property Rights (IPRs) presented in this section will contribute to the
general understanding of the various forms in which human creation can be protected by law. Two
main categories of IPRs may also be identified within the broader notion of Intellectual Property:
Industrial Property and Copyright, the former related to the protection of innovation and trade
(through Patents, Utility Models or Trademarks for example) and the latter related to the protection
of literary and artistic work.
It is important to note that the violation of rights granted by the various forms of IPRs is not
indicated by law with different legal definitions for each of them; the only differentiation that is made
follows usually the above mentioned distinction between Industrial Property and Copyright. In the
former case the violation of the rights granted is referred to as counterfeiting and in the latter case
as piracy. These are the notions that we will also use for the purpose of this training manual.
1.1 Copyright and related rights
The copyright holder is granted exclusive rights by the Berne Convention for the Protection of
Literary and Artistic Work of 9 September 1886 and by a number of national legislations. The term
“exclusive” suggests that only the copyright holder may exercise these rights, thereby excluding all
unauthorized third parties from exercising them. The copyright holder may also decide not to use
any of the rights that are provided for, or to exercise them over a limited period of time.
It is possible to distinguish between two different rights granted by copyright: economic rights,
which allow the copyright holder to obtain profits if his/her work is used by other parties; and moral
rights, which allow the copyright holder to act in order to maintain a connection with the results of
his/her creative work.
The economic framework of copyright generally allows the author to prohibit or authorize a series
of behaviours/actions in relation to his/her creative work, including: the reproduction of the work in
various forms; the distribution of copies of this work as well as its public representation;
broadcasting of the work by radio/television or through other media; translation into other
languages; and adaptations of the work.
It should be noted that the ability of the copyright holder to prevent the reproduction, distribution,
marketing and importing of copies of his/her work is the central element upon which the economic
protection granted by copyright is based. The economic protection is further reinforced by the other
rights mentioned above.
The strictly commercial element of copyright is supported by an additional element whose specific
goal is to guarantee that the origin of the work is always acknowledged. It must be considered
separately from the commercial component, in accordance with the provisions of Article 6bis of the
Berne Convention. Furthermore, moral rights cannot be transferred (unlike economic rights) and
their recognition is only granted to the individual author.
The rights analyzed thus far are generally attributed to the author of the artistic, scientific or literary
work by the Berne Convention. Although moral rights are always retained by the commercial rights’
holder, they are subject to certain exceptions.
Rights deriving from copyright are subject to limitations relative to the individual copies that are
legally produced, marketed and acquired by a third party which becomes the owner of the copy in
question. The owner is not prohibited from reselling the copy. The only exceptions are cases where
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the transfer of ownership occurs between parties operating in different countries where there are
importing limits relative to such products.
The limitations mentioned above include a series of exceptions that are specified within most
national legislation and concern particular categories of goods. The Berne Convention recognizes
the free usage of certain categories of works within Article 9 (2) as long as this usage does not
interfere with the legitimate rights of the author and does not lie outside the normal usage of the
work in question. An example of free usage includes citing specific phrases of a book while
mentioning the source of the citation, the author and using a work for illustrative, educational or
informational purposes.
The determination of a copyright’s duration falls under the competence of national legislation. The
minimum guaranteed protection must, in any case and in accordance with Article 7, correspond to
the life of the author plus fifty years after his/her death within countries that are bound by the Berne
Convention. Individual national legislation differs as to when this protection should begin. In
specific cases, the initial date corresponds to the date of creation of the work while other cases
provide for the date in which the work has been officially completed. Current trends have involved
the lengthening of the period of granted protection in order for the author’s heirs to fully enjoy the
fruits of the creative work1.
Legal basis for copyright protection
Copyright and related rights have a strong social purpose which consists of protecting,
encouraging and rewarding creative work2.
The legal basis for the protection of “literally and artistic works” has been provided in the Berne
Convention for the Protection of Literary and Artistic Work. Article 2 (1) defines and outlines the
field of artistic and literary works and states:
“The expression ‘literary and artistic works’ shall include every production in the literary, scientific
and artistic domain, whatever may be the mode or form of its expression, such as books,
pamphlets and other writings; lectures, addresses, sermons and other works of the same nature;
dramatic or dramatico-musical works; choreographic works and entertainments in dumb show;
musical compositions with or without words; cinematographic works to which are assimilated works
expressed by a process analogous to cinematography; works of drawing, painting, architecture,
sculpture, engraving and lithography; photographic works to which are assimilated works
expressed by a process analogous to photography; works of applied art; illustrations, maps, plans,
sketches and three-dimensional works relative to geography, topography, architecture or science.”
The Berne Convention currently counts 164 contracting State parties.
The World Intellectual Property Organization (WIPO) Copyright Treaty, adopted on 20 December
1996, is a complementary legal tool in the protection of copyright as it applies to categories of
works not included in the Berne Convention. The aim of the Copyright Treaty is stated in the
preamble:
“[…] Recognizing the need to introduce new international rules and clarify the interpretation of
certain existing rules in order to provide adequate solutions to the questions raised by new
economic, social, cultural and technological developments; Recognizing the profound impact of the
development and convergence of information and communication technologies on the creation and
use of literary and artistic works […]”
Articles 4 and 5 stipulate the protection of computer programmes and compilation of data
(databases), respectively.
The purposes and scope of the WIPO Copyright Treaty is therefore the extension of copyright
granting and protection to software. This is also included within the concept of artistic or literary
1
The part of General Information on Copyright Protection is based on the UNICRI report Counterfeiting: A Global
Spread, A Global Threat, pp. 15-17. Online. Available HTTP: http://counterfeiting.unicri.it/report2008.php
2
World Trade Organization (WTO), Trade-related Aspects of Intellectual Property Rights (TRIPS), What are
Intellectual Property Rights? Online. Available HTTP: http://www.wto.org/english/tratop_e/trips_e/intel1_e.htm
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work being the result of creative scientific work and therefore falling under the scope of Article 2 of
the Berne Convention.
Currently, the WIPO Copyright Treaty counts 88 contracting State-parties.
Industrial Property
Patents, utility models, industrial designs, layout designs, trade names/firms, marks and
designation of origin and geographical indications are either industrially or commercially applicable
and they fall within the industrial property field. The rules for their grant, regulation, conditions of
application, registration and protection measures against misuse, abuse and infringement are
stipulated in the Paris Convention for the Protection of Industrial Property. It was adopted on 20
March 1883 and is the basic reference document for industrial property3.
The substantive provisions of the Convention fall into three main categories: national treatment,
right of priority and common rules. They apply to all of the categories of industrial property defined
by the Convention.
Under the provisions on national treatment, the Convention states that each contracting State must
grant the same protection to nationals of the other contracting States. Nationals of non-contracting
States are also entitled to national treatment under the Convention if they are domiciled or have a
real and effective industrial or commercial establishment in a contracting State.
The Convention provides for the right of priority for patents (and utility models, where they exist),
marks and industrial designs. This right implies that on the basis of a regular first application filed in
one of the contracting States, the applicant may, within a specified period of time (12 months for
patents and utility models; 6 months for industrial designs and marks) apply for protection in any of
the other contracting States. These later applications will then be regarded as if they had been filed
on the same day as the first application. These later applications will have priority (hence the
expression “right of priority”) over applications which may have been filed during the given period of
time by other individuals for the same invention, utility model, mark or industrial design.
Furthermore, these later applications based on the first application, will not be affected by any
event that may have taken place during this period. Examples include any publication of the
invention or sale of articles bearing the mark or incorporating the industrial design. One of the
practical advantages of this provision is that when an applicant requires protection in several
countries, she/he is not required to present all her/his applications at the same time but has six or
12 months at his disposal to decide the countries she/he wishes protection and organize the steps
she/he must take to secure protection.
Industrial Property and Competition law
The exclusive rights granted by the State to IPRs holders (especially Patents) must be well
balanced to avoid a situation in which the exclusive rights may lead to the creation of a monopoly,
hampering the functioning of markets based upon the respect of competition law. At a first view, in
fact, these two important pillars of modern trade may seem to be, in principle, naturally opposite.
IPRs protecting the innovation by providing a “non-rivalrous” right to exclusive exploitation of the
content of the innovation, and competition law protecting the access to a market that has to be
granted to different competitors. However, the limit of IPRs exclusive exploitation have been
usually identified in the fact that the latter must not pose at risk the social welfare.
The provisions contained in art. 7, Art. 8.2 and Art. 40 of the TRIPs Agreement are a good example
of how this balance may be achieved. The TRIPS suggests that the abuse of IPRs must be
prevented, especially if the latter may hamper the social welfare, and lead to a restriction of trade
and limit the international transfer of technology. Article 40 is dedicated to the prevention of anticompetitive practices that may derive from contractual licensing.
The
Paris
Convention
on
the
Protection
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P232_38660
3
of
Industrial
Property ,
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1.2 Patent (industrially applicable)
Definition
A patent is an exclusive right granted for an invention, which is a product or a process that provides
a new way of doing something, or offers a new technical solution to a problem.4 This is made in
exchange of public disclosure of the invention.
A patent provides the owner of the patent with protection for the invention. The protection is
granted for a limited period of time, generally 20 years. 5.
Patent protection means that the invention cannot be commercially made, used, distributed or sold
without the patent owner's consent. These patent rights are usually enforced in a court, which in
most systems holds the authority to stop patent infringement. A court can also declare a patent
invalid upon a successful challenge by a third party.6
In general, an invention must fulfil the following conditions to be protected by a patent: it must be of
practical use; it must show an element of novelty, i.e. a new characteristic unknown to the body of
existing knowledge in its technical field. This body of existing knowledge can be referred to as
"prior art". The invention must show an inventive step which could not be deduced by a person with
average knowledge of the technical field. Finally, its subject matter must be accepted as
"patentable" under law. In many countries, scientific theories, mathematical methods, plant or
animal varieties, discoveries of natural substances, commercial methods, or methods for medical
treatment (as opposed to medical products) are generally not patentable.
The legal basis on patents is principally provided in the Paris Convention7 (Articles. 1§2, 4§A, I, G,
4bis, ter, quarter, 5§A, D, 5 bis (1) (2), ter, quarter) and in the TRIPS Agreement (Art. 27-34). In
particular, the Paris Convention provides a few common rules which all contracting States must
follow regarding patents. The most significant include:8

patents granted in different contracting States for the same invention are independent from
one another: the granting of a patent in one contracting State does not oblige the other
contracting States to grant a patent;

a patent cannot be refused, annulled or terminated in any contracting State on the grounds
of it being refused or annulled or terminated in any other contracting State;

the inventor has the right to be named as such in the patent;

the grant of a patent may not be refused, and a patent may not be invalidated, on the
grounds of the sale of the patented product, or of a product obtained by means of the
patented process, is subject to restrictions or limitations resulting from the domestic law;

each contracting State that takes legislative measures providing for the grant of compulsory
licenses to prevent the abuses which might result from the exclusive rights conferred by a
patent may do so with certain limitations. Thus, a compulsory license (license not granted
by the owner of the patent but by a public authority of the State concerned) based on failure
to work the patented invention may only be granted pursuant to a request filed after three or
four years of failure to work or insufficient working of the patented invention and it must be
refused if the patentee gives legitimate reasons to justify his inaction. Furthermore,
forfeiture of a patent may not be provided for, except in cases where the grant of a
World
Intellectual
Property
Organization
(WIPO),
Frequently
Asked
Questions/
Patent,
http://www.wipo.int/patentscope/en/patents_faq.html#protection
5
Ibid.
6
Ibid.
7
The Paris Convention includes provisions applied on Industrial Property. The articles referred here are either
common to all the categories of Industrial Property, or concern exclusively patents. WIPO, Paris Convention on the
Protection of Industrial Property, http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P232_38660
8
World intellectual property Organization (WIPO), Summary of the Paris Convention for the Protection of Industrial
Property, http://www.wipo.int/treaties/en/ip/paris/summary_paris.html
4
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compulsory license would not have been sufficient to prevent the abuse. In such cases,
proceedings for forfeiture of a patent may be instituted, only after the expiration of two years
from the grant of the first compulsory license.
1.3 Utility model (industrially applicable)
Definition
A utility model is an exclusive right granted for an invention, which allows the right holder to prevent
others from commercially using the protected invention, without his/her authorization, for a limited
period of time. Its basic definition may vary between countries (where such protection is available).
A utility model is similar to a patent. Utility models are sometimes referred to as "petty patents" or
"innovation patents."9 It shall, therefore, be understood as a new technical solution, which is
beyond the framework of mere technical skill and is industrially applicable. The utility model is
considered as a "low-cost entry point into the intellectual property system."10
Main differences between utility models and patents are the following:

The requirements for acquiring a utility model are less stringent than for patents. While the
requirement of "novelty" is always to be met, that of the "inventive step" or "nonobviousness" may be much lower or completely absent. In practice, protection for utility
models is often sought for innovations of a rather incremental character which may not
meet the patentability criteria.

The term of protection for utility models is shorter than for patents and varies from country
to country (usually between 7 and 10 years without the possibility of extension or renewal).

In most countries where utility model protection is available, patent offices do not examine
applications as substance prior to registration. This means that the registration process is
often significantly simpler and faster. It takes an average of six months.

Utility models are much cheaper to obtain and to maintain.

In some countries, utility model protection can only be obtained for specific fields of
technology and only for products, not processes.

Utility models are based on registration principle as patents. The difference is that the
granting of a patent is preceded by complete examination of patent application, whereas
utility models are preceded by formal examination only.11
Utility models are considered well suited for Small/Medium-sized Enterprises that make "minor"
improvements and adaptations to existing products. Utility models are primarily used for
mechanical innovations. Only a small number of countries and regions provide the option of utility
model protection. This option is not available in Romania.
Legal provisions on utility models can be found in the Paris Convention. (Articles 1§2, 4§A, 5§D,
5bis, 11). and in the TRIPS Agreement (Articles 25 and 26).12
1.4 Industrial design (industrially applicable)
An industrial design is the ornamental or aesthetic aspect of an article. The design may consist of
three-dimensional features, such as the shape or surface of an article or of two-dimensional
features, such as patterns, lines or colour.
The design is considered to be a purely aesthetic or ornamental element that is incorporated within
an object that is mass-produced. Reference is made to products deriving from an industrial process
9
WIPO, Protecting Inventions by Utility Models, What is a Utility model?
http://www.wipo.int/sme/en/ip_business/utility_models/utility_models.htm
10
Ibid.
11
Ibid.
12
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P145_20374
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whose aesthetic element serves as a differentiating function with respect to other products of the
same category which are created for the same purpose. The aesthetic element is one form of
selection criteria used by the consumer. Further examples include: quality, price and function of the
marketed good. The need to protect this distinctive element derives from this ability to influence
consumer choices.
Industrial designs are applied to a wide variety of products of industry and handicraft: from
technical and medical instruments to watches, jewellery and other luxury items; from house wares
and electrical appliances to vehicles and architectural structures; from textile designs to leisure
goods.
An industrial design is primarily of an aesthetic nature and does not protect any technical features
of the article to which it is applied.13 The owner is defined as the person or entity that has
registered the design. When an industrial design is protected, the owner is assured an exclusive
right against unauthorized copying or imitation of the design by third parties.
This protection is only granted to a design relative to a good produced on an industrial scale that
possesses certain specific characteristics (novelty or originality). The originality of the design is not
exclusively imposed by the function of the products. Granting protection over the design of widely
distributed products such as a simple screw or a belt, would distort the market by creating
monopolies in which only one producer would have the possibility of manufacturing and selling
screws or belts. In contrast, it is possible to protect a particular design applied to screws or belts if
this design represents a novelty and characterizes the producer, thereby rewarding the latter for
the effort and creativeness involved in the design and stimulating further research in this area.
In most countries, an industrial design must be registered in order to be protected under industrial
design law. As a general rule, to be registered, the design must be "new" or "original". Different
countries have varying definitions of such terms and variations in the registration process.
Generally, "new" means that no identical or similar design is known to have existed before. Once a
design is registered, a registration certificate is issued. The term of protection is generally five
years. The possibility of further periods of renewal in most cases is up to 15 years.14
Depending on the particular national law and the type of design, an industrial design may also be
protected as a work of art under copyright law. In some countries, industrial design and copyright
protection can exist concurrently. In other countries, they are mutually exclusive. Once the owner
chooses one form of protection, she/he can no longer invoke the other.15
Under certain circumstances an industrial design may also be protectable under unfair competition
law, although the conditions of protection and the rights and remedies ensured can be significantly
different.16
Legal provisions on industrial design can be found in the Paris Convention (art. 1§2, 4§A, 5§B, D,
5bis, quinquies, 11) and in the TRIPS Agreement (Articles 25 and 26).17
As with patents, marks, trade names and sources of indication, the Paris Convention lays down a
common rule regarding industrial designs which all contracting States must follow. This is that
industrial designs must be protected in each contracting State, and protection may not be forfeited
on the ground that the articles incorporating the design are not manufactured in that State.
1.5 Integrated circuits and Layout-designs (topographies)
Integrated circuits and layout-designs are protected by the Treaty on Intellectual property with
respect to Integrated circuits (or “Washington Treaty”) adopted on 26 May 1989. It is not yet in
force as, currently, it has only 10 Contracting Parties.
13
14
15
16
17
http://www.wipo.int/designs/en/
Ibid.
Ibid.
Ibid.
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P145_20374
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Article 2 of the Treaty outlines the following definitions of these categories of Industrial property:
(i) “‘integrated circuit’ means a product, in its final form or an intermediate form, in which the
elements, at least one of which is an active element, and some or all of the interconnections
are integrally formed in and/or on a piece of material and which is intended to perform an
electronic function.
(ii) “‘layout-design (topography)’ means the three-dimensional disposition of the elements,
however expressed. At least one of which is an active element, and of some or all of the
interconnections of an integrated circuit or such a three-dimensional disposition prepared
for an integrated circuit intended for manufacture […]”
1.6 Trademarks (commercially applicable)
Definition
A trademark is a distinctive sign which identifies certain goods or services as those produced or
provided by a specific person or enterprise. Its origin dates back to ancient times, when craftsmen
reproduced their signatures, or "marks", on their artistic or utilitarian products. Over the years these
marks have evolved into today's system of trademark registration and protection. The system helps
consumers identify and purchase a product or service to meet their needs due to its nature and
quality, as indicated by its unique trademark.18 Article 15.1 of the TRIPS Agreement allows the
trademark to be defined as any symbol, name or combination of the latter (given the restrictions
described below) which allow the products or services of one company to be distinguished from
those of other companies.
A trademark provides protection to the owner of the mark by ensuring the exclusive right to use it to
identify goods or services or to authorize another to use it in return for payment. The period of
protection varies, but a trademark can be renewed indefinitely beyond the time limit on payment of
additional fees. Trademark protection is enforced by the courts, which in most systems have the
authority to block trademark infringement.
In a larger sense, trademarks promote initiative and enterprise worldwide by rewarding the owners
of trademarks with recognition and financial profit. Trademark protection also hinders the efforts of
unfair competitors, such as counterfeiters, to use similar distinctive signs to market inferior or
different products or services. The system enables people with skill and enterprise to produce and
market goods and services in the fairest possible conditions, thereby facilitating international
trade.19
The possibilities are almost limitless. Trademarks may be one or a combination of words, letters
and numerals. They may consist of drawings, symbols or three- dimensional signs (e.g. the shape
and packaging of goods), audible signs (e.g. music or vocal sounds), fragrances or colours used as
distinguishing features. 20
In addition, several other categories of marks exist. Collective marks are owned by an association
whose members use them to identify themselves with a level of quality and other requirements set
by the association. Examples would be associations representing accountants, engineers or
architects. Certification marks are given for compliance with defined standards, however, they are
not confined to any membership. They may be granted to anyone who can certify that the products
involved meet certain established standards. The internationally accepted "ISO 9000" quality
standards are an example of such widely-recognized certifications.21.
To obtain the protection of the distinguishing sign, name or mark, an application for registration of a
trademark must be filed with the appropriate national or regional trademark office. The application
World
Intellectual
Property
Organization
(WIPO),
What
is
a
Trademark?
http://www.wipo.int/trademarks/en/trademarks.html
19
Ibid.
20
World Intellectual Property Organization (WIPO), About Trademarks, What kinds of trademarks can be registered ?
http://www.wipo.int/trademarks/en/about_trademarks.html#function
21
Ibid.
18
13
Reference Text for Trainers
must contain a clear reproduction of the sign filed for registration, including any colours, forms or
three-dimensional features. The application must also contain a list of goods or services to which
the sign would apply. The sign must fulfil certain conditions in order to be protected as a trademark
or other type of mark. It must be distinctive, so that consumers can distinguish it and identify a
particular product. It must neither mislead nor deceive customers or violate public order or
morality.22 Finally, the rights applied for cannot be the same as or similar to rights already granted
to another trademark owner. This may be determined through search and examination by the
national office, or by the opposition of third parties who claim similar or identical rights.23
Almost all countries register and protect trademarks. Each national or regional office maintains a
Register of Trademarks, which contains full application information on all registrations and
renewals, facilitating examination, search and potential opposition by third parties. The effects of
such a registration are limited to the country (or in the case of a regional registration, countries)
concerned.24
To avoid the need to register separately with each national or regional office, WIPO administers a
system of international registration of marks. This system is governed by two treaties, the Madrid
Agreement Concerning the International Registration of Marks and the Madrid Protocol. A person
who has a link (through nationality, domicile or establishment) with a country party to one or both of
these treaties may, on the basis of a registration or application with the trademark office of that
country, obtain an international registration having effect in some or all of the other countries of the
Madrid Union. 25
The Madrid system for the international registration of marks established in 1891 functions under
the Madrid Agreement (1891) and the Madrid Protocol (1989). It is administered by the
International Bureau of WIPO located in Geneva, Switzerland.
Thanks to the international procedural mechanism, the Madrid system offers a trademark owner
the possibility to have his/her trademark protected in several countries by simply filing one
application directly with the national or regional trademark office.. If the trademark office of a
designated country does not refuse protection within a specified period, the protection of the mark
is the same as if it had been registered by that Office. The Madrid system also greatly simplifies the
subsequent management of the mark, since it is possible to record subsequent changes or to
renew the registration through a single procedural step. Further countries may be designated
subsequently.
Article 4 reads in its two paragraphs:
(1) “From the date of the registration so effected at the International Bureau in accordance with
the provisions of Articles 3 [Contents of Application for International Registration] and 3ter
[Request for “Territorial Extension”], the protection of the mark in each of the contracting
countries concerned shall be the same as if the mark had been filed therein direct. The
indication of classes of goods or services provided for in Article 3 shall not bind the contracting
countries with regard to the determination of the scope of the protection of the mark.”
(2) “Every mark which has been the subject of an international registration shall enjoy the right
of priority provided for by Article 4 of the Paris Convention for the Protection of Industrial
Property [A. to I. Patents, Utility Models, Industrial Designs, Marks, Inventors’ Certificates:
Right of Priority], without requiring compliance with the formalities prescribed in Section D of
that Article.”
22
World Intellectual Property Organization (WIPO), About Trademarks, How is a trademark registered?
http://www.wipo.int/trademarks/en/about_trademarks.html#function
23
Ibid.
24
World Intellectual Property Organization (WIPO), About Trademarks, How extensive is trademark protection?
http://www.wipo.int/trademarks/en/about_trademarks.html#function
25
World Intellectual Property Organization (WIPO), Madrid System for the International Registration of Marks,
http://www.wipo.int/madrid/en/
14
Reference Text for Trainers
Legal provisions on trademarks can be found in the Paris Convention (articles 1§2, 4§A, 5§C 5bis,
6, 6bis, ter, quarter, quinquies, 6, 6bis, ter, quarter, quinquies, sexies, septies, 7, 7bis, 9-11) 26, and
in the TRIPS Agreement (Articles 15-21).
The Paris Convention lays out a few common rules which all the contracting States must follow
regarding trademarks.27
The Paris Convention does not regulate the conditions for the filing and registration of marks which
are determined in each contracting State by the domestic law. Consequently, no application for the
registration of a mark filed by a national of a contracting State may be refused, nor may a
registration be invalidated, on the ground that filing, registration or renewal has not been made in
the country of origin. Once the registration of a mark is obtained in a contracting State, it is
independent of its possible registration in any other country, including the country of origin;
consequently, the lapse or annulment of the registration of a mark in one contracting State will not
affect the validity of registration in other contracting States.
Where a mark has been duly registered in the country of origin, it must be accepted on request for
filing and protected in its original form in the other contracting States. Registration may still be
refused in well-defined cases, such as: when the mark would infringe acquired rights of third
parties, when it is devoid of distinctive character, when it is contrary to morality or public order or
when it is of such a nature as to be liable to deceive the public.
If in any contracting State, the use of a registered mark is compulsory, the registration cannot be
cancelled until after a reasonable period and only if the owner cannot justify his inaction.
Each contracting State must refuse registration and prohibit the use of marks which constitute a
reproduction, imitation or translation liable to create confusion of an already registered by the
competent national authority and well-known in that State mark.
Each contracting State must likewise refuse registration and prohibit the use of marks which
consist of or contain without authorization, armorial bearings, State emblems and official signs and
hallmarks of contracting states, provided they have been communicated through the International
Bureau of WIPO. The same provisions apply to armorial bearings, flags, other emblems,
abbreviations and names of certain intergovernmental organizations.
Collective marks must be granted protection.
1.7 Trade names (commercially applicable)
A trade name can be defined as, “a name of a business or one of its products which, by use of the
name and public reputation, identifies the product as that of the business. A trade name belongs to
the first business to use it and the identification and reputation give it value and the right to protect
the trade name against its use by others.”28
Furthermore, “trade names are used by profit and non-profit entities, political and religious
organizations, industry and agriculture, manufacturers and producers, wholesalers and retailers,
sole proprietorships and joint ventures, partnerships and corporations, and a host of other business
associations. A trade name may be the actual name of a given business or an assumed name
under which a business operates and holds itself out to the public.”29
Legal provisions on trade names can be found in the Paris Convention (articles 1§2, 5bis, 8-10,
10ter).30 The Paris Convention lays out a specific common rule regarding trade names, which all
26
World Intellectual Property Organization (WIPO), Paris Convention for the Protection of Industrial Property
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P113_13775
27
World Intellectual Property Organization (WIPO), Summary of the Paris Convention for the Protection of Industrial
Property, http://www.wipo.int/treaties/en/ip/paris/summary_paris.html
28
http://legal-dictionary.thefreedictionary.com/trade+name
Ibid.
30
World Intellectual Property Organization (WIPO), Paris Convention for the Protection of Industrial Property
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P113_13775
29
15
Reference Text for Trainers
the contracting States must follow: “Protection must be granted to trade names in each contracting
State without the obligation of filing or registration.”31
31
World Intellectual Property Organization (WIPO), Summary of the Paris Convention for the Protection of Industrial
Property, http://www.wipo.int/treaties/en/ip/paris/summary_paris.html
16
Reference Text for Trainers
1.8 Geographical indications (commercially applicable)
Definition
A geographical indication is a sign used on goods that have a specific geographical origin and
possess A geographical indication is a sign used on goods that have a specific geographical origin
and possess qualities, reputation or characteristics that are essentially attributable to that place of
origin. Most commonly, a geographical indication includes the name of the place of origin of the
goods. Agricultural products typically have qualities that derive from their place of production and
are influenced by specific local factors, such as climate and soil. Whether a sign is recognized as a
geographical indication is a matter of national law. Geographical indications may be used for a
wide variety of products, whether natural, agricultural or manufactured.32
An appellation of origin is a special kind of geographical indication. It generally consists of a
geographical name or a traditional designation used on products which have specific qualities or
characteristics that are due to the geographical environment in which they are produced. The
concept of a geographical indication encompasses appellations of origin.33 The use of
geographical indications is not limited to agricultural products. They may also highlight qualities of
a product which are due to human factors associated with the place of origin of the products, such
as specific manufacturing skills and traditions. That place of origin may be a village or town, a
region or a country, for example, “Bohemia” is recognized as a geographical indication in many
countries for specific products made in the Czech Republic, in particular crystal ware. 34
A geographical indication points to a specific place, or region of production, that determines the
characteristic qualities of the product which originates from that location. It is important that the
product derives its qualities and reputation from that location. Since those qualities depend on the
place of production, a specific "link" exists between the products and their original place of
production. 35
Many geographical indications have acquired valuable reputations which, if not adequately
protected, may be misrepresented by dishonest commercial operators. False use of geographical
indications by unauthorized parties is detrimental to consumers and legitimate producers.
Consumers are deceived into believing they are buying a genuine product with specific qualities
and characteristics, when they are actually purchasing an imitation. Legitimate producers are
deprived of valuable business and the established reputation of their products is damaged.36
A geographical indication tells consumers that a product is produced in a certain place and has
certain characteristics that are due to that place of production. It may be used by all producers who
make their products in the place designated by a geographical indication and whose products
share specified qualities. Unlike a trademark, the name used as a geographical indication will
usually be predetermined by the name of the place of production.37 Geographical indications are
protected in accordance with international treaties and national laws under a wide range of
concepts, including:
 special laws for the protection of geographical indications or appellations of origin
 trademark laws in the form of collective marks or certification marks
 laws against unfair competition
 consumer protection laws, or
32
World Intellectual Property Organization (WIPO), About geographical indications, What is a Geographical
Indication? http://www.wipo.int/geo_indications/en/about.html#agri
33
Ibid.
34
World Intellectual Property Organization (WIPO), About geographical indications, Can geographical indications only
be used for agricultural products? http://www.wipo.int/geo_indications/en/about.html#agri
35
World Intellectual Property Organization (WIPO), About geographical indications, What does a geographical
indication do? http://www.wipo.int/geo_indications/en/about.html#agri
36
World Intellectual Property Organization (WIPO), About geographical indications, Why do geographical indications
need protection? http://www.wipo.int/geo_indications/en/about.html#agri
37
World Intellectual Property Organization (WIPO), About geographical indications, What is the difference between a
geographical indication and a trademark? http://www.wipo.int/geo_indications/en/about.html#agri
17
Reference Text for Trainers
 specific laws or decrees that recognize individual geographical indications.
Applicable sanctions range from court injunctions preventing the unauthorized use the payment of
damages and fines or, in serious cases, imprisonment. 38
A number of treaties administered by WIPO provide for the protection of geographical indications,
most notably the Paris Convention for the Protection of Industrial Property of 1883, and the Lisbon
Agreement for the Protection of Appellations of Origin and Their International Registration.
Furthermore, Articles 22 to 24 of the Agreement on Trade-Related Aspects of Intellectual Property
Rights (TRIPS) deal with the international protection of geographical indications within the
framework of the World Trade Organization (WTO). 39
If a geographical term is used as the common designation of a type of product, rather than an
indication of the place of origin of that product, then the term no longer functions as a geographical
indication. Where this has occurred in a certain country, then that country may refuse to recognize
or protect that term as a geographical indication. For example, the term “cologne” now denotes a
certain kind of perfumed toilet water, regardless of whether or not it was produced in the region of
Cologne.40
WIPO is responsible for the administration of a number of international agreements which deal
partially or entirely with the protection of geographical indications (see, in particular, the Paris
Convention for the Protection of Industrial Property and the Lisbon Agreement for the Protection of
Appellations of Origin and Their International Registration). Furthermore, through the work of the
Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications
(SCT), made up of representatives of Member States and interested organizations, WIPO explores
new ways of enhancing the international protection of geographical indications.41
Legal provisions on trade names can be found in the following articles of the Paris Convention
(articles 1§2, 5bis, 10, 10bis) 42 and in the TRIPS Agreement (articles 22-24).
B. INTERNATIONAL TREATIES, AGREEMENT AND CONVENTIONS PROTECTING IPRS
1. The WTO Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS)
The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) is an international
agreement administered by the World Trade Organization (WTO)43 and negotiated and achieved
during the Uruguay Round of the General Agreement on Tariffs and Trade (GATT)44 in 1986-1994.
This Agreement introduced, for the first time, intellectual property rules into the multilateral trading
system while fixing the minimum standards for many forms of intellectual property regulation. The
TRIPS Agreement is an attempt to narrow the differences in the way IP rights are protected around
the world, and to bring them under common international rules.
38
World Intellectual Property Organization (WIPO), About geographical indications, How are geographical indications
protected? http://www.wipo.int/geo_indications/en/about.html#agri
39
World Intellectual Property Organization (WIPO), About geographical indications, How are geographical indications
protected on the international level? http://www.wipo.int/geo_indications/en/about.html#agri
40
World Intellectual Property Organization (WIPO), About geographical indications, What is a "generic"
geographical indication? http://www.wipo.int/geo_indications/en/about.html#agri
41
World Intellectual Property Organization (WIPO), About geographical indications, What is a "generic" geographical
indication?
What
is
WIPO's
role
in
the
protection
of
geographical
indications?
http://www.wipo.int/geo_indications/en/about.html#agri
42
World Intellectual Property Organization (WIPO), Paris Convention for the Protection of Industrial Property,
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html#P113_13775
43
The World Trade Organization (WTO) is an international organization, constituted by 153 members whose objective
is to supervise and liberalize international trade. It was established on 1st January 1995, under the Marrakech Agreement
and replaced the General Agreement on Tariffs and Trade (GATT) of 1947. For further details visit: www.wto.org.
44
The General Agreement on Tariffs and Trade (GATT) was signed in 1947 by 23 countries. The agreement was
designed to provide an international forum to encourage free trade between member states through the regulation and
the reduction of tariffs on traded goods, also providing a common mechanism for resolving trade disputes. For further
details visit: http://www.wto.org/english/tratop_e/gatt_e/gatt_e.htm.
18
Reference Text for Trainers
The TRIPS Agreement establishes how the legislation of the adhering countries must deal with the
following issues: copyright; trademarks; geographical indications, including appellations of origin;
industrial designs; patents; integrated circuit layout-designs; monopolies for the developers of new
plant varieties and trade dress.
The main issues considered by the Agreement include: i.) how the basic principles of the trading
system and other international intellectual property agreements should be applied; ii.) how to give
adequate protection to intellectual property rights; iii.) how countries should enforce those rights
adequately in their own territories; iv.) how to settle disputes on intellectual property between
members of the WTO and; v.) special transitional arrangements during the period when the new
system is being introduced.
Finally, TRIPS encompasses the two basic principles that also govern the GATT and General
Agreement on Trade and Services (GATS): i.) the national treatment; and ii.) the most-favourednation treatment. TRIPS went one step forward and introduced a third principle according to which
intellectual property protection should contribute to technical innovation and the transfer of
technology from which both producers and users should benefit and economic and social welfare
should be enhanced. Czech Republic is Party to the TRIPS Agreement.
1.2 On Copyright and related rights
1.2.1 The Berne Convention
The Berne Convention for the Protection of Literary and Artistic Work of 9 September 1886 has
offered the legal basis for the protection of “literally and artistic works”. The Convention rests on
three basic principles which are: i) the principle of “national treatment”; ii) the principle of
“automatic” protection and; iii) the principle of the “independence” of protection. It contains a series
of provisions determining the minimum protection to be granted, as well as special provisions
available to developing countries which would like to use them.45
The Convention also provides for “moral rights,” these are, the right to claim authorship of the work
and the right to object to any mutilation or deformation or other modification of, or other derogatory
action in relation to the work which would be prejudicial to the author’s honour or reputation.
The Convention is open to all States. Instruments of ratification or accession must be deposited
with the Director General of WIPO. Currently, the Berne Convention counts 164 contracting Stateparties. Czech Republic is Party to the Berne Convention.
1.2.2 The WIPO Copyright Treaty (WCT)
The WIPO Copyright Treaty, adopted on 20 December 1996, is a complementary legal tool in the
granting and protection of copyright as it applies to categories of works not included in the Berne
Convention and therefore constitutes a special agreement under the Berne Convention. The Treaty
mentions two subject matters to be protected by copyright: (i) computer programmes, (ii)
compilations of data or other material (“databases”), in any form, which by reason of the selection
or arrangement of their contents constitute intellectual creations.
The Treaty deals with three rights of authors which are: (i) the right of distribution; (ii) the right of
rental and (iii) the right of communication to the public. Each of them is an exclusive right, subject
to certain limitations and exceptions.
The Director General of WIPO is the depositary of the Treaty which is open to States members of
WIPO and to the European Community. The Assembly is constituted by the Treaty and currently
comprises 88 members. Czech Republic is Party to the WIPO Copyright Treaty.
1.3 On Industrial Property
1.3.1 The Paris Convention
45
For further information on the Berne Convention, see http://www.wipo.int/treaties/en/ip/berne/summary_berne.html
19
Reference Text for Trainers
Patents, utility models, industrial designs, lay-out designs, trade names/firms, marks and
designation of origin and geographical indications are either industrially or commercially applicable.
They fall within the industrial property field. The rules for their grant, regulation, conditions of
application, registration and protection measures against misuse, abuse and infringement are
stipulated in the Paris Convention for the Protection of Industrial Property, adopted on 20 March
1883, which is the basic reference document for what concerns industrial property.46
The substantive provisions of the Convention fall into three main categories: i) national treatment;
ii) right of priority and; ii) common rules47 which apply to all the categories of industrial property
defined by the Convention. The Paris Convention contains provisions for the repression of unfair
competition (Art. 1, §2 and Art. 10bis).
This area of intellectual property is now harmonised at an international level for the first time. On
the basis of Art.1 countries to which the convention applies form a Union for protecting industrial
property.
Focusing on Trademarks, Article 6 of the Convention establishes that the conditions for the filing
and the registration of trademarks shall be determined and regulated in each country of the Union
by its domestic legislation. Simultaneously, a trademark registered in a country of the Union
created by the Paris Convention shall be considered as independent of marks registered in the
other countries of the Union, including the country of origin. As specified by Article 6, “an
application for the registration of a mark filed by a national of a country of the Union in any country
of the Union may not be refused, nor may a registration be invalidated, on the ground that filing,
registration or renewal, has not been made in the country of origin”.
Currently, there are 173 Contracting Parties of the Paris Convention. Czech Republic is Party to
the Paris Convention.
1.3.2 The Patent Cooperation Treaty
Apart from the Paris Convention and the TRIPS provisions on patents, there is also the Patent
Cooperation Treaty (PCT).48 The PCT, was concluded in 1970 and amended in 1979, 1984 and
2001. It is open to State parties to the Paris Convention for the Protection of Industrial Property.
The Treaty makes it possible to seek patent protection for an invention simultaneously in a large
number of countries by filing an "international" patent application. This application may be filed by
anyone who is a national or resident of a Contracting State. Generally, it may be filed with the
national patent office of the Contracting State of which the applicant is a national or resident or with
the International Bureau of WIPO in Geneva (at the applicant's option). If the applicant is a national
or resident of a Contracting State which is party to the European Patent Convention, the Harare
Protocol on Patents and Industrial Designs (Harare Protocol), the revised Bangui Agreement
Relating to the Creation of an African Intellectual Property Organization or the Eurasian Patent
Convention, The international application may also be filed with the European Patent Office (EPO),
the African Regional Industrial Property Organization (ARIPO), the African Intellectual Property
Organization (OAPI) or the Eurasian Patent Office (EAPO).
Once completed, the international application is then subjected to an "international search." This
search is carried out by one of the major patent offices appointed by the PCT Assembly as an
International Searching Authority (ISA). The search results in an "international search report,"
which is, a listing of the citations of such published documents that might affect the patentability of
the invention claimed in the international application. At the same time, the ISA prepares a written
opinion on patentability. The international search report and the written opinion are communicated
by the ISA to the applicant who may decide to withdraw his application, in particular where the said
report or opinion makes the granting of patents unlikely. If the international application is not
46
The full text of the Paris Convention can be found at http://www.wipo.int/treaties/en/ip/paris/
World Intellectual Property Organization (WIPO), Summary of the Paris Convention for the Protection of Industrial
Property, http://www.wipo.int/treaties/en/ip/paris/summary_paris.html
48
The description and information provided here on the Patent Cooperation Treaty can be found on
http://www.wipo.int/pct/en/treaty/about.html
47
20
Reference Text for Trainers
withdrawn, it is published by the International Bureau together with the international search report.
The written opinion is not published.
The procedure under the PCT has the following advantages: (i) the applicant has up to 18 months
more than she/he has in a procedure outside the PCT to reflect on the desirability of seeking
protection in foreign countries, to appoint local patent agents in each foreign country, to prepare
the necessary translations and to pay the national fees etc.; (ii) the search and examination work of
patent offices can be considerably reduced or virtually eliminated thanks to the international search
report, the written opinion and, where applicable, the international preliminary examination report
that accompany the international application and; (iii) since each international application is
published together with an international search report, third parties are in a more favourable
position to formulate a well-founded opinion about the patentability of the claimed invention.
Currently there are 142 Contracting Parties of the Patent Cooperation Treaty. Czech Republic is
Party to the PCT.
1.3.3 The Hague Agreement on Industrial Designs49
The Hague Agreement is an international registration system which offers the possibility of
obtaining protection for industrial designs in a number of States and intergovernmental
organizations by means of a single international application filed with the WIPO. Thus, under the
Hague Agreement, a single international application replaces a whole series of applications which,
otherwise, should have been effected with different national (or regional) Offices. The Hague
Agreement is currently constituted by two international treaties:
 The Hague Act of 28 November 1960 (the “1960 Act”); and
 The Geneva Act of 2 July 1999 (the “1999 Act”).
The Hague System for the International Registration of Industrial Designs provides a mechanism
for registering a design in countries and/or intergovernmental organizations party to the Hague
Agreement. It is administered by the International Bureau of WIPO. This System gives the owner of
an industrial design the possibility to have his design protected in several countries by simply filing
one application with the International Bureau of WIPO, in one language, with one set of fees in one
currency (Swiss Francs). The Hague System simplifies the management of an industrial design
registration, since it is possible to record subsequent changes or to renew the registration through
a single procedural step with the International Bureau of WIPO.50
Advantages of the Hague System
 The Hague System enables design owners from a Contracting Party to obtain protection
for their designs with a minimum of formalities and expense. In particular, they are relieved of
the need to make separate national applications in each of the Contracting Parties in which
they seek protection, thus avoiding any complications that can arise from procedures and
languages which differ between states.
 The Hague system also avoids the need for constant monitoring of the deadline for
renewal of a whole series of national registrations, varying from one State to the other.
Furthermore, it avoids the need to pay a series of fees in various currencies.
 Moreover, by having a single international registration with effect in several Contracting
Parties, the subsequent management of the international registration is considerably
enhanced. For instance, a change in the name or address of the holder, or a change in
ownership for only some or all of the designated Contracting Parties, can be recorded in the
International Register and have effect by means of one simple procedural step carried out by
the International Bureau.
49
The information on the Hague System presented here are based on the World Intellectual Property Organization
(WIPO) document, “The Hague Agreement Concerning the International Registration of Industrial Designs: Main
Features and Advantages”, http://www.wipo.int/export/sites/www/freepublications/en/designs/911/wipo_pub_911.pdf
50
Hague System for the International Registration of Industrial Designs,
http://www.wipo.int/ hague/en/
21
Reference Text for Trainers
The Hague Agreement has 56 Contracting parties. Czech Republic is NOT Party to the Hague
Agreement.
1.3.4 The Washington Treaty on Integrated circuits and Layout-designs (topographies)
Integrated circuits, and layout-designs are protected by the Treaty on intellectual property in
respect of Integrated circuits (or “Washington Treaty”) adopted on 26 May 1989. It is not yet in
force as it has only 10 Contracting Parties. The Czech Republic, Poland and Romania are so far
NOT contracting parties.
The aim of the treaty is to ensure the protection of Integrated circuits and layout-designs within the
territory of each of its members though the offer of a legal ground for the prevention of unlawful
actions against Integrated circuits and Layout-designs and for appropriate legal remedies in cases
of committed infringements. Art. 4 states: “Each Contracting Party shall be free to implement its
obligations under this Treaty through a special law on layout-designs (topographies) or its law on
copyright, patents, utility models, industrial designs, unfair competition or any other law or a
combination of any of those laws”.
1.3.5 The Madrid Agreement Concerning the International Registration of Marks
The Madrid Agreement concerning the International Registration of Marks was adopted in 1891
and entered into force in 1892. The agreement was revised in 1900, 1911, 1925, 1934, 1957 and
1967 and amended in 1979. Any State being a party to the Paris Convention may accede to the
Madrid Agreement.
The Protocol relating to the Madrid Agreement (Madrid Protocol) was adopted in 1989 and entered
into force on 1 December 1995. Under the Madrid Protocol the application for international
registration can be based on a trademark application filed in the country of origin. It is administered
by WIPO.
Due to the international procedural mechanism, the Madrid system offers a trademark owner the
possibility to have his trademark protected in several countries by simply filing one application
directly with his own national or regional trademark office. An international mark so registered is
equivalent to an application or a registration of the same mark effected directly in each of the
countries designated by the applicant. If the trademark office of a designated country does not
refuse protection within a specified period, the protection of the mark is the same as if it had been
registered by that Office. The Madrid system also simplifies the subsequent management of the
mark, since it is possible to record subsequent changes or to renew the registration through a
single procedural step.
In October 2004, the European Community joined the Madrid Protocol System, thus including the
possibility to use Community Trademarks as a basis for international trademark applications and
for Community Trademarks to be applied for via international route.
The Madrid Agreement has 56 members while the Madrid Protocol has 82. Czech Republic is
member of both.
1.3.6 The Singapore Treaty on the Law of Trademarks
The Singapore Treaty on the Law of Trademarks51 was signed in Singapore in March 2006. The
Treaty entered into force in 2009. Czech Republic is NOT Party to the Treaty.
The Treaty establishes common standards for procedural aspects of trademark registration and
licensing. It maintains the streamlined application formalities of the current Trademark Law Treaty
of 1994, but eliminates the provision that required national offices to accept paper applications.
This variation allows national trademark offices to progress to an entirely electronic system.
The Singapore Treaty applies to marks that can be registered under the law of a Contracting Party.
Most importantly it is the first time that non-traditional marks are explicitly recognized in an
international instrument dealing with trademark law. The Treaty is applicable to all types of marks
including non-traditional visible marks, such as holograms, three-dimensional marks, movement
51
The full text of the Singapore Treaty could be found on: http://www.wipo.int/treaties/en/ip/singapore/
22
Reference Text for Trainers
marks, and non-visible marks, such as sound, olfactory or taste and feel marks. The Regulations
provide for the mode of representation of these marks in applications, which may include nongraphic or photographic reproductions. The Treaty also includes a new provision addressing relief
measures for failure to comply with time limits during the trademark application process.
Special provisions have been drawn up to provide developing and less developed countries (LDCs)
with additional technical assistance and technological support as to enable them to take full
advantage of the provisions of the Treaty. It was recognized that LDCs shall be the primary and
main beneficiaries of technical assistance by Contracting Parties of the WIPO.
1.3.7 The Lisbon Agreement for the Protection of Appellations of Origin and their International
Registration 52
The Lisbon Agreement was concluded in 1958, revised in Stockholm in 1967 and amended in
1979. The Agreement is open to States party to the Paris Convention. The aim of the Agreement is
to provide for the protection of appellations of origin. Names as such are registered by the
International Bureau of WIPO in Geneva upon the request of the competent authorities of the
interested contracting State. The International Bureau communicates the registration to the other
contracting States. A contracting State may declare that it cannot ensure the protection of a
registered appellation within one year. A registered appellation may not be declared to have
become generic in a contracting State as long as it continues to be protected in the country of
origin.
The Lisbon Agreement has 27 members: the Czech Republic is a contracting party.
52
World Intellectual Property Organization (WIPO), Summary of the Lisbon Agreement for the Protection of
Appellations
of
Origin
and
their
International
Registration,
available
at:
http://www.wipo.int/treaties/en/registration/lisbon/summary_lisbon.html
23
Reference Text for Trainers
SOURCES
Organization for Economic Cooperation and Development (OECD) (2007), “The Economic Impact
of
Counterfeiting
and
Piracy”,
Executive
Summary,
http://www.oecd.org/dataoecd/13/12/38707619.pdf
United Nations Interregional Crime and Justice Research Institute (UNICRI) (2007) “Counterfeiting:
A Global Spread, A Global Threat”, available at: http://www.unicri.it/news/07123_Counterfeiting_CRT_Foundation.php
World Intellectual Property Organization (WIPO) (2010) About geographical indications, What is a
Geographical Indication? http://www.wipo.int/geo_indications/en/about.html#agri
World Intellectual Property Organization (WIPO) (2010) About Industrial Designs, available at:
http://www.wipo.int/designs/en/about_id.html#protect
World Intellectual Property Organization (WIPO) (2010) About Trademarks, What kinds of
trademarks
can
be
registered?
available
at:
http://www.wipo.int/trademarks/en/about_trademarks.html#function
World Intellectual Property Organization (WIPO) (2010) Frequently Asked Questions/ Patent,
available at: http://www.wipo.int/patentscope/en/patents_faq.html#protection
World Intellectual Property Organization (WIPO) (2010) Hague System for the International
Registration of Industrial Designs, http://www.wipo.int/ hague/en/
World Intellectual Property Organization (WIPO) (2010) Industrial Designs, available at:
http://www.wipo.int/designs/en/
World Intellectual Property Organization (WIPO) (2010) Madrid Agreement concerning the
International
registration
of
Marks,
available
at:
http://www.wipo.int/madrid/en/legal_texts/trtdocs_wo015.html
World Intellectual Property Organization (WIPO) (2010) Madrid System for the International
Registration of Marks, available at: http://www.wipo.int/madrid/en/
World Intellectual Property Organization (WIPO) (2010) Patent Cooperation Treaty (PCT) (1970),
available at: http://www.wipo.int/pct/en/treaty/about.html
World Intellectual Property Organization (WIPO) (2010) Protecting Inventions by Utility Models,
What
is
a
Utility
model?
available
at:
http://www.wipo.int/sme/en/ip_business/utility_models/utility_models.htm
World Intellectual Property Organization (WIPO) (2010) Summary of the Paris Convention for the
Protection
of
Industrial
Property,
available
at:
http://www.wipo.int/treaties/en/ip/paris/summary_paris.html
World Intellectual Property Organization (WIPO) (2010) Summary of the Lisbon Agreement for the
Protection of Appellations of Origin and their International Registration, available at:
http://www.wipo.int/treaties/en/registration/lisbon/summary_lisbon.html
World Intellectual Property Organization (WIPO) (2010) The Hague Agreement Concerning the
International Registration of Industrial Designs: Main Features and Advantages, available at:
http://www.wipo.int/export/sites/www/freepublications/en/designs/911/wipo_pub_911.pdf
World Intellectual Property Organization (WIPO) (2010) What is a Trademark? available at:
http://www.wipo.int/trademarks/en/trademarks.html
World Trade Organization (WTO) (2010) PART II — Standards concerning the availability, scope
and
use
of
Intellectual
Property
Rights,
available
at:
http://www.wto.org/english/tratop_e/trips_e/t_agm3b_e.htm#4
World Trade Organization (WTO) (2010) TRIPS: Geographical indications, Background and the
Current situation, available at: http://www.wto.org/english/tratop_e/trips_e/gi_background_e.htm
24
Reference Text for Trainers
The World Trade Organization (WTO), www.wto.org
25
Reference Text for Trainers
SECTION 2
Definitions of Counterfeiting and Piracy and the Involvement of
Organized Crime
2.1 Definitions of Counterfeiting and Piracy
Counterfeiting and piracy are terms used to describe a range of illicit activities linked to IPR
infringement.53 In its broader sense, the term counterfeiting is often used at the international level
to indicate the infringement of any intellectual property rights, including trademarks, patents,
industrial designs, copyrights and related rights.
A distinction between the two concepts of counterfeiting and piracy can be made, where the first
term refers to the infringement of the norms ruling the use of trademarks and industrial property in
general and the latter refers to the reproduction of copyrighted material without the consent of the
right holder.
The TRIPS Agreement suggests the definitions of counterfeiting and piracy for the purposes of the
agreement. Footnote 14 of art.51 “Suspension of Release by Customs Authorities”, states:
(a) "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 its essential aspects 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;
(b) "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.54
The International Trademark Association (INTA) defines counterfeiting as “the practice of
producing goods, often of inferior quality, and selling them under a brand name without the brand
owner’s authorization. Generally, counterfeit goods are sold under a mark that is identical to or
substantially indistinguishable from a mark that is registered for the same goods, without the
approval or oversight of the trademark owner. Many famous brands, such as COCA-COLA®,
MARLBORO®, and MICROSOFT®, are the subject of counterfeiting, as are brands associated
with products ranging from peanut butter to aircraft parts. Counterfeiting should be distinguished
from trademark infringement or passing off, which involves the use of confusingly similar indicia.
Counterfeiting is most prevalent in developing countries with a strong manufacturing capability but
generally speaking, counterfeit goods are produced and sold around the globe.”55
The UNESCO World Anti-Piracy Observatory states that piracy “includes the reproduction and
distribution of copies of copyright-protected material, or the communication to the public and
making available of such material on on-line communication networks, without the authorization of
the right owner(s) where such authorization is required by law. Piracy concerns different types of
works, including music, literature, films, software, videogames, broadcasting programmes and
signals.”56 The same source also mentions an interesting debate on the compatibility between the
term of “piracy” and the absence of the commercial purpose in the activity by stating that
“[t]raditionally, piracy concerned the unauthorized reproduction and distribution of physical copies
53
Organization for Economic Cooperation and Development (OECD) (2007), “The Economic Impact of Counterfeiting
and Piracy”, Executive Summary, http://www.oecd.org/dataoecd/13/12/38707619.pdf
54
World Trade Organization (WTO), Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS),
http://www.wto.org/english/docs_e/legal_e/27-trips.pdf
55
International
Trademark
Association
website,
“What
is
counterfeiting?”,
http://www.inta.org/index.php?option=com_content&task=view&id=1534&Itemid=&getcontent=4
56
UNESCO, World Anti-Piracy Observatory, “What is Counterfeiting?”, http://portal.unesco.org/culture/en/ev.phpURL_ID=39397&URL_DO=DO_TOPIC&URL_SECTION=201.html
26
Reference Text for Trainers
of protected works, on a commercial scale or with a commercial purpose. However, the rapid
development of the Internet and the massive unauthorized on-line use of protected content, where
the "commercial" element is often missing, have given rise to a lively debate. The question whether
such use constitutes "piracy" and should be treated in the same way as traditional piracy is at the
heart of the current copyright debate. […]”57
Numerous definitions of counterfeiting exist in literature. Staake and Fleisch (2008) define
counterfeiting as “the unauthorized reproduction of goods, services or documents in relation to
which the state confers upon legal entities a statutory monopoly to prevent their exploitation by
others”.58 If we specifically refer to products, counterfeiting is defined by the same authors as “the
manufacture of articles which are intended to appear to be as similar to the original as to be passed
off as genuine items”.59
Different typologies of counterfeiting – or distinctions within the general definition – could be also
identified. Staake and Fleisch distinguish between deceptive counterfeiting and non-deceptive
counterfeiting: the first refers to cases in which the buyer purchases counterfeit goods in “good
faith”, i.e. without knowing that the intellectual property right inherent to the good has been
infringed; the second to cases in which the buyer fully knows that the article is the result of an IPR
infringement.60
According to Casillo, another distinction could be made between two modalities of counterfeiting:
allusion and expropriation.61 The first concept refers to goods which are very similar but
intentionally not identical to those already commercialized on the market or to goods which recall
other brands or trademarks of famous articles.62 On the contrary, cases of expropriation could be
identified when: (a) the original brand is affixed to goods which belong to product categories
different from the original one63; (b) the original product is imitated in its format or design or
functionality64; (c) goods are produced almost identical to the original articles, by copying brands,
trademarks, design, format and technical characteristics. The last case of counterfeited goods
almost identical to the original ones is alternatively defined by Casillo as total counterfeiting.65
2.2 Counterfeiting as a financial and IP crime
According to the Interpol, Intellectual Property Crime (IPC) is a generic term used to describe a
wide range of counterfeiting and piracy offences. It primarily affects the industrial and trade sector,
therefore, IPC falls under the classification of financial crimes. Counterfeiting and piracy are
undoubtedly among the most serious and widespread crimes under the IPC category and by
extension under financial crimes. Other types of financial crimes are currency counterfeiting,
money laundering, payment/credit card fraud etc.66
A comprehensive definition of IPC has been made by the Northern Ireland Organized Crime
Taskforce according to which IPC involves “counterfeited and pirated goods, manufactured and
sold for profit without the consent of the patent or trademark holder.”67 IPC represents one aspect
57
Ibid.
Staake, T., Fleisch, E. (2008), “Countering Counterfeit Trade”, Springer (ed.), p.17.
59
Ibid.
60
“Deceptive counterfeiting shall refer to cases where a person or an organization purchases counterfeit goods in
the belief they are buying genuine articles; non-deceptive counterfeiting shall refer to cases where a person or an
organization purchase counterfeit goods knowing of their counterfeit nature”. Ibid., p.18.
61
See Casillo, S. (1998), “L’irresistibile ascesa dell’industria del falso in Italia”, in Il Mulino, n°4, p.709.
62
Some examples could be done: famous cases of allusion are counterfeiting of perfumes such as Chanel No.5
and Versace (respectively counterfeited as “Cannel 5” and “Versage”) or of car-stereo Pioneer (become “Pioniere”) and
even pens (Bic which has been counterfeited as “Bip”).
63
For example the brand of a perfume could be affixed to clothes or other goods which are not perfumes.
64
This is for example the case of reverse engineering or industrial espionage able to lead to the production of
products with the same level of quality or functionality.
65
Casillo, S., op. cit., p.698.
66
Information retrieved form the Interpol website, http://www.interpol.int/public/FinancialCrime/default.asp
67
See the Organized Crime Taskforce of Northern Ireland (2002), “The Threat: Assessment 2002. Serious and
Organized
Crime
in
Northern
Ireland”,
the
Police
Service
of
Northern
Ireland,
p.8,
http://www.nio.gov.uk/organised_crime_threat_assessment_2002.pdf
58
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Reference Text for Trainers
of the informal economy (black market) which operates in parallel to the formal economy.68 A
variety of activities within the informal economy involve organized crime. Examples include: drugs
trafficking, human trafficking, smuggling of migrants or counterfeit credit cards and is structured
upon practices such as corruption, extortion, blackmail, bribery etc. IPC involves a wide range of
criminal actors ranging from individuals to organized criminal groups. IPC includes the
manufacturing, transporting, storing and sale of counterfeit or pirated goods. Generally, the above
is organized and controlled by criminals or criminal organizations.69 Due to its expansion and its
significant economic importance the informal economy favours the perpetration of IPC while IPC in
turn continues to nourish informal economy’s networks.
Interpol states that IPC is a serious financial concern for producers, brand owners and various
companies70 as it contributes towards mass losses in annual turnovers, hampers the Research and
Development (R&D) sector and encourages unfair competition which cannot be sustained by
legitimate companies. In addition, counterfeiting is a serious threat against the health and safety of
consumers in many cases as the compromised quality of counterfeit products put consumers’ life in
danger, especially products of “first range” consumption such as medicines, food and beverages,
spirits and children’s toys.
2.3 Beyond IPR Infringement: the Negative Impact of Counterfeiting
Counterfeiting is generally considered to be a relatively harmless and “victimless” crime.71
Furthermore, from a consumer’s perspective this activity apparently creates some advantages as
counterfeit goods are usually low price replicas of costly, desirable goods. Consequently, this
allows the average consumer to purchase goods which would otherwise have been out of reach. It
may be for this very reason that the repression of counterfeiting has been lower than other types of
crime.72 In reality, however, counterfeiting constitutes a serious problem which causes grave
repercussions throughout the economy, the state and in many cases, among consumers.73
Adopting the mainstreaming classification of the costs of crime (e.g. the Mainstreaming
Methodology for Estimating Costs of Crime project -MMECC)74, three categories of costs can be
distinguished: costs in anticipation of crime, costs as a consequence of crime and costs in
response to crime. Costs in anticipation of crime, which follow a preventive approach, are incurred
when measures are implemented with the objective of reducing the vulnerability of goods to
counterfeiting. These costs may include specific expenses (i.e. anti-counterfeiting technologies) or
general costs to improve risk-reducing behaviour (i.e. internalization of the company’s code of
ethics and principles by employees as to ensure a higher level of confidentiality with regards
projects and goods). Costs as a consequence of crime correspond to any costs or losses incurred
by victims as a consequence crime. These may include productivity loss, property loss, long term
consequences of victimization, legal expenses, health services etc. Ultimately, costs in response of
crime are equivalent to expenses incurred for the detection of a crime and the prosecution of
offenders (e.g. police, prosecution and legal expenses).75
2.3.1 IPR Holders
The IPR holders are usually those companies which manufacture and sell the goods for which they
hold IPRs. In general, there are two situations which may increase the risk for companies to
become victims of counterfeiting:76
68
Ibid., pp.2-3.
Ibid., p.3.
70
Interpol website, op. cit., http://www.interpol.int/public/FinancialCrime/default.asp
71
OECD (2008), op. cit., p.263.
72
Ibid.
73
International Anti-Counterfeiting Coalition (IACC) (2005), “The Negative Consequences of Intellectual Property
Theft: Economic Harm, Threats to the Public Health and Safety and Links to Organized Crime and Terrorism”, white
paper, Washington.
74
See the MMECC website, http://www.costsofcrime.org/CostingPrinciplesandMethodology/
75
Ibid.
76
Calovi, F., Vettori, B., Yu J. (2008), op. cit., pp.132-134.
69
28
Reference Text for Trainers

when they fail to protect themselves adequately as a result of lack of knowledge regarding
the norms related to IPRs and/or they do not apply these norms because they believe them
to be a waste of money or they simply chose not to invest to protect the brand;

when they contract out or set up company branches in countries where the protection of
IPRs is inadequate and/or where countermeasures against such criminal activities are not
implemented.
To reduce this risk, numerous companies now invest in preventive measures and actions to
prevent the crime, such as R& D for the proposal of new products, the hiring of private investigators
and/or the introduction of anti-counterfeiting technologies.77 Despite these interventions,
companies are still at risk of counterfeiting.
The existence of a “counterfeiting industry”, which produces and sells products at a lower price
than the originals, has grave repercussions on the legal industry. It should also be noted that the
counterfeiting industry also benefits from the fact that it does not incur some costs which are
instead applied to a legal industry and the legal market. Examples of such costs include:

costs to guarantee high quality standards;

costs resulting from the compliance with regulations concerning safety in the workplace
and/or quality controls;

costs for the purchasing of high quality materials;

costs for marketing and R&D (these are incurred by the industry which legally produces the
original goods).
The counterfeiting industry produces goods which already include R&D value and which do not
require any type of marketing, as advertising carried out for the original good is usual enough
publicity. Taxes are generally avoided by counterfeiters as their products are usually sold on the
black market.78 Lower expenses incurred mean that the counterfeiting industry can produce and
sell counterfeit goods at a lower price.79 Consequently, the following can be expected with respect
to the legal company:

a loss in terms of market share for the company;

a reduction in revenues;

a loss in terms of job positions.
According to a classification system formulated by Bronca, two categories of costs can be
distinguished:80

Direct costs: reduction in demand as consumers opt for the cheaper version of the product,
financial damages occur due to required changes in productions, as well as investment in
R&D.

Long term indirect costs: expenses incurred for the registration of a trademark, advertising,
investigation costs and legal expenses.
According to the Association of Public Safety Communications Officials (APCO), the incidence of
counterfeited sporting goods is equivalent to 10-12% of the total value of the sector globally. In the
EU alone this incidence is equivalent to 11% and the estimated losses are more than 7.5 billion
Euros.81 The World Health Organisation (WHO) estimates that the problem of counterfeit
77
Ghidini G. (1998), “Ricerca e Sviluppo come motore del ‘vantaggio competitivo’: il ruolo della proprietà
intellettuale” in Micro&Macro Marketing, n°2, pp.229-244.
78
UNICRI (2007), op. cit., p. 41.
79
Centre d’Etudes Internationales de la Propriété Industrielle (CEIPI) (2004), “Impacts de la contrefaçon et de la
piraterie en Europe. Rapport Final”, Université Robert Schuman, Strasbourg, pp.16-17, downloadable at
http://counterfeiting.unicri.it/resources.php
80
Bronca, E. (1998), “La contraffazione del marchio” in Micro&Macro Marketing, n°2, August, pp.195-196.
81
APCO (2003), “Global Counterfeiting”, Background Document, p.18.
29
Reference Text for Trainers
medicines is limited in developed countries in which their presence is less than 1% due to efficient
regulatory and control mechanisms. The problem is significant in developing countries (Africa,
areas of Asia and areas of Latin America) in which the incidence of counterfeit medicines ranges
from 10-30%. It is worth noting that some former Soviet republics have a proportion of counterfeit
medicines which is above 20% of market value. Finally, WHO estimates that more than 50% of
medicines sold online through sites that conceal their actual postal address are counterfeit.82
According to the Centre for Economics and Business Research, counterfeiting within the
pharmaceutical sector has led to a loss of 292 million Euros 83. According to The Motor and
Equipment Manufacturers Association, sale of counterfeited spare motor vehicle parts has caused
a total loss of 12 billion dollars and a loss of 750,000 jobs.84 According to the WIPO, total losses in
the perfume and cosmetics sector are estimated to be 3,017 million Euros.85 Furthermore,
according to the Council of Europe, every year counterfeiting causes a total loss of 100,000 jobs
within the European Union.86
2.3.2 Consumers’ Health and Safety
There are two types of consumers who purchase counterfeit goods: aware consumers and
unaware consumers. Consumers of counterfeit clothes and accessories are usually aware of what
is being purchased. In this case, the item is purchased as people aspire to move up the social
ladder through imitating members of higher social classes through buying a “status symbol”
product. Advertising and brands’ reputation amplify this desire. The average consumer, however,
does not have enough financial resources to buy such costly goods and may tend to opt for the
counterfeit version.87
Accidental consumers are people who buy counterfeit products without being aware of their illegal
nature. Deceived consumers sincerely believe to have purchased an authentic product at a
convenient price. In such case, it often results in the goods bought not meeting the consumer’s
expectations.
It is to be noted that low quality of some counterfeit products can be extremely hazardous to the
consumers’ health and safety.88 Examples include: pharmaceuticals, electronic components,
alimentary products, spare parts for motor vehicles and toys. Such counterfeit goods are usually
made from sub-standard materials which have not undergone any sort of safety control, which in
some cases may contain harmful substances. For this reason consumers of counterfeit goods tend
to be more cautious when purchasing such items and consequently counterfeiters are obliged to
produce goods even more similar to the original, making them less distinguishable from one
another. Examples of serious consequences caused by counterfeited goods include: numerous
deaths in various countries (China, Turkey, Thailand)89 caused by the consumption of counterfeit
food and/or beverages; food and/or alcohol poisoning; plane and/or car crashes as a result of
counterfeit spare parts used in aircrafts and/or motor vehicles; serious health problems caused by
the consumption of counterfeit medicines (often made without or with insufficient active
ingredients) or smoking of counterfeit cigarettes (produced by mixing plastic, soil, sand and rodent
droppings with tobacco leaf or which contain extremely high nicotine levels); eye, ear, kidney and
immune system problems caused by counterfeit batteries (often made with high levels of mercury);
inflammation caused by use of fragrant and cosmetic products containing bacteria or toxic
substances; safety problems for children who play with counterfeit toys.90
82
WHO (2006), “Counterfeit medicines: an Update on Estimates”, International Medical Products AntiCounterfeiting
Taskforce,
IMPACT,
15
November
available
online
http://www.who.int/medicines/services/counterfeit/impact/TheNewEstimatesCounterfeit.pdf
83
Centre for Economics and Business Research (CEBR ) (2000), “The Economic Impact of Counterfeiting in
Europe”, pp. 2-3.
84
Majid, Y. (2005), “A Deadly Faith in Fakes”, quoted in CEBR (2000), ibid., p.8.
85
World Intellectual Property Organization (WIPO) (2004), “WIPO National Seminar” ibid., p.4.
86
Council of Europe (2004), “Counterfeiting: Problems and Solutions”, Report of the Committee on Economic
Affairs and Development.
87
Curcio, A.M (1998), “Desiderio di falso, falso desiderio?” in Micro&Macro Marketing, n°2, pp.215-216.
88
UNICRI (2007), op. cit., pp. 49-50.
89
"Global Counterfeiting” (2003), background document, pp.11-15.
90
Ibid.
30
Reference Text for Trainers
Examples of counterfeit goods considered to be hazardous which have been seized include:
counterfeit shampoos which contained bacteria or even acid in North America and in Zambia;
packages of counterfeit toothpaste which contained toxic substances in Spain; children toys
produced with flammable materials in Canada.91
Health and safety costs are not the only costs incurred by consumers. Other costs may include
emotional and physical harm (value of reductions in wellbeing experienced by an individual or
household as a result of the physical and emotional impact of victimization) and legal expenses
(only if the users decide to take legal action).92
2.3.3 National Economy and Society
The State is also a victim of the counterfeiting industry, since it has to bear the costs in response to
crime. In particular, the State must cover police costs, justice costs, costs deriving from criminal
sanctions, costs linked to the drawing-up of a legislative structure which disciplines the crime, as
well as the penalties and costs necessary to have effective controls at customs.
Further costs incurred by the State include those which derive from crime. These costs can be
divided into two categories:

Direct losses: national governments may bear losses due to a reduction in tax revenues. A
reduction in tax revenues can be caused by different factors. Primarily, it may reflect a
reduction of revenues originating from legal companies as a result of less profit earned and
thus lower taxes to be paid. A second factor is linked to the fact the counterfeit industry
often sells its products on the black market thus avoiding paying taxes.

Indirect losses: counterfeiting can lead to general loss of trust in the government’s capacity
of ensuring compliance with IPRs. Consequently, there is an ever higher reluctance to
establish company branches in countries where counterfeiting is widespread, thus, a
reduction in the amount of foreign investments made within these countries.
Furthermore, authentic products which are manufactured in countries where the counterfeit
industry is notably active tend to be perceived, even though authentic, as low quality goods. This
obviously has a negative effect on exports. As a result, the authentic product’s reputation is
defamed and the levels of exports are decreased.93
2.4 Types of Counterfeiters
Counterfeiters are individuals in various ways involved in activities linked to the unauthorized
production of copies of original products with the purpose of generating profits. The decision to
invest in the production of counterfeit goods is often based on a cost-benefit analysis.
Counterfeiters base their costs assessment on a calculation of the efforts required to produce a
particular counterfeit good. Social perceptions, legislation and the level of its enforcement94 are
also taken into account. Furthermore, the evaluation of benefits weighs up the opportunities of
earning large profit margins at low costs.95 It is to be noted that counterfeiting has until recently
been regarded as a “victimless crime” and has not been deemed socially dangerous, therefore its
repression has been limited.96
Counterfeiters are often involved in other criminal activities, such as drug and arms trafficking,
illegal workforce employment, human trafficking, illegal immigration and money laundering.
Furthermore, these individuals may resort to violence as a tool to coerce others to work and/or
cooperate with them. These coercive methods may include psychological pressure, blackmail and
91
Ibid., pp.49-51 and UNICRI (2007), op. cit., pp. 49-50.
For further information see http://www.costsofcrime.org/CostingPrinciplesandMethodology/
93
“Global counterfeiting” (2003), ibid., p.16, and UNICRI, (2007), op. cit., p. 49.
94
Williams F.P., Mc Shane M.D. (2002), “Devianza e criminalità”, Il Mulino, Bologna, p.196.
95
OECD
(2008),
“The
Economic
Impact
of
Counterfeiting”,
Paris,
http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/OECD-FullReport.pdf
96
Ibid., p.87.
92
pp.
47-49,
31
Reference Text for Trainers
intimidation.97 Characteristics which, together with the use of coercion, have led to the worldwide
involvement of numerous individuals operating alone or more often organized in groups.
2.4.1 Single Counterfeiter
Even though counterfeiting activities are often carried out at an international level and require a
complex set of skills, which individual companies do not usually possess, smaller scale
counterfeiting activities do exist. These small scale activities are carried out by small
entrepreneurial organizations constituted mainly by single counterfeiters who may cooperate
together and which produce and distribute counterfeited goods. These small scale activities can
evolve into larger scale activities if there is a significant amount of capital and the entrepreneur has
tight connections with third parties operating in and across different locations.98 In such cases,
crimes considered to be typical of those linked to organized crime are committed. This may include
the employment of an illegal workforce, corruption of customs officers and police forces, coercive
methods such as blackmail and intimidations used to oblige legal companies to produce counterfeit
goods. Furthermore, these illegal activities may be facilitated by weak border controls, differences
across jurisdictions and a lack of severe and adequate penalties.99
Five types of counterfeiters have been detected by Staake and Fleisch:100

Disaggregators: usually produce replicas of fashion company brands. Goods produced are
easily made and are often of poor quality (the machines used during manufacturing may be
of poor quality). In order to minimize transport costs these goods are usually sent in large
quantities. Disaggregators reduce the risks of detection by choosing countries considered
to have weak border controls as places of destination for the goods in question.

Imitators: produce replicas of medium quality, thus imitators are required to have specific
knowledge regarding the production of the chosen goods. Furthermore, a large amount of
initial capital is invested in machinery used for manufacturing the goods. Imitators
counterfeit both brands and designs. Their market is mainly national.

Fraudsters: produce low quality counterfeit goods. The goods produced are similar in
appearance to the original. It is for this reason that their retail price is just slightly lower than
the original good.

Desperados: produce easily imitable goods, such as medicines and spare parts for motor
vehicles. In order to reduce the risk of being detected, desperados produce small quantities
of goods to then sell them at high retail prices.

Counterfeit smugglers: profit by avoiding tax and violating custom laws. One particular form
of ‘counterfeiting’ consists of suppliers selling factory overruns on the black market. Factory
overruns are those goods produced in excess with respect to the quantity contractually
ordered from the supplier by the retailer. This phenomenon cannot be formally considered
as counterfeiting, since neither copyright nor trademark rights are violated (after all, the
good being sold is an authentic product). The license agreement stipulated between the two
parties (supplier and retailer) is violated. It is to be noted, however, that these products are
often included in statistics concerning counterfeit products and their dissemination through
business associations.
2.4.2 The Implication of Organized Crime
97
Union des Fabricants (UNIFAB) (2004), “Counterfeiting & Organized Crime Report”, 2nd edition, Paris, p. 11,
http://counterfeiting.unicri.it/docs/Union%20des%20Fabricants.Counterfeiting%20and%20Organised%20Crime%20Repo
rt.2nd%20edition2004.pdf
98
UNICRI, op. cit., p.110.
99
Savona E.U. (1999), “Trends and Causes of Cross-border (organized) Crime in Europe”, text of the report used
during the “Conference on Area of freedom, security and justice in the EU: policy development and practical
implementation of criminal law co-operation”, ERA Congress Centre, 18-19 October, Trier (Germany).
100
Staake, T., Fleisch, E. (2008), “Countering Counterfeit Trade. Illicit market insights, Best-Practice Strategies and
Management Toolbox”,Springer-Verlag (editions), Berlin Heidelberg, pp.22-54.
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Reference Text for Trainers
The United Nations Convention against Transnational Organized Crime101, adopted by General
Assembly resolution 55/25 of 15 November 2000, is the main international instrument in the fight
against transnational organized crime. The Palermo Convention entered into force on 29
September 2003, but the Czech Republic has not ratified it.
The Convention represents a major step forward in the fight against transnational organized crime
and signifies the recognition by Member States of the seriousness of the problems posed by it, as
well as the need to foster and enhance close international cooperation in order to tackle those
problems. States that ratify this instrument commit themselves to taking a series of measures
against transnational organized crime, including the creation of domestic criminal offences
(participation in an organized criminal group, money laundering, corruption and obstruction of
justice); the adoption of new and sweeping frameworks for extradition, mutual legal assistance and
law enforcement cooperation; and the promotion of training and technical assistance for building or
upgrading the necessary capacity of national authorities.
Counterfeiting is a highly profitable crime and a major source of tax-free income. It is yet another
“seed corn” enabling organized criminal groups to invest the profits of crime into other illegal
activities. The Palermo Convention represents a significant advancement in the repression of the
phenomenon of counterfeiting as irrefutable links between counterfeiting and organized criminal
groups have been established.
According to Art.5 an organized criminal group is a “structured group of three or more persons,
existing for a period of time and acting in concert with the aim of committing one or more serious
crimes or offences established in accordance with this convention, in order to obtain, directly and
indirectly, an economic or other material benefit”.102 These criminal groups are characterized by a
durable structure which commits criminal offences in order to generate profits. The globalization of
markets, together with the widespread distribution of information technologies has led an ever
greater demand for illegal goods and services. Consequently, this increase in demand has led to
new profit opportunities and the formation of alliances among various organizations.103 These
elements provide a better understanding of why a significant portion of counterfeit trafficking is
managed by organized criminal groups. There is a demand for illegal products which is satisfied by
them. Counterfeit goods may be sought by consumers if there is a lack of products along legal
distribution chains or if the prices offered are more advantageous than those of the original
products.
These counterfeit goods are often transported along the same trade routes used for drug and arms
trafficking. Consequently, such goods may be transported in collaboration with the various groups
managing other types of illegal trade.104 These relations have, with time, facilitated the evolution of
counterfeiting and transformed it into an extremely well organized transitional criminal activity.
Organized criminal groups have various economic resources and thus can invest in all types of
sectors, including the technological ones, therefore, they can be considered as real illegal mass
producers. Direct involvement of the criminal groups in the counterfeiting industry occurs if the
counterfeit activity is owned by one of these organized criminal groups.
Indirect involvement in counterfeiting occurs when one of these groups decides to endorse a preexisting legal company.105 Organized criminal groups are able to evade border controls by resorting
to corruption and/or intimidation which may further result in their products being put on the legal
distribution chain.106 Counterfeiting activities ensure a low level of detection and a high level of
profitability. Organized criminal groups consider counterfeiting as a way to generate funds which
can be then laundered by investing them in other activities, both illicit and licit.107
101
To download the text of the United Nations Convention against Transnational Organised Crime, please visit:
http://www.unodc.org/unodc/en/treaties/CTOC/index.html
102
United Nations (2000), “United Nations Convention against Transnational Organized Crime”, Art. 2(a).
103
UNIFAB (2004), op. cit., p.7.
104
UNICRI (2007), op. cit., pp.104-109.
105
Calovi, F., Vettori, B., Yu, J. (2008), “I falsi di moda. Le vulnerabilità del mercato italiano della moda alla
contraffazione”, Franco Angeli (editions), Milano, p. 130.
106
UNICRI (2007), op. cit., pp.104-109.
107
“Global counterfeiting” (2003), Background document, p.20.
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The Organisation for Economic Co-operation and Development (OECD) states that organized
criminal groups are actively involved in producing, smuggling and selling untaxed alcoholic
beverages and cigarettes; electronic components; clothes and accessories. This speculation is
based on the fact that the previously mentioned sectors are the most profitable and involve less
risk.108 According to the Union des Fabricants, the Italian Camorra, Albanian gangs, Asian gangs
(especially the Japanese Yakuza) and Turkish clans (in particular the Bucak clan) are the main
criminal networks operating in the counterfeiting industry.109 According to police and
investigations110, it is thought that the Camorra is specialized in counterfeiting clothes, especially
items associated with famous brands. In the Port of Naples alone, according to the Italian Customs
Agency, 60% of the goods unloaded are not checked. 1,600,000 tonnes of goods with Chinese
origin are unloaded and registered; however, another 1,000,000 tonnes of Chinese goods remain
unchecked. It has been estimated that two hundred million Euros of taxes were evaded. Cheap
counterfeit products were bought in Eastern countries, where illegal workforces are often employed
in the production process of such goods, then shipped over to Italy and unloaded at Port of Naples,
to be then loaded onto vans and distributed throughout Italian and other European cities.111 The
Camorra is also involved in the production of counterfeit CDs. These CDs are often imported from
countries such as Bulgaria and Ukraine.112 The Camorra manages all stages of production,
distribution and sales of counterfeit products by financing and controlling the companies which
produce the goods.
Albanian gangs are particularly active in the port of Antwerp in Belgium and they deal with all types
of counterfeit products. Asian gangs are more skilled in the manufacturing and distribution of
counterfeit credit cards, software and electronic entertainment devices. Asian gangs are known to
collaborate with organized criminal groups in Eastern Europe, Eastern India and Nigeria. The
Bucak clan monopolizes the sales of counterfeit clothes in Kusadasi in Turkey.113
The Link between Counterfeiting and other serious Organised Crimes
As any serious organised crime, counterfeiting poses a significant threat to the legitimate economy,
consumer safety, national values and social stability.114 Nevertheless, IP crime is still considered
very attractive to global criminal groups as it is high-profit and low-risk, with inadequate penalties often just a fine and/or a short suspended sentence.
Organized crime’s involvement in counterfeiting may be better understood by considering three
motivations: consolidating, expanding vertically, and expanding horizontally. In the first, as the
entry barrier to piracy is lowered, organized crime entrenches itself in the activity in order to fend off
amateur competitors. In the second, a criminal group expands into piracy to derive profit from
experience in related criminal activity. For instance, the methods used in human smuggling—forging
documents, laundering money, smuggling objects or people across borders, and the like—can be
leveraged when turning to piracy and vice-versa. The third, and most prevalent, motivation is
expanding into piracy to diversify a criminal group’s illicit revenue streams.
The profits made by counterfeiting are often used to fund other serious organized crime such as
drugs and arms smuggling, people trafficking, identity theft, money-laundering and child
pornography.115
108
OECD (2008), op. cit., pp.87-88.
Union des Fabricants, (2004), op. cit., pp.16-17.
110
See, Saviano R. (2006), “Gomorra. Viaggio nell’impero economico e nel sogno di dominio della camorra”,
Mondadori (editions), Milano, pp.11-47.
111
Ibid.
112
UNIFAB (2004), op. cit., pp.16-17.
113
Ibid.
114
The Anti-Counterfeiting Group, Links between counterfeiting and other serious organised crime, available at:
http://counterfeiting.unicri.it/docs/AntiCounterfeiting%20Group.Links%20between%20Counterfeiting%20and%20Other%20Serious%20Crimes.February2008.
UK.pdf
115
RAND Corporation (2009), Film Piracy, Organised Crime and Terrorism, RAND, available at:
http://www.rand.org/pubs/monographs/2009/RAND_MG742.appendix.pdf
109
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By investigating drugs or other trafficking/corruption-related crimes, it is frequently found that
warehouses containing counterfeit products are also discovered. The opposite situation hardly
occurs. This is mainly due to the fact that investigations on counterfeiting cases usually are not
deep enough to allow discovering possible links with other crimes.
For this very reason, in order to make advancements in countering counterfeiting-related crimes
and discovering the criminal networks behind them, all the available investigation tools need to be
used.
Some case studies and news showing the connection between counterfeiting and other organised
crimes are reported in the boxes below.
Box 1
Operation Lund and human smuggling in Britain
On 5th February 2004, 21 illegal Chinese immigrant cockle-pickers drowned as their unlicensed gang
master forced them to work in dangerous conditions. Police found evidence that the head of the syndicate
ran an extensive human-smuggling operation at his numerous residences. In gathering evidence, police
also found more than 4,000 counterfeit DVDs, as well as computers containing counterfeit materials. This
case highlighted the “range of possible entry methods exploited by Chinese organized immigration crime
groups”.
Highlight. This case demonstrates an IPR-infringement crime connection to one of the most infamous
incidents of illegal Chinese immigration and labour abuse in England’s history.
Piracy revenue was a secondary but important part of this operation: the commercial scale of operation
showed a significant investment in equipment and blank media. There was no surveillance or intelligence
about how he entered into piracy.
Motivation for entry into piracy. This is a case of vertical expansion, as the gang master’s piracy operation
was a direct extension of the gang’s primary activity of human smuggling. By expanding into piracy, the
gang master was able to capture additional profits from the labour he had at his disposal.
Role of law enforcement. Police identified the piracy operation they uncovered; prosecutors successfully
convicted the gang master and his accomplice of 11 counts of copyright infringement.
Evidence base. The evidence base comprises the court proceedings and press accounts, which provide
vivid details of the drowning tragedy and the national response that followed.
Police discovered tens of thousands of counterfeit DVDs, disc copiers, and high-end printers in a search of
the gang master’s cousin’s residence. Counterfeit DVDs like those found at the residence were being sold
by Chinese illegal immigrants in the area. These circumstances suggest that the immigrant cockle-pickers
were recruited to also assist in the manufacture and sale of the counterfeit DVDs. The gang master’s
cousin was charged with both immigration and trademark offences.
Source: Rand Corporation, Safety and Justice Programme
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Box 2
Counterfeiting revenues to fund drug trafficking in the U.K.
On July 2009 fake goods worth around £3m were seized in one of the biggest-ever counterfeit raids in
Manchester. Customs and trading standards officers swooped on a Piccadilly warehouse after a tip-off and
found thousands of boxes of bogus gear.
Officials believe the warehouse supplied hundreds of shops and market stalls across the country. They are
treating it as a body blow to counterfeit gangsters who have plagued Manchester.
In 2007, the M.E.N revealed the city was regarded as the country's fake goods capital and officers have
continued to target the illegal industry. They are now hunting for the factory's owner - nobody was inside
when the doors were smashed down at the Chapeltown Street site.
The huge stash included fake Gucci purses, Prada handbags and thousands of boxes of trainers bearing
brand names such as Nike and Lacoste. There were also polo shirts, fleeces, t-shirts and coats from
bogus top labels such as Armani and Dolce and Gabbana. One pile of boxes contained the popular
Australian Ugg boots.
Officers also found hundreds of ghd hair straighteners. The company warned that the fakes could be
`lethal'. A spokesman for the Anti-Counterfeiting Group said: "There is no doubt that some of the vast
sums raised from counterfeiting go to fund drug trafficking".
Graham Forbes, from Her Majesty's Revenue and Customs, added: "The gangs behind this form of
criminality reap huge profits from their sales which are ploughed straight back into the criminal underworld,
feeding activities like drug dealing and fraud."
Source: Manchester Evening News
Box 3
Counterfeiting and firearms smuggling: the involvement of Camorra
U.S. authorities alleged that a band of criminals sent from Italy by the Camorra ran a counterfeiting ring
in the tri-state area (New York, New Jersey and Connecticut) that sold knock-off clothing and electronics
on street corners, at flea markets and on the Internet.
It is claimed the proceeds from the sales were funnelled back to the organized crime leadership in
Italy.
The alleged leader of the ring imported items such as video cameras, MP3 players and clothing
through his company and then placed counterfeit labels on them. Authorities alleged the group working
under the leader consisted of dozens of people sent by a Naples-based organized crime family, part of the
Camorra organized crime syndicate.
After a seven-month investigation, police raided the ring leader’s house, his company warehouse,
together with another house where authorities said many Italian nationals allegedly involved in the scam
were living. Hundreds of items of counterfeit merchandise, including Apple iPod labels, were recovered
from the warehouse, and police also found a number of firearms.
Source: CIB Counterfeiting Confidential
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Box 4
The case of Ang Bin Hoey Triad in Malaysia
Malaysia became a major centre for the production and distribution of pirated films since law enforcement
in China and Hong Kong began to crack down aggressively on burning labs and began arresting
organized-crime bosses as well as low-level front men in the 1990’s. Many of the counterfeiting operations
in Malaysia are said to have ties to organized crime in Taiwan.
Ang Bin Hoey Triad comprises a network of more than a hundred street gangs with an estimated 11,000
members. It’s leader is alleged to have controlled more than 1,000 companies, many of them illicit,
including several piracy factories.
Highlight. This case demonstrates how counterfeiting and piracy operations fit easily into a traditional,
hierarchical organized-crime structure.
Piracy revenue. The triad profited from counterfeiting and piracy primarily through the extortion of vendors
in Kuala Lumpur.
Motivation for entry into piracy. This is a case of both consolidation and horizontal expansion. At the street
level, the triad’s gangs consolidated its power over territory, in part including profitable counterfeiting and
piracy markets among its rackets. The horizontal expansion was made thorough the 1,000 companies the
leader is alleged to have controlled across both licit and illicit markets.
Role of law enforcement. The Ministry of Domestic Trade and Consumer Affairs handles the enforcement
of anti-piracy laws. Over the years enforcement has been met with violence and intimidation from pirates,
cumulated with death threats against the MDTCA.
Evidence base. Information on ‘Operation Copperhead’ was compiled from numerous press reports and
verified by interviews with law enforcement.
Source: Rand Corporation, Safety and Justice Programme
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Reference Text for Trainers
SOURCES
APCO (2003), “Global Counterfeiting”, Background Document.
Bronca, E. (1998), “La contraffazione del marchio” in Micro&Macro Marketing, n°2, August.
Calovi, F., Vettori, B., Yu, J. (2008), “I falsi di moda. Le vulnerabilità del mercato italiano della
moda alla contraffazione”, Franco Angeli (editions), Milano.
Casillo, S. (1998), “L’irresistibile ascesa dell’industria del falso in Italia”, in Il Mulino, n°4.
Centre d’Etudes Internationales de la Propriété Industrielle (CEIPI) (2004), “Impacts de la
contrefaçon et de la piraterie en Europe. Rapport Final”, Université Robert Schuman, Strasbourg,
pp.16-17, downloaded at http://counterfeiting.unicri.it/resources.php
Centre for Economics and Business Research (CEBR) (2000), “The Economic Impact of
Counterfeiting in Europe”.
CIB Counterfeiting Confidential, (August 2008) available at: http://www.iccccs.org/index.php?option=com_content&view=article&id=29&Itemid=3
Council of Europe (2004), “Counterfeiting: Problems and Solutions”, Report of the Committee on
Economic Affairs and Development available at
http://assembly.coe.int/Documents/AdoptedText/ta04/EREC1673.htm
Curcio, A.M. (1998), “Desiderio di falso, falso desiderio?”, in Micro&Macro Marketing, n°2.
International Anti-Counterfeiting Coalition (IACC) (2005), “The Negative Consequences of
Intellectual Property Theft: Economic Harm, Threats to the Public Health and Safety, and Links to
Organized Crime and Terrorism”, white paper, Washington.
International Trademark Association, “What is counterfeiting?”, available at:
http://www.inta.org/index.php?option=com_content&task=view&id=1534&Itemid=&getcontent=4
Interpol, http://www.interpol.int/Public/FinancialCrime/IntellectualProperty/Default.asp
Majid,
Y. (2005), “A Deadly Faith in Fakes”, quoted in CEBR (2000) “The Economic Impact of Counterfeiting in Europe”.
Manchester Evening News, £ 3m in fake goods seized, available at:
http://menmedia.co.uk/manchestereveningnews/news/s/1127317_3m_in_fake_goods_seized
Noble, K.R. (2003), “The links between intellectual property crime and terrorist financing”, Text of
public testimony of the Secretary General of Interpol, p.2, available at:
http://www.iccwbo.org/uploadedFiles/BASCAP/Pages/links.pdf
Organization for Economic Cooperation and Development (OECD) (2007), “The Economic Impact
of Counterfeiting and Piracy”, Executive Summary, available at:
http://www.oecd.org/dataoecd/13/12/38707619.pdf
Organized Crime Taskforce of Northern Ireland (2002), “The Threat: Assessment 2002. Serious
and Organized Crime in Northern Ireland”, the Police Service of Northern Ireland, p.8, available at:
http://www.nio.gov.uk/organised_crime_threat_assessment_2002.pdf
RAND Corporation (2009), “Film Piracy, Organised Crime and Terrorism”
Saviano, R. (2006), “Gomorra. Viaggio nell’impero economico e nel sogno di dominio della
camorra”, Mondadori (editions), Milano.
Savona E.U. (1999), “Trends and Causes of Cross-border (organized) Crime in Europe”, text of the
report used during the “Conference on Area of freedom, security and justice in the EU: policy
development and practical implementation of criminal law co-operation”, ERA Congress Centre,
18-19 October, Trier (Germany).
Staake, T., Fleisch, E. (2008), “Countering Counterfeit Trade”, Springer (ed.), p.17.
38
Reference Text for Trainers
The Anti-Counterfeiting Group, Links between counterfeiting and other serious organised crime,
available at: http://counterfeiting.unicri.it/docs/AntiCounterfeiting%20Group.Links%20between%20Counterfeiting%20and%20Other%20Serious%20
Crimes.February2008
UNESCO, World Anti-Piracy Observatory, “What is Counterfeiting?”, available at:
http://portal.unesco.org/culture/en/ev.phpURL_ID=39397&URL_DO=DO_TOPIC&URL_SECTION=201.html
Union des Fabricants, (UNIFAB) (2004), “Counterfeiting & Organized Crime Report”, 2nd edition, Paris,
http://counterfeiting.unicri.it/docs/Union%20des%20Fabricants.Counterfeiting%20and%20Organis
ed%20Crime%20Report.2nd%20edition2004.pdf
United Nations Convention against Transnational Organised Crime, available at:
http://www.unodc.org/unodc/en/treaties/CTOC/index.html
Williams F.P., Mc Shane M.D. (2002), “Devianza e criminalità”, Il Mulino, Bologna
World Trade Organization (WTO), Agreement on Trade-related Aspects of Intellectual Property
Rights (TRIPS), available at: http://www.wto.org/english/docs_e/legal_e/27-trips.pdf
39
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SECTION 3
Counterfeiting at the European Union Level
3.1 The Normative Framework
The Green Paper of 15 October 1998 stated the European Commission’s efforts to define the
objectives of the Community strategy against counterfeiting and piracy and identified the areas
where improvement was required. The main objectives of the Green Paper are: (a) to assess the
economic impact of counterfeiting and piracy in the Single Market; (b) to review the existing
legislation in this field, while identifying the problems and the improvements required on the legal
front; (c) to examine the need for Community action in this area with reference to the objectives of
the Single Market.
Furthermore, the document identified four key areas in which improvements could be made in the
measures to combat counterfeiting within the EU Single Market:
- monitoring by the private sector;
- the use of technical devices;
- sanctions and other means of enforcing IPRs
- administrative cooperation between the competent authorities.
Intellectual property is protected by a series of international normative instruments of which the
Member States of the European Union are also a Party. In 2001 the European Union adopted
Directive 2001/29 /EC on the harmonization of specific aspects of copyright and related rights in
the information society (a.k.a. EU Copyright Directive, EUCD), whose aim was to keep the legal
framework of the EU Member States in line with the international conventions on the subject. The
EUCD aims to maintain a high level of protection for copyright and related rights, considering also
the needs arising from the diffusion of digital technology and providing a harmonized protection at
the community level. This harmonized protection should grant to all the rights holders the exclusive
right to make their works protected by copyright accessible to the public as well as the materials
that are protected by other rights.
The EU Legislator intervenes to identify the content of specific exclusive rights of economic use as
well as the extent of the related exceptions. Furthermore, it provides new forms of protection
regarding technological measures designed and used by right holders to prevent any unauthorized
act involving their work. Similar protection is also accorded to rights management information. This
term can be defined as information provided by the right holder that identifies the work, the author
or any other right holder, information regarding the terms and conditions of use of the work, or
numbers and codes that represent such information. The Copyright Directive specifies the content
of the rights of reproduction, communication to the public and of distribution.
Art. 2 confers to authors, performers, phonogram producers, producers and broadcasting
organizations the right of reproduction. It outlines the “exclusive right to authorize or prohibit direct
or indirect, temporary or permanent reproduction by any means and in any form of”, their works,
fixations of their performances, their phonograms, the first fixations of films in respect to the original
and copies of their films and fixation of their broadcast.
The EUCD confers right holders the exclusive right to authorize or prohibit any communication or
transmission to the public, by wire or wireless, of their work, copy of their work and of performances
of performers regarding the right of communication to the public (Art. 3) and the right of distribution
(Art. 4). Moreover, the authors enjoy the exclusive right to authorize or prohibit the distribution of
the original of their works or of copies in any form. The exceptions to the previously mentioned
rights are stated in Art. 5. The main principle is to avoid any prejudice to the technological
development and to adapt the concepts of use and reproduction to the specificities of digital
communication.
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The Directive excludes the prohibition of temporary acts of reproduction which are transient or
incidental and that constitute an essential and integral part of a technological process. These
reproduction acts should, for instance, be performed with the sole purpose of enabling a lawful use
of a work or other protected material and should not have independent economic significance.
Member States retain the right to provide for further exceptions or limitations to the right of
reproduction, the right of communication to the public, and the right of distribution. Articles 6 and 7
are directly related to the implementation of the WIPO Copyright Treaty. They are aimed at
ensuring adequate legal protection against the circumvention of the technological measures that
are implemented by the right holders to prevent unauthorized acts on their works protected by
copyright, and to provide for adequate legal protection for rights management information. The
term “technological measures” (art. 6.3) indicates any technology, component or device that, in the
normal course of its operation, is designed to prevent acts, with reference to a work, not authorized
by the right holder of any copyright or related right. The protection accorded by the EUCD relates to
the necessity for the ratifying countries of providing adequate legal measures against the
manufacture, import, distribution or sale of devices, products or components which: a) are
promoted, advertised or marketed for the purpose of circumvention of the specific technological
measures; b) have only a limited commercially significant purpose or are used other than to
circumvent the technological measures; c) are primarily designed, produced adapted or performed
for the purpose of enabling or facilitating the circumvention of the technological measures (art. 6.2).
The concept of rights management information is defined by art. 7 as any information provided by
the right holders which identifies the work or other protected materials under the Directive, the
author or any other right holder, or information about the terms and conditions of use of the work or
of other protected materials, or any number or codes representing such information.
The EUCD calls Member States for the provision of adequate legal protection against anyone who
a) removes or modifies, without the authorization of the right holder, any rights management
information; b) distributes, imports for distribution, broadcasts, communicates or makes available to
the public, protected works from which the rights management information has been removed or
altered without authorization with the aim of ensuring an effective implementation of the WIPO
Copyright Treaty. The individual must, however, know or have reasonable ground to know that by
so doing she/he is inducing, enabling, facilitating or concealing any infringement of any copyright or
any related right.
The EU legislative framework on customs cooperation relies on Council Regulation 1383/2003. Its
aim is to improve customs cooperation for the identification of goods infringing an IPR. Art. 2 of the
Regulation proposes a distinction between “counterfeit” and “pirated” products. The term
“counterfeit goods” is used by the Regulation to identify those goods unlawfully bearing a
trademark identical or very similar to the registered one, while the term “pirated goods” indicates
goods which are or contain unauthorized copies of a work protected by copyright. The provisions of
the regulation, and especially those articles regarding customs actions, are also applicable to those
products infringing: a) a patent registered in one of the EU Member States, and b) an indication of
origin. Customs actions may be performed upon goods intended for export, import and transit (Art.
1).
Customs actions may be initiated by the national customs officers when there is the suspicion that
the goods may infringe an IPR and may also be initiated after the presentation of an application for
action by the right holder. In the latter case, the request should be sufficiently detailed, describing
and indicating the type of alleged infringement. Other information, if available, should concern: the
final destination of the identified goods, the scheduled time for their arrival or departure, the means
of transport used, the interested countries, and the differences between the original and the
infringing products. Furthermore, the applicant has to present a declaration of assumption of
responsibility for the damages eventually suffered by the party against whom the customs action is
requested. This declaration represents an assurance for the alleged infringer when the measures
taken by the customs are revoked in consequence of an act or an omission on the part of the
requesting party or in the case in which it is later found that no infringement occurred (Art. 5 and
Art. 6). Art. 13 affirms that the competent customs office must receive communication on the
initiation of judicial proceedings for the decision on the merits of the case. This must occur within
10 working days from the day in which the notification was received regarding the suspension of
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the goods from the channels of commerce or of the seizure of the goods. In the case of inaction on
the part of the requesting party the alleged infringing goods are released. The suspension from
commerce and the seizure are provided for by Art. 9. In such cases where suspicion arises after a
customs control Art. 11 states that, with the consent of the right holder, the alleged infringing goods
suspended or seized may be destroyed. In this case, a decision on the merits of the case has yet to
be taken as there is only suspicion that the goods are infringing an IPR. For this reason the
provision of Art. 11 could only be applied if the customs authorities receive a written declaration, on
the part of the owner or of the proprietor of the alleged infringing goods, indicating her/his
favourable opinion for the destruction of the said goods. This declaration is presumed if the owner
or proprietor does not oppose the request of the destruction of the goods within the established
time limits. Art. 16 indicates the measures to which these goods are subjected that have been
recognized to infringe an IPR following the end of judicial proceedings. In this situation, the
identified goods cannot enter the EU channels of commerce, cannot be exported and must be
suspended in case in which they were already traded.
Commission Regulation (EC) No 1891/2004 of 21 October 2004 set provisions for the
implementation of Council Regulation (EC) No 1383/2003. This regulation defines the natural and
legal persons who may represent the right holder or any other person authorized to use the right.
This Regulation also specifies the nature of the proof of ownership of intellectual property, while
providing a model form and the language requirements for filing a request for action, specifying the
type of information necessary in order to facilitate the work of the customs administrations in
recognizing the goods that may infringe an intellectual property right. Both the national and
customs applications and the procedures for the detention of counterfeit goods by customs have
been harmonized in all the EU member states. There is no unified EU customs entity, however, the
national customs administrations of the 27 member states:
-
work together;
-
are subject to common regulations;
-
exchange information through a centralized information system.
It is to be noted that EU customs practices still have different characteristics in each member state.
In addition, even if the means used to enforce IP rights have been harmonized, civil and criminal
procedures are different in each Member State.
On March 2004, the European Union Institutions adopted the Directive 2004/48/EC, also known as
the “IPR enforcement directive”, focused primarily on the protection of IPRs. The preamble to the
Directive explicitly recalls the obligations binding the EU Member States in consequence of their
participation to the TRIPs Agreement, being the European Community itself a Contracting Party of
the Agreement and not only the EU Member States individually. The intervention of the Community
Institutions is necessary to harmonize the relevant legislation and practice of the EU Member
States, which varies from one member to the other. This is the case for example for what concerns
the procedure to be followed by the competent authorities to indicate provisional measures aimed
at preserving evidence. The preamble of the Directive foresees a normative framework which
presents certain points in common with the TRIPs Agreement, but the act owns, in this case, all the
strength that Community legislation has towards the EU Member States. Art. 1 defines the object
and scope of the IPR Enforcement Directive: the protection of IPRs, including also industrial
property rights. The extent of its application is specified by the following article which states that the
Directive has to be applied in any case of infringement of an IPR in a Member State or in the
Community, without any prejudice to the application of a more stringent protection in the case in
which protection should be provided by other national or Community means.
Art. 3 (1) calls Member States for the adoption of remedies and procedures applicable to enforce
IPRs. The remedies and procedures should be effective, proportionate and dissuasive, they should
not be applied in a manner to create barriers to commerce, and they should not be unnecessary
complicated or costly, or entail unreasonable time-limits or unwarranted delays. The Directive
adopts the presumption of paternity of the work to the advantage of the person who placed her/his
name on the said work. Norms concerning the acquisition and protection of proofs are very similar
to the ones contained in the TRIPs. Thus, Articles 6 and 7 provide for: the power, held by the
judicial authorities, to order the resistant to present the element of proof at her/his disposal; the
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possibility to order provisional measures to protect the elements of proof inaudita altera parte,
when there is the possibility that the proofs could be compromised or destroyed; the possibility to
subordinate the order of such measures to the lodging, on behalf of the requesting party, of a sum
of money as an assurance towards the party against which the measures should be ordered; the
payment on behalf of the requesting parties to the alleged infringer of compensation for the
damages suffered, in the case in which the ordered measures are revoked for any act or omission
of the requesting party or in cases where it is subsequently found that there has been no
infringement.
The Directive, similarly to the TRIPs Agreement, indicates the possibility for the judicial authorities,
(upon request of the claimant) to order the release of information to: a) the infringer or to any
person b) found in possession of goods infringing an IPR, or c) commercially distributing such
goods, or d) providing services used in infringing activities or e) to any other person indicated by
the before mentioned subjects. The Directive presents a more detailed description of the subjects,
who bear the obligation to provide information. The same obligation is better defined with regard to
its object and it must contain the names and addresses of the producers and of distributors of
infringing goods as well as of all the subjects which participated towards the illicit activity. It must
also contain an indication regarding the units produced and distributed and the average sale price
(art.8).
Article 9 provides the power, held by the judicial authorities, to order provisional measures also to
prevent an alleged infringement of an IPR or to forbid the continuation of an alleged infringing
activity. To achieve this aim the competent authorities may order the subjects to maintain a certain
behaviour or may seize the alleged infringing goods. In the case where the alleged infringing
activity is an activity conducted on a large scale, the competent authorities may also order the
precautional seizure of movable and immovable property of the alleged infringer, including the
blocking of her/his bank accounts and other assets. Ordering of such measures is subordinated to
the demonstration on the part of the injured party of circumstances likely to endanger the possible
recovery of damages. The measure could be ordered inaudita altera parte and could be revoked.
The latter could be the consequence of inaction on the part of the requesting party with regard to
the initiation of proceedings to decide on the merit of the case, or could also be subsequent to the
finding by the competent authorities that no infringement has occurred. In this case, the requesting
party could be ordered to pay the damages eventually suffered by the alleged infringer. In the case
where the judicial authorities find that an infringement occurred, the Directive, similarly to the
TRIPS Agreement, foresees the possibility to suspend, retire from the channels of commerce, or
destroy the infringing goods at the expenses of the infringer (Art. 10). For what concerns the
compensation for damages, Art. 13 provides for two calculation standards. The first (Art. 13, 1, (a))
assesses the economic consequences suffered by the damaged party while the second (Art. 13, 1
(b)) assesses the economic value of the IPR and of the licenses. The last articles of the Directive
call Member States to improve their cooperation and exchange of information also by publishing
the relevant Court sentences and informing the Community Institutions about any problem
encountered in the implementation of the Directive.
Declaration 2005/295/CE of the Commission specifies article 2 of the Directive 2004/48/CE of the
European Parliament and of the Council on the observance of intellectual property rights. This
declaration of the Commission regards the following intellectual property rights falling within the
enforcement of the mentioned directive: royalties; rights in connection with the royalties; rights of
makers of topographies; rights of trademarks; rights on designs and models; registered
trademarks; rights coming from complementary, protective certifications; geographical indications;
rights of public utility; sole right for vegetal inventions; commercial names if protected by sole right
of the domestic legislation.
The IP Criminal Enforcement Directive (CED) is still at the stage of discussion within the European
Institutions. The absolute novelty for the legislative framework put in place by the European
Institutions will be that the CED will, for the first time, specifically address criminal law provisions to
which Member States will have to conform to enhance the fight against counterfeiting and piracy.
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Apart from the criticism116 that surrounded the CED since its first appearance as a draft, it is
nonetheless very interesting that the EC recognizes that counterfeiting and piracy are supporting
the activities of organized crime (and also of terrorist groups) and that specific typologies of
counterfeit products – in particular medicines – are a real threat for consumers’ health and safety.
This is the starting point that leads the Directive to propose criminal measure to reduce
counterfeiting and piracy. The CED, thus, contains provisions on the penalties that have to be
inflicted for committing the crime and also on the confiscation of goods of the offender. Patents and
Plants Varieties Rights are excluded from the sphere of application of the CED117 that is also
applicable only to those activities that are: 1) committed on a commercial scale and 2) intentional.
Interesting provisions also relate to the creation of joint investigation teams between Member
States that could improve cooperation in these matters. Time will tell the real effectiveness of the
CED and which form and scope will have the provisions contained in its final version.
3.2 The Dimensions of Counterfeiting
Three estimates, formulated by different institutions and using various data, have been taken into
consideration, namely the estimates provided by: 1) TAXUD; 2) WCO; and 3) OECD. Some other
measures which have been calculated by other organizations will also be presented.
Estimations by the EU Taxation and Customs Union (TAXUD)
Statistics provided by the EU Taxation and Customs Union (TAXUD) refer to the number of
seizures which take place at the EU border in relation to goods suspected of infringing an IPR.
According to Commission Regulation No 1891/2004, national customs across the EU are obliged
to provide the EU TAXUD with statistics related to the number of cases involving the seizure of
goods suspected of infringing IPRs that, once elaborated, will then be published by TAXUD in an
annual report. It must be noted that the statistics provided by TAXUD only take account of: goods
which are imported into the EU, goods which are exported out of the EU, re-exports, transshipments and goods in transits. Consequently, all potentially counterfeited goods which may have
been produced and consumed within the same country, or the EU, are excluded from the data
provided. The result is that any assessment on the extent of counterfeiting which has been carried
out using these statistics may underestimate the real magnitude of the phenomenon. In addition,
the general accuracy of statistics based on seizures needs to be properly weighed, as many factors
(i.e. new legislation, customs performance, effectiveness of customs risk assessment methods)
may influence the interception of counterfeit products. Thus an increase or decrease of seizures
may not exactly represent the actual trend of the traffic of counterfeit goods and should generally
not lead to generalizations.
Considering the number of cases involving the seizure of goods suspected of infringing an IPR, in
2009, 43,572 cases were registered on EU borders (a decrease from the 49,381 cases registered
in 2008). This phenomenon has been on the increase since 1999, a year in which only one tenth of
the amount of these cases were registered (see Image 1) The actual amount of items confiscated
in 2009, is approximately 118 millions items (Image 2). It must be noted that these statistics do not
refer only to cases of brand counterfeiting, as they include cases of piracy.
116
Criticism related to several aspects of the CED. The fact itself that the European Institutions owned the competence
to propose measure falling within the criminal sphere was not clear to many commentators. Other criticized elements
related to the contents of the CED, as for example the criminalization of abetting or inciting to commit the crime (which
could lead to the criminalization of the advice provided by a lawyer that an IPR was not infringed by acting in a certain
way).
117 Mainly because of the complexity of these rights for which it is not always clear if the infringement has been
committed.
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Image 1
Source: TAXUD
Image 2
Source: TAXUD
Although the 2009 statistics show a decrease in both the total amount of cases registered and the
total amount of products seized, it should be noted that the data indicates an increase in the
seizure of counterfeit products that are potentially dangerous to consumers’ health and safety.
Medicines represent 10% of the entire amount of detained goods. The TAXUD Report recognizes
that counterfeiting does not just affect luxury goods but everyday products (i.e. shampoos,
toothpaste, toys and electrical appliances). Counterfeit products intended for daily use and
products potentially dangerous for consumers’ health and safety constitute 17 million items
intercepted, or 18% of the total amount.
More detailed trends for the latter products can be obtained by examining the data of the TAXUD
Reports of recent years, both with reference to the number of articles detained (see Images 3, 4
and 5) and to the number of cases registered (see Images 6, 7 and 8). These trends are
particularly alarming as they show an increase in the trade of counterfeit goods potentially
dangerous for consumers’ health and safety.
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Image 3
Counterfeit foodstuffs detained
Num ber of articles detained
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
2006
2007
2008
2009
Source: UNICRI elaboration based on the TAXUD 2006-2009 Reports
Image 4
Counterfeit toys detained
Number of articles detained
8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
2006
2007
2008
2009
Source: UNICRI elaboration based on the TAXUD 2006-2009 Reports
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Image 5
Counterfeit m edical products detained
Number of articles detained
14000000
12000000
10000000
8000000
6000000
4000000
2000000
0
2006
2007
2008
2009
Source: UNICRI elaboration based on the TAXUD 2006-2009 Reports
Image 6
Counterfeit foodstuffs
Number of cases
90
80
70
60
50
40
30
20
10
0
2006
2007
2008
2009
Source: UNICRI elaboration based on the TAXUD 2006-2009 Reports
I
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mage 7
Counterfeit toys
Number of cases
2000
1800
1600
1400
1200
1000
800
600
400
200
0
2006
2007
2008
2009
Source: UNICRI elaboration based on the TAXUD 2006-2009 Reports
Image 8
Counterfeit m edical products
Number of cases
4000
3500
3000
2500
2000
1500
1000
500
0
2006
2007
2008
2009
Source: UNICRI elaboration based on the TAXUD 2006-2009 Reports
Image 9 presents the outcome of the detention of suspected infringing goods, showing that a
significant percentage (47.44%) were destroyed using the simplified procedure.
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Image 9
Source: TAXUD
The provenance118 of counterfeit goods seized at EU borders in 2009 is illustrated by the TAXUD
report which provides a breakdown of the origin of goods, per number of products detained.
Overall, China is still the most prevalent country of provenance (more than 64% of the total amount
of products detained – see Image 10), confirming a trend that is valid since 2003.
Image 10
Source: TAXUD
118
The report states that the provenance of the goods is considered (from where they were sent to the EU) and not their
real origin (where they were actually produced) since this is often difficult to ascertain due to infringers practices aimed at
hiding the country of production/real origin of the goods. Refer to: Report on EU Customs Enforcement of Intellectual
Property Rights, Results at the EU Borders – 2009, TAXUD, 2010, page. 13
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Other countries were also identified as main countries of provenance for specific products/sectors.
This is the case for Turkey for the category “Foodstuffs”, for Egypt for the category “Toys” and for
the United Arab Emirates for the category “Medicines”. Finally, the analysis of the means of
transport used in 2009 (see Image 11) confirms the trends already shown by the 2008 TAXUD
Report, showing an increase in the use of shipments through the postal service.
Image 11
Source: TAXUD
Estimations by the WCO
The World Customs Organization (WCO) provides statistics related to the number of seizures
made by customs authorities within countries which are members of the organization. These
statistics are usually collected by WCO through the Customs Enforcement Network system (CEN).
In 2009, a total number of 13,280 cases (Image 12) involving the seizure of counterfeit goods were
reported by the national customs administrations of the WCO Member States, while the total
number of products seized totalled 291 million (Image 13).
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Image 12
Source: WCO
Image 13
Source: WCO
The WCO data – similarly to the TAXUD stats – also show an alarming increase in the trade of
counterfeit products potentially dangerous for consumers’ health and safety. This is the case of
counterfeit pharmaceutical products and of counterfeit spare parts. The great majority of the
seizures were performed by customs administrations and only 178 cases were the result of
cooperation between customs and police forces. These few cases totalled approximately 15% of
the entire amount of products seized, suggesting that improved inter-agency cooperation can
greatly benefit the detection activities. As shown by Images 14 and 15, countries such as China,
Italy and Mexico are in the top 10 category for what concerns both the number of cases registered
and the number of items seized in 2009. This data not only reveals the extent of the problem and
but underlines the commitment of the national authorities in the fight against IPR infringements.
Image 14
Image 15
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Source: WCO
Source: WCO
The WCO data also identify both the country of origin – in the same way as TAXUD data – and the
actual country of departure. In both cases the top 10 list is very similar and it is interesting to note
that 99 different countries were identified in the reports as country of origin (see Image 16) and 122
as country of departure (see Image 17).
Image 16
Image 17
Source: WCO
Source: WCO
Finally, six EU Member States are in the top 10 destination countries (see Image 18) while seven
are in the top 10 transit countries (see Image 19).
Image 18
Image 19
Source: WCO
Source: WCO
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3.3 Recent Cases
2010: A Joint Customs Operation (code-named Matthew II) has led to the seizure of more than 16
million cigarettes, 241 kilograms of tobacco products, 6 400 litres of alcohol, 20 tonnes of
counterfeit perfumes, 53.418 other counterfeit items such as bags, coats, scarves, wallets, and
1,515.75 kilograms of cannabis. During the operational phase, additional seizures of more than 25
million cigarettes also took place in some EU ports. The operation was organized by the Czech
Republic, in close cooperation with Poland and the European Commission (OLAF).
(Source: EUROPA Press Release IP/10/418)
2010: In Romania, over 78,000 glass containers inscribed with various brand names including
Dolce Gabbana, Clinique and Gucci were seized, on suspicion of being counterfeit goods.
(Source: Business Action to Stop Counterfeiting And Piracy (BASCAP) Digest 15-28 February
2010)
2010: Large quantities of counterfeit cigarettes were seized in a number of countries including
Ireland, the Netherlands and the UK
(Source: BASCAP Digest 15-28 February 2010)
2010: In the UK £180,000 worth of fake medicines were seized in a joint operation between police
and the UK Medicine and Healthcare products Regulatory Agency (MHRA).
(Source: BASCAP Digest 1-14 March 2010)
2009: The UK Border Agency (UKBA) seized £1,646,173 of counterfeit goods entering into the
country in just four months from 1 April. The fakes seized by UKBA officers include England
football shirts, GHD branded hair straighteners, designer watches, handbags, shoes and
cigarettes. A spokesman said the popular hair straightener and cigarettes were made with
potentially dangerous materials.
(Source: The independent (Press association))
2009: Fake goods worth around £3m were seized in one of the biggest-ever counterfeit raids in
Manchester. Customs and trading standards officers swooped on a Piccadilly warehouse after a
tip-off - and found thousands of boxes of bogus gear. Officials believe the warehouse supplied
hundreds of shops and market stalls across the country. Officers also found hundreds of hair
straighteners. The company warned that the fakes could be `lethal'.
(Source: Manchester Evening News)
2009: Hundreds of Chinese workers were kept in virtual slavery for years as part of a multimillionpound pirate DVD industry uncovered in the UK. The men and women, many of whom lived 11 to a
room, were the labour behind an organised crime syndicate that began on a market stall in
Hackney, east London, and grew into a £5m illegal industry. Detective Constable Evelyn Steeples
said the case revealed the large profits that could be made from organised crime.
(Source: The Guardian)
2009: Italian police have seized counterfeit merchandise from China worth more than Euro 20
million ($28 million) during raids on 17 warehouses in Rome. Italy's financial police say 18 Chinese
citizens are being investigated for allegedly importing counterfeit goods including clothes,
electronics and some 150,000 children's toys.
(Source: Associated Press)
2008: Drinkers in Buckinghamshire have been told to be wary of buying cheap bottles of “Glen’s”
vodka after counterfeit 70cl bottles were found on sale in Chesham, Aylesbury and Downley.
Counterfeit vodka has caused blindness and even death in past instances. Genuine “Glen’s” vodka
has an AGC (Allied Glass Containers) logo on the base of the bottle as well as a distinctive glue
pattern comprising lines of glue 2mm apart which bind the label to the bottle.
(Source: www.thisisbucks.co.uk, 22 January 2008)
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2008: Health authorities in Sierra Leone seized a container filled with banned toothpaste from
China, which contained high levels of a toxic substance that could cause kidney and liver failure. In
2007, health authorities in several countries including the United States and Hong Kong warned
against brands of Chinese low-cost toothpaste that were found to contain the poisonous chemical
diethylene glycol.
(Source: Counterfeiting Intelligence Bureau (CIB) Counterfeiting Confidential November)
2008: IBM sued a company that it alleged was selling unsafe counterfeit laptop batteries. The
company was alleged to be “offering counterfeit IBM products which posed a substantial threat to
the safety of the consuming public.” The discovery of the alleged counterfeits happened after a
consumer in Ohio bought a battery for a laptop. The battery caught fire and damaged the laptop.
After conducting an examination of the faulty battery, IBM learned that it was not genuine. It then
bought 12 Thinkpad batteries from the suspect company for further analysis. All the batteries were
found to be counterfeits.
(Source: CIB Counterfeiting Confidential January)
2008: MarkMonitor’s “Spring 2008 BrandJacking Index” found airline parts on sale at popular online
consumer auction sites. They included valves, gears, flanges, gauges and radar parts.
(Source: CIB Counterfeiting Confidential July)
2008: Police in Italy arrested 12 members of an organized criminal gang involved in the distribution
of pirate CDs and DVDs. A meticulous investigation had preceded the arrests, which took place in
Naples and Milan. A series of raids uncovered six illegal pirate factories, five in Naples and one in
Milan, which contained 350 burners. More than 70,000 CDs and DVDs were seized during the
raids, alongside more than 100,000 counterfeit inlay cards. The gang members were charged with
conspiracy and copyright infringement and might face jail sentences of up to six years.
(Source: CIB Counterfeiting Confidential July)
2008: Scottish smokers have been advised to resist the temptation to buy cheaper cigarettes amid
fears of what they may actually contain. “Cheap cigarettes” usually meant those that had been
smuggled into the U.K. from outside the E.U. However the “bargain cigarette” market is more and
more dominated by counterfeit cigarettes, which are packaged to look like the real brands. The
fake cigarettes may contain up to 160% more tar, 80% more nicotine, 5.8 times more lead and
three times more arsenic, in some cases they had also been found to contain sawdust, beetles and
rat droppings. Proceeds from this illicit trade were used to fund other crimes, such as people
trafficking and prostitution.
(Source: BBC News, 8 March 2008)
2007: Counterfeit Colgate toothpaste, containing diethylene glycol, was found on sale in different
Countries: i.e. Spain, the United States of America, Panama, the Dominican Republic and
Australia. Spanish authorities seized 100,000 toothpaste tubes and, according to the Spanish
newspaper El País, 10,000 packages were distributed in the hospitals in Valencia.
(Source: http://webintel.wordpress.com and www.elpais.com)
2007: Counterfeit cigarettes from Eastern Europe and the Far East were reportedly being sold for
as little as £1 a packet by shopkeepers in Leicester. The counterfeit cigarettes contained higher
levels of tar, arsenic, nicotine and other carcinogens and were smuggled into Leicester and sold to
shopkeepers in bulk at heavily discounted prices. Customs officials issued a warning to consumers
as the packaging on the fake cigarettes was indistinguishable from the genuine variety. Organized
criminal gangs were thought to be behind the scheme for huge profits to be made from selling
counterfeit cigarettes. Officials who seized also a shipment worth millions of pounds analysed the
ingredients with alarming results. The fake cigarettes contained extremely high levels of arsenic,
cadmium, benzene and formaldehyde, a lethal mix of carcinogens.
(Source: Leicester Mercury, 31 August 2007)
2007: Couples in East London have been warned after fake Durex condoms were discovered
during raids on shops and newsagents. The investigation began when a member of the public
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noticed something “not quite right” and contacted the local authorities. Durex warned consumers
that despite the packaging looking genuine, the fakes were not effective contraceptives and were
unlikely to provide effective protection against sexual diseases.
(Source: East London Advertiser, 22 October 2007)
2007: More than a year-long operation into an organized crime ring pirating DVD’s, culminated in a
massive anti-piracy operation in which 20 raids across Hong Kong were conducted. The raids took
place at a number of locations, including three storage units and three retail outlets, and yielded 14
arrests and 120,000 fake DVD’s. According to the head of the task force conducting the raids the
syndicate was one of Hong Kong’s notorious triad gangs. The gang was believed to be selling
more than $6,000 worth of DVD’s a day. The fake DVD’s originated in mainland China and then
smuggled into Hong Kong using a cross-boundary container lorry, which was also seized.
(Source: DPA news)
2007: Russian police intercepted and arrested a criminal group alleged to illegally produce aircraft
parts and sell them in Russia, as well as to other nations. The organized group was arrested after
allegedly stealing components from the Saturn plant in central Russia and producing and selling
civil aircraft parts.
(Source: CIB Counterfeiting Confidential September)
2007: The Agence Française de Sécurité Sanitaire des Produits de Santé (AFSSAPS) was
informed by the European Medicines Agency (EMEA) about a case of a counterfeit medicine
identified in Great Britain. The elements on the products’ distribution network led to the recall of the
medicine from the French territory. This was the first case of recall of counterfeit “Plavix” in France.
(Source: Emballage Digest, 14 February 2007)
2007: The Italian customs and Guardia di Finanza in Naples seized different shipments of
counterfeit products (including fake toys) whose value was estimated at 11,000,000 of Euro.
(Source: Italian Customs Agency)
2007: The Medicines and Healthcare Products Regulatory Agency (MHRA) began a criminal
investigation after a counterfeit batch of “Casodex” was discovered. The drug, which is used in the
treatment of prostate cancer, was found to contain only 75% of the active ingredient bicalutamide.
(Source: BBC News, 2 June 2007)
2007: The customs office at the port of Le Havre seized almost 410,000 counterfeit medicines
(145kg) and 11 million of medicines with a high pseudo-ephedrine content (two tonnes) for a total
estimated value of € 5,8 million. The operation was conducted by customs officers who had been
previously informed about a container originating from Syria and destined to Honduras.
(Source: Emballage Digest, 17 December 2008)
2007: The link between counterfeiting and organized crime has once again been demonstrated
after Italian police uncovered an illegal distributing network operating in Sicily. 2,000 counterfeit
CD’s and DVD’s were seized along with guns, ammunition and bomb making equipment. Police
then started investigating possible links between those arrested and organized crime, in particular
Sicily’s notorious mafia families.
(Source: IFPI)
2006: 140,000 counterfeit razor blades were seized in Italy after investigations by the Guardia di
Finanza. The products were ready to be inserted into the licit supply chain and sold to
unsuspecting buyers. The fake blades may have caused skin irritations and infections.
(Source: Confesercenti, Counterfeiting and cybercrime: damages to the economy and to
enterprises)
2006: 35,000 counterfeit electrical products were seized by the Italian Guardia di Finanza. The
products posed risks of fire and electric or thermal shock.
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(Source: Confesercenti, Counterfeiting and cybercrime: damages to the economy and to
enterprises)
2006: A laboratory used for the production of fake cosmetics and perfumes was discovered in
Rome by the Guardia di Finanza that seized more than 600,000 packages.
(Source: Confesercenti, Counterfeiting and cybercrime: damages to the economy and to
enterprises)
2006: British authorities identified 18 websites selling counterfeit “Tamiflu”, the websites were
based in the UK, Canada, Switzerland, Bahrain, Cyprus, Singapore and Malta, highlighting the
worldwide nature of this illicit trade.
(Source: CIB, 3 March 2007)
2006: Officials seized in the UK, 5000 packets of counterfeit “Tamiflu”, estimated to be worth
£500,000. US customs also seized over four dozen shipments of fake “Tamiflu” in South San
Francisco. The shipment was labelled “Generic Tamiflu”.
(Source: CIB, 3 March 2007)
2006: The Italian Guardia di Finanza seized 138 tonnes of counterfeit olive oil. The bottles and
cans filled with the counterfeit oil looked almost identical to those used by famous producers.
(Source: Confesercenti, Contraffazione e criminalità informatica: I danni all’economia e alle
imprese)
2006: The Italian customs and the Guardia di Finanza seized a container with 15 tonnes of
counterfeit toys originating from China.
(Source: Italian Customs Agency)
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Sources
Business Action to Stop Counterfeiting And Piracy (BASCAP), available at:
http://www.iccwbo.org/bascap/id1127/index.html
Emballage Digest website, available at: http://www.emballagedigest.fr/
EUROPA Press Release IP/10/418, available at:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/418
International Federation of the Phonographic Industry (IFPI) website, available at:
http://www.ifpi.org/
Italian Customs Agency website, available at: http://www.agenziadogane.it/wps/wcm/connect/ee/
Leicester Mercury website, available at: http://www.thisisleicestershire.co.uk/
TAXUD website, available at: http://ec.europa.eu/taxation_customs/index_en.htm
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SECTION 4
Counterfeiting in Czech Republic
1. National Legislation on Intellectual Property Rights Enforcement
Below an overview of the main legislative documents on IPRs.
Copyright and Related Rights


Act No. 121/2000 Coll. on Copyright and Rights Related to Copyright and Amendment to
Certain Acts (entered into force on December 1, 2000), amended by:
-
Act No. 81/2005 Coll. (entered into force on 23 February,2005);
-
Act No. 61/2006 Coll. (entered into force on 8 March 2006);
-
Act No. 186/2006 Coll. (entered into force on 1 January 2007);
-
Act No. 216/2006 Coll. (entered into force on 22 May 2006);
-
Act No. 168/2008 Coll. (entered into force on 19 May 2008).
Decree No. 488/2006 Coll. defining types of devices for making reproductions, types of blank
record carriers and the amount of lump-sum remuneration (entered into force on November 10,
2006), amended by Decree No. 408/2008 Coll. (entered into force on 1 January 2009).
Industrial Rights:
- Act No. 221/2006 Coll. of 25 April 2006, on the Enforcement of Industrial Property Rights and on
the Amendment of Industrial Property Protection Acts (Enforcement of Industrial Property Rights
Act), which incorporates the relevant EU legislation (Directive 2004/108/EC of 29 April 2004) and
regulates the legal remedies serving for IPR enforcement.
- Act No. 132/1989 Coll. on the Protection of Rights to New Plant and Animal Varieties, as
amended by Act No. 93/1996 Coll.;
- Act No. 527/1990 Coll. on Inventions and Rationalization Proposals, as amended by Act No.
519/1991 Coll., Act No. 116/2000 Coll. and Act No. 207/2000 Coll.;
- Act No. 529/1991 Coll., on the Protection of Topographies of Semiconductor Products
Topographies, as amended;
- Act No. 478/1992 Coll. on Utility models, as amended by Act No. 116/2000 Coll.;
- Act No. 206/2000 Coll. of 21 June 2000, on the Protection of Biotechnological Inventions and on
the Amendment to Act No. 132/1989 Coll. on the Protection of Rights to New Plant and Animal
Varieties, as amended by Act No. 93/1996 Coll.;
- Act No. 207/2000 Coll. on the Protection of Industrial Designs and on the Amendment to Act No.
527/1990 Coll., on Inventions, Industrial Designs and Rationalization Proposals, as amended;
- Act No. 452/2001 Coll. of 29 November 2001 on the Protection of Designations of Origin and
Geographical Indications and on the Amendment to Act on Consumer Protection as amended by
Act No. 131/2003 Coll. and Act No. 501/2004 Coll.;
- Act No. 441/2003 Coll. of 3 December 2003 on Trademarks and on the Amendment to Act No.
6/2002 Coll., on Judgements, Judges, Assessors and State Judgement Administration and on
the Amendment to some other Acts (Courts and Judges Act) as amended, (Trademarks Act) as
amended by Act No. 501/2004 Coll.;
- Act No. 378/2007 of 6 December 2007, on Pharmaceuticals and on Amendments to Some
Related Acts.
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Other relevant Laws
- Penal Code (Act No. 40/2009 Coll.) as amended (entered into force on 1 January 2010);
- Civil Code (Act No. 40/1964 Coll.) as amended (entered into force on March 1, 1964). The most
important amendment was Act. No. 509/1991 Coll. (entered into force on 1 January 1992);
- Code of Civil Procedure (Act No. 99/1963 Coll.),, as amended (entered into force on 1 January
1964);
- Act. No. 191/1999 Coll., on Some Measures Regarding Import, Export and Re-import of Goods
Infringing Certain Intellectual Property Rights and on Amendment to Certain Acts, as amended
(entered into force on 1 December, 2009).
1.2 Relevant Legislation on Criminal Activities Involving Organized Crime

The Czech Republic has signed the United Nations Convention against Transnational
Organized Crime on 12 December 2000 as well as the Protocol to Prevent, Suppress and Punish
Trafficking in Persons, Especially Women and Children and the Protocol against the Smuggling
of Migrants by Land, Sea and Air. Nonetheless, no action has been taken so far with regard to
the third Protocol against the Illicit Manufacturing of and Trafficking in Firearms, their Parts and
Components and Ammunition (2001). Moreover, ratification of the Convention as well as of the
two already signed Protocols has not taken place yet.

In April 2005, the Czech Republic signed the United Nations Convention against Corruption
(2003) but the ratification process which will enable the Convention to come into force is still
pending.

The Czech Republic is also a State-member of the United Nations Convention against Illicit
Traffic in Narcotic Drugs and Psychotropic Substances (1988) (through succession as
Czechoslovakia had signed and ratified the Convention on 7 December 1989 and 4 June 1991,
respectively.)

The Czech Republic signed and ratified the Council of Europe Convention on Laundering,
Search, Seizure and Confiscation of the Proceeds from Crime (1990), on 18 December 1995 and
19 November 1996, respectively.
The basic Acts of the Czech Criminal Law are:
- Act 1993, on the Execution of Custody;
- Act No. 109/1994, on the Code Governing the Execution of Pre-trial Detention;
- Act No. 61/1996 Coll., on Selected Measures against the Legalization of the Proceeds of Crime
and on the Amendment to related Acts, as amended by Act No. 15/1998 Coll., Act No. 159/2000
Coll., Act No. 239/2001 Coll., Act No. 440/2003 Coll., Act No. 257/2004 Coll., Act No. 284/2004
Coll., Act No. 344/2005 Act No. 444/2005, Act No. 56/2006 Coll., Act No. 57/2006 Coll., and Act
No. 70/2006 Coll.;
- Act No. 169/1999, on Imprisonment;
- Act No. 137/2001 Coil., on the Special Protection of Witnesses and other Persons in Connection
with Criminal Proceedings and on the amendment of Act No. 99/1963 Coll., Civil Legal Code, as
amended;
- Act No. 253/2008 Coll., on Certain Measures against Legitimization of Proceeds of Crime and
Terrorist Financing with subsequent amendments;
- Regulations according to Article 81 of the Act No. 169/1999Sb. on the imprisonment and on
amendments of some related Acts.
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Section 129 of the Penal Code (act. 40/2009 Coll.) defines an organized criminal group as a
fellowship of several persons with an internal organization structure, with divided functions and
division of activities that is focused on continuous committing of deliberate criminal activities.
In 2007, the Czech Financial Police was disestablished as an independent police service and its
employees were taken over back by the Police Unit for Combating Corruption and Financial Crime
and by the Organized Crime Unit both of which belong to the Office of Service of Criminal Police
and investigation.119
In addition, during the last years, the MoneyWeb network has been enlarged and currently the
relevant police service and almost all banks are connected with the Financial Analytical Unit (FAU)
of the Ministry of Finance (MoF). MoneyWeb is used for the information exchange with the Law
enforcement for receiving STRs from banks and requesting additional information from the latter.120
For what concerns the fight against trafficking in persons, the “Trafficking in Persons Report 2010 Czech Republic” of the US Department of State, states that the Government of the Czech Republic
fully complyd with the minimum standards for the elimination of trafficking. On January 2010, a new
section (Section 166) introduced in the Criminal Code to increase the maximum penalty for
trafficking from 15 to 16 years' imprisonment and continued to provide excellent protection and
assistance to victims of trafficking both within the Czech Republic and also in source countries.
With regard to the prosecution of such an offence, the report mentioned that the government
demonstrated mixed law enforcement efforts over 2009. During most of the reporting period, the
Czech Republic prohibited trafficking for commercial sexual exploitation and labor exploitation
through Sections 232a and 204 of its Criminal Code and punishments prescribed under these
statutes ranged from 2 to 15 years' imprisonment.121
In late 2010, the Ministry of Interior, introduced a framework of a new anti-corruption strategy. One
of the first steps is the establishment of the Anti-corruption Council. The members of the council
are experts from various fields – governmental offices, non-governmental organizations and
representatives of professional organizations. The council’s tasks consist in preparing legislative
and non-legislative measures to enforce anti-corruption efforts. The Police have the main
responsibilities in investigating cases of corruption. An anti-corruption guide destined to the citizens
has also been created. The main aim of this guide is to encourage citizens to report corruption to
the Police or to State prosecutors and to facilitate the procedures by answering frequently asked
questions how to tackle corruption. Oncoming actions and measurements of anti-corruption
strategy consist of tighter legislative specifications in number of laws leading to prevent corruption
behaviour.122
1.3 Focus on Trademarks: Definitions and Conduct
Under Section 1 of the Act on Trademarks, a trademark may consist of any sign capable of being
graphically represented, particularly words, including personal names, colors, designs, letters,
numbers, the shape of goods or their packaging, provided that such a sign is capable of
distinguishing the goods and/ or services of an enterprise from those of another enterprise.
A collective trademark is any registered sign which is capable of distinguishing goods or services of
the members or stakeholders of a legal entity or of the members of an association from the goods
and/or services of other persons.123
Section 2 of the Trademark Act provides that a trademark shall be protected when:124
- it is registered in the Register which is kept at the Industrial Property Office;
119
Ibid., p.4
Ibid.
121
United States Department of State (2010), “Trafficking in Persons Report 2010 - Czech Republic”, June
14, online at: http://www.unhcr.org/refworld/docid/4c1883fa2d.html
122
Information published on the official website of the Ministry of the Interior of the Czech Republic, on October
2010: http://www.mvcr.cz/mvcren/article/new-anti-corruption-strategy-introduced.aspx
123
See Section 35, Act on Trademarks.
124
See Section 2, Act on Trademarks.
120
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- it is registered in the Czech Republic in the Register of the International Bureau of the WIPO or in
the Register of the Office for the Harmonization of National Markets;
- it is a recognized trademark within the Czech Republic, as expressed in Article 6 of the Paris
Convention.
Any natural person or legal entity considered fit to perform legal acts may be proprietor of a
registered trademark. The written application for the registration of a sign as a registered trademark
must be submitted to the Industrial Property Office in person, by post or electronically jointly with a
certified digital signature.125
Chapter V of the Trademarks Act regulates the registration procedure for trademarks. The stages
to be followed in applying for a registered trademark are listed below:
- the applicant may file an application requesting the registration of a sign as a trademark. The
application must include personal details of the applicant or the representative; a list of the goods
and/or services to which the trademark will be associated; and a reproduction of the sign to be
registered. The applicant must also pay an administrative fee within one month as and from the
date the application was first submitted;126
- a formal examination shall be carried out by the IPO. If the application fails to meet the necessary
requirements, as listed in Section 19, the applicant may remedy the deficiencies within a given
time period. This time period cannot be less than 15 days;127
- if the formal requirements are fulfilled, a substantive examination shall be performed in order to
determine whether or not the application can indeed be registered. If, for some reason, the
registration is denied or a member of the public objects to the registration of the sign as a
trademark,128 the IPO notifies the applicant. On notification the applicant can respond within a
given time period. If impediments for registration turn out to be irresolvable the application will be
rejected.129
When formal and substantive requirements are fulfilled, the IPO publishes the application in the
Official Journal. During the three months following its publication, persons who were previously
granted rights which may be potentially be infringed by the sign which is pending registration may
oppose to its registration. The IPO is the competent authority on this matter. The opposing
procedures are regulated by Sections 25 and 26 of the Trademark Act.
Under Section 28 of the Trademark Act, if an application requesting the registration of a sign as a
trademark meets all the requirements and no objection is filed or if any opposition proceeding has
been refused by a definitive decision, the IPO registers the sign as a trademark which enters it into
the Register.130 Once the mark is registered the applicant receives a certificate of registration. 131
The registered trademark is protected for a ten-year period as and from the date of the application
requesting registration was first submitted to the IPO. Registration of the trademark is renewable
and can be renewed during the last year.132
Counterfeit Goods and Infringement
Section 8(2) of Trademarks Act provides that a civil infringement of the exclusive right of the
trademark owner is constituted by any use, during the course of trade and without the consent of
the trademark proprietor, of:
125
If the filling is done by fax or electronically without a guaranteed electronic signature, the original document must
be received by the IPO within five days. Section 42 of the Act on Trademarks provides that any submission to the IPO
has to be made in the Czech language.
126
See Section 19, as last amended by the Decree no. 97/2004, which requires specific information when the sign
is a three dimensional trademark or if it is created by combination of colors.
127
See Section 21, Act on Trademarks.
128
See Section 24, Act on Trademarks.
129
See Section 22, Act on Trademarks.
130
See Section 44, Act on Trademarks, concerning Register and Official Journal and which enables remote access
to those documents.
131
See Section 28, Act on Trademarks.
132
Section 29, Act on Trademarks.
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- identical signs which are associated to goods and/or services similar to those for which the
trademark has been registered;
- signs identical or similar to a registered trademark which are affixed to goods and/or services
identical or similar to those for which the trademark has been registered, hence creating
confusion among the consumers as a result of the possible association between the counterfeit
sign and the registered trademark;
- signs identical or similar to a trademark in relation to goods or services which are not similar to
those for which the trademark is protected, if the trademark is widely recognized within the Czech
Republic, and if use of the sign, without due cause, takes unfair advantage of, or is damaging to,
the distinctive nature and/or the repute of the renowned trademark.
In particular, the following acts are prohibited:
- affixing it to goods or the packaging thereof;
- offering goods or putting them on the market or stocking them for such purposes under the sign;
- offering or supplying services under the sign;
- importing or exporting goods under the sign; or
- using the sign on business papers or in advertising.
Section 2 of the Act No. 191/1999 defines “counterfeit goods”:
- goods and/or packages thereof which bear, without the consent of the registered owner of the
trademark, a sign which is identical to or can be mistaken for the trademark registered for the
goods in question;
- all articles bearing a sign identical or similar to a registered trademark on packaging, labels,
stickers, logos, tags, promotional leaflets, operating instructions, warranty documents etc.;
- any mould or apparatus specifically designed and/or altered to produce counterfeit trademarks,
or goods bearing such trademarks, or digital models of such trademarks.
Furthermore, under Section 15, Act No. 191/1999 provides that infringement is also committed by
whomever:
- has submitted a Customs declaration to release counterfeits or pirated goods for free circulation
or to insert them in export procedures;
- by having violated Customs regulations, has allowed for counterfeits and/or pirated goods to be
released into circulation, inserted them in re-export procedures or in any of the suspension
procedures, or in a Free Customs zone or a Free Customs warehouse;
- has submitted a request to release counterfeit or pirated goods for re-export or to have inserted
them in a Free Customs zone or a Free Customs warehouse;
- has exported or imported counterfeits and/or pirated goods;
- owns, holds, stores or sells counterfeit and/or pirated goods with Czech Republic borders;
- fails to comply with conditions governing the handling of goods withheld as described hereunder.
Under Section 16, when one of the above infringements has been committed by a natural person,
unless the natural person in question is an entrepreneur, albeit because of recklessness or
negligence, it constitutes a petty offence.
Section 25 states that the infringement committed by a legal entity or by an entrepreneur
constitutes an administrative tort.133
Section 8 of Consumer Act states that the following infringing acts may deceive consumers:
- offering or selling goods which violate certain intellectual property rights;
133
See Sections 16 and 25, Consumer Protection Act.
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- storage of such goods with the purpose of offering or selling the same.134
2. Statistics on the Czech Republic
Recent statistics by TAXUD provide an overview of the number of suspect counterfeit articles
intercepted in the period 2006-2009. In the case of the Czech Republic the increase in number
over the period under examination is striking (see chart below).
Source: European Commission, Taxation and Customs Union, “Report on EU Customs Enforcement of IPRs.
Results at the EU Border-2009”, p.19i
134
Under Section 8(6) of the Consumer Protection Act, storage of goods or products violating intellectual property
rights means the placement of such goods or products in storage facilities, means of transportation, offices or other nonresidential areas as well as points of sale, including outdoor stands.
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Source: European Commission, Taxation and Customs Union, “Report on EU Customs Enforcement of IPRs.
Results at the EU Border-2009”, p.12i
2.1 Recent Statistics on Counterfeiting in the Czech Republic135
135
The information (text, tables and graphics) included in paragraph 2.2 are presented in the Czech Trade
Inspectorate Annual Report 2009, online at http://www.coi.cz/files/documents/vyrocni-zprava-coi-2009-cti-annual-report2009.pdf
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1,738: number of controls
382: number of controls with confiscated fakes
41,804: number of pieces of confiscated fakes
59,038 (in thousands of CZK): Price of confiscated fakes considering the prices of the originals
In 2009, a considerable decrease of the number of fakes confiscated by the CTI was noticed in
comparison with the year 2008 (129,955 pieces). This was not due to any decreased number of
controls on the issue, but due to more active work of the CTI in cooperation with other State
bodies. This way a required legal state in this field was managed to be set. The CTI cooperates
with the Customs Administration which – in the contrary to the CTI – has got the right to enter also
locked spaces and then perform inspection activities there as well. Results of this work are then
shown in the Customs Administration statistics. This way of work is much more effective and
provides the CTI with the advantage to use its capacities in other inspection fields. The lower
number of confiscated fakes can also be attributed to a broader range of legal competencies given
to the Customs authorities on the local market.
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The majority of the confiscated goods were fake copies of products of foreign IPRs owners. Among
Czech goods there were only exceptions especially products of the Bateria Company (in huge
amounts). Most frequently products that were confiscated were infringing rights of the trademarks:
Bateria (45.9%), Puma (9.8%), Adidas (6.7%), Nike (6.1%), Gucci (3.7%), Lacoste (3.1%).
Out of the total number of confiscated fakes, 933 products were handed over to humanitarian
purposes. Other confiscated fakes not fulfilling humanitarian purposes criteria were liquidated.
After detecting infringements of unfair commercial practices restriction, concretely infringements of
restriction to offer or sell products or services infringing some IPRs and stocking of such products
with the view of their offer or sale, the CTI Inspectorates’ directors issued fines in administrative
proceedings. When doing so, they take account of the weight of the violation, especially the way it
was committed, the circumstances of its commitment and its consequences.
2.3 Cases136
 On 29 March 2009, the inspectors of the CTI performed inspections of markets and buy and sale
affairs in Hatě. This inspection was focused on sales, offers and storage of goods which violate
regulations of the Intellectual Property Law. Inspection was performed by 10 CTI inspectors, in
cooperation with the Regional Directorate of Foreign Police. 4,141 fake or counterfeit products
were confiscated, such as shoes and clothing of a total value of CZK 10,440,810.
 On 17 March 2009, the inspectors of the CTI performed inspections of markets and buy and sale
affairs in Hatě and Hevlín. They mainly focused on goods as well as on the storage conditions of
goods which may violate regulations of the Intellectual Property Law. The inspection was
performed by 5 CTI inspectors in cooperation with the Regional Foreign Police Directorate. 470
136
The cases listed in paragraph 2.3 are taken from the Czech Trade Inspectorate website and are briefly reported here
as examples. For an exhaustive list of cases of seizures of counterfeits, please see: http://www.coi.cz/en/tiskovy-servis1/tiskove-zpravy-1.html The webpage contains numerous alerts on defective, therefore unsuitable and even dangerous
children’s toys and gadgets that pose immediate risks for their health and safety.
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fake or counterfeit products were confiscated, such as shoes and clothing in the total amount of
CZK 545,320.
 On 22 November 2009, the CTI performed inspections at the Šenovská market place in Ostrava
focusing mainly on counterfeited products. The Foreign police, the Police of the Czech Republic,
the Employment Office and the Trade and Licensing Office in Ostrava also participated in this
event. A total of 24 sellers, selling shoes, textiles, clothing, glass, leather clothing, household
goods and artificial flowers have been inspected. Shortcomings or failures to comply with the
applicable laws were found in 21 cases, which represent 87.7% from all inspected sellers. The
products that did not comply with the necessary product regulations were recalled from sale.
These products represented value in the amount of CZK 3,339. For failure to comply with the
applicable consumer protection law, a total of 17 fines were issued, totalling CZK 16,500.
 On January 2010, the CTI performed controls focused on offering and selling goods infringing
various IPRs. All inspectorates on the CTI participated in the controls. The controls took place in
marketplaces in border regions. Officers of the Police of the Czech Republic, the Alien Police and
the Customs Office took also part. From 119 controls that were performed in total on offer and
sale of fakes, in 19 of the premises raided, 4.263 pieces of products infringing IPRs were
confiscated of a total value of CZK 13,658,062. These were textile products, watches, jewellery,
lather fancy goods, audio and video records, sports products and accessories. The confiscated
forgeries were in the majority labelled with trademarks such as Puma, Adidas, Nike, Luis Vuitton,
Diesel, Lacoste, Replay. The highest number of detected and confiscated fakes was made by the
Jihomoravský and Zlínský Inspectorate of the CTI Authority. Its inspectors confiscated 1,927
fakes of a total value of CZK 2,277,382. The Prague and Středočeský Inspectorate performed
controls in the SAPA Marketplace, Tiskařská and the marketplace River Town in PragueHolešovice. This inspectorate confiscated 510 fakes of CZK 11,311,680 of total value.
 On February 2010, the CTI performed controls to branches focused on products infringing IPRs.
All inspectorates of the CTI participated in the controls performed in the marketplaces,
marketplaces in the border regions and in shops. 132 controls were performed in total and they
were focused on offer and sale of fakes. In 22 checked branches there were confiscated totally
1,301 articles IPRs of a total value of CZK 998,440. The CTIA inspectors cooperated with the
members of the Customs Office, the Police of the Czech Republic and the Alien Police.
Confiscated products included textile goods, audio and video records, sports products and
accessories. The confiscated forgeries were mostly marked under well-known trademarks such
as Puma, Adidas, Nike and Luis Vuitton.
 During February and March 2010 the Ústecký and Liberecký Inspectorate of the CTI performed
11 controls on selling of fakes and imitations in market places of border regions. The controls
revealed that products of famous brands were being sold at prices and were of quality not
equivalent to the real ones. For example scarves, cups and gloves traded as Chanel were offered
for CZK 35 despite that original products of this brand are of thousands of crowns.
 The Středočeský and Prague Inspectorate of the CTI performed a control on 26 March 2010
focusing on selling, offering and stocking of goods infringing some IPRs on the territory of Prague
9. Six inspectors of the CTI performed the control in cooperation with members of the Police of
the Czech Republic. In total 18,720 pieces of forgeries were seized of a total value of CZK
5,616,000, based upon the price of the originals. The confiscated products were traded under
the trademark Kappa.
 The Jihomoravský and Zlínský Inspectorate of the CTI performed on 30 March 2010 in their area
of competence marketplaces control focused on selling, offering and stocking goods infringing
IPRs. The control activity was performed by 20 inspectors of the CTI in cooperation with
members of the Alien Police. The inspectors checked 13 persons in total. Within these controls
they took away 696 pieces of fakes such as clothing, shoes and fancy goods in the total amount
of CZK 1,148,860.
 On 12June 2010, the Středočeský and Prague Inspectorate of the CTI carried out a control at the
River Side Marketplace in Prague. The control focused on offering and selling goods infringing
IPRs. 6 employees of the Středočeský and Prague Inspectorate of the CTI participated in the
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control together with 4 members of the Customs Office. During the control, 581 pieces of
products infringing IPRs were confiscated of an approximate total amount of CZK 1,867,050.
Object to confiscation were especially textile products, watches and leather fancy goods products
labelled mostly under trademarks such as Armani, Prada, Gucci, Louis Vuitton, Rado,
Dolce&Gabbana, Guess, Peak, Pepe Jeans, Samsøe, Rolex, Diesel, Ed Hardy, Puma, Chanel,
Burberry, Levis, Play boy, Lacoste, Replay and Hugo Boss.
 In the period from 7 to 9 July 2010, the CTI performed a control in cooperation with the
Metropolitan Police at the SAPA marketplace in Prague 4. In total, 17 employees of the CTI
performed the control and through the activity they confiscated 214 forgeries – textile products
illegally labelled with trade-marks “Calvin Klein, Burberry, Diesel, Dolce&Gabbana, Armani,
Chanel, Gucci, Guess, G-Star, Polo, Tommy Hilfiger, Prada, Replay and Louis Vuitton. Sales
price of their originals would be of about CZK 1,388,050. The controls were focused not only on
traded forgeries but also on abiding with the Consumer Protection Act.
 In the period from April to June 2010, the CTI performed controls focused on sale of jewels
containing Czech garnets. The control activity was performed in cooperation with the Customs
Administration in the regions of Karlovy Vary, Mariánské Lázně, Plzeň, Prague, České
Budějovice a Český Krumlov. The purpose of the control activity was to verify whether sellers
were using unfair commercial practices by declaring misleading information on stones used in
jewels by calling these stones “Czech garnets”. In total 15 controls were performed in workplaces
with this assortment. Part of the controls was an undercover purchase of jewels that were offered
by the seller as jewels with Czech garnets. After the necessary technical controls, in 13 cases
offering and selling jewels with various stones out of the 15 performed controls, the garnets were
not Czech ones.
 On 25 August 2010, the Středočeský and Praha Inspectorate of the CTI performed a control at
the River Side marketplace focused on offering and selling goods infringing IPRs. 8 CTI
employees and 4 employees of the Customs Office D8 participated in the control. During the
event, 74 products infringing some IPRs were confiscated. The total value of the original products
would be CZK 446,890. Objects to confiscation were textile products and leather fancy goods
labelled mostly with the trademarks Armani, Gucci, Dolce&Gabanna, Louis Vuitton, Puma,
Burberry, Lacoste, Hugo Boss, Levis and Hello Kitty.
 On 13 October 2010, the Plzeňský and Karlovarský Inspectorate of the CTI performed control
activities in cooperation with customs officers and Alien Police at the Svatá Kateřina Marketplace.
The inspectors detected fakes in two stalls - Adidas bags and Rolex watches among others – out
of a total number of 111 pieces and of a total value of CZK 2,180,000. Textile products of value of
about 1 million CZK were also confiscated.
 In October 2010, the Středočeský and Prague Inspectorate of the CTI performed controls in
cooperation with the members of the Police of the Czech Republic and the Regional Directorate
of Alien Police service. 2 extraordinary controls focused on infringements of IPRs at the River
Town Marketplace in Prague 7 and at the “Tiskařská” Marketplace in Prague 10. In total 19
employees of the CTI and 10 members of the Police of the Czech Republic participated in the
controls. During 4 controls, 1,275 pieces of textile products, watches, leather fancy goods and
keys lockets that were illegally labelled with trademarks such as Polo, Versace, Pepe Jeans,
Gant, Lacoste, Calvin Klein, Burberry, Diesel, Dolce&Gabbana, Armani, Chanel, Gucci, Guess,
Tommy Hilfiger, Replay, Adidas, Roberto Cavalli, Bentley, Breitling, Rolex, Cartier, Roxy,
Burton, DC, Quicksilver and Louis Vuitton were confiscated. The sale price of the originals would
be of CZK 4,372,300.
 In October 2010, the Plzeňský and Karlovarský Inspectorate of the CTI performed a joint control
with the participation of CTI employees and members of the Customs Office and Alien Police at
the Svatá Kateřina Marketplace. During the performed control, the CTI inspectors in cooperation
with the members of the Customs Office confiscated fakes of a total value over CZK 3,5 million.
Those were mostly textile goods illegally marketed under trademarks such
as Adidas, Bench, Lacoste, Diesel etc. During the last control on October 3, 2010, goods of a
total value of about CZK 3 million had been confiscated. At the same time, the CTI employees
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controlled also the level of compliance with the obligations defined by the Act on Consumer
Protection and deficiencies in pricing of goods and other information obligations.
3. Remedies and Actions against Counterfeiting:
3.1 Border Measures
Act No. 191/1999 specifies conditions under which customs are authorized to implement action in
order to counteract parting, owning, holding, storing or selling goods by whose production
intellectual property rights have been infringed. Under Act No. 191/1999, Czech Republic allows for
three different procedures:
 Ex officio measures: in accordance with Article 4 of Regulation 1383/2003, if there are grounds to
suspect that certain goods infringe an IPR even before a right holder files a request for action
and/or before such a request is received, Section 9 allows customs authorities to suspend the
release or detain of the alleged infringing goods for a total of three working days. The customs’
office immediately informs the rightholder about the incident and the amount of the products.
Subsequently, during the course of the proceedings, the right holder or representative has the
right to proceed by means of a simplified procedure or legal action. If, within three working days
of notification, no request for action has been filed with the competent customs’ authorities, the
customs office must release the suspected goods.137
 Preventive application for action: according to Article 5 of the Regulation, the registered owner of
a trade mark, the person authorized to use the trademark or his/her representatives may file a
request for action, valid for one year. Under Section 4(1) of Act No. 191/1999, this request for
action must be filed with the Directorate of Customs in Hradec Králové. If the Directorate grants
the actions, the authorized person is invited to deposit a security within 15 days as and from the
date of invitation. If the customs office is told to extend detainment of suspected goods, it notifies
the right-holder and informs the latter about the quantity of goods. The right-holder may also be
given samples and photographs of the suspected goods. The authorized person may also
request further details about the declarant, the consignee and the consignor, as well as the origin
and provenance of the goods. In such cases, the right owner is obliged to file a lawsuit with the
competent court. Any related lawsuits must be filed immediately and customs authorities must be
informed, without undue delay, of such legal actions.138
 Simplified procedure: Under Section 14 of Act No. 191/1999, customs authorities may accept the
right-holder’s request to destroy the alleged infringing goods, without having to proceed to a court
ruling on the merit. After receipt of the notification concerning the extended detainment of the
suspected goods, the right holder must apply in writing, or in electronic format, within ten working
days. The request to destroy the infringing goods must comprise a statement prepared by an
expert which confirms that the relevant goods do indeed infringe an IPR. The request must also
include consent given by the declarant, holder or owner of the goods for the destruction of the
goods in question. This consent shall be presumed if the declarant, holder or owner of the goods
does not expressively object to the request within ten days, as and from the date in which the
request for consent is issued. The infringing good are then destroyed under the supervision of
three customs officers. All expenses incurred are to be paid by the registered right holder.
Furthermore, Section 23(6) of the Consumer Protection Act allows customs authorities to exercise
controls similar to those carried out by the CTI in order to guarantee the observance of obligations
stipulated in Sections 7b, 8 Subsection 2 and 8a of this Act.139 As to effectively fulfil this duty, the
137
See Section 9, Act No. 191/1999. Under Subsection 4, customs office may leave the detained goods with the
possessor, ordering not to use, to take away or dispose of them by any means.
138
See Sections 4, 5 and 6, Act No. 191/1999.
139
See Holy, M., Vyplel J., “Czech Republic”, in Anti-counterfeiting 2009 A Global Guide, online at:
http://www.worldtrademarkreview.com
Under Section 7b of the Consumer Protection Act, it is prohibited to offer, to sell, or to export products or goods intended
for humanitarian purposes and labelled with the mark “humanita”. Section 8 of the Consumer Protection Act prohibits
deceptive consumers’ transactions. Section 8a of the Consumer Protection Act provides that holders and co-holders of a
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authority given to Customs is provided in detail under Section 23b and Section 23c of the
Consumer Protection Act (perform checks of legal entities and individuals who manufacture, store,
distribute, import, export, purchase and/or supply alleged infringing goods and/or services; enter
outlets or storage facilities; require submission of relevant documentation; order seizure of alleged
infringing goods).140
Under Section 21 concerning petty offences and Section 29 for administrative torts, Customs
authorities within the jurisdiction where the petty offence or the administrative tort has been
committed may impose a fine and/or; the confiscation of goods used to perpetrate the offence
obtained through or in exchange for goods acquired by the infringements.141 Furthermore, if the
court ruling should find that the goods are indeed counterfeit, at the expense of the offender, the
customs office shall arrange for:
 with the consent of the right holder, the removal of the trademark from forfeited or confiscated
counterfeit goods and/or other modifications of forfeited or confiscated counterfeit goods;
 with the consent of the right holder, and after the trademark has been removed, the donating of
the counterfeit goods for humanitarian purposes to other State offices and charities and/or NGOs
which provide social services and/or which are considered to be active within the health or
educational system.
3.2 Civil Sanctions
Under Section 6 of Act No. 221/2006 which implements the EU Directive 2004/48, the Council
Municipal Court in Prague shall provide court rulings, as the court of first instance, related to:
- Disputes on claims concerning IPRs, on claims resulting from damages of an infringement upon
the IPRs and on claims to surrender of the unjust enrichment acquired to the prejudice of the
beneficiary of the IPRs;
- Community Trade Mark or Community Designs. This Court shall also review final administrative
decisions issued by the IPO. All these proceedings are conducted and decided in specialized
panels composed by three judges before the Municipal Court in Prague.142
In order to achieve communitarian standards related to the protection of IPRs, Section 8,
Subsections 4-7 of the Trademarks Act has been repealed by Section 14 of Act No. 221/2006,
Enforcement of Industrial Property Rights. Under Section 2 of Act No. 221/2006, persons granted
the exclusive right over a trademark:
- the right holder or the proprietor of the trademark;
- the person entitled to the right of use in accordance with the Trademarks Act, in particular a
licensee and a professional organization engaged in the protection of rights and which is duly
recognized as an organization with authority to represent the IPRs holders or proprietors.143
At present, the aforementioned authorized persons may instigate the following claims and
procedures:
patent/copyright certificate/trademarks/registered industrial design or utility model or their representatives must upon
request submit to the supervisory authority documentation necessary for assessment of goods or products within 15
business days of receiving such a request. Holders of intellectual property rights are responsible for ensuring that such
documentation is truthful, accurate, complete and effective. They must inform the supervisory authority of any changes
which may be material for the accuracy of an assessment of goods or products […].
140
See Section 23b, Consumer Protection Act.
141
See, Section 19 and Section 27, Act No. 191/1999, respectively, for petty offences and administrative torts.
142
See Section 6 of the Act No. 221/2006, Enforcement of Industrial Property Rights Act.
143
See Section 2, Enforcement of Industrial Property Rights Act. Under Subsection 2, the licensee may enforce the
right only upon the consent of the right holder or the proprietor. The consent shall not be required when the right holder
fails to initiate a claim within one month from the receipt of the licensee’s notification of the infringement.
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 Information rights. Authorized parties may demand information from third parties who participated
in acts which violated an IPR. Such third parties may include persons that, for the purpose of
economic benefit:
- are keeping infringing goods;
- are using or providing infringing services;
- are identified by any of the above persons as a producer, complier, distributor, service provider or
any other person that has participated in the infringement. Under Section 3, Subsection 2 of Act
No. 221/2006, should a third party fail to cooperate in providing the requested information, one
may resort to legal proceedings.144
 Proceedings on merits. When an infringement has been established, the registered trademark
owners can obtain the following corrective measures:
- dilatory action: this action requires specific facts about the offence committed. Furthermore, as it
may take a few years to conclude the proceedings, the plaintiff has the right to apply for interim
relief;145
- removal action and destruction of infringing goods: a court ruling may call for the infringer, or
person whose means and/or services were used by third persons for the infringement, to
discontinue use of and/or permanently remove all products, materials, machinery, tools and/or
equipment designed or used for infringement. In all of these cases, the penalty should be
proportionate to the offence committed. If the penalties provided are inadequate, the judge may
order the payment of a sufficient pecuniary compensation to the authorized persons;146
- damages: the infringer shall be liable to compensate the proprietor for damages resulting from
the infringement of IPRs. In order to calculate damages, the court shall consider the profits
obtained through the violation of the law. Should it prove impossible to determine the exact sum
of damages, the court may order the payment of an appropriate compensation in a flat amount
and equivalent to double the sum due for the license fee which would have had to be paid had
the infringer bought a license to use the right;
- publication of the court ruling: expenses due for publication are to be paid by the infringer who is
defeated in the litigation.147
3.3 Criminal sanctions
According to the Czech Criminal Code Act. No. 40/2009 Coll.:148
Trademarks
§ 268 (1) Each person that enters into circulation or provides services bearing without authorization
a trademark the exclusive right in which belongs to someone else, or bearing a confusingly similar
trademark or who for this purpose for himself or someone else offers, mediates, manufacturers,
imports, exports or otherwise acquires or posses such products or offer or mediates such service,
shall be punished by imprisonment of up to two years and/or prohibition of activity, and/or forfeiture
of a thing or another property asset.
144
See Section 3, Enforcement of Industrial Property Rights Act. The information shall include: (a) name and
surname or corporate business name and place of permanent residence or registered office of the manufacturer,
processor, distributor, supplier and other previous possessor of the goods or service infringing the right; (b) details of the
manufactured, processed, supplied, stored, received or ordered quantity and of the price received for the given goods or
services.
145
Ĉìžkova, D., Zacha, T., 2009, “Czech Republic Protecting your Intellectual Property: New Options for IP Rights
Holders, in Building and Enforcing Intellectual Proeprty Value 2009,, www.buildingipvalue.com
146
See Section 4, Subsections 2-3-4, Enforcement of Industrial Property Rights Act.
147
See Section 4, Subsection 5, Enforcement of Industrial Property Rights Acts.
148
24-25.
INTA (2010), Criminal prosecution of Counterfeiting and Piracy in Member States of the European Union, pp.
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(2) concerns company names and geographical indications
(3) The perpetuator shall be punished by imprisonment from six months to five years and/or fine
and/or forfeiture of a thing or another property asset,
(a) if he/she obtains by an act described in subsection (1) or (2) for him(herself or someone
else significant benefit or
(b) commits such act to a significant extent
(4) The perpetuator shall be punished by imprisonment from three to eight years,
(a) if he/she obtains by an act described in subsection (1) or (2) for him/herself or someone
else large scale benefit or
(b) commits such act in a large extent
Copyrights
§ 270 (1) Each person that infringes in a not negligible manner the statutory rights in copyright,
artistic performance, audio or audiovisual recording, radio or television broadcast or database shall
be punished by imprisonment of up to two years and/or prohibition of activity, and/or forfeiture of a
thing or another property asset.
(2) The perpetuator shall be punished by imprisonment from six to five years and/or penalty and/or
forfeiture if,
(a) the act described in subsection (1) has features of commercial activity or other business,
(b) if he/she obtains by an act described in subsection (1) for him/herself or someone else
large scale benefit or
(c) commits such act to a significant extent
(3) The perpetuator shall be punished by imprisonment from three to eight years,
(a) if he/she obtains by an act described in subsection (1) for him/herself or someone else
large scale benefit or
(b) commits such act in a large extent
Counterfeiting and imitation of work art
§ 271 (1) Each person that counterfeits author’s work of art or imitate art demonstration by another
author with a view to get a new work considered to be an original work of such author shall be
punished by imprisonment up to three years, prohibition of activity or forfeiture or other assets
(2) The perpetuator shall be punished by imprisonment from one to six years
(a) if he/she commits an act described in subsection (1) as a member of an organized group
(b) if he/she obtains by such an act a significant benefit for him/herself or for someone else
(c) if he/she commits such act to a significant extent.
(3) The perpetuator shall be punished by imprisonment from three to ten years
(a) if he/she obtains by an act described in subsection (1) for him/herself or someone else
large scale benefit or
(b) commits such act in a large extent
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SOURCES
Act on Trademarks: section 2, 4, 5, 6, 9, 21, 22, 24, 28, 29, 44
Decree no. 97/2004, section 19
Czech Trade Inspectorate Annual Report 2009, available HTTP:
http://www.coi.cz/files/documents/vyrocni-zprava-coi-2009-cti-annual-report-2009.pdf
INTA (2010), Criminal prosecution of Counterfeiting and Piracy in Member States of the European
Union.
Ministry of the Interior of the Czech Republic (October 2010), available HTTP:
http://www.mvcr.cz/mvcren/article/new-anti-corruption-strategy-introduced.aspx
United States Department of State (2010), “Trafficking in Persons Report 2010 - Czech Republic”,
June 14, available HTTP: http://www.unhcr.org/refworld/docid/4c1883fa2d.html
http://www.coi.cz/en/tiskovy-servis-1/tiskove-zpravy-1.html
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SECTION 5
Main Concepts and Suggested Best Practices for Investigations
5.1.1 Detection of Counterfeit Goods and Initiation of the Investigation 149
One of the main aims of this training manual is to provide law enforcers, and all those involved in
the detection and identification of counterfeit goods, with the operational tools to improve their
counterfeit investigations.
For this reason, the investigators should not just stop with identifying the “counterfeit sellers” as
they can be considered “the tip of the iceberg” and occasionally also victims of crime. The
investigations should aim to achieve the following two specific objectives:
1. Identification of the whole counterfeiting chain, up to and including the production sites;
2. Identification of the involvement of possible criminal organisations.150
The seized goods can also provide a variety of information. Examples include information on the
routing of counterfeit goods and evidence against the manufacturers. Furthermore, investigations
may lead to the finding of existing links between counterfeiting and organized crime.
One important weapon in the fight against counterfeiting is the clear presumption of IPR ownership,
putting the onus on the suspect to prove that goods in his/her possession are not counterfeit.
A law enforcement officer encountering a product for the first time has to consider the following
questions:

What is the product and is it illicit or licit?

Where can I obtain assistance to confirm my suspicions?

Where do I obtain evidence of rights ownership?

What evidence is available to support or disprove allegations of IPR infringement?

What evidence do I require to support prosecution?151
Investigators and law enforcers should adopt a common strategy aimed at identifying all relevant
persons involved in the manufacturing, distribution and sale of counterfeit products. The discovery
of the following information could be essential:

Companies and persons (partially or totally) involved in the production and distribution
network. This information is essential for recognising the possible involvement of an
organised crime group and the relevant internal structure152;

Money transfers that might constitute important evidence for tracking the illicit trading flows
and for obtaining the seizure and confiscation orders;

Real estate and property, especially production sites, warehousing or selling points that are
not only crucial for seizure and confiscation proceedings, but also key points of the criminal
chain.
149
The main source for the whole paragraph is UNICRI (2010), Strategies for technical-juridical training and
awareness raising on counterfeiting, (unpublished Italian version).
150 UNICRI (2010), Strategies for technical-juridical training and awareness raising on counterfeiting, (unpublished Italian
version), p. 101.
151 See, INTERPOL (2007), Guide To Intellectual Property Crime And Investigations, Lyon.
152 One of the main weak points of all criminal organizations, including those with a “satellite structure”, is represented by
the need to acquire enormous quantities of raw materials. The set up of complicated company structures is needed to
cover the significant number of purchase orders. Such companies avail themselves usually of just one or two suppliers,
easily identifiable as few are the factories producing the necessary raw materials.
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
Details and registrations of vehicles or other means of transport used in production
(movement of raw materials, parts or e.g. packaging) and distribution;

Details of mobile communications and IT hardware used in infringements.
The complex distribution chain of counterfeit products can complicate any exercise aimed at
tracing items back to the various parts of the illicit supply chain. This traffic is managed by veritable
transnational criminal networks, capable of progressively refining the methods to conceal and trade
products, following well established routes also used for the trafficking of other illicit goods,
especially drugs. The methods used to avoid customs controls have evolved rapidly. A common
method employed by criminal networks involves transiting the products through several countries
in order to conceal their actual origin. This technique is most used when the country of origin is
particularly “sensitive”. 153
It is particularly important to highlight that prevention and repression of counterfeiting must be
accompanied by thorough information and evidence gathering on the complex system underlying
the illegal reproduction of goods. Counterfeiting is a very complex phenomenon that cannot be
stopped just by limiting the presence of small traders both licensed and unlicensed or through
isolated actions. We need to develop proper strategies to combat counterfeiting in all its
complexity.154
It may be useful to specify the main factors that should be taken into account in the investigative
framework:

The possible origin of the investigation;

The analysis of events;

The choice of investigative methodology;

The data collection plan;

The investigative developments.
The above steps are not intended to cover all of the countless possibilities arising from different
scenarios. They suggest effective investigative activities aimed at identifying and dismantling the
criminal organizations that are responsible for managing significant levels of trafficked counterfeit
goods, and which are also responsible for causing the most harm to right holders, the State and
society as a whole. Investigations should be targeted at understanding the complete criminal
scenario, identifying the counterfeiting production-distribution chain (capital, factories, facilities,
distribution network, warehouses and equipment in general), in order to identify criminal
organizations involved. If these organizations are operating in several countries, the possible
application of those norms regarding transnational organized crime should also be verified before
adopting them.
There are a variety of methods in which investigations on counterfeiting can be initiated, for
example:

During criminal investigations for a different crime;

Receiving a complaint from the right holder, or communications from other institutions;

Instances of Customs’ protection;

During normal controls of the territory;

Other police activities;

International cooperation and mutual administrative assistance.
The scenario to be investigated will be more or less complex depending on whether investigations
will consider:
153
154
UNICRI (2010), “Strategies for technical-juridical training and awareness-raising on counterfeiting”, p. 31.
UNICRI (2010), “Strategies for technical-juridical training and awareness-raising on counterfeiting”, p. 34.
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
Small traders, both licensed and unlicensed, who constitute the last links of the
counterfeiting market;

Counterfeiting entrepreneurs (the producers and intermediaries trading counterfeit goods).
The following information sources can be used to acquire elements in support of the investigation:

Information available in existing national databases;

Analysis of other open sources;

Analysis of databases on trademarks, patents, designs and models, such as:
 European trademarks (http://oami.europa.eu/)
 International trademarks (http://wipo.int/portal/index.html.en)
 European
Patents
Office
(Espacenet,
http://www.espacenet.com/index.en.htm)
http://www.epo.org/
&
 Other databases on designs and model.

National and regional IP enforcement associations;

Related industry associations (such as Union des Fabricants, the pharmaceutical industry
associations, etc.)
After having collected and analyzed the information of the suspected counterfeit product, the
products’ safety and potential risks for consumers should be ascertained. The following distribution
and trade channels should be detected:

Regular distribution (mix-sale);

Mail-order and via the Internet;

Out of the regular distribution channels.
At the end of this first phase of analysis, investigative hypotheses can be carried out on the
following:

Subjects involved;

Type of infringement and/or crimes committed;

Identification of operational modalities;

Geographical locations;

Driving motives;

Time-span.
Once these pieces of information are collected, it will be possible to evaluate which of the following
investigative methods are considered most appropriate:

Inspections at borders;

Collection of photographic evidences;

Identify people and means;

Technical investigations;

Identify the production/distribution chain, financial assets etc;

Inspections (documents inspections, verification of the information);

Surveillance;

Ambushes;
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
Use of informants;

Raids;

Retrieve declarations and information;

Other investigation techniques;

Undercover operations.
BOX 5
The Romanian common national database
A pre-investigative analysis should always be carried out whatever the origin of investigation activity
is, through a series of preliminary checks in order to acquire all the useful elements.
Primarily, the importance of information sharing tools should be considered. These are the national
databases developed in some countries, both in Europe and outside the EU. An outline of the Romanian
national common database is detailed below.
Information contained within databases can also help customs’ agents and policemen in detecting
fake products and preventing their trading.
Other main functions of the Romanian national common database are detailed below.
The Romanian national Common Database consists of several modules:
1. Penal Case module, which is the main functionality where information regarding infringements
and deeds can be entered into the system. The penal case must contain information about origin
institution and assignment of prosecutor and investigators. A case number has to be created
manually by the user due to the structure and nomination of the case numbers. It also provides
the opportunity to search for existing penal cases and view/edit them. Each penal case must be
attached to an Infringer. The system provides the opportunity to attach the Penal Case to either a
Natural Person or to a Legal Person.
2. Persons module, contains information on infringers, both Natural and Legal persons. The module
holds detailed information, such as address, ID and connection to penal cases etc.
3. Right Holder Registration module, provides a searchable overview of selected IPR-related
information from SOIT and RCO. The user will be able to perform searches in respective
registers.
4. Detainments module, intends to show a listing of searchable details regarding different seized
goods etc. from NCA.
5. Reports and Statistics, module allows obtaining of reports and statistics regarding criminal files in
the IPR-field, depending on various parameters.
The beneficiaries/end users of the IT database are:
 Public Ministry – Prosecutor’s Office attached to the High Court of Cassation and Justice,
(POAHCCJ)
 General Inspectorate of the Romanian Police (Fraud Investigation Division)
 General Inspectorate of Romanian Border Police (GIBP)
 National Authority of Customs (NAC)
 Romanian Copyright Office (RCO)
 State Office for Inventions and Trademarks (SOIT).
Source: Romanian Public Ministry
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BOX 6
VINCI Information Exchange System
On 10 April 2008, a system for the protection of intellectual property rights “Leonardo da VINCI” (“VINCI”)
was introduced in Poland
Responding to the needs of economic environments, this system introduces numerous simplifications for
the owners of intellectual property rights.
It enables, inter alia:
- to collect and process information provided by producers on original and fake goods, necessary for
customs services to identify pirate and fake products (eg. photos, contact points for the exchange of
information),
- entering and processing data about all confiscated illegal products and
- preparing various statistical reports, including reports for the European Union.
VINCI presented in the European Commission is one of the most modern tools supporting both owners of
intellectual property rights (business) and customs services in fighting counterfeiting and piracy.
Assumptions underlying VINCI system have been used to create a Community system IT IPR “COPIS”.
It is possible that in the near future business will be able to have direct access to the system on the
Internet.
Source: The (Polish) Team for Counteracting Infringements of Copyright and Related Rights
5.1.2 Border Controls Aiming to Detect Counterfeit Products and Anti-Counterfeiting Technologies
Those involved in counterfeiting use a variety of means to introduce their products into the market.
The main distribution chains to consumers include market stalls, itinerant small traders, both
licensed and unlicensed, and sales over the internet.155
We will now start by analyzing how border controls work and how the infringers sometimes avoid
them. We shall outline some useful means already used to detect counterfeit goods before they
reach the market.
Investigations are rather complex as capital, production units, distribution and market circuits are
parcelled out. It may happen, for instance, that counterfeit products sold in Europe are destined for
another market and are thus in transit. In order to deceive customs’ authorities, counterfeiters
resort to indirect transportation systems, involving hiding the origin of the products by passing
through different countries before sending them to their final destination. There are many examples
illustrating this manoeuvre:
-
In September 2003, approximately 15,000 counterfeit glasses (whose estimated value on
the French market was 1,262,650 euros) were discovered at Roissy airport, in France. The
cargo, coming from Dubai, the most notorious seaport for world counterfeiting, was
addressed to Abidjan, Ivory Coast.
-
In December 2003, customs officials of the cargo control unit of Roissy airport seized
approximately 245,000 counterfeit labels of the following trademarks: Lacoste, Timberland,
Nike and Ecko. The labels had been shipped from Hong Kong with Morocco as the final
destination.156
Counterfeiters try to hide the origin of the products to avoid raising suspicion. For this reason,
every counterfeit product has its own circulation and distribution network. There is not a standard
pattern, a number of transit countries are chosen due to the mass trafficking of goods (making
customs work difficult) or perceived weak controls within these territories and customs units. Some
155
156
IP Crime Group (2010), Annual Report 2009-2010, p. 9.
Unions des Fabricants (2005), “Rapport sur la contrefaçon et la criminalité organisée”, p. 13.
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areas are nothing other than turntables: within the EU this is the case with some ports like Antwerp
or Rotterdam, or some airports as Schipol or Roissy. Outside Europe, Dubai, and Hong Kong or
some ports in the U.S. are considered privileged transit places. Furthermore, counterfeiters make
use of every kind of transportation means (by air, land and sea) and recur to the faster transport
routes available. The European Commissioner responsible for TAXUD (Taxation and Customs
Union), László Kovács declared: "All these techniques and the indirect routes taken by many
cargos are similar to the ones used by drugs traffickers, which clearly shows which kind of
organisations we are dealing with”157.
The origin of the products can also be masked by taking advantage of the so-called Free Trade
Zones (FTZs). Goods passing through FTZs or Free Ports (FP) create opportunities for
counterfeiters to disguise the true country of origin of goods. They can also take advantage of
countries where customs control on shipped or in-transit goods is known to be weak. Over the
years quite a number of FTZs and FPs in different countries have been cited in reports as hotspots
for counterfeit goods. These include Latvia, Lithuania, Paraguay (Ciudad del Este), UAE (Abu
Dhabi and Fujairah), China (Hong Kong, Shanghai and Guangdong), Panama, Taiwan and
Mexico.158
BOX 7
Counterfeiting and Free Trade Zones (FTZs)
A recent New York Times exposé on the trade in counterfeit pharmaceuticals shows how FTZs can play
an important role in facilitating their sale. One particular case revealed a complex supply chain of fake
drugs originating in China and ran through Hong Kong, Dubai, the UK, the Bahamas and the US. It was
exposed when British customs officials intercepted a large consignment of counterfeit pharmaceuticals at
Heathrow Airport. What surprised them was that the shipment had come from the UAE and was bound for
the Bahamas - not a route normally used by legitimate pharmaceutical companies. This seizure triggered
investigations and raids all over the world.
In Dubai, customs officers raided the warehouse of a trading house called Euro Gulf, impounded a
significant cache of counterfeit drugs, and charged several people. In the Bahamas, the authorities
entered the offices of the Personal Touch Pharmacy and seized drugs worth 4 million USD. As the
investigation progressed, in the US and other parts of the world. As well as exposing the complex supply
chains counterfeiters’ use, the case revealed the role of FTZ’s in masking the origin of products. According
to Ilisa Bernstein, director of pharmacy affairs at the US Food and Drug Administration, “Free Trade Zones
allow counterfeiters to evade the laws of the country because often times the regulations are lax in these
zones.”
Source: ICC Counterfeiting Intelligence Bureau (2009), International Anti-Counterfeiting Directory, p. 27.
Since an understanding of the counterfeit goods’ flows can help licit manufacturers, brand owners,
and law enforcement agencies to protect the licit supply or to disrupt counterfeit activities a
diagrammatic representation of the potential trade routes used by counterfeiters has been created
by Europol. This diagram also illustrates connections between criminal groups operating in various
countries.
157
Unions des Fabricants (2005), “Rapport sur la contrefaçon et la criminalité organisée”, p. 14.
ICC Counterfeiting Intelligence Bureau (2009), “International Anti-Counterfeiting Directory”, p. 27, available at
http://counterfeiting.unicri.it/docs/IACD.A%20key%20information%20resource%20to%20combat%20the%20global%20pl
ague%20of%20counterfeiting.2009.pdf
158
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Unicri 2007, source: Europol
International best practices
An interesting example of a new tool that allows countries to improve how they track the source of
counterfeit goods and also monitor the ports of transit for these fake products is the database
elaborated by the United States National Intellectual Property Law Enforcement Coordination
Council (NIPLECC), in collaboration with the U.S. Chamber of Commerce, to support Interpol in the
establishment of “Interpol Intellectual Property Crime Database”.
This new database will allow countries around the world to share information on counterfeiting and
piracy to track IP crime and prevent future criminal acts. The database will act as an important new
tool for information exchange between countries. It allows countries to share information they hold
on counterfeiting and piracy, while also allowing for information to be entered into the database
from the individual companies who own the goods that have been stolen.159
Another good practice, presented in box 2 below, is the Customs & Border Protection’s (CBP)
online registration system for trademarks and copyright
United States National Intellectual Property Law Enforcement Coordination Council (2008), Report to the
President and Congress on Coordination of Intellectual Property Enforcement and Protection , p.35. For a more in-depth
159
analysis of this database look also p. xx, chapter 5, part C (a good practice: DIIP).
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BOX 8
U.S. Customs & Border Protection IPR registration process: a good practice
The U.S. Customs and Border Protection (CBP) is the unified border agency within the Department of
Homeland Security responsible of the management, control and protection of national borders at and between
the official ports of entry.
“CBP’s online registration system for trademarks and copyrights allows rights owners to electronically record
their trademarks and copyrights with CBP.
CBP personnel use the system daily to make IP infringement determinations.
The IPR registration system makes IP information relating to imported merchandise (such as images of
trademarks and copyrights, contact information, countries of production, and licensees) readily available to
CBP personnel as they are inspecting shipments at the ports of entry in real time.
As of the end of 2007, over 21,000 trademarks and copyrights were recorded with CBP.
For more information on this tool or to register your trademark or copyright, visit CBP’s e-recordation website”.
Source: U.S. Customs and Border Protection, http://www.cbp.gov/xp/cgov/trade/priority_trade/ipr/
For information on border measures as effective means of blocking counterfeit products, see the
implementation of the EU Customs Regulation in Czech Republic (Part 3 of this manual). In the following
boxes two good practices on customs action (in Ireland and in France respectively) are presented as
suggestion for both Czech Republic and the rest of the EU.
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BOX 9
Customs action against goods suspected of infringing IPR in Ireland
“1. Suspect goods identified in the course of checks carried out at the request of a right-holder
The entry of the goods should be monitored in accordance with the terms of the application in question. To
facilitate the identification of the goods, suitable arrangements should be made including the insertion of
appropriate profiles on the AEP (Automated Entry Processing) system, for the period of the application
under consideration.
Where imported goods appear to infringe an IPR covered by an application they are to be detained and
the right-holder and the person who imported the goods are to be informed. In addition, the detention
should be reported immediately to the IPR Co-ordinator. The right-holder is to be provided with a sample
of (or asked to view) the goods. Furthermore, he/she is requested to confirm in writing whether or not the
goods are counterfeit or pirated, giving reasons by reference to the characteristics of the goods or their
packaging or otherwise. The person who imported the goods should also be given the opportunity to
inspect them. This person’s name should not be divulged to the right-holder.
2. Suspect goods identified in the course of normal checks
During normal checks, if goods are discovered which appear to infringe an IPR, but are not the subject of
an application, they are to be detained. The right-holder whose IPR is suspected of being infringed and the
person who ipmorted the goods are to be informed. In addition, the detention should be reported
immediately to the IPR Co-ordinator. The detention, which can only be for a period of 3 working days, is to
allow the right-holder an opportunity to lodge an application with International and Trade Security Branch,
Customs Division.
If an application is granted, the procedure should be applied.
If an application is not lodged within the 3 working days the goods are to be released provided that all
customs formalities have been complied with.
3. Follow Up and Reporting
Where goods have been detained, a right-holder has 10 working days to confirm that the suspect goods
infringe an IPR under National law. In the absence of this confirmation the goods will be released provided
that all customs formalities have been complied with. The 10-day working period may be extended by a
maximum of 10 further working days if considered necessary. In cases involving perishable goods
suspected of infringing an IPR, this period is 3 working days and may not be extended. If the goods are
subsequently seized, a written report setting out all the facts shall be forwarded immediately to Anti-Fraud
Unit, in accordance with standing instructions on the reporting of seizures. A copy of this report should
also be sent to the IPR Coordinator. To facilitate the requirement of quarterly reporting to the Commission
of goods seized under these provisions, the report in each case must include the following information: the
name of the right-holder, a description of the goods and the brand name of the IPR infringed.
For each item, the quantity of goods detained or seized, their customs status, the type of IPR infringed, the
means of transport used; and whether commercial or passenger traffic was involved and whether the
procedure was initiated in the course of normal checks, or specific checks covered by an application for
action”.
Source: International & Trade Security Branch, Customs Division (2008), Intellectual Property Rights
(IPR), Manual Customs action against goods suspected of infringing certain intellectual property rights and
the measures to be taken against goods found to have infringed such rights, Ireland.
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BOX 10
Customs action in France
“According to law 94-102 of 5th February 1994, counterfeiting is a customs-related crime (articles 38, 215
bis of Code de Douanes). The following customs penalties regarding trademarks counterfeiting include:
the seizure of counterfeit goods, means of transport and facilities used to hide the crime; a fine whose
value can be once or twice the counterfeit merchandises’ cost (art. 414 Code de Douanes) and with a
minimum of 300 Euros (art. 437 Code de Douanes). A 3 years-maximum imprisonment is also incurred.
The proceedings are then transmitted to the prosecutor according to art. 40 of the Criminal Procedure
Code.
The customs action can become customs seizure due to the intervention request sent by a rights’ owner to
the Direction Nationale du Renseignement et des Enquêtes Douanières (DNRED). The rights’ owner,
within 10 days, has to justify to customs services both the measures decided by the TGI president and
whether a civil proceeding was started (art. L.335-10, art. L.521-7 and art. L.716-8 of CPI).
The law of 9th March 2004, adapting measures to the new crime evolutions, extended the customs
authorities’ prerogatives concerning intellectual property. So, regarding the trademarks counterfeiting, the
new article 67 of the Code de Douanes allows customs agents to proceed with undercover operations,
with the authorization and under the control of the Public Prosecutor.
The European Regulation n° 1383/2003 (22nd July 2003) strengthened the Customs possibilities for action
within the European Union. Since 1st July 2004 the Customs are able to act whenever a sufficient
suspicion exists, even before the call for action by the IPRs’ owner. This system is applied to all IP rights,
including the geographical indications, appellations of origin and the vegetable patents. Moreover, free
and harmonized intervention requests are foreseen by this Regulation.
The Customs administration have the right of self-directed prosecution in front of the repressive jurisdiction
for the implementation of fiscal sanctions, but only if the public action of the common right has been
engaged either by the Prosecutor or by the right’s owner. If the public action has not been activated, the
Customs will have to close a transaction. Transaction power – regarding Customs – is exerted mainly for
low levels of counterfeit products. Customs transactions have no effects over the public action in
prosecuting the infringements of common law. For this purpose, the proceeding has to be transmitted to
the Public Prosecutor according to art. 40 of the Criminal Procedure Code.
Source: Unifab (2004), La lutte anti-contrefaçon. Manuel destiné aux officiers de police judiciaire, 2ème
édition, p. 14.
5.1.3 Anti-counterfeiting Technologies
The great volume of international commercial trade is not the only involuntary ally of organized
crime in the trafficking of counterfeit goods. Modern logistic management of international trade is
facilitated thanks to intermodal shipping. Intermediary destinations are often chosen from those
hubs which law enforcement authorities do not consider to be “high risk” thereby making the origin
of the goods appear less questionable. This creates additional practical difficulties when attempting
to detect counterfeit goods.160
The problem becomes more complex when the imported object is not a finished counterfeit
product. To avoid border controls, counterfeiters resort to a variety of techniques to disguise the
goods; examples include: mixing original and counterfeit products or using double bottomed
transportation means. In 2000, a Bulgarian ship transporting goods from Ukraine and ex-
12
UNICRI (2010), “Strategies for technical-juridical training and awareness-raising on counterfeiting”
UNICRI (2007), op. cit.
14
CEIPI (2004), p.27
15
International Anti-Counterfeiting Directory (2009), “A key information resource to combat the global plague of
counterfeiting”, pp. 8-9.
13
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Yugoslavia was inspected. A double bottom was discovered containing more than 220,000 pirated
CDs whose value was about USD 500,000.161
The practice of parcelling out the components of a product across several shipments is also very
common. Clothes and counterfeit trademarks can be sewn on to clothes that have been shipped
separately. Sometimes a product is delivered first, followed later by its packaging. In this case the
manufacturing of the product is completed only after its transport, thus subdividing the risks
involved in shipping.
Since there are many techniques to conceal counterfeit products and to make them increasingly
hard to distinguish from the original ones, a variety of detecting measures have been elaborated in
the recent years. Some of the most used are outlined below.
The report entitled “A key information resource to combat the plague of counterfeiting” published in
2009, provides a series of new anti-counterfeiting technologies available to the market in 2008:162
-
Two Australian chemists developed a new rapid forensic test for authenticating antique
porcelain after discovering that all porcelain has its own unique ‘fingerprint’. This
‘fingerprint’ allows its history to be traced back to the precise quarry from where the clay
was mined, the furnace in which it was fired, and the period in which it was manufactured.
The technology involves a laser sampling technique to determine the unique signature of
the clay from any porcelain object to be authenticated.
-
Bayer CropScience also launched its Qualidate fingerprint authentication technique, a new
patented technology based on approved food additives developed to protect crop protection
products. The system provides a quick and easy test to determine whether or not a product
is authentic and of original Bayer CropScience quality.
-
In 2008 a new tool in the fight against counterfeit wine was also launched. French scientists
developed a particle accelerator that can authenticate a wine bottle’s age and detect
counterfeits. As testing wine to determine its age is problematic, as such tests are often
questionable (especially for wines older than 50 years) this technique analyzes the
composition of the bottles. Glass production centres are unique, and production methods
have changed over time, leaving on each bottle specific marks. The analysis focuses on the
bottle’s glass and not its contents, thus the bottle can remain sealed, during the test. The
particle accelerator projects an ion beam at a bottle and then studies the X-rays that are
emitted from the glass using a semiconductor detector. The process does not harm the
bottle in any way. The test results are then compared with information in a database, which
contains an analysis of bottles sent directly from wineries to ensure their provenance.
-
Another interesting anti-counterfeiting system was launched in Ghana aiming to give
consumers first hand information on the authenticity of pharmaceutical products being sold
in the country. The system, known as mPedigree, links producers and distributors with
consumers and regulators and has been designed to eliminate the information blockage on
which counterfeiters thrive. A strategist of the mPedigree platform stated that once the
system is operational, it will be the world’s first consumer protection system of its kind.
Under the system, drug buyers and/or consumers have the opportunity to check for free
whether their purchases are genuine or not, by using their mobile phones to send special,
non-duplicable codes embossed on drugs and to receive in a few seconds a response
confirming or denying the authenticity of the product concerned.
-
Sanofi-aventis also inaugurated its Central Anti-Counterfeit Laboratory at the company’s
pharmaceutical plant in Tours, France. The laboratory, with its experts and state-of-the-art
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equipment, has a three-fold remit in respect of reducing the threat of counterfeit drugs. This
involves: conducting direct examinations of packaging items and leaflets as well as
definitive chemical tests on suspect samples of commonly counterfeited products;
developing test methods and distributing them globally. This would allow any industrial
plant in the world to inspect and test, the suspect products corresponding to those
manufactured by Sanofi-aventis with the same criteria; and to centralise “Identity Cards” for
the counterfeit drugs found, in a single, central database, making it possible to compare
different types of counterfeit goods.
It should be emphasized that anti-counterfeiting technologies can be taken as example and
possibly replicated in similar contexts. Also this underlines the importance of sharing information,
both between public and private sector and between the institutions involved in the fight against
counterfeiting.
Authentication technologies are used to authenticate products. Consequently, these technologies
form a source of evidence for the courts and thus aid law enforcement agencies during procedures
related to the seizure of infringing goods. Markings are divided in four categories: overt (visible to
human eye), hidden (elements incorporated into overt features or packaging which are visible to
human eye by means of tools such as reactive pens, laser pointed tools, optical filters or UV lights),
covert (elements which can only be detected with specific detection devices), forensic (elements
which can only be detected by means of an infield kit or through a laboratory analysis which allows
for a more comprehensive analysis).
Track and trace technologies are used to follow and analyse the movement of products through
supply chains and hence can help enforcement agencies during investigations. Such technologies
can provide barcodes or radio frequency identification (i.e. an automatic identification method
which is incorporated into a product and is transmitted through radio signals). A good practice is
represented by GS1 Standards: they use RFID technology within barcodes in order to manage
shipments, inventories & assets and to reduce counterfeiting. The barcodes system enable
companies to manage the supply chain more efficiently, thus may help in finding counterfeiting
actors operating at that level.163
International Best Practices
The Italian Customs Agency own one of the international best practices on computerized customs
risk management, entitled FALSTAFF. (Fully Automated Logistical System against Forgery and Fraud).
163
Transcrime (Joint Research Centre on Transnational Crime), (2010) Anti Brand Counterfeiting in the EU: report
on best practices (unpublished version)
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BOX 11
A best practice of computerized customs’ risk management
Fully Automated Logistical System against Forgery and Fraud (F.A.L.S.T.A.F.F.)
The project of fight against counterfeiting – the Fully Automated Logistical System against Forgery and
Fraud (FALSTAFF) – developed by the Italian Customs Agency is based on a multimedia database of
original products. It is included in the information system of the Agency.
Each producer, manufacturer or right holder applying for customs protection generates a record in the
database, which contains several data related to the products for which protection is requested – information
on routes and quantities traded, technical information for the identification of the product, photos of the
trademark and of the product itself as well as packaging information.
Customs officers can query the database obtaining real time information and in case of an application for
action, they can also refer to the support of experts of trade associations and/or quality certification bodies
for the products concerned.
The database is also integrated with the customs control circuit, thus allowing for the definition of further risk
profiles which result in corresponding actions aimed at protecting trademark rights.
The customs control circuit performs a real time analysis of all import and export declarations submitted to
custom s and automatically redirects them to the relevant control channels matching those risk profiles. The
risk profiles are elaborated also on the basis of parameters indicated in the forms submitted by right holders
to the Agency.
The implementation of the system is a positive step undertaken by the Italian Customs Agency to meet
some of the most urgent needs resulting from the First World Congress on the Fight against Counterfeiting.
These include: identifying the highest possible number of counterfeit products and counterfeiting strategies;
and taking the fastest possible actions in these respects. These tasks are achievable only through the
adoption of electronic technologies.
In 2005, FALSTAFF was awarded the Honour Mention in the eEurope Awards, European Oscar for the
better initiatives related to eGovernment, held in Manchester. This was as FALSTAFF was an innovative
and ambitious project aimed at combating the counterfeiting phenomenon within the European Union single
market. It is an excellent example to be followed by the other European customs agencies and can improve
the efficacy of cooperation among the EU member states.
Source: www.agenziadogane.it/wps/wcm/connect/ed/Servizi/F.A.L.S.T.A.F.F.
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5.1.4 Raids at Production/Stockpiling Points or Local Markets
In the previous paragraph, we analyzed how border controls work, within the EU
framework, in cases of IPRs infringement. We also explored some technologies
implemented to discover and detect counterfeit products.
On the basis of preliminary information acquired by law enforcement and border officials,
another instrument to counter these criminal practices is the one of Raids, which literally
means ‘searching without warning, making a sudden surprise attack’.
It is crucial to mention that raids and the related activities are usually carried out with
joint teams from different law enforcement agencies including: immigration controls,
vehicle standards, trading standards, social welfare fraud investigators and other
‘organized crime’ investigators such as vice squad, drugs, arms etc.
The so-called “surprise effect” is carried out in production/stockpiling points and local
markets: it is a key tool for acquiring every useful element to identify all the events
related to the crimes. For this reason, a prior inspection should be completed to
understand the external features of the premises. This would make it easier to safeguard
the exits when entering into the buildings or into the warehouses.
“In particular, when a search is performed, a series of activities shall be carried out,
involving:

Examining tax records;

Examining the Customs documentation in the case of international transactions;

Examining commercial correspondence;

Looking for any documentation that may be relevant to the investigation (such as
diaries, notes, receipts, correspondence, addresses) on the premises and
facilities used for the activity, including motor vehicles used in relation to the
business;

Looking for any technical documentation (such as declarations of conformity,
technical documentation, reports, etc.) or documentation relating to the
production processes (in the case of a manufacturer);

Verification of permits, notices and licenses to conduct the business (also in the
case of e-commerce);

Examination of documentation proving ownership of trademarks, licenses,
concessions, supply contracts, royalties, etc;

Analysis of the quantity and composition of computer equipments (e.g. personal
computers, local networks etc.);

Acquisition of magnetic media to assist later examination for the identification of
any transactions that can be of interest. Special attention should be given to data
contained in the hard disks of personal computers used by the owner, or by
others with management responsibilities. This can be achieved through backingup the identified hard disks;

Identification of all the personnel effectively working in the enterprise, specifying
personal identification data, the tasks performed, the date of commencement of
the activities, the type of employment responsibilities;
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-
Performing an analytical inventory (quantity, value and provider) of the existing
products (even extending the search to any premises that may be available to the
suspect)”.164
The identification of counterfeit products can be performed using two criteria:
-
-
Simple criterion:

Very low price;

Characteristics of the seller;

Lack of distinctive signs, information and labels;

Quality of packaging;
Complex criterion:

Technical advice;

Sending samples (including photos) of the product to the right holder;

Chemical or physical examination;

Analysis and laboratory tests.165
5.1.5
Evidence Gathering and Types of Evidence Presented to the Court in
Counterfeiting Cases166
An investigation is an activity aimed at gathering information and evidence and is
conducted for many different reasons. The purpose of any investigation is to determine
and document facts concerning a particular issue to ensure the law enforcement agency
can make informed and sound decisions. Investigation is a general term and can apply
to a very general activity or a specific type of information gathering process. Some
specific types of investigations include: a complaint investigation, a disaster
investigation, a health fraud investigation and a product counterfeiting/tampering
investigation.167
An operative list of actions to be carried out during the investigation process is presented
below. It can be applied to different forms of fake products posing risks for consumers’
health.
Counterfeiting/Tampering Investigations
The purpose of these investigations is to determine if counterfeiting/tampering has
occurred; the seriousness of the problem; the quantity of affected products on the
market; the source of the counterfeiting/tampering; and quick removal from consumers or
commerce of any contaminated product. The office specifically assigned to criminal
investigations will seek to identify and initiate criminal prosecution of those persons
responsible for criminal activity associated with counterfeiting/tampering/threat incidents.
Counterfeiting/tampering incidents historically have occurred in unpredictable forms and
products. Some ‘standard operating procedures’, in most cases, will suffice for these
164
UNICRI (2010), “Strategies for technical-juridical training and awareness-raising on counterfeiting”
These guidelines are the ones outlined by the Italian Guardia di Finanza in the UNICRI (2010)
publication, but could prove as a useful example for other European countries.
166
The main source for the whole paragraph is:
U.S. Food and Drug Administration (last update march 2010), Investigations Operation Manual, ch. 8,
available at http://www.fda.gov/downloads/ICECI/Inspections/IOM/UCM123515.pdf
165
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investigations. As events take place, specific instructions for some investigations may be
provided by the assigned offices. Prompt resolution is important, especially when a
health hazard is involved.
The law enforcement official(s) shall attempt to answer the following questions as rapidly
as possible:
1. Has counterfeiting/tampering occurred, or can the condition of the product be
explained by other means?
2. Is death, injury, or illness associated with the report and, if so, does it appear to
be caused by the product counterfeiting/tampering?
3. Does the incident appear to be isolated or widespread?
4. Is it likely that other similarly affected products remain in distribution, and if so,
what is the extent and magnitude of distribution?
5. If not isolated, could the product counterfeiting/tampering have occurred at the
production facility or in the distribution chain?
6. Can specific persons or points in the distribution chain be identified as possibly
causing the problem?
Contacting rights owners is an essential step in every investigation process. They can
contribute to evidence and information gathering due to their past experiences and
knowledge on the original products.
- Interviews with informants and/or suspects:
1. Conduct interviews in a location which reduces unnecessary interruptions or
distractions.
2. Establish rapport with the person or persons being interviewed to put them at
ease.
3. Listen to the person. Let them first tell the story in their own way. Listen carefully
to each side.
4. Be genuine and at ease.
5. After hearing the entire story, ask them for more information to fill in details.
6. Ask for clarification of key points. Obtaining details and requesting clarification of
key points allows you to obtain an idea of the validity of the person's story
through comparison of the accuracy of the details with previous information
supplied.
7. Note-taking may put the person being interviewed on edge. If this appears to be
the case, do not take notes until you request clarification of key points. Video /
audio recording should also be considered.
8. For cases of counterfeiting/tampering, ask who was with the person, what
happened in the store, any problems noted with the product at the store, and
other questions which will pro-vide you with more information on when, where, or
why events took place, who was present, etc. If two investigators are involved in
the interview, one should take notes while the other asks the questions.
9. During interviews, watch for changes in attitudes, body language, hesitation in
speech, etc., as you observe and listen to the person being interviewed. Describe
your observations of body language and personal characteristics in your report.
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- Sampling:
1. Whenever a sample is collected for suspected tampering/counterfeiting, you must
collect an authentic sample of the same product. It should be from the same lot
and code, if at all possible.
2. Collect any containers a suspect may have handled as they placed the tampered
product on the shelf.
3. When handling product containers or other evidence associated with
tampering/counterfeiting, take care to avoid adding or smearing fingerprints by
wearing cotton gloves, using tongs, forceps, or by picking the container up by
opposing corners.
4. Identify product containers carefully and in as small an area as possible.
5. Do not open outer containers to identify inner containers or inserts.
The sampling is often related to tampering cases, however, in most counterfeiting cases,
investigators do not usually collect an authentic sample of the same product.
- Retail stores:
1. Before starting any activity at the scene, protect the area to preserve any
evidence on the store shelves, floor or adjacent areas and products.
2. Discuss with the firm's management, and/or the personnel in charge of the
stocking of the shelves, how material is received and handled prior to being
placed on shelves.
3. Document the area using photographs of the product shelves, surrounding area,
and any shots which would provide information on the product, its location and
store layout.
4. Samples of materials in the area that may be applicable to the investigation are to
be collected.
5. Be observant of persons present in the store, as guilty parties are thought often to
return to such location, especially when the agency or news media are present.
Be alert to statements of store personnel about activities they have observed.
Obtain descriptions of the actions, dress and physical characteristics of
individuals the employees have noted exhibiting unusual/notable behaviour in the
store.
6. Determine if the firm has a closed circuit TV monitoring system and if they
maintain tapes. If so, these may be a source of leads.
7. Obtain information about employees terminated in the past year, employee
problems, or shoplifters who may wish to cause problems in the store.
The key to a successful investigation or inspection is to clearly define the objectives of
the operation and to examine each facet of the establishment in light of the objectives.
- Manufacturing sites:
Aspects of the production/distribution system to inspect for leads may include:
1. Age of facility and date when production of the first batch of the product under
investigation was initiated.
2. List of other facilities which produce the product under investigation.
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3. For drugs, list by strength, size of container, name, dosage form, and number of
packages per shipping case, all products manufactured or processed at the
facility.
4. Obtain the names, titles, addresses, office and residence telephone numbers of
representatives of the company.
5. Contract packagers, if any, should be described by name, location and products
handled.
6. For the suspect lot, give its lot number, the size of the lot, size and type of
containers in which it was packaged, its history of production and distribution
beginning with the date of weighing of the raw material, and the dates and
description of steps in processing.
7. Describe any locations within the facility where an employee could have access
to the product/contaminant being investigated.
8. Describe the characteristics of the suspected product/contaminant within the
facility, its container type, its brand and generic name, its lot number, size of
container, whether the container is full or partially full and the approximate
amount remaining.
9. Describe security for the suspected product/contaminant including limitations of
access, where it is stored, and responsibility for controlling access to the material.
10. Describe what legitimate use, if any, the facility has for the suspected
product/contaminant in each of the locations found.
11. Determine how often the material is used and whether or not a log of its use is
maintained.
12. If a log is maintained, obtain a copy showing its use and discuss with plant
management the legitimacy of each such use.
13. Determine whether the firm verifies use and use rates and has a method of
determining explanations for any discrepancies noted.
14. Have samples of the suspect product/contaminant been obtained by, for instance
the FDA in the case of medicines, or other competent agencies, and if so, what
are the results of analysis?
15. Does the firm test for the product/contaminant under investigation?
16. What method is utilized for such testing, and at what frequency?
17. List the facility's sources of raw materials for the suspect lot/product.
18. Evaluate the raw material storage conditions to determine the potential for
manipulation of materials.
19. Describe the lot numbering system, any plant identification numbers, and
expiration dates placed on retail products and cases.
20. If any product for export is processed at this plant, describe any differences from
domestic products.
21. If the product under investigation has tamper resistant packaging (TRP),
determine the type of system utilized, and if the system utilized has been
evaluated to determine if breaching is possible. If breaching is possible, describe.
Describe lot numbers or code numbers placed on TRP and security measures
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taken for TRP materials on hand and those sent to contract packagers.
Determine whether TRP materials are accountable.
22. If the plant process includes collection of samples for examination on the
production line or by laboratory facilities, discuss where the samples are
maintained, who has access to them, and their disposition.
23. Report dates and description of each step in processing, including identification
of storage locations between steps. Obtain estimates of flow rates and volume of
materials in hoppers and drums at key stages. Determine distances between
production areas or between processing equipment at critical points. This
information can be useful for statistical evaluation of the likelihood of
contamination at various points in the process.
24. Include a description of the in-process lot numbering systems for each phase of
manufacturing, security for each process and/or product while in storage and
during processing.
25. In some types of processes, there are provisions for an individual to ensure
sufficient products are placed in each container before being filled. If this is the
case in the plant under inspection, describe the circumstances and security for
this process.
26. Determine whether the facility hires part-time employees, or transfers employees
from one location to another on a temporary basis. Were any present during
production of the suspect lot?
27. Describe provisions for determining reliability of employees.
28. Determine if employees can move from area to area within the facility. Describe
any restrictions on their movements and if enforced.
29. Describe laboratory control tests and in-process tests performed on the finished
packaged product and in-process materials. Determine if reserve samples are
retained of all lots.
30. Determine how rejects and reworked materials are handled.
31. Describe any unusual event which may have taken place during the period when
the suspect material was within the facility.
32. Determine if the firm has a plan to safeguard against counterfeiting/tampering as
part of its quality assurance (Q.A.) programme. If so, determine the
implementation date of this plan and review any periodic assessment reports for
potential problem areas.
- Distribution facilities:
It may be necessary to obtain the following information at each level in the distribution
chain:
1. Amount of suspect lot on hand at time of inspection.
2. Obtain the turnover rate for the product under investigation.
3. Amount of suspect lot received, and any variations from amount consigned to the
facility.
4. Date received.
5. How received.
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6. Name and type of carrier which delivered the product. Determine security of the
vehicle or container while in-transit.
7. Obtain distribution history of the suspect lots.
8. Describe the distribution area covered by the facility being inspected and the
number of accounts served, whether they are retail or wholesale.
9. Determine if the facility handles any cash and carry orders.
10. Determine if the facility will accept returns and how are they handled.
11. Describe stock rotation practices and how they can be assured.
12. Determine if lot numbers of products distributed can be traced.
13. Describe the method of packing of shipments; for instance, plastic tote bins
sealed with nylon tape, intact cartons only, cases are split, etc.
14. Describe the methods of shipment utilized by the warehouse.
15. Describe personnel practices, problems and other information on visitors,
contractors, etc.
It is often advantageous to produce a pictograph or a timeline chart of the distribution
system. This would show basic information on each level in the distribution chain and
distances between each link in the chain. It is also often worthwhile to prepare a timeline
chart showing the progression of the suspect lot through the manufacturing process to
the source of the complaint, including the significant steps in the manufacture and
distribution of the suspect product.
- Security:
Methods used to report this information should be discussed with the supervisor, since
an inadvertent release could compromise the facilities security system.
1. General security arrangements including: the number of guards, their shifts,
locations, and whether or not they patrol the facility.
2. Describe any closed circuit TV systems, their locations, and any physical barriers
to prevent access to the plant grounds and its facility.
3. Describe who is logged in and out of the facility and whether or not employees
must display identification badges upon entry. If plant employees are issued
uniforms by colour or design, which designate their work station locations, also
describe.
4. Determine whether visitors, contractor representatives, cleaning crews, etc., are
subject to movement tracking or control, and if any were present during
production of the suspect product.
5. If the suspect product was particularly vulnerable to in-plant tampering during
certain stages of handling, identify particular employees who had access to
product during these stages and interview them individually. There may be
occasions when line employees may be able to remember suspicious activities
on the part of co-workers or others working in the area when suspect lots were
being produced.
6. Describe the security measures taken for the processing area after hours, during
work breaks, and at meal times. Be alert to those periods when in-process
containers are left unattended on a packing/production line.
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7. Describe any employee relations problems such as layoffs, firings, probations,
adverse actions, etc.
-
Reporting:
Reporting an investigation is frequently completed using a memorandum. The format is
not as defined in sections as an inspection report. A good rule of thumb to follow is to
first summarize what has been done, why or give the reason for the investigation and
briefly state the findings. After this, one can go into detail about the investigation was
conducted and what was found.
Reporting the course of the investigation and relevant findings chronologically works in
many situations. For long narratives, using headings will make it easier for the reader to
follow the report. Some types of investigations have forms that need to be completed in
addition to the narrative.
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BOX 12
In summary: How to operate?
The police officer getting knowledge or checking up on a counterfeiting-related fact should act
gradually by:
- Gathering whatever information concerning the fact (that will inform the Public
Prosecutor), as charges, written documents or complaints, even interviewing, if
possible, informed people and other customers of counterfeiters;
- Paying close attention in acquiring the notitia criminis, by researching all information
sources considered suitable;
- Aiming at detecting the counterfeiting chain (capitals, factories, structures, distribution
network, warehouses and generic tools), by activating each informative and
investigation source whenever a criminal organization is involved, according to the
Palermo Convention’s definition;
- Contacting another law enforcement agency or a specialized organisation (tax police,
customs, port authorities, associations or privates involved in countering
counterfeiting etc.) when his/her expertise is not adequate in order to delve into fiscal
aspects or other issues concerning immigration or job conditions;
- Taking care, as carefully and promptly as possible when gathering data to send to
administrative centres in order to improve the implementation of the prevention and
repression of those crimes;
- Finally, the rights’ owner should be informed in order to initiate civil or criminal
proceedings, and ask for compensation with prejudicial consequences for the
counterfeiter.
Other countering instruments
The experience in the carrying out of investigations showed that the producer is different from
the small traders both licensed and unlicensed: the unlicensed, often clandestine, can be
punished through expulsion; while the licensed trader is usually an underground entrepreneur,
can be efficiently punished by civil or criminal measures.
Sanctioning the associative bond can act as a powerful deterrent with both direct and indirect
consequences.
The main deterrent for the counterfeiter is being damaged in his/her own entrepreneurial
activity. If the seizures of the destruction of thousands of counterfeit goods may be an
economic loss, the confiscation of an apartment, a bank account or a licence, or the forfeiture
of driving licence or documents for leaving one’s country is the real deterrence.
Usually, the criminal sanctions’ effects are more preventative than repressive. The sanction
creates a deterrent effect due to its existence, by creating insecurity among the criminals.
Deterrence can be carried out by making counterfeiting less interesting and attractive. If
counterfeiting is also a way of laundering ‘dirty money’, we can assume that by increasing
sanctions, using counterfeiting for this aim would no longer appear attractive.
Source: Italian Ministry of the Interior
5.1.6 Internet Investigation
The use of the Internet for the advertisement/sale of counterfeit products has created an
independent distribution process. It directly targets final users, contributing to ordinary
distribution and sometimes overlapping it. The Internet is an important supply channel for
the counterfeiters as it allows them to simultaneously supply products at the retail and
wholesale level.
The data provided by the U.S. Food and Drug Administration (FDA), indicates that 10
million parcels enter the USA every year. This demonstrates that the use of the Internet
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as a distribution channel is rapidly growing. The OECD predicts that the volume of sales
over the internet will rise by 20%-30% per year, thus, potentially increasing the
distribution of infringing products.
The Internet guarantees anonymity due to the impersonal nature of online commercial
exchanges.
-
Auction sites and online marketplaces. The auction sites are well used routes to
market, sell and distribute counterfeit products, including digital files, CDs and
DVDs. Recent years have seen a growth in more established market places,
such as Amazon and eBay. Currently, there are over 90 UK based auction
websites. The past year has seen action being taken to try and tackle this issue,
in particular through joint work with the auction sites. The Internet Auction
Working Group is led and chaired by trading standards. It is developing ways to
harmonise the approach to removing sites that sell infringing products, with the
aim of reducing the burden on enforcement and agencies brand holders. The
group is also looking to introduce a code of practice for auction sites.
-
Another key area is where dedicated websites have been set up to sell specific
fake or pirated content. In some instances, items are clearly advertised as fake or
their price might indicate that they are not legitimate products. In other instances
the products are represented as genuine articles.
-
Criminal activity through P2P file sharing sites, for example by running or hosting
a site, continues to be an area of serious risk. Much of the discussion and debate
regarding P2P in 2009/10 has centred on the civil infringement issues resulting
from the large volumes of consumers who are making use of P2P technology to
download unlawfully copied content. These activities do not typically fall into the
category of IP crime although civil law breaches may be occurring (also involve
criminality).
-
Streaming sites are a concern to the audio-visual sector as a whole. They raise
particular concerns for those involved in audiovisual rights around sporting
events. It is the “live” nature of the sporting event which provides the greatest
appeal to a prospective audience. It is at risk of piracy by means of live streaming
on the Internet.
Online purchases seriously jeopardize the identifying function given to trademarks, as it
is practically impossible for the consumer to know who or what is behind an Internet site.
Furthermore, the consumer may not have physical contact with the good she/he intends
to acquire, but must trust the images that are presented on the online store. The
combination of these factors, which could be defined as conditions of non-verifiability –
creates a fertile ground for the development of illegal activities which aim to sell
replicated products. Due to this level of anonymity, the investigations implemented by the
law enforcement officials have been considerably more difficult”.168
It is necessary to take into consideration the dynamism of the Internet when regarding
investigations within the digital environment. The Internet can easily and rapidly modify
itself. It may happen that those responsible for the websites can alter the webpage
contents and format while the investigations are in progress after having realized that
they are being investigated. For this reason, while carrying out the inquiries, some
168
IPO Crime Group, IP crime Report 2009/2010, United Kingdom, p.10 and following.
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information and documents need to be noted down, so as to identify and retain evidence
about websites and contents investigated. Examples are listed below:
-
precise webpage address, through the URL (Uniform Resource Locator)
-
download of the webpage in a digital support. It is possible to verify its content
and the existence of any business advertisement related to the products or
services offered through the webpage (banners)
-
day and time periods during which the non-authorized activities are carried on
-
Ip (Internet Protocol) addresses from which the acts have been realized
-
Download of products or services offered in the web
-
Certification made by the rights’ owner, in which is proved that the investigated
portals is not authorized for carrying out these activities
-
Nicknames of forum users, the ones who make non-authorized exploitations”.169
International Best Practices
In 2004, an investigation related to various Internet sites and the pharmaceutical
distribution chain was implemented by the US Immigration and Customs Enforcement
(see box below). The Immigration and Customs Enforcement (ICE) believes that the
Internet is the preferred tool for criminals involved in the trafficking of counterfeit
medicines. Nevertheless, the Internet is also a preferred supply channel for other
products posing a risk to consumers’ health and safety, such as spare parts for
aircraft.170
169
Ministerio de Cultura de España (2008), Manual de buenas practicas para la prosecución de los
delitos contra la propiedad intelectual.
170
L'Espresso, available HTTP: http://espresso.repubblica.it/dettaglio-archivio/1077207.
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BOX 13
Internet investigations by the US
Immigration and Customs Enforcement (ICE)
Operation Ocean Crossing – February 2005
The ICE discovered a trade network of counterfeit medicines originating from China and
directed towards the US, the UK and other European nations. This trade was managed by a
Chinese criminal organization that was linked to an American citizen. Three Chinese citizens
operating in the province of Tianjin were arrested and the following was seized: more than
55,000 packages of counterfeit Viagra and Cialis, 75,000 loose pills, a device used to seal
pharmaceutical packages and a significant amount of counterfeit trademarks bearing the
Viagra inscription. In September 2005, a police operation was implemented in three facilities
with in the region of Henanth were involved in the production of counterfeit drugs. This
operation led to the arrest of eight Chinese citizens and the seizure of more than 222,000 pills
of counterfeit Viagra, 70,000 loose pills, 260 kilograms of raw materials and 580,000
counterfeit Viagra trademarks. At the same time, U.S. authorities arrested a US citizen who
subsequently pleaded guilty to the charge of importing counterfeit drugs.
Onelinepillbox.com
Investigations conducted by the ICE, the FDA and the Drug Enforcement Administration
(DEA) led to the discovery of an Internet site, onlinepillbox.com, which offers regulated drugs
and substances with out requiring a valid medical prescription. These substances were sent to
US consumers through regular mail. It was later discovered that the delivered substances
were unauthorized drugs from Thailand, the Philippines and Mexico.
Source: US Immigration and Customs Enforcement (ICE), www.ice.gov
BOX 14
Case study on auction sites
March 2010 saw the eventual conviction of three men who defrauded buyers out of hundreds
of thousands of pounds through the sale of counterfeit goods through eBay following
investigations and raids in 2007 and 2008 by Sandwell Trading Standards. One of the men
was jailed for 12 months and the other two were given suspended sentences and unpaid work
in the community. The men were convicted under the Trade Marks Act 1994 for offences
relating to the possession and sale of a range of counterfeit goods through the auction
website. The goods included trainers, clothing, perfume, handbags and sunglasses and were
being sold to consumers as genuine products. The men now face a Proceed of Crime Act
hearing.
Source: www.sandwell.gov.uk
5.1.7. Financial Investigations
A financial investigation is a combination of the more traditional investigative techniques
and those used by auditors for 3,000 years. What makes financial investigation any
different from other techniques used by law enforcement? The reason for creating a
paper trail is to enable someone to reconstruct what happened, to whom, and for the use
of criminal investigators. Although much of an auditor’s time is spent reviewing financial
documents, a substantial amount is devoted to interviewing people, asking questions
about the records and about specific transactions.
The links that exist between counterfeiting and organized crime today are proven and
recognized at the international level. The potential and financial profits are becoming
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more and more attractive.171 As a case in point, we may refer to the creation of
companies operating with the sole purpose of laundering or reinvesting proceeds of
crimes originating from the same criminal group or transferred to it from other criminal
organizations for this purpose. In this context, counterfeiting represents a new
investment opportunity.
The counterfeiting enterprise also benefited from the already existing financial profits that
were at the disposal of criminal groups rendering it a surprisingly flexible activity, capable
of reacting quickly to variations in product demand and to enforcement controls.
Channels and methods used for the introduction, trade and sale of other illicit products
were also ready to be used for fake products. In Italy, for instance, in the territories where
the Mafia-type organizations are stronger, they have been able to force legitimate shops
to sell their counterfeit products as a substitute to extorting protection money from them.
Counterfeiting and its huge economic potential are in the process of being fully exploited
by organized crime. Following this assumption, there is no reason to replicate only luxury
products since every product in the market can be replicated due to the modern
technologies available. From medicines to toys, from spare parts to food and beverages,
everything can be and is counterfeited. The rule of profit maximization is also at the basis
of the search for the cheapest raw materials, which often involves using substandard,
toxic or poisonous substances for a variety of products, turning them into real dangers
for consumers’ health and safety.172
Two short examples are presented below showing how financial investigations can be
successful.

In July 2002, during the breaking up of an important network of luxury
counterfeited trademarks in Southern Italy (specifically in Naples and Teramo),
the Italian Guarda di Finanza discovered some significant money transfers
between London and Naples, concerning revenues generated by the
counterfeiting business.

In December 2004, a counterfeiter’s network was broken up in Tours, France.
Thirteen individuals were investigated; counterfeit trousers and shirts, equivalent
to 25 cubic metres of fabric were seized. In addition, many bank accounts were
frozen, some properties bought with ‘dirty money’ have been embargoed prior to
forfeiture and huge sums of cash have been confiscated. 173
Counterfeiting is considered an easy and profitable investment yielding massive sums of
‘dirty money’ from the different types of trafficking involved. It is frequently just part of a
much wider criminal portfolio and its participants cooperate with the other criminal
organizations.
According to ICE, partnerships between the public and private sectors may represent
one of the strongest means to detect, deter, disrupt and deny criminal organizations illicit
profits and material support required to fuel their evil acts. In the case study (Box 6) we
provide an example of good practice on financial investigations and the possible
vulnerabilities and red flag indicators of criminal activity are presented.
The role of the private sector in countering counterfeiting is later analyzed in this manual.
171
172
173
UNICRI (2010), op.cit., p.33.
UNICRI (2010), op.cit., p.34.
Unions des Fabricants (2005), Rapport sur la contrefaçon et la criminalité organisée.
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BOX 15
Case Study: Counterfeit of alcoholic drinks in Romania
(use of shell companies, offshore centres – real estate investment)





A and B are two companies working in the domain of alcoholic drinks (production and
sale), whose associates and administrators are Romanian citizens. Company B
designated as administrator a non-resident citizen from a Middle East country for 39
days. Police indicated that he was acting in Romania under 3 false identities and was
member of a criminal network.
The Romanian Financial Intelligence Unit (FIU) received information from the Border
Police that company A exported to a Free Zone an important quantity of alcoholic drinks
to be packed and labeled. The control noticed that the export documents mentioned that
the merchandise was “alcohol”, but the product was packed and labeled in bottles
specific to “Ballantyne’s Scotch Whisky”. According to company A’s representatives it
was meant to be sold on the Romanian market.
The tax police when controlling the headquarters of company B found that the invoices
issued to company A were registered as being stolen and that the means of transport
registered were not proper for transporting alcohol.
It appeared that such “commercial operations” had been made by the two companies
many times before. The loss to the state budget made by A company by not paying
taxes was calculated at more than 8,300,000 lei (2,5 million US$).
A few months after these transactions, C company (a Romanian company) became the
beneficiary of an external loan for 12 million US$, the transfer being made by a bank
situated in another offshore jurisdiction. The majority associates of that company is a
foreign company registered in the second offshore jurisdiction (from where the money
came), and the administrators of the company are the same Romanian citizens involved
in A and B companies mentioned above.
In this case, in order for company C to give its external transfer a legal aspect, company C and
its non-resident associate made an external loan agreement registered at the Romanian
National Bank, on the private debt. This facto would allow them to get a legal form for their
further transfers with explanation “credit reimbursement”. The administrator of company C used
these to buy more tourist resorts (hotels, boarding houses) in Romania.
Source: Moneyval, Money laundering and counterfeiting, Typologies Report 2007-2008
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5.1.8 Use of Informants and other Special Investigative Techniques
The use of informants is fundamental to investigative work. It is accompanied with the
opportunity to receive clear intelligence about the activities of an individual or groups of
people acting illegally. On occasion, it can also give rise to serious problems and
abuses. Informants must be given clear and unambiguous instructions about what they
can and cannot do. For this reason it is important to carry out a risk analysis before
deploying an informant, not only for the safety of the individual concerned but for the
organisation as a whole. This risk analysis should include an assessment of the motives
of the informant.
In some countries the regulations controlling the use of informants are stringently
enforced and any deviation from them can lead to defendants subsequently being
released and embarrassment being caused to law enforcement and industry.174
The generic term “informant” is often used by police and prosecutors to describe a wide
variety of individuals who confidentially provide them with information concerning
criminal activities175. The Black’s Law Dictionary, a legal resource for lawyers, defines an
informant as “A person who informs or prefers an accusation against another, whom
she/he suspects of the violation of some penal statute”.
The testimony of witnesses must be considered with more caution than the testimony of
others: for instance, a paid informer or a witness who has been promised that he/she will
not be charged or prosecuted may have reason to make a false statement.
Terms used to identify informants and methods of utilizing informants can differ
drastically from region to region and within different agencies.
The list provided below is reported by the American FBI Manual of Investigative
Operations and Guidelines and concerns the factors considered in determining an
individual’s suitability to be an informant176:
1. whether the person appears to be in a position to provide information concerning
violations of law that are within the scope of authorized […] investigative activity
2. whether the individual is willing to voluntarily provide information
3. whether the individual appears to be directed by others to obtain information
4. whether there is anything in the individual’s background that would make him/her
unfit for use an informant
5. whether the nature of the matter under investigation and the importance of the
information being furnished outweigh the seriousness of any past or
contemporaneous criminal activity of which the informant may be suspected
6. whether the motives of the informant in volunteering to assist the police appear to
be reasonable and proper
7. whether the information that the informant can provide could be obtained in a
more timely and effective manner through other sources or by a less intrusive
means
Interpol, Guide to IP crime and investigations, 2007, p.29.
Fitzgerald D.G. (2007), Informants and undercover investigations: a practical guide to
Law, Policy and Procedure, Taylor & Francis Group, New York, p.1.
176
Fitzgerald D.G. (2007), Informants and undercover investigations: a practical guide to
Law, Policy and Procedure, Taylor & Francis Group, New York, pp. 4-5.
174
175
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8. whether the informant is sufficiently reliable and trustworthy, and whether there is
an adequate means by which to verify his/her truthfulness
9. whether the individual appears to be willing to conform to the agency’s rules
regarding his/her operation
10. whether the police will be able to adequately monitor and control the activities of
the informant
11. whether the use of the informant could compromise an investigation or
subsequent prosecution that may require the government to move for a dismissal
of the case.
With organized crime the informants can be particularly difficult to control, though they
are most of times essential for the investigators’ job.
One of the responsibilities of the analysts (investigator) is to corroborate an informant’s
information (by checking on whether it is substantiated by other intelligence) and to
determine the informant’s reliability.
The following terminology states a scale of reliability for the informants:177

Reliable - no doubt of the person's authenticity; past information reliable in all
instances

Usually Reliable - some doubt, but past information has been reliable in most
instances

Fairly Reliable -- some doubt, but past information has been reliable on average

Not usually Reliable - there is doubt, and past information has only been reliable
on occasion

Unreliable - there is great doubt; past experience has proven it to be unreliable
but that doesn't mean that this piece of info now is not reliable.
Wiretapping represents a more adequate response to the complexity and transnational
nature of criminal activities and criminal trafficking, often supporting the possibility to
achieve a "mapping" of criminals behind this illegal phenomenon. It is also important to
highlight the importance of controlling data communication, since in several operations
conducted it has been shown that the heads of criminal organizations made extensive
use of the VoIP (Voice over Internet Protocol), and in particular of Skype, for their
communications.
A variety of measures can also be used in the fight against counterfeiting in terms of
assets’ control. These measures are aimed at identifying the criminal turnover and
profits, analyzing the suspects’ movable and immovable properties, money, and values
for which a preventive seizure can be proposed to the Competent Authority, in view of
the possible adoption of further measures178. Furthermore, where the illegal proceeds
were not subject to the previously mentioned penal measures, it is always possible, and
appropriate, to proceed with controls on tax evasion. In particular, this activity must be
primarily aimed at detecting and targeting the evasive behaviour put in place by
natural/legal persons involved in different phases of the production of illicit products,
APS
University,
professor
Tom
O’Connor
website,
available
HTTP:
www1.apsu.edu/oconnort/3220/3220lect07a.htm
178
For instance, confiscation, also in case of disproportion of the assets if compared to the
declared income (in some countries).
177
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often identified by the omission of tax records or the issue of documents for nonexistent
transactions.
For a more in-depth analysis of assets recovery see also paragraph 6.2.5.
5.1.9 Confiscation and Management of Confiscated Counterfeit Products
The principle behind forfeiture is ancient and is commonly regarded as a logical and fair
response to its detractors: the criminal. The criminal cannot keep the fruits of his/ her
crime, nor can the instruments or tools used to commit the crime be allowed to stay in
criminal hands. Forfeiture is the legal process by which the government may confiscate
those items.179
In respect of the involvement of organized crime in counterfeiting offences, the
Convention against Transnational Organized Crime (a.k.a. Palermo Convention)180
defines the guidelines both for seizures of goods and for the management of confiscated
goods/crime seized proceeds.
Art. 12 – Confiscation and seizure
“1. States Parties shall adopt, to the greatest extent possible within their domestic legal
systems, such measures as may be necessary to enable confiscation of:
(a) Proceeds of crime derived from offences covered by this Convention or property the
value of which corresponds to that of such proceeds;
(b) Property, equipment or other instrumentalities used in or destined for use in offences
covered by this Convention.
2. States Parties shall adopt such measures as may be necessary to enable the
identification, tracing, freezing or seizure of any item referred to in paragraph 1 of this
article for the purpose of eventual confiscation.
3. If proceeds of crime have been transformed or converted, in part or in full, into other
property, such property shall be liable to the measures referred to in this article instead
of the proceeds.
4. If proceeds of crime have been intermingled with property acquired from legitimate
sources, such property shall, without prejudice to any powers relating to freezing or
seizure, be liable to confiscation up to the assessed value of the intermingled proceeds.
5. Income or other benefits derived from proceeds of crime, from property into which
proceeds of crime have been transformed or converted or from property with which
proceeds of crime have been intermingled shall also be liable to the measures referred
to in this article, in the same manner and to the same extent as proceeds of crime.
6. For the purposes of this article and article 13 of this Convention, each State Party shall
empower its courts or other competent authorities to order that bank, financial or
commercial records be made available or be seized. States Parties shall not decline to
act under the provisions of this paragraph on the ground of bank secrecy.
7. States Parties may consider the possibility of requiring that an offender demonstrate
the lawful origin of alleged proceeds of crime or other property liable to confiscation, to
179
Schott P.A. (2006), Reference Guide to Anti-Money Laundering and Combating the Financing of
Terrorism, World Bank, Washington D.C.
180
To
download
the
full
text
of
the
Palermo
Convention
please
visit:
http://www.unodc.org/unodc/en/treaties/CTOC/index.html#Fulltext
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the extent that such a requirement is consistent with the principles of their domestic law
and with the nature of the judicial and other proceedings.
8. The provisions of this article shall not be construed to prejudice the rights of bona fide
third parties.
9. Nothing contained in this article shall affect the principle that the measures to which it
refers shall be defined and implemented in accordance with and subject to the provisions
of the domestic law of a State Party.”
Art. 14 - Disposal of confiscated proceeds of crime or property
1. Proceeds of crime or property confiscated by a State Party pursuant to articles 12 or
13, paragraph 1, of this Convention shall be disposed of by that State Party in
accordance with its domestic law and administrative procedures.
2. When acting on the request made by another State Party in accordance with article 13
of this Convention, States Parties shall, to the extent permitted by domestic law and if so
requested, give priority consideration to returning the confiscated proceeds of crime or
property to the requesting State Party so that it can give compensation to the victims of
the crime or return such proceeds of crime or property to their legitimate owners.
3. When acting on the request made by another State Party in accordance with articles
12 and 13 of this Convention, a State Party may give special consideration to concluding
agreements or arrangements on:
(a) Contributing the value of such proceeds of crime or property or funds derived from
the sale of such proceeds of crime or property or a part thereof to the account
designated in accordance with article 30, paragraph 2 (c), of this Convention and to
intergovernmental bodies specializing in the fight against organized crime;
(b) Sharing with other States Parties, on a regular or case-by-case basis, such proceeds
of crime or property, or funds derived from the sale of such proceeds of crime or
property, in accordance with its domestic law or administrative procedures.
Corrective measures involving counterfeit goods181
Recall from the market, definitive removal and/or destruction of counterfeit goods are the
corrective measures contemplated by the EU Directive on the Civil Enforcement of
Intellectual Property Rights (IPRED) as remedies in the cases of IPR infringement.
However, as highlighted by the EU Counterfeiting and Piracy Observatory, even if all EU
Member States have adopted these remedies, “it is unclear in certain member states
from whom the infringing products may be recalled/removed”.182 This is due to “the
scarcity of precedents/relevant court cases”. For instance, in many countries it is not
specified if the costs for removing and destroying the infringing goods must be borne by
the infringer, the IPR holder or the state.
The general principles of these corrective measures are explained below.
1. Destruction of counterfeit goods:
181
Transcrime (Joint Research Centre on Transnational Crime), (2010) Anti Brand Counterfeiting in
the EU: report on best practices (unpublished version)
182
See EU Counterfeiting and Piracy Observatory, Corrective Measures in IPR infringements, p. 1. It
can be downloaded here: http://ec.europa.eu/internal_market/iprenforcement/observatory/index_en.htm.
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According to IPRED, destruction of goods infringing IPR should be the general principle.
Goods have to be destroyed in order to avoid to the infringer advantages for his/her
activity: they should not be able to distribute counterfeit products on the market after
removing the infringing items (e.g. trademarks or brands or logos).
As mentioned before, it is not clear by whom the destruction costs must be borne: in
principle, in civil proceedings, costs must be paid by the infringer: they are borne by the
right owner, who must be reimbursed by the infringer. In criminal proceedings,
destruction is usually performed by state officials, mainly by the police, and the
destruction costs are borne by the State. However, practices vary country by country: in
Greece the costs of destruction are borne by the State, whereas storage costs are paid
by right holders. In Belgium, Luxembourg and the Netherlands the destruction of goods
is deemed to be a penalty and can only be imposed on a defendant who has been
convicted.
2. Secondary use of counterfeit goods:
Even if destruction of counterfeit goods should be the general rule, sometimes a
secondary use of fakes is also allowed. After removing the infringing items (e.g. brands,
trademarks, logos, etc), goods could be donated to charities, recycled or reused. Some
precedents exist: counterfeit goods can be reused in Estonia, Denmark, Germany,
Hungary, Italy, Portugal, Romania, Sweden and UK. In Denmark, Germany, Hungary
and UK the secondary use is not allowed in customs proceedings. In Finland the
secondary use appears to be the general rule, when destruction is ordered only recycling
can be implemented. In some countries, on the contrary, the secondary use is prohibited:
France, Greece, Latvia, Belgium, Netherlands and Slovenia. In Poland “secondary use of
goods is not explicitly mentioned as a remedy available to the plaintiff in civil
proceedings”.
3. Definitive removal of counterfeit goods from commercial channels
In order to be destroyed and/or reused, counterfeit goods and other products infringing
IPR must be firstly removed from commercial channels. Compared to market recall,
which is a temporary measure, the removal of counterfeit goods from the market is
definitive and aimed at the destruction of the goods.
As noted by the EU Counterfeiting and Piracy Observatory, the removal of products from
the commerce is necessary, “otherwise only the infringing products already seized or still
present at the infringer’s premises […] would in the end, be destroyed”.
As we have seen earlier, this practice is implemented differently according to differences
in national legislations. For instance, it is unclear if goods must be removed only if they
are still in the hands of the infringer, if the measure can also be put in place when
products are already in commerce, when distributed by wholesalers and retailers or even
possessed by customers/consumers/end-users.
In many countries, when goods are already in commerce or in the hands of consumers, it
is no more than an obligation for the infringer to inform all his/her customers notifying
them of the infringement, and offering them the possibility to sell back the fakes (e.g. in
the Netherlands) and/or to give back goods to the infringer at their own expense (e.g.
Germany).
In other countries, such as in UK, if the court orders the destruction of goods (and their
removal from the market), this order applies irrespectively, no matter who holds the
product.
4. Recall of counterfeit goods from commercial channels
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Different from the definitive removal, recalls of counterfeit goods from the market must
be considered temporary or precautionary measures: this implies that the recall can be
reversed or the goods can be marketed again after the IPR attached to the goods
expires. However, as noted by the EU Counterfeiting and Piracy Observatory, “this
interpretation seems to be inconsistent with the deterrence purpose of these measures,
since it would give the infringers the possibility of retaining at least a part of the economic
benefit coming from their infringing activity”, enabling them to wait for the expiration of
the IPR with no consequences for its counterfeiting activity.
5.1.10 Inter-sectorial Cooperation between Customs and Police Services and
International Collaborators
Inter-sectorial cooperation
In order to optimize the available police resources within the territory and offering to the
consumers a better security service related to the IP crimes, it should be necessary that
the specific coordination protocols existing between Law Enforcers, Customs authorities
etc. include specific agreements concerning the following issues:183
-
Information exchange, in order to obtain an accurate analysis of the situation
concerning these kinds of crime, aimed at promoting the corresponding policies
and police operation.
-
Development and integration of databases. With respect to the existing laws
related to data protection, the development and implementation of specific
databases of persons, companies, and all the information linked to these crime
activities, both for statistical aims and for understanding, for a better knowledge
of piracy/counterfeiting organized networks’ modus operandi within a country.
This could really represent a step forward in countering counterfeiting and piracy.
(see also par. B.2.1)
-
Participation by the Local Police to the juridical police offices.
Most certainly, there can be no efficient enforcement of IPR without appropriate
cooperation among the various institutions having competencies on IP matters.
In Czech Republic184, cooperation between the state administration authorities in the
area of IPR enforcement proceeds in two platforms. One was established in July 1997,
when an agreement between four state administration authorities was signed. Gradually,
the necessity of cooperation with other subjects arose, which is why eight state
authorities in total cooperate within the framework of the agreement. Another platform of
the cooperation is an interdepartmental advisory committee for the abatement of IPR
infringement of the Ministry of Industry and Trade.
Presently the “Agreement of Cooperation” is composed by the following eight state
administration authorities:
- the Czech Commercial Inspection
- the Police of the Czech Republic
- the Industrial Property Office
183
Ministerio de Cultura de España (2008), Manual de buenas practicas para la prosecución de los delitos
contra la propiedad intelectual
ELSO Group (2007), Enforcement of Intellectual Property Rights. Teaching Materials, volume I, book II,
Czech Republic.
184
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- the Ministry of Finance – General Customs Directorate
- the Ministry of Industry and Trade – department of Trade Licensing
- the Ministry of Finance – Central Financial and Tax Directorate
- the Ministry of Culture
- the State Agricultural and Food Inspection
The set of measures adopted is as follows: media policy area; area of education;
analytical area; technical and organizational area; area of legislation; interdepartmental
cooperation area and international cooperation area.
It is important to mention that the Czech Commercial Inspection started its activities in
the field of the abatement of IPR infringement in 1994, when approached by the Police of
Czech Republic with a request of assistance in this area. The COI conducted inspection
purchases for the police, and its inspection protocol provided the foundation for the
commencing of criminal proceedings (see par. 5.2.1). In 2000, after the amendments to
Consumer Protection Act and Act on the Czech Commercial Inspection the COI became
an inspection authority with competencies to abate the rights infringements using
statutory means.
Another important field of cooperation is between the COI (Czech Commercial
Inspection) and NGOs, such as the International Federation of the Phonographic
Industry (FPI) and the Czech Anti-Piracy Union (CPU) and with the right owners. A
comprehensive information system was created for all persons and institutions
participating in the abatement of IPRS infringement; it is available since the 2004 at the
internet site www.dusevnivlastnictvi.cz.
At the European level, a significant progress in this direction was achieved by the
Council Act of 28 November 2002, with a Protocol amending the Europol
Convention. The Protocol stipulates that Europol can ask the competent authorities of
Member States to initiate conduct or coordinate criminal investigations in specific
cases. If the competent authorities decide not to positively respond to this request, they
shall inform Europol of their decision unless it has to be kept confidential for reasons
related to national security or for the success of other ongoing investigations. The
Protocol also provides for the inclusion in the Europol Convention of an article regarding
the participation of Europol officials in joint investigation teams if they are investigating
crimes falling within the Europol competence.
The cooperation possibilities contemplated by the creation of joint investigative teams
are potentially highly innovative. Joint and common investigations carried out by different
countries imply in fact that they should be valid and enforceable by the courts of all
countries taking part in the investigation. The creation of joint investigative teams can be
performed under specific conditions:
-
They must arise from complex investigations conducted by a Member State but
having repercussions in other countries of the European Union;
-
They must investigate crimes that require coordinated action with the
participation of more than one Member State.
Investigation teams will be headed by a representative of the competent Member State
in which the team operates and will operate in accordance with the law of the Member
State in which the team is intended to conduct its operations. Furthermore they will be
created only with the mutual agreement of the Member States concerned, for a specific
purpose and for a limited period extendable only with the agreement of all the parties.
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Another instrument at the European level is the Supplementary Information Request at
the National Entries (SI.RE.NE) and is a link service ensuring a continuous assistance,
24h per day, for the police forces of EU Member countries. This is one of the so called
"compensation mechanisms” adopted by the EU to balance the effects of the free
movement of persons and vehicles, since in the Schengen no internal border controls
are usually foreseen.
The SI.RE.NE offices are a unique point of contact, where representatives of all the
National authorities related to the Schengen Information System operate. Their main
task is the analysis of "reports" included in the Schengen Information System (SIS) and
the implementation of specific monitoring measures. They also play a key role in crossborder police cooperation.
In particular, these offices provide additional information for the alerts, coordinate the
measures related to alerts in the SIS, and ensure that appropriate measures are taken in
different cases, for instance: if a wanted person is arrested, if a person who had already
been refused entry attempts to enter the Schengen area, if a missing person is found or
a stolen car or ID document are seized.
EUROJUST is an agency of the European Union dealing with judicial co-operation. It is
composed of national prosecutors, magistrates or police officers of equivalent
competence from each of the EU states. Its task is to enhance the effectiveness of the
national authorities when they are dealing with the investigation and prosecution of
cross-border and organised crime.
The Southeast Cooperative Initiative, SECI Center, is an operational regional
organization bringing together police and customs authorities from 13 member countries
in Southeast Europe. The Center supports the national customs and law enforcement
agencies by offering a trusty environment for information sharing, knowledge
development, joint planning and common action in the field of trans-border crime.
Member States of SECI Center are: Albania, Bosnia and Herzegovina, Bulgaria, Croatia,
Greece, Hungary, F.Y.R. of Macedonia, Moldova, Montenegro, Romania, Serbia,
Slovenia and Turkey. The SECI Center's network is composed of the Liaison Officers of
Police and Customs Authorities from the member countries, supported by 13 National
Focal Points established in each member state. The NFP representatives stay in
permanent contact with the liaison officers in the headquarters and keep close
relationships with the police and customs authority in the host country. The National
Focal Points assure the rapid information flow, by collecting and distributing the
information requests and answers from and to the law enforcement agencies and the
headquarters liaison officers.
The SECI Center will transform into SELEC - Southeast European Law Enforcement
Center - once two thirds of the Member States have deposited their instruments of
ratification of the Convention of SELEC signed on the 9th December 2009, during a
ceremony organized in Bucharest, Romania, together with celebrating 10 years of the
SECI Center185.
International Collaborations186
Counterfeiting is a transnational crime, since counterfeit goods are often produced in
countries other than the ones where they are purchased and consumed. Counterfeit
185
For a more in-depth analysis of SECI Center’s activities: http://www.secicenter.org/m105/Home
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goods are often transported across borders, thus involving different customs and border
authorities. For these reasons, international collaborations musts to be properly set up
and promoted in order to combat counterfeiting.
We itemise in the following paragraphs some of the most important International
agreements signed during recent years and some police/customs operations carried out
at the international level.
International Agreements
1. The EU-US Action Strategy for the Enforcement of IPR was adopted at the EUUSA Summit held in Vienna on 21st June 2006. This Action Strategy has three
main goals: 1) promote enforcement of related laws by customs and border
control officials, 2) strengthen cooperation among the parties, 3) promote publicprivate partnerships.
2. In order to achieve the first goal, the Action Strategy introduces measures such
as the exchange of IPR border enforcement practices and experiences, as well
as the exchange of information on IPR seizures and the introduction of a joint IPR
border enforcement action. As far as the second goal is concerned, bilateral
networks with third countries have been created, in primis with China and Russia.
Such networks facilitate the exchange of information, technical assistance and
joint industrial practices related to the enforcement of relevant laws. With regard
to the third goal, joint public-private discussions have been organised and
representatives from various business sectors have been invited to exchange
information and intelligence with law enforcement agencies.
3. The EU-China Project on the protection of the IPR, launched in 2007, defines
which technical assistance shall be provided by EU to China with regards to the
enforcement of China’s IPR regulation. Such technical assistance includes: 1) the
training of custom officers ; 2) the exchange of expertise, best practices and
know-how; 3) cooperation between a network of authorities, including Chinese
and European right holders and other stakeholders; and 4) techniques for a more
effective enforcement of IPR regulations.
4. This agreement should increase the level of trust in future EU-China trade
relationships.
5. According to the Agreement on Trade, Development and Co-operation between
the European Community and its Member States and the Republic of South
Africa, which entered in force on 1st January 2000, the Community may provide
technical assistance to South Africa in the preparation of laws and regulations for
protection of IPR; the establishment and reinforcement of domestic offices and
other agencies involved in enforcement and protection, including the training of
personnel.
6. According to the Framework Trade and Co-operation Agreement between the
European Community, its Member States and Korea, which entered in force on
1st April 2001, parties should respect the obligations contained in multilateral IPR
conventions, integrate the TRIPS within their national legislation and facilitate
cooperation between customs authorities.
186
Transcrime (Joint Research Centre on Transnational Crime), (2010) Anti Brand Counterfeiting in the
EU: report on best practices (unpublished version)
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International Operations
1. The Joint Customs Operation “Infrastructure”, carried out in November/December
2007, was the first IPR enforcement operation undertaken by Customs and
Border Protection (CBP) and the European Union. It created a close relationship
between European Union and United States customs reinforcing the EU-US
Action Strategy for the Enforcement of Intellectual Property Rights. The operation
consisted of cooperation and the exchange of information, concerning counterfeit
goods, between EU and US customs. This action strategy was implemented
especially for the seizure of counterfeit integrated circuits and computer
networking equipment. In all, over 360,000 counterfeited integrated circuits
bearing over 40 different trademarks were seized. These kinds of goods were
chosen for the strategy because they have an IPR infringement risk and also a
high safety risk.
2. Joint Customs Operation “Diabolo II”.
The Asia-Europe Meeting (ASEM) is a form of informal cooperation between Asia
and Europe which started in 1996. Many initiatives have been suggested to
strengthen relationship between these two continents in the fight against
counterfeit goods. One of the objectives of ASEM partners is to increase customs
cooperation. During the 7th meeting, held in Yokohama in November 2007, it was
decided to implement operation “DIABOLO II”. This operation was signed by all
27 EU Member States and 13 Asian countries (Burma/Myanmar, Cambodia,
Indonesia, Japan, Laos, Malaysia Mongolia, Pakistan, the Philippines, Singapore,
Republic of Korea, Thailand, and Vietnam). DIABOLO II was organised and
coordinated by the European Commission.
The operation focused on containers shipped from Asian ports of loading to EU
ports of discharge. Each country appointed a national contact point which was
responsible for the gathering of national data and its transmission to other
countries, ensuring its confidentiality. This operation, focused mainly on
counterfeited cigarettes but also on other products, leading to the seizure of more
than 65 million counterfeited cigarettes and 369,000 other counterfeited items,
bearing over 20 different trademarks.
3. Operation “Mamba”
Operation “MAMBA” is the first combined INTERPOL and WHO (World Health
Organization) operation targeting counterfeit pharmaceutical products. The
operation was carried out by the WHO’s International Medical Products AntiCounterfeiting Taskforce (IMPACT). The aim of IMPACT is to raise awareness of
the dangers of counterfeit medical products and to curb their manufacture and
distribution. In many countries, especially in Africa, counterfeit medical products
(such as fake anti-malarial drugs) represent a big problem. Operation Mamba is
deployed in Uganda and Tanzania. In this Operation multiple law enforcement
agencies (police, drugs and financial crime authorities) joined forces to confiscate
counterfeit medicines. INTERPOL and IMPACT organized a two-day training
course in each country on methods and procedures of anti-counterfeiting, to
support cross-agency efforts to combat transnational organized criminals who
manufacture and distribute counterfeit medical products throughout Africa. An
investigative guide produced by the Permanent Forum on International
Pharmaceutical Crime was also distributed.
4. Operation Matthew II
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The Joint Customs Operation, code-named Matthew II, was aimed at detecting
the smuggling of cigarettes in commercial consignments entering the EU by road.
The operational phase took place from 24 November to 3 December 2009 and
large seizures of cigarettes carried in personal cars and buses were reported.
Controls were focused on methods of transport entering the EU customs territory
from third countries via the eastern EU border.
The operation was organised by the Czech Republic, in close cooperation with
Poland and the European Commission (OLAF) which provided organizational
and technical support. All Member States were invited to participate in the JCO
Matthew II, as were Europol and the WCO/RILO WE (World Customs
Organization / Regional Intelligence Liaison Office for Western Europe). The
WCO/RILO WE supported the joint operation by means of analytical activity.
Selected non-EU Member States (Croatia, Russia, Serbia, Norway and
Switzerland) were also invited to participate in this operation.
The Operation has led to the seizure of more than 16 million cigarettes, 241
kilograms of tobacco products, 6 400 litres of alcohol, 20 tonnes of counterfeit
perfumes, 53.418 other counterfeit items such as bags, coats, scarves, wallets,
and 1.515,75 kilograms of cannabis. During the operational phase, additional
seizures of more than 25 million cigarettes also took place in some EU ports.
5.2. Prosecution. Legal Proceedings
5.2.1 Jurisdiction in Case of Counterfeiting: Criminal or Civil Case
Criminal procedure
For both trademark counterfeiting and copyright piracy, anyone (regardless of whether
they have been injured or not) may file a criminal complaint describing the alleged
criminal conduct of another person and requesting the prosecutor or police to initiate
criminal proceedings. Also, the police or customs may initiate criminal proceedings when
they discover criminal activity.187
The task of the courts in the criminal proceedings is to decide the guilt of the accused
person and to inflict punishments specified by law and/or order other measures. The
purpose of the criminal proceedings is to detect a criminal act by a lawful procedure,
establish its perpetrator, investigate a deed that accomplishes the criminal law of
substance and bring the offender before the court which will decide the issue of his/her
guilt or innocence. If the court finds the offender guilty, it shall impose a penalty or a
protective measure on him/her, or it shall refrain from punishment, and then shall
execute the penalty or the protective measure, if these were imposed. From the view
point of enforcement of the IPR, the courts have the competence in the criminal
proceedings in case of the below said criminal acts.
- Criminal act of infringement of rights to trademark and other sign (section 268, Penal
Code)
- Criminal act of infringement of protected industrial property rights (section 269, Penal
Code)
The International Trademark Association (INTA) (2010), Criminal Prosecution of Counterfeiting and
Piracy in Member States of the European Union, September, pp 73-75.
187
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- Criminal act of infringement of copyright, rights related to copyright and database rights
(section 270, Penal Code)
- Criminal act of falsification and imitation of a work of fine art (section 271, Penal
Code)188
Civil procedures
“The task of the courts in the civil proceedings is to decide on the rights, obligations and
law-protected interests of natural and legal persons and the state. The private-law nature
of the intellectual property is reflected in the fact that in all cases of infringement of the
intellectual property rights, civil proceedings may be initiated upon the motion (action)
made by entitled, i.e. actively legitimated, person. Several fundamental rights may be
sought through a civil action” 189.
In civil procedure the following rights are foreseen190:
- Negatory Right
- Right to Elimination of Consequences or Desctruction of Goods
- Right to Information
- Right to Satisfaction
- Right to Compensation
- Right to Surrender of Unjust Enrichment
- Declaratory Action
5.2.2 Main proceedings
188
Ibid.
189
ELSO group (2007), Enforcement of Intellectual Property Rights. Teaching materials, Volume II, Book II,
Czech Republic, pp. 11
190
For a more in-depth analysis see ELSO (2007), pp.11-16.
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BOX 16
Good practice in Poland on counterfeit medicines-related preparatory proceedings
In order to eliminate the phenomenon of counterfeit medicinal products, we should concentrate
above all on fighting illegal trade in these products.
One of extraordinary meetings of the CMP Team in 2008 was devoted to the problem of illegal
trade in medicinal products in sex shops. As a result of decisions made during the meeting, shops
previously selected by the Police have been controlled. The control was conducted by police
officers in cooperation with pharmaceutical inspectors from Provincial Pharmaceutical
Inspectorates and with sanitary inspectors. Within the framework of the operation (conducted
simultaneously in seven voivodships) 1 fitness club and 68 sex shops were controlled.
In these places, numerous cases of trade in medicinal products (in one place 400 packages of
medicinal products used for treating erectile dysfunction were confiscated) and in medicinal
products unauthorized for marketing (containing yohimbine) were detected and numerous dietary
supplements were called into question.
According to the data as of December 2008, out of 14 preparatory proceedings 3 were
dismissed (due to the lack of statutory features of a prohibited act or due to insignificant social
noxiousness of an act) and 2 proceedings were suspended (due to extended time needed to
obtain an expert’s opinion). Three cases were handed over to a Regional Prosecutor’s Office with
a motion for the approval of bills of indictment. The remaining preparatory proceedings are in
progress.
Similar operations were repeated in 2009. As a result of these operations, 22 preparatory
proceedings were instituted. In 6 of these proceedings charges have already been brought and 2
of them have ended with bringing bills of indictment.
In five cases proceedings were dismissed, while in 11 remaining cases proceedings are in
progress.In three cases sanitary inspectors imposed fines.
Source: Team for Counteracting Infringement of Copyright and Related Rights (2009), Special
Report
5.2.3 Bringing Evidence into Court
Existing practices in the U.K. 191
The general principle with criminal proceedings within the United Kingdom is that a
witness should give evidence orally in a court of law or, as an alternative, a written
statement.
In advance of any trial, a prosecutor must disclose the existence of the statement
identifying the counterfeit goods to the defence. The defence can request for a copy of
the statement and of any test results based on experts’ findings on the counterfeit goods.
A clear and concise expert’s statement can contribute greatly towards encouraging a
‘guilty’ plea; while any contradictions in such statements will encourage the evidence to
be contested and/or enter for a ‘not guilty’ plea.
A witness bringing evidence into court must primarily give details regarding her/his
qualifications and her/his appropriate experience. Furthermore, her/his statement should
191
The source of this paragraph is The Anti-Counterfeiting Group (seventh revision, April 2010), ACG
guidance note. Guidelines for Witnesses in Counterfeiting, based upon the Criminal Procedure Rules 2010,
effective from 5 April 2010.
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give details on the literature or other information used by or provided in reaching a
particular opinion. For instance, she/he can declare if the trademark owner has a manual
for identifying counterfeit goods.
All information given must be proven to have substance. The expert witness should
provide the information received that led to the preparation of the report/witness
statement. The witness must prove that the trademark is officially registered. The
integrity of the counterfeits’ sample plays a pivotal role in the trial. It is also necessary to
identify when the sample was received. It is preferred not to identify any individual
involved.
Anyone who makes a statement, whether within the UK or abroad may be called to give
evidence in person at court. It is the witness’ responsibility to attend court, even if the
arranged time is inconvenient. The witness should describe the sample, by stating the
points of difference between the genuine and the counterfeit item. It may be relevant in
some cases to exhibit a genuine product to compare against the counterfeit version.
5.2.4 The Prosecutor’s Role in the Criminal Case
The basic role and function of prosecutors vary considerably among legal systems,
particularly with the civil law system and the common law system. The role that
prosecutors may can vary significantly in the pre-trial phase – during the actual
investigation of a crime.192 In inquisitorial systems, as in Italy, ‘the prosecutor is duty
bound to begin investigations immediately on receipt of a notitia criminis, that is, as soon
as she/he is aware of the possible commission of a criminal offence. If, after
investigation, the Prosecutor considers that there is sufficient evidence to prosecute,
she/he is legally bound to prosecute. Yet she/he does not enjoy any discretionary power.
Though, discretionary power exists in other civil law countries such as in France and
Belgium, it is tightly controlled within the UK.
As emphasised in the preamble of the United Nations Guidelines on the Role of the
Prosecutors, it is essential for States ‘to ensure that prosecutors possess the
professional qualifications required for the accomplished of their functions, through
improved methods of recruitment and legal professional training, and through the
provision of all necessary means for the proper performance of their role in combating
criminality, particularly in its new forms and dimensions’193.
The UN guidelines include several paragraphs, which stress the importance of the role of
the prosecutor in maintaining the rule of law and criminal justice. Prosecutors shall
perform an active role in criminal proceedings. Responsibilities include: institution of
prosecution; when authorized by law or consistent with local practice, in the investigation
of crime, supervision over the legality of these investigations; supervision of the
execution of court decision and the exercise of other functions as representatives of the
public interest.
In Czech Republic, the Act. No. 283/1993 Coll. on the Public Prosecutor’s Office came
into force on 1st January 1994. During its preparation, various models of conception of
the position of the prosecution, or the newly established public prosecutor’s office, within
the system of state bodies, were referred to. Most often it was suggested that the public
192
104
UNICRI & UNODC, Investigation, prosecution and adjudication of drug – related cases (200?), pp.102-
193
United Nations, Guidelines on the Role of the Prosecutors, Adopted by the Eight United Nations
Congress on the Prevention of Crime and Treatment of Offenders, Havana, Cuba, 27 August to September
1990
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prosecutor’s office form separate system of state authorities designed to represent the
state in cases defined by law. However, an opinion was put through politically, that the
public prosecutor’s offices should be arranged as a part of the executive power, within
the framework of the Ministry of Justice.194
Existing practices in Romania
For Romania, a central role in ensuring the proper enforcement of IPR and coordination
of the various institutions in this field was recently entrusted to the General Prosecutors
Office (GPO)195, a department of the Public Ministry196.
According to the Romanian Constitution the Public Ministry functions under the Minister
of Justice’s (MoJ) authority. It should be clearly stated that the MoJ retains no authority
over cases but only has a coordinating role. According to the legal provisions, upon
proposal of the general prosecutor the MoJ, set up, by Order 412/2006 a specialized IPR
unit, within the GPO. The unit is composed of 10 prosecutors specializing in IP crime and
organized in two tiers:
−
Operative sub-unit: prosecutors effectively working on IPR cases
−
Studies sub-unit: prosecutors centralizing data countrywide, studying the process of
investigation of IPR cases, drafting analyses and disseminating them in the
country, for the appropriate, unified and efficient enforcement of IPR.
This structure acts as a central hub for coordinating the other institutions. Its
responsibilities include: centralizing the relevant data needed for the enforcement of IPR
from the other institutions and private entities; coordinating the development of activities
of the Prosecutor’s Office and all prosecutors within Romania (including resources and
training); monitoring the implementation of the National Strategy - Action Plan;
organizing meetings to optimize the working methods and establishing best solutions to
streamline the legislation and its implementation; and ensuring communication and
cooperation between Government institutions and anti piracy/counterfeiting groups.
Another important measure includes the appointment in each prosecutor’s office
attached to tribunals of at least one prosecutor to deal with IP cases. Special training
programmes are designed and organised for these prosecutors. This measure is taken
according to the Action Plan. It should be regarded as bringing the penal IP cases up to
the level of tribunals and prosecutors offices. Furthermore, it reflects the growing
importance now placed upon IP crime.
Government Emergency Ordinance n. 190/2005 includes provisions to increase
efficiency in prosecuting offences against IPR:
1. IPR offences are prosecuted ex officio and the possibility of amiable settlement of
criminal litigation has been eliminated
2. IPR offences are under the jurisdiction of tribunals
194
ELSO (2007), p. 27.
195
The General Prosecutors Office is officially named the Prosecutors Office attached to the High Court of
Cassation and Justice and is the central prosecutorial structure that coordinates the other prosecutors’
offices countrywide. The GPO and the rest of prosecutors offices, which function attached to the courts, form
the Public Ministry
196 WIPO, Advisory Committee on Enforcement, Romanian efforts to improve awareness of decision
makers and public on issues related to the enforcement of intellectual property rights (2006), p.6
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3. IPR offences are investigated by more experienced prosecutors at the level of
county offices (minimum 4 years length of service)
4. IPR offences related to organized crime are investigated by the specialized
department within the Prosecutors’ Office attached to the High Court of Cassation
and Justice197
6.2.5 Asset Recovery
Asset recovery is a very recent field of international activity in countering a variety of
crimes. It involves an efficient and effective criminal justice system, sound preventive
policies, and transparent financial regulations.
The high priority given to asset recovery initiated numerous international initiatives.
Examples include the StAR (the Stolen Asset Recovery Initiative), the ADB/OECD AntiCorruption Initiative for Asia and Pacific, the International Centre for Asset Recovery
(ICAR) at the Basel Institute on Governance, U4 Anti-Corruption Resource Centre and
other entities.
Article 6 and article 12 of the UN Convention on Transnational Organized Crime (the
Palermo Convention) deal with such areas, particularly on the criminalization of the
laundering of proceed of crime and the confiscation and seizure of those proceeds of
crime.
Asset recovery is relevant in cases of seizure or forfeiture of counterfeit goods.
Recovered assets and proceeds of illegal counterfeiting activities may be used in order
to compensate the material (and moral) damages of the victims.
Existing good practices in EU
Some EU countries’ internal laws already possess such measures.
-
In Austria, for the civil remedies and in particular the proceedings on merits, “(b)
in case of negligence, the payment of damages – including lost of profits and
moral damages – or the handing over of any asset made by the infringement” is
foreseen.
-
In Belgium, the civil measures adopted only deal with the seizure of counterfeit
goods during the preliminary proceedings. Proceeds generated by illegal activity,
personal or real goods of the suspected infringer and the freezing of the
infringers’ bank account. As far as the damages within the proceedings on merits
concern: “(c) the confiscation of all profits made by the unauthorized use of
registered trademark” is stated.
-
In Estonia, civil law holders may claim compensation for damages, whether
material or moral. Material damages may include damage to assets and loss of
profits.
-
In the Czech Republic, within the proceedings on merit, the removal action and
destruction of infringing goods can occur. The court can consider the profits
obtained through the violation of the law in order to calculate damages.
Assets recovery measures are taken into consideration by the national laws mainly
within the civil remedies, as mentioned previously. The shortage of juridical measures
concerning this challenging matter can be regarded as a gap in the national and
197
Ibid, p.16
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European legislative framework. An important step forward should involve both single
States and the EU as a whole. Furthermore, applied research in this field may play a
significant role.
5.3. The Role of Private Sector
5.3.1 Experience Exchange and Knowledge Sharing and Cooperation with the Private
Sector in Terms of Information-Exchange
Prosecutions of IP crime depend on the cooperation between IP owners and law
enforcement. Without the sharing of information, prosecutors can neither determine the
most effective overall enforcement strategies, nor meet the burden of proof in a given
case.
The Canadian IP council – is a Canadian business coalition designed to provide a central
voice to press for stronger IP protection both in Canada and worldwide. They suggest the
following steps for private sector collaboration with law enforcements198:
-
Conduct a thorough investigation: investigations encompass a variety of
investigative steps including interviewing witnesses, acquiring counterfeit goods,
conducting surveillance of suspects as well as an examination of computers and
other services
-
Document all investigative steps: maintain a record of investigative steps
employed (to be presented to law enforcement and entered into evidence)
-
Preservation of evidence
-
Contact law enforcement agencies without delay: early referral is the best way to
ensure that all investigative avenues are fully explored
-
Assist in the identification of stolen IP: law enforcement may call upon an owner’s
representative or expert to examine items obtained during an investigation to
determine their origin or authenticity […] in certain investigation LEA may wish to
have an intellectual property owner present during the execution of a search
warrant to help agents identify specific items to be seized.
-
Share the results of internal investigations or civil lawsuits with law enforcement
-
Participate in law enforcement task forces
-
Help train law enforcement authorities
-
Registering IP by ‘private sector’: the resources of law enforcement and customs
are limited; the private sector should provide them as much information as
possible. They also have to designate a central point of contact (an individual or a
group) which Customs can work with, to deal with the counterfeiting problem.
-
Help Customs to be helped by them: providing customs with tools, like a
dedicated email address for them to send in info or request; a secure webpage; a
reference manual etc.
198
The Canadian IP Council, Intellectual Property: Enforcement Manual. A Practical and Legal Guide for
Protecting Your Intellectual Property Rights, p.19
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-
Help train customs official: there is no substitute for one-on-one training; training
seminars [by enterprises] should be complemented by the distribution of product
identification manuals, security feature identifiers etc.
-
Responding to inquiries regarding suspect goods
-
Following up on seizures
Existing best practices in the EU
INTERPOL works as a catalyst to encourage police, customs, international
organizations, the public health sector, cross-industry representative bodies, IP crime
affected industries and other stakeholders to work together to combat transnational
organized counterfeiting and piracy.
The database that INTERPOL is developing within the IPR programme to further
improve the exchange of information and intelligence on this subject is presented below:
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BOX 17
Database on International Intellectual Property Interpol
The INTERPOL Database on International Intellectual Property (DIIP) Crime is an autonomous
iBase database containing information on transnational and organized IP crimes.
It has been specifically developed to be a depository for private sector industry information on
transnational and organized IP crime. The DIIP Crime neither competes with established public
sector IP crime databases nor duplicates existing IP crime data collection mechanisms.
Data contained in the database will be subjected to criminal analysis to identify links between
transnational and organized cross-industry sector IP criminal activity; facilitate criminal
investigations; and develop regional and global strategic IP crime reports.
INTERPOL does not disclose information contained in DIIP. Participating industries receive
feedback in the form of referrals indicating that two or more industries are being targeted by the
same transnational organized criminals.
Arising benefits:
 It is used to inform and facilitate law enforcement interventions in transnational
organized IP crime
 It is used to produce regional and global strategic IP crime reports
 Improves the information flow between stakeholders and leads to more effective
international law enforcement
The expressed purpose of DIIP is to collect reliable information about transnational organized
criminals from IP crime affected industries. Industries often know the identity of the individuals or
groups who attack them. They are the same people that affected industries take civil actions
against to protect their IP and enforce rights.
Information collected to support civil actions is expensive and typically once the civil action is
complete the information is not used for any other purpose. This information is a valuable
resource since it contains information about transnational organized criminals. Pooling the
information in DIIP adds value to the information and improves its cost effectiveness. Pooled
information is searched to identify links between all IP crime affected industries and can then be
used for the collective benefit of all stakeholders.
The priority is to ensure that confidential and proprietary information provided by participating
industries is not disclosed.
Information contained in DIIP will be subjected to criminal analysis to identify links between
transnational and organized cross-industry sector IP criminal activity, facilitate criminal
investigations, and develop regional and global strategic IP crime reports.
Source: Interpol
Member countries working within the INTERPOL IPR Programme
Source: Interpol
Interpol issued a ‘Recommended Minimum Global Standard’ for the Collection of
Information on Counterfeiting and Piracy by the Private Sector.
The purpose of the INTERPOL Recommended Minimum Global Standard is to provide
IP crime affected private sector entities with guidance about the type of information they
should consider collecting about transnational and organized IP crime attacks on their
interests.
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It is expected that private sector entities will continue to collect data on their business
activities. The information collected for this purpose, however, will not necessarily be
information which can be used to identify if they are being attacked by the same
organized criminals that are also attacking other entities or industry sectors.
Some private sector entities do systematically collect information about how
transnational and organized IP criminals affect their business. Other private sector
entities do not collect such information, but may wish to do so in the future.
The Recommended Minimum Global Standard provides both types of private sector
entities with recommended minimum standards for the collection of information, which is
compatible with searchable information fields, contained in the INTERPOL DIIP Crime.
In the event that the private sector entities adopt the Minimum Global Standard it will
enable the information to be easily assimilated into the INTERPOL DIIP Crime in
accordance with DIIP Data Handling and Referral Procedures.
The Minimum Global Standard will also enable private sector entities to share
information about transnational and organized IP crime with each other more effectively.
Annex table:
http://www.interpol.int/Public/FinancialCrime/IntellectualProperty/DIIP/ExplanNotes.asp
5.3.2 The Contribution of the Private Sector during the Evidence-Gathering Monitoring
Processes199
The monitoring of counterfeit market activities serves two purposes. Firstly it helps to
identify incidents of counterfeit trade and allows for timely responses at an operational
199
The main source for the whole paragraph is Staake T., Fleisch E. (2008), “Countering Counterfeit
Trade. Illicit market insights, Best-Practice Strategies, and Management Toolbox”, Springer-Verlag
(editions), Berlin Heidelberg, chapter 5.
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level. Secondly it provides management with information on the development of the
counterfeit market and thus supports decision-making as well as market observations or
competitor analyses for the licit market.
Information exchange across industry associations (and between industry associations
and institutions, law enforcement agencies etc.) is desirable as an illicit producer often
targets more than one brand within the same product category; implementing monitoring
processes is closely related to awareness training.
If a larger number of counterfeit products are sold on a regular basis, illicit actors need to
establish some sort of stable distribution channel to market their products. In such cases,
brand owners must obtain timely data on shipment routes, sales channels and identifying
features of imitation products to ease product inspections at other locations.
Monitoring activities often call for the engagement of local investigators to track down
middle men and the identification of sources of counterfeit production.
Local contacts can also support test purchases in suspect stores or help to analyze
warranty claims, etc. Frequent counterfeit cases also lead to better market insights, thus
helping to identify high-risk distribution channels and typical import routes.
The relevant information sources as well as selected recommendations for organizing
data collection and reporting activities are outlined below:
Customs enforcement statistics
Pro: they provide the basis for counterfeit market share analyses. They also reveal other
information such as locations of production, import routes and addresses; they may help
to predict the future development of counterfeit activities.
Con: official statistics rarely provide timely information, they are strictly dependent on
Customs performance and are thus only of limited value for triggering reaction
processes.
Consumer surveys
Pro: they can provide a variety of information on market penetration and the availability
of imitation products, pricing strategies of counterfeit actors, sales channels, consumer
behaviour and awareness, reasons for and against buying counterfeit goods,
characteristics of counterfeit consumers, the perceived impact on the exclusiveness and
reputation.
Con: surveys are difficult to design and they are expensive to conduct if the required
samples size has to be high.
Sampling
Pro: it provides the brand owner with information on how counterfeit goods are sold and
allows for a detailed physical analysis of the products after purchase.
Con: the approach is relatively expensive especially if the authentication procedure is
destructive and if the share of counterfeit articles is small.
Company-internal data
Pro: they can provide timely information on counterfeit occurrences; an analysis of
warranty cases or consumer inquiries constitutes a more sensitive instrument.
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Con: the analysis of warranty cases is only applicable with respect to deceptive
counterfeit cases where customers are concerned about unannounced changes in
product appearance, taste etc.
Data on counterfeit production facilities may help to gain a better understanding of the
mechanism of counterfeit trade. Related information facilitates retrospective crosschecks of other monitoring activities.
Information provided by supply chain partners
Within the corporate world and especially organizations which are not directly affected by
a given counterfeit case, established personal contacts appear to be essential for
thorough information exchange.
Information from competitors often proves helpful as counterfeit actors frequently target
more than one product or brand. Industrial associations play an important role in
establishing contacts among brand-protection experts.
Information from Internet research
The World Wide Web constitutes an important distribution channel especially for nondeceptive counterfeiters and for deceptive counterfeit products that consumers tend to
avoid purchasing in person.
Reporting activities
The information obtained from the various sources has to be organized, processed and
put into a form which is suitable for presentation and communication to a given audience
that does not necessarily consist of anti-counterfeiting experts.
The frequency of reporting depends on the magnitude of threats. Standardized reporting
tools may also help to increase awareness of the problem among senior management,
provide an organ for brand-protection experts, foster information exchange between
different business units and functions, and help to document the company’s anticounterfeiting efforts.
Reaction processes
Trademark and copyright holders have the prime responsibility for initiating measures to
protect their goods […] the reaction process may be subdivided into 6 steps:
Withdrawing counterfeit articles from circulation:
Initiating product seizures is the first step to avert danger from the customer; the brand
owner may require search warrants and support from the police. Seizures become more
difficult the earlier they take place in the counterfeit actor’s value chain. The closer they
are to production, the more likely it is to cut off counterfeit supply.
Warning those who are affected by the imitations
The timeliness of information is critical, not only to prevent accidents but also to
document that the company is properly dealing with the case.
Finding/eradicate the source of illicit products
Brand owners should approach the occurrence of counterfeit goods in a constructive way
and collect as much information as possible to increase the chance of successful
prosecution of offenders.
Seeking the prosecution of offenders
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Prosecution of offenders is the logical consequence of identifying illicit actors; even if it is
a difficult process. The importance of tacking legal steps should be stressed, even if they
do not directly affect the illicit financiers. They may lead to seizures of production
machinery and unsettle middle men, which can dramatically increase the cost of
counterfeiting.
Managing the relationship with the informant and other supportive stakeholders
Most reactions are initiated after receiving hints from individuals such as customs
officials or managers from retail stores who are not directly associated with the brand
owner.
Refining the anti-counterfeiting strategy
Details from individual cases should be fed back to adjust the monitoring process and
improve prevention techniques
In conclusion, the reaction processes are highly dependent on the affected product,
country, and the nature of the individual case.
BOX 18
Case Study - Operation Jupiter in South America (2005-2010)
Operation Jupiter was launched with the support and participation of the national police forces of
Argentina, Brazil and Paraguay. Brazilian customs also joined the operation, together with
representatives from pharmaceutical, recording, motion picture and tobacco cross-industry
representative bodies. The operation then involved 7 countries of Latin America.
INTERPOL IPR programme, which spearheaded Operation Jupiter, provides a central point of
reference to facilitate co-operation between law enforcement authorities and the public and
private sectors in the fight against transnational organized IP crime. Under the umbrella of
Operation Jupiter, police and customs agents from Argentina, Bolivia, Brazil, Chile, Paraguay,
Peru and Uruguay carried out 299 co-ordinated enforcement operations resulting in 311 arrests
and the recovery of a range of dangerous products including life-threatening fake medicines,
counterfeit foodstuffs, electrical goods and agrochemicals.
INTERPOL and the WCO worked with participating countries to identify the transnational
organized criminal groups involved in cross-border smuggling and to target resources
accordingly. Police and customs authorities in each country then launched investigations and
combined interventions to disrupt these frequently complex criminal activities.
An important part of Operation Jupiter was the close co-operation and support provided to
investigators by the private sector. “Public-private partnerships like this are pivotal for bringing
criminal counterfeiters to justice, while protecting the innovators, workers and consumers who
rely on intellectual property protection,” said Dr. Mark T. Esper, Executive Vice President of the
U.S. Chamber of Commerce’s Global Intellectual Property Centre.
Since the first phase of Operation Jupiter in 2005 – which involved just three countries –
operations throughout the region have so far resulted in nearly 700 arrests and the seizure of
goods worth an estimated USD 290 millions.
Source: Interpol
5.3.3 Cooperation Initiatives with the Business Sector
As several studies and reports emphasize, some business sectors are more exposed to
brand counterfeiting and IPR violations than others. Consequently, a more active role in
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suggesting anti-counterfeiting initiatives can be expected from the sectors most at risk.
Common initiatives promoted by sector-related associations, as well as liaison with
public authorities and public institutions are examples of best practices.
1) Liaison between EU customs administrations and the pharmaceutical sector
A meeting was held on 14th September 2009 between the EU Commission, EU customs
administrations and EU pharmaceutical companies in Brussels. It was the first step in an
ongoing liaison between those parties. The main issue discussed regarded the
effectiveness of the seizure of goods suspected of infringing IPRs, carried out by
customs during EU border controls.
Participants discussed customs measures relating to the enforcement of patent rights at
the border, in particular the need to protect such rights effectively, whilst ensuring that
“the legitimate flow of and access to genuine generic products from manufacturer to
customer outside the EU was not restricted” (from the Joint Statement after the meeting,
see below). As a result of this meeting, EU custom authorities will extend and improve
their collaboration with EU pharmaceutical companies in order to prevent any chance
that the detention of suspected goods might hinder the legal trade of medicines. Such
measures should speed up control procedures and the procedures related to the
releasing of suspected goods. Customs will notify EU pharmaceutical companies about
each and every case of goods suspected of infringement. This joint commitment to act
demonstrates the will to act in accordance with EC Regulation 1383/2003.
2. Liaisons between Custom authorities and the semiconductor industry
The liaisons between customs experts and manufacturers of semiconductor devices
concerning anti-counterfeiting issues cover the following countries: China, Chinese
Taipei, European Union, Japan, Korea and the United States (countries adhering to the
GAMS - Governments/Authorities Meeting on Semiconductors).
For the first time, representatives from each of the six major regions involved in the
manufacturing of semiconductor devices (joined in the GAMS), met to discuss the
problems posed by counterfeit semiconductor products. On 21st – 22nd September 2009,
customs experts from China, Chinese Taipei, the European Union, Japan, Korea and the
United States convened in Korea, together with representatives from their relevant
industries and trade ministry officials. During the meeting customs experts shared
experiences and best practices in the fight against counterfeited semiconductor devices.
Customs experts also reaffirmed the need for governments to join forces and increase
joint government/industry cooperation in the fight against the counterfeit industry. It was
also mentioned that a particularly effective countermeasure, is that which gives customs
officers access to information about products manufactured and processes implemented
by the semiconductor industry. This type of information facilitates the identification of
suspected counterfeit products.200
200
The main source of this paragraph is Transcrime (2010), Anti-brand counterfeiting in the EU: report
on best practices, unpublished version, pp. 57-59.
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