Anti-counterfeiting experts from law enforcement, brand protection and online platforms have underscored the importance of collaboration when combating counterfeiters.

Speaking at the third annual Anti-Counterfeiting World Law Summit, hosted by the Global Legal Post at the Caledonian Club in London on 18 October, the experts discussed how to fight resilient, adaptable and creative counterfeiters, and how anti-counterfeiting practitioners can learn from each other to tackle a common enemy. 

One of the highlights of the summit was Mattel’s Michael Moore, who spoke from Los Angeles about the phenomenal success of the Barbie movie. He provided some fascinating insights into how it partnered with Warner Bros. Studios to make what became the movie of the summer. A number of key themes emerged from the day.

Counterfeiting is NOT a victimless crime

Fighting the image that counterfeiting is somehow a victimless crime was a recurring theme throughout the summit.

At times, counterfeiting can put lives at stake, along with the economic damage wrought by counterfeits. The conference opened with a compelling case study of how a pharmaceutical company smashed a huge organised counterfeit ring, not only managing to seize thousands of counterfeit bottles, but freezing bank accounts and real estate from dozens of counterfeiters.

Speakers emphasised that counterfeit sales were linked to global organised crime gangs, with evidence that the profits provided seed money for activities like money laundering, prostitution, weapons, forced labour, drugs and more.

There had also been an explosion in the type of items being counterfeited with a huge rise in counterfeit pharmaceuticals, spare parts for machinery, and alcohol, which can all have a direct impact on human health.

If there are no consequences for bad actors, behaviour doesn’t change

There was a discussion about the interplay between civil and criminal law, and that parallel cases could be conducted. The discussion also touched on ensuring that counterfeiting is sufficiently high on the priority lists of already overstretched law enforcement bodies.

Penalties in civil and criminal cases are becoming more severe. PIPCU (Police Intellectual Property Crime Unit), founded 10 years ago and funded by the UK IPO was dedicated to protecting physical goods from intellectual property crime and combatting online piracy. When it was created, penalties were low, but a recent case saw a criminal face seven years’ imprisonment and hand over £120,000.

Sometimes the counterfeiter could be a “small fish” sourcing from China, but in other instances it could be a sophisticated operation involving hundreds of bank accounts.

Influencers and social media

Representatives from brands discussed the biggest challenges in an increasingly complex online space, such as deceptive practices like hidden links and streaming live sales where counterfeit items are sold. Brands also have to contend with social media, dupes, NFTs (non-fungible tokens) and the metaverse.

But why do people buy counterfeits online? One speaker pointed out that 91% of seizures from online sales are made at borders. Studies have revealed a number of drivers for buying counterfeit goods, such as rationalising that “the luxury item is too expensive anyway and the quality is irrelevant”, or they have a bigger risk appetite and believe, say, “the hair straighteners are as safe as the real version”.

It is imperative, attendees said, that anti-counterfeiting messages are targeted at the younger generation (who most frequently buy online counterfeits), and stress the human cost of counterfeiting such as the exploitation of young and vulnerable people.

It can be challenging working with social media influencers but it is crucial to engage with them to show the damage counterfeiting can cause.

Collaboration

Criminals share processes all the time and anti-counterfeiting practitioners need to do this as well – and lawfully, the speakers said. The industry can also work together to lobby for legislative changes.

Brands extolled the benefits of working with bodies like the UK’s Trading Standards and membership organisation ACG (Anti-Counterfeiting Group), and working as groups with border force agencies. Some brands have banded together to carry out joint raids, given that certain related products will often be found in the same places.

Many brands believe the EU’s Digital Services Act has been very helpful because it puts increased obligations on online intermediaries to remove infringing items. And many speakers were heartened by the Metabirkins judgment, where luxury brand Hermes won a trademark infringement battle with an NFT artist who was selling furry digital handbags called metabirkins.

Brands need to give as much information as possible to border control. For instance, what do the fakes look like and how do they compare to the originals? Brands also need data back from enforcement bodies and to share intelligence so that they can quickly notice when counterfeiters adapt and change to evade detection. “We have to copy their creativity,” one of the speakers said.

Constantly evolving nature of counterfeiters

Counterfeiting is constantly evolving, but there are some consistent factors. The majority of the counterfeiting material comes from three places: China, Turkey and Hong Kong. While 80% of counterfeits still come from China, that is changing. Since the Covid pandemic, there has been a noticeable rise in counterfeit textiles and other infringed products from Turkey.

There has also been a huge increase in the variety of items that are now being counterfeited – it is not just watches and sunglasses, but products like olive oil, spare parts, pharmaceuticals and wine. Another trend spotted is unbranded items like t-shirts entering into a country, with the logos sent in a separate consignment. The counterfeit item is then assembled inside that country.

Disposing of counterfeits sustainably

At the conference, the lanyards were hung using recycled material from seized counterfeit goods, nicely demonstrating one way that counterfeits can be disposed of sustainably. They were created by Virginia Cervieri, founder of Uruguay-based Cervieri Monsuarez, which aims to use counterfeit textiles in a creative way such as making pencil cases and backpacks. These can then be donated to schools, hospitals and other institutions that work with vulnerable groups. 

Colgate’s Surender Sharma described its responsible disposal campaign PASS (Prevent, Avoid, Support, Share). Brands need to move away from using methods like open-air burning disposal and prepare them for recycling instead. Sharma used the example of 12,000 counterfeit toothbrushes that were shredded and combined with other waste material to make plates used in industries like construction and agriculture.

Africa

Many brands are reluctant to initiate brand protection operations in Africa because they believe it will be very complex or because they don’t really know what is going on. But in a session on tackling IP infringements in Africa, speakers urged delegates to avoid the caricature of Africa – Africa is not a lawless landscape, it is just lacking the right legislation to tackle the problem. There are other challenges such as inadequate border control between 54 countries and far less information online. It is very much a relationship-driven market, with the key to success having a local footprint. The continent has a strong oral tradition and far less bureaucracy. This can be good and bad, but it makes it more difficult to access information when investigating counterfeiters. Routes used by counterfeits can change quickly – they adapt and are very flexible.

The counterfeit spirits trade is alive and well in Africa, with one speaker describing a lengthy undercover operation in Togo, West Africa, which resulted in four individuals receiving prison sentences totalling 120 months and significant fines.

At the larger end of the scale, the speaker managed to track counterfeit spirits to 24 shipping containers in Gambia, and after nearly three years of litigation they succeeded in getting the product destroyed.

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