'Tis the season to beware fake goods

How big a problem is the counterfeit goods market?

A joint report published in 2019 by the OECD and EUIPO suggests that trade in counterfeit and pirated goods accounts for 3.3% of world trade and is steadily rising. In the UK alone, this costs the economy billions of pounds each year and many of the sales are made through online outlets.

There have, however, been great strides to try and combat counterfeiting in UK. The Police Intellectual Property Crime Unit (PIPCU funded by the UK Intellectual Property Office) was established in 2013 and specialises in IP related law enforcement and NCA (National Crime Agency) has a dedicated department dealing with IP crime. In 2020, recognising the problem, Amazon announced its own Counterfeit Crimes Unit.

To what extent do fraudsters use online marketplaces?

Some online sites are a huge source of counterfeit goods entering the UK marketplace. Many of the counterfeits originate from China and are exported to UK where one of the easiest ways to sell is online.

Of counterfeit items seized in 2016, footwear was the most prevalent making up 22% of goods with toys slightly more common than jewellery and pharmaceuticals at 3%.  This may not sound much, but it equates to millions of counterfeits, and who knows how many of these slip through the net and go unnoticed?

The ability to remain anonymous and reach a global custom base make these markets places very attractive indeed for criminals.

How do the scams work?

Sales online don’t allow the customer to actually physically touch the product. The pictures on these sites often don’t represent the product being sold. Often ‘genuine product receipts’ are provided with the product delivered but these are in themselves fake. Even a seller who has imported counterfeit goods may not be aware that they are infringing third party rights or that their activity is a criminal offence. Some online sites may sell both original products as well as counterfeits in an attempt to look more legitimate.

What is the impact on the brands involved?

It isn’t just sales that get hit.  Reputations do too.  Alarmingly, many consumers simply do not realise they bought a fake.  Even if they do, they think it must be the same product, simply wearing different clothes.  Counterfeit and copycat products are often inferior quality and often fail to meet safety standards, but consumers may not realise this and associate poor quality with the genuine article.

The TIE reported that they had bought nearly 200 toys from across four well-known websites. They then checked them all for compliance against EU safety standards. They found that a shocking 97% of the toys were non-compliant with EU law and 76% of those tested were unsafe for children. This echoes the findings of an earlier study by the British Toy and Hobby Association which found 58% of toys that they assessed were illegal to sell in the UK as they failed to meet safety regulations and 22% had serious safety failures “which could cause serious injury or death to a child”.

What is the law covering this area and is it sufficient or employed correctly?

Trade Mark law (Trade Marks Act 1994). This allows owners to register trade marks. Such registered rights help PIPCU and the NCA, as well as the courts, to take quicker and more cost effective action against infringers. Copyright, Designs and Patents law (Copyright, Designs and Patents Act 1988). Patent and design rights are enforced in the same way as trade marks. Copyright is an automatic right in original works and is useful in combating fake DVDs and CDs in the film and music industry and copying of computer software.

What measures are in place to combat this kind of fraud?

Owning Intellectual Property rights is essential, whether that is a patent, a trade mark or a design. Wynne-Jones IP has a long tradition of helping companies protect their IP rights. These rights all help the courts allow enforcement by the owners against infringers. The rights are also essential when requesting Amazon and eBay to close sites selling infringing products. Often without such registered rights Amazon and eBay will refuse to take any action. Rights are also used by Customs and Excise in controlling the borders.

What should consumers who want to avoid fake products look out for?

Price, packaging, quality and where the goods are on sale. Unofficial sites are always a good indication. As are online auction sites. But eBay and Amazon are still main targets for counterfeiters as if one site gets closed down another can be set up shortly after.

For more information, and to speak to an expert contact us today.