Intellectual Property Piracy

Intellectual Property piracy is fundamentally an unlawful action. Protective rights piracy can be punished by requests for authorization, warnings with declaration to cease and desist, provisional injunctions or with criminal charges, in special cases.

What does “product piracy” means?

Trademark and product piracy is the misappropriation and distribution of third-party´s intellectual property and the deliberate violation of copyright. Meanwhile, it is really easy to find fake products or copies of original registered materials on the market.

Which are the consequences of trademark and product piracy?

The consequences of product piracy are fatal for the society as a whole. According to recent estimations, the economy is generating hundreds of billions of dollars’ worth of damage worldwide every year. The state also loses revenue because “pirates” pay no taxes. Research and development, for which companies spend a great amount of money and energy in, are not worthwhile if the inventor or right-holder is not making the most from its protection. For consumers, counterfeiting can even be dangerous if, for example, medicines, car parts or aircraft spare parts are replaced with materials from unknown origins.

Product and brand pirates refrain from accounting; the damage can only be estimated. The most reliable statistical source for Germany is the customs figures on the value of confiscated products, and the number of seizures within the EU in the last years. However, this numbers only cover the top of the iceberg.

Which facts do we know about products piracy?

A study made by the OECD estimates the value of counterfeit and cross-border traded products in 2005 at around $ 200 billion. However, it did not take account of counterfeit products manufactured and sold within the country and products traded on the internet. Therefore, the total – according to the authors of the study – can be “several hundred billion” higher. The International Chamber of Commerce (ICC) estimates the value of goods, which is implemented worldwide with counterfeit products, at 600 billion dollars.Customs administrations in Europe confiscated around € 1 billion in counterfeit products in 2012. A large proportion of the counterfeits comes from China and Hong Kong.

Which sectors of the economy are affected by product piracy?

Falsification and piracy do not spare any branch of industry. All products and brands are affected. From artistic works, software products, trademark name products from the clothing and sports products sector, watches, jewellery, cosmetics, beverages and foodstuffs to pharmaceuticals and technical products from the mechanical engineering, automotive and aerospace industries, and so on. 

How should we face this “piracy” problematic?

The basis for piracy control, whether counterfeiting or piracy, is the comprehensive protection of intellectual property – inventions, design or trademarks- . As a rule, it is necessary to protect any intellectual property by means of protective rights in order to successfully act against eventual imitators.Only comprehensive security concepts are effective in the fight against counterfeiting and piracy. Therefore, it is important to settle a central communication point in the company, which ensures the coordination of the various departments. The following overview only highlights a few points that illustrate the necessity for a concerted approach: 

Legal Measures

Property rights management strategies, registration of property rights, obtaining evidence and preserving evidence, enforcement of legal violations, border seizure proceedings

Research and development

Backup concepts for new products, technology protection, technical protective measures to secure the products

Distribution

Selection of reliable distribution partners, awareness of employees, suppliers and dealers, communication of certain identifiers to specific target groups, market observation, counterfeit reporting system, concept for participation in the fair

Communication

Crisis scenarios in case of damage with counterfeit products, communication of security measures

 

Which security technologies actually exist?

There are different security technologies that help keeping products counterfeit-proof. Anti-counterfeit features are attached to the product or are part of the packaging. These can be labels, security threads, security labels, holograms or microtaggants.Openly visible features sensitize consumers and retailers. Concealed features for instance, allow the manufacturer to prove in cases of doubt – for example, in cases of damage – whether it is indeed his product or it is actually a fake.

What is a border seizure?

The customs authority, with its border seizure procedure, offers copyright holders an effective instrument to confront counterfeiters. The border seizure process can prevent counterfeit articles, mostly from abroad, from entering the retail sector and being offered to consumers. The intervention of the customs authorities takes place only at request of the right holder: www.ipr.zoll.de

Seizure for product counterfeiting at trade fairs such as the CeBit or the “Hannover Messe Industrie”

Trade fairs serve to initiate business and provide visitors with an overview of the available products. Especially for companies, they offer the opportunity to inform themselves about eventual competitors. If a company finds out that there are copies on the market, of the products offered, an extremely quick reaction is fundamental.If anyone discovering a piracy crime would decide to take legal action against this one, piracy could easily and quickly be fought: legal warnings, injunction or other criminal measures might be the consequence of a piracy action.

What should be considered in cases concerning counterfeit from China?

A large part of the products confiscated by customs in Germany comes from the People’s Republic of China / Hong Kong. In connection with China, the DIHK has joined the action group against counterfeiting and piracy e. V. (APM) and has set up a China Contact Point for companies facing product and brand piracy issues in China. The task of the contact point is to gather information about problem cases and to evaluate positive and negative experiences. Companies that are exposed to counterfeiting and piracy from a Chinese source can contact this service number to get a first consultation and to be further connected to more specific contacts.

Technology transfer

German companies are often complaining about increasing technology transfers in China. The transfer of cutting-edge technology is often the basis for cooperation between German and Chinese companies interested in high technology business.A problem in this context, however, is the Chinese government’s pressure on foreign companies to transfer technology on a large scale (with no payment). For the individual company, it is often difficult to escape this pressure. The Asia-Pacific Committee of German Business (APA) has produced a free brochure containing practical tips on how to handle technology transfer at corporate level.

What do dealers and importers have to consider?

The retail sector must also take its responsibility seriously in the area of ​​product and trademark piracy. The company has responsibilities towards the costumers; this latter want to by a quality product which has not to be mistaken with goods of inferior quality.  In particular, the trading company should:

  • Carefully choose the suppliers in order to be able to guarantee a warranty in case of conflict;
  • Check the origins of imported products and materials;
  • Provide sanctions for violations and communicate accordingly;
  • Check lists of examination institutes that mention manufacturers who used fake certificates
  • Seek legal support:  inform manufacturers of suspected cases of trademark and product piracy.

What shall the consumer be aware of when purchasing a counterfeit product?

The unintentional purchase of counterfeit products can be detrimental to the consumer: the counterfeit is generally offered to a much higher price, compared to the actual value of the object.

Basically, counterfeiters refrain from product testing and do not care about compliance with standards or limits. In case of damage, the bruised manufacturers have obviously no warranty. Anyone who resells counterfeit goods may be liable to prosecution and may be required to pay compensation for damages. Please consider the following possible legal problems:

  • Withholding of piracy products by authorities
  • Subsequent customs and fines issued by authorities
  • Product pirates do not assume any warranty claims
  • Product liability cases do not include “pirate” products

Some hints on how the consumers can protect themselves from buying counterfeit products unintentionally:

  • Branded products or electronic equipment sold at not normal market conditions should be exactly examined before purchase;
  • When buying on the Internet, you should carefully pay attention to the seriousness of the provider. Here, the goods can not be carefully inspected, as you are accepting to buy an object you are not able to “touch and test with your hands”. Original photos are often shown, but the products shipped are actually not what expected.
  • If you know the original product, you should compare the exact characteristics of both. Slightly changed lettering or brand names are also really common on counterfeit products.
  • Check the packaging. The addresses of the manufacturer and importer have to be mandatorily on the product.
  • For electrical appliances, a user manual has to be issued also in German. If these are missing, you should keep your hands off them despite the test seal. Seals can also be easily falsified.
  • Current movies are not offered on DVD at the same time.
  • Please note: high-quality original goods, image and sound carriers as well as software are never sold in large quantities at flea markets.