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Law for Business

Knowhow - guidance - precedents

11 DEC 2012

Counterfeit products: When imitation is not the best form of flattery


A growth in counterfeit goods was widely reported in the run up to Christmas last year.  If you have a strong brand for your products or if you are selling products that are leading brands, you cannot afford to ignore the risks of counterfeit products appearing within the markets in which you operate.

There are a number of measures that can be taken to prevent counterfeiting.

Protect your intellectual property rights

The first step in preventing counterfeiting is to make sure that your intellectual property rights are protected. 

If you have not done so already, you should obtain legal advice to ensure that you are adequately protected.

Intellectual property is a collection of distinct legal rights, each protecting different components of the creativity, innovation and investment which its owner's work represents. 

As a simple rule of thumb:

• patents apply to inventions only, and not names, titles, logos or literary or artistic works;

  • trade marks protect names or logos;

• designs protect the outward appearance of your product and packaging, including colours, shape, texture, decoration, lines and materials;
• passing off aims to prevent anyone falsely presenting their goods or services as someone else's goods or services;
• copyright protects literary and artistic works, as well as films, television programmes and music.

Patents, trade marks and registered designs must be registered in order to obtain protection.  Having a registered intellectual property right can make enforcement of your intellectual property rights easier.

An appropriately qualified lawyer can work with you to create a system of checks that allow new intellectual property to be identified early, protected through confidentiality and, where possible, registered.

Create an awareness of intellectual property rights in your organisation

Raising and maintaining awareness of issues relating to intellectual property is essential.  Your staff will then have a better understanding of how the products that they sell and/or manufacture are protected.  They will also be better able to recognise when intellectual property laws are being broken and this may help to increase awareness of any counterfeit products that may be being sold.

Managing supply chain

You should use business information agencies and Companies House (or its equivalent in other countries) to check your suppliers, manufacturers, subcontractors, distributors are legitimate and of good standing.

Make sure that you only buy genuine materials and goods and keep records of your purchases.  Advise your suppliers that you only accept genuine materials and goods.

You should use contracts in your supply chain to protect your rights and to control the risk of counterfeiting. It is always important to start thinking, at an early stage, how your rights will be used.  Licensing provisions in agreements should determine the scope of their permitted activities and will allow the owner of the intellectual property rights to control how their rights are used.

Once contracts are signed the work should not stop.  Regularly check compliance.  For example, you can use "mystery shopping" to buy back products that you have sold to distributors and check that the products are priced, packaged and labelled correctly and lawfully.

Ensure that waste products are securely disposed of and destroyed to avoid them being used to develop or sell counterfeit products.
Regularly check well known internet sites, for example auction sites, and report anyone breaking the law on counterfeiting to the owner of the sites.

Packaging and product design

It is important that products and their packaging are designed so that they cannot easily be copied.  This can include complicated labels or parts that are difficult to produce.  This can increase production costs, but this can be balanced with losses that you may suffer from counterfeiting.

Customers are increasingly adept and using packaging and design to identify and authenticate products to ensure that they are buying a genuine article.

Also clear and distinctive packaging with contact information will help police and other enforcement agencies to look out for counterfeiters' products.  Counterfeiters may seek to cut costs in areas of packaging and labelling - enforcers often look out for poor quality printing and packaging to distinguish between the fake and the genuine. 

It sounds obvious, but you should also ensure that the information is free from grammatical and spelling errors - these are common on counterfeit goods!

Educate your customers

Imitation is a form of flattery.  It shows that you have a leading brand.  Customers will want to "buy into" the exclusivity of that brand. 

Businesses are, therefore, increasingly educating their customers about the existence and dangers of buying counterfeit products.  You can find ways of reassuring customers that the products that they are purchasing are genuine.  Business such as Uggs  provide guidance on websites to warn people of the risks and dangers of purchasing counterfeit products and identifying ways in which genuine products can be distinguished from counterfeit products, by reference to the design of the product and packaging.

Notify appropriate authorities of any suspicions

You should get the appropriate authority involved as soon as possible if you suspect counterfeiting.  In the UK, counterfeiting may involve a number of crimes being committed, so there are a number of ways that criminal law may be applied.  The main authorities are the police, trading standards (local government officers) and customs (as appropriate) and/or the United Kingdom Border Agency.

For further information on the issues raised in this article, please contact Rem Noormohamed, Partner and Head of Technology, Media & Communications at Michelmores at rehman.noormohamed@michelmores.com or Associate Tom Torkar or tom.torkar@michelmores.com

Disclaimer: This information has been prepared by Michelmores LLP as a general guide only and does not constitute legal advice on any specific matter and should not be relied upon as such. We recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of this information.

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