Counterfeiting is a significant problem for brand owners. A recent Border Force report on IP crime trends noted that, between 2021 and 2023, counterfeit goods worth more than £500 million were seized at the UK border, with trade mark infringement being the most common IP issue. Counterfeiting has likely only increased since.
Counterfeit goods are distinguishable from similar types of IP infringement such as dupes (third party products with different branding which appear similar to the market leader) and parallel imports (genuine branded articles imported from outside the UK). Unlike these articles, counterfeit goods are simply flagrant unauthorised copies (or “fakes”) of the genuine product.
Counterfeits may vary in price and quality. Some are sold at a similar price point to the genuine article, particularly for more everyday goods, but are manufactured to a lower standard for a lower cost price. At the point of purchase such products can prove difficult for consumers to distinguish from the genuine article (particularly when shopping online), risking harm to consumers and brands.
Other counterfeits may be priced lower than the genuine article. Some will be consciously priced as cheaper “knockoffs” of high-end products, which are more readily identified as counterfeits, including by consumers who knowingly buy them as such. Other counterfeits may only have a slightly lower price point than the genuine article, which allows them to be sold as a convincing second-hand product on online marketplaces.
Counterfeiting activity affects a broad range of products from the more usual toys, clothing and accessories to products such as automotive spare parts, medical devices and pharmaceuticals. In all of these cases, a lack of regulatory control over the manufacturing process means that consumers can be exposed to a very real safety risk.
The manufacture and supply of counterfeit goods often involves a complex web of organised criminal activity taking place across borders through multiple entities and individuals. Counterfeit operations also quickly adapt to enforcement practices, consumer trends and to exploit new opportunities. Tackling this challenging problem requires a tailored approach informed by experience and an awareness of what can be achieved at proportionate cost.
Counterfeiting can give rise to both civil and criminal liability under UK law. An effective anti-counterfeiting strategy is likely to involve a combination of the following enforcement options:
- working with UK customs (Border Force) to confiscate and destroy infringing goods at the border;
- taking civil law action ranging from pre-action steps through to court proceedings; and
- referring matters to Trading Standards or the police for criminal investigation.
These options are summarised below.
Working with Border Force
Rightsholders can take proactive steps to prevent counterfeit goods from entering the UK by working with Border Force. This should be considered as a first line of defence against counterfeit products which are manufactured abroad. Equally important is ensuring that your registered IP portfolio is up-to-date with UK registrations to protect your product branding, designs and inventions.
IP owners should start by filing an Application for Action to put Border Force on notice of their rights. This will entitle Border Force to seize and destroy suspected counterfeit goods at the border. In some cases, suspect goods which come to the attention of Border Force officials may also be seized “ex officio” without a prior notice in place. In that situation, the Application for Action must be filed as soon as possible to allow the seized goods to be destroyed.
There is no fee for filing an Application for Action, which makes this a very cost-effective measure. However, the procedure will be most beneficial for brand owners who provide Border Force with actionable intelligence that can be used to detect counterfeits. The sheer number of goods coming through customs (and competing priorities at the border) means that counterfeits are unlikely to be identified effectively without up-to-date information and a regular dialogue from brand owners.
Once the Application for Action is in place, if Border Force detects suspect goods, it will contact the rights holder to check whether the goods are genuine. The rights holder must confirm whether the goods infringe and whether they agree to destruction. There is also a helpful streamlined procedure which allows Border Force to destroy small shipments of suspected counterfeit or pirated non-perishable goods without first consulting the rights holder.
Goods can be destroyed where both the rights holder and the importer agree, or where the rights holder agrees and the importer does not respond within the notification period. If the importer objects, the rights holder must start court proceedings. Otherwise, Border Force will release the goods. The brand owner is liable for associated costs incurred by Border Force, including handling, transport, storage and destruction costs.
Online takedowns
Counterfeiters will rarely acknowledge receipt of a cease and desist letter. However, if the counterfeit goods are being sold online, another important measure to consider is a takedown request to the website host and/or online marketplace being used. In clear cases of infringement (which counterfeit goods often are), this can be a fairly quick and effective action. This is also important to protect customers against identity theft.
In some more complex cases, counterfeiters may seek to appeal the takedown notice. A recent trend has seen counterfeiters seeking to rely on fraudulently obtained registrations for company names and trade marks to convince platform operators that they are legitimate and entitled to sell the goods. Actions to cancel the relevant registrations can be used in these circumstances, as well as carefully targeted correspondence to key contacts at the platforms.
Court proceedings
Civil court action should be carefully considered in counterfeiting cases. There are unique challenges associated with litigating against parties who make a business out of sophisticated criminal activity, particularly where the network of parties involved is difficult to determine and key evidence, individuals and assets may be located out of the jurisdiction. Nonetheless, there are situations in which an action before the High Court or IPEC can be important and/or necessary.
In particular, court proceedings may be considered where complex fraud, very large scale or repeat infringement activity is involved and the more typical case-by-case approach of customs destruction and online takedowns is not likely to shut it down. Rightsholders may also be forced to commence an action because a significant shipment of goods detained by customs cannot be destroyed without a court order following an objection from the importer.
In these cases, the documentary disclosure that can be obtained through the court process is likely to be an important consideration. Something to consider at an early stage is an urgent application for a search order and/or freezing injunction to preserve key evidence and assets before the counterfeiters have the opportunity to dissipate them. To obtain such relief, it is important to move quickly (and without notice to the counterfeiters) following the relevant customs seizure or discovery of the activity.
Criminal investigations
Counterfeiting activity is likely to constitute a criminal offence contrary to s. 92 Trade Marks Act 1994.
As such, when deciding whether to commence a civil action, it is important to consider whether criminal proceedings may be the more appropriate action. Criminal prosecutions will typically be handled by the police and/or Trading Standards. However, in situations where Trading Standards is unable to assist or the brand owner wishes to retain control over the progress of the proceedings, it is also possible to bring a private prosecution.
A criminal prosecution may open up the possibility of sanctions (including a prison sentence) and investigatory powers which are not available when taking the civil route and which may be a more effective deterrent. For the brand owner, referring an appropriate matter for public prosecution is also likely to be lower cost.
This is the first article in our Brand Protection in Practice series. Further articles will look at several of these routes in more detail, including online brand protection, Applications for Action and court remedies.
How we can help
Whether you are dealing with counterfeits now or want to protect your brand before they appear, our IP team can help you find the right approach, from prevention through to enforcement. To discuss how we can help, please get in touch with Oliver Fairhurst or Aaron Trebble.
