IP Enforcement and AntiCounterfeiting in Latin America
J. Michael Martinez de Andino
Hunton & Williams LLP
February 6, 2013
Table of Contents
I.
Counterfeiting in Latin America
II. International Efforts to Combat
Counterfeiting
III. Multi-Faceted Anti-Counterfeiting Program
IV. Summary
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Counterfeiting in Latin America Problems Created
World markets and global supply chains
provide benefits:
• Great for opportunities and growth
But also create and encourage:
• Counterfeit products
• Theft of intellectual property (IP)
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Defining Counterfeiting
The TRIPS Agreement
Agreement on Trade-Related Aspects of Intellectual
Property Rights
• “Counterfeit trademark goods…bearing without
authorization a trademark…validly registered …
which…infringes the rights of the owner…”
• “Pirated copyright goods…goods which are copies…
without the consent…copy would have constituted an
infringement …”
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Counterfeiting
The World Health Organization uses a broader
definition
• Goods deliberately made to look like the genuine article
• To misrepresent to a consumer that the product is the
product of the other
• Can apply to both branded and generic products
• May include products with the correct ingredients, the
wrong ingredients, without active ingredients, with
insufficient active ingredients or with fake packaging.
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Counterfeiting
Creates:
• Global problems, affecting a wide range of industries
• No oversight of manufacturing process
• No incentive to produce high quality goods
• Consumer complaints directed to the brand owner
• Potential for safety and health risks
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Counterfeiting
Examples of Affected Industries:
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Pharmaceuticals
Consumer Goods
Consumer Electronics
Apparel
Spare Parts
Luxury Products
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Counterfeit Pharmaceuticals
Health & Safety Risks
• Substandard Drugs
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Poor quality raw materials
Under-dosage
Inadequate storage or transportation
Not following Good Manufacturing Practice
• Harmful Ingredients
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Boric acid
Brick dust, chalk dust
cement powder, talcum powder
Floor polish, shoe polish
antifreeze
• Adverse Drug Reactions
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Examples of Counterfeit
Pharmaceuticals
Country: Panama
Date: 2006
Product: Deadly Cough Syrup
Details:
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Cough medicine made using a toxic syrup
Originated in China
Led to over 100 deaths
Toxic syrup was stored in barrels labeled to have glycerin, a
sweetener and thickening agent used to make medicines into
syrup.
– Barrels actually had diethylene glycol, a poisonous chemical
commonly found in antifreeze and brake fluid.
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Examples of Counterfeit
Pharmaceuticals
Country: United States
Date: 2012
Product: Counterfeit Cancer Drug
Details:
• Avastin® - Injectable medicine used to treat cancer
• Counterfeit version did not contain any of the active
ingredient.
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Counterfeit Consumer Goods
Examples:
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Toothpaste
Toys
Cigarettes
Beverages
Health & Safety Risks
• May include poor or tainted toxic chemicals (lead,
arsenic, antifreeze, methanol)
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Examples of Counterfeit
Consumer Goods
Countries: Mexico, United States
Date: 2007
Product: Toothpaste
Details
The Colgate-Palmolive Co. warned that counterfeit
toothpaste falsely labeled as “Colgate” was found to contain
the poisonous chemical diethylene glycol (DEG) – also used
in antifreeze.
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Examples of Counterfeit
Consumer Goods
Countries: South America, United States
Date: December 2012
Product: Toys
Details
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Fake Thomas the Tank Engine toys were seized
Confiscated toys had lead paint that can cause long term
injury
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Counterfeit Consumer Electronics
Examples:
• Smartphones
• Computers
• DVDs
Health & Safety Issues
• Quality
• Wrong parts
• Fakes have potential to overheat or cause fire
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Example of Counterfeit Consumer
Electronics
Countries: United States, India, China
Date: 2009
Product: Counterfeit cellphone batteries
Details
• Counterfeit cell phone batteries that can overheat or
explode, injuring phone users.
• 17 -year-old took out his Sprint cell phone to call his
girlfriend. The fake battery caused the cell phone to
overheat and when he placed the phone by his ear, he
got a 2nd degree burn.
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Counterfeit Apparel
Impact
• Poor quality
• Consumer complaints directed to the
brand owner
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Example of Counterfeit Apparel
Country: Argentina
Date: April 2008
Product: Nike Shoes
Details:
• Nike filed a trademark infringement action against a
MercadoLibre subsidiary.
• The subsidiary of the leading online auctioneer was
infringing Nike’s trademarks as a result of the seller listing
counterfeit Nike branded products through the Company’s
website.
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Counterfeit Spare Parts
Health and Safety Risks
• Equipment failure
• Improper construction
• Poor quality
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Example of Counterfeit
Spare Parts
Country: United States
Date: October 2012
Product: Airbags
Details
• The National Highway Traffic Safety Administration
issued a consumer safety warning to alert vehicle
owners and repair shops about the counterfeit airbags.
• Airbags would not deploy or would inflate improperly.
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Counterfeiting
Leads to:
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Inferior products
Consumer complaints being directed to the brand
owner
Endangers public safety
Costs of enforcement leading to higher prices
Loss of jobs resulting in unpaid fees and salaries
Infringement of trademarks, patents, designs,
copyrights, trade secrets
Loss of company revenue
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International Efforts to
Combat Counterfeiting
Anti-Counterfeiting Trade Agreement (ACTA)
• International agreement signed in 2011 by Australia,
Canada, Japan, Morocco, New Zealand, Singapore,
South Korea, and the United States.
• The European Union and Mexico signed in January of
2012.
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International Efforts to
Combat Counterfeiting
Anti-Counterfeiting Trade Agreement (ACTA)
• Provides international standards for enforcing IP rights
and cooperation regarding border control
• Targets trademark counterfeit goods, generic medicines
and pirated copyrighted goods
• Creates a governing body outside existing forums, such
as the World Trade Organization, to allow IPR holders to
have access to civil or administrative procedures to order
a party to desist from infringement
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International Efforts to Combat
Counterfeiting: Organizations
International AntiCounterfeiting Coalition (IACC)
• An umbrella organization, offering anti-counterfeiting
programs to increase protection of patents, trademarks,
copyrights, service marks and trade secrets
• Comprised of a cross section of business and industry
• Provides training program for law enforcement
• Training Programs in Chile, Ecuador, Uruguay, Argentina,
Paraguay, Columbia, Mexico and Brazil.
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International Efforts to Combat
Counterfeiting: Organizations
Latin American Anti-Counterfeiting Unit (LAAC)
• Provides necessary evidence and tools in order for the
local police to prosecute counterfeiters
• Member States include El Salvador, Honduras, Guatemala,
Nicaragua, Costa Rica, Panama, Columbia, Brazil,
Paraguay, Argentina
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International Efforts to Combat
Counterfeiting: Organizations
International Organizations
• World Customs Organization
• Interpol
• International Trademark Association (INTA)
• World Health Organization
• U.S. Immigration and Customs Enforcement (ICE)
• Institute of Economic Affairs (IEA)
• International Federation of the Phonographic Industry
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Does your business have a
counterfeit problem?
• Do you have well-known or emerging brands?
• Do your brands have a large market share?
• Do you have a high profit margin?
• Is there an unexplained increase in returns or customer
complaints?
• Does your brand have market share where you are not
even doing business?
• Have you lost market share in a particular region?
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What Should You Do?
Multi-Faceted Anti-Counterfeiting Program
• Education
• Partnership
• Practical Measures
• Enforcement
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Education
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Raise awareness of the dangers of using counterfeit
products
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Provide information on your company website about
how to identify and avoid counterfeit goods
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Provide product authentication training
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Provide access to facilities for identifying counterfeit
products
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Provide information on those engaged in the illicit trade
of your company’s brands
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Partnership
•
Police, Customs and Taxing Agencies
− Educate, train, offer samples of your product
− Offer use of your company’s labs or facilities
•
Industry Organizations
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Work to ensure authenticity of raw materials and
component parts
Clients
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Help buyers understand distinctive qualities
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Partnership
Partnership
• Competitors
− Join forces to fight forgers in court
• Local Organizations
− Promote programs encouraging the destruction of
counterfeit goods
− Set up recycling programs to ensure packaging cannot
be reused
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Practical Measures
• Product-Level Anti-Counterfeiting Measures
• Smart cards, holographic images, color-shift inks,
RFID tags, UV inks, digital coding, electronic tax
verification systems
• Consult
• Meet with your agents, distributors, suppliers and
others who are knowledgeable about local conditions
for the goods or services in question to help identify
potential risks
• Forge good relationships with organizations that can
help you.
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Practical Measures
• Manufacturers
• The manufacturer is in the best position to identify a
fake product
• Should be required to assist in identifying copies of
their products
• Audit Controls
• Ensure your supplier is not part of the problem
• Set up product purchase programs to help identify
problems
• Maintain control of the distribution channel, and be
able to trace products from manufacturing to sale
• Follow up on quality control issues, which may identify
counterfeit goods
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Practical
Measures
Practical
Measures
• Monitor the market place
• Intelligence-gathering helps with quality control
• Include Internet sites for potential sales of counterfeit
goods
• Keep a product library
• Document marketing materials and products for
potential use in future infringement actions
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Enforcement
•
Support law enforcement and regulatory agencies
•
Register your intellectual property, such as your
trademarks, and record the trademarks with the
appropriate customs agencies
•
Investigate those involved in providing counterfeit
goods
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Identify bad products, persons involved
•
Participate in international efforts to combat
counterfeiting activity
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When appropriate, take court action
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Summary
• Problems created by counterfeit goods
• International efforts to combat counterfeiting
• Multi-Facet Anti-Counterfeiting Program
− Education
− Partnership
− Practical Measures
− Enforcement
• Steps to Protect Your Products and Intellectual Property
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Thank You!
J. Michael Martinez de Andino
[email protected]
804-788-7216
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