ip enforcement and anti-counterfeiting in latin america · international anticounterfeiting...

IP Enforcement and Anti-Counterfeiting in Latin America

J. Michael Martinez de AndinoHunton & Williams LLPFebruary 6, 2013

I. Counterfeiting in Latin America

II. International Efforts to Combat Counterfeiting

III. Multi-Faceted Anti-Counterfeiting Program

IV. Summary

Table of Contents

2Hunton & Williams LLP © 2013

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)


Defining Counterfeiting

The TRIPS AgreementAgreement 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 …”


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.


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


Examples of Affected Industries:• Pharmaceuticals• Consumer Goods• Consumer Electronics• Apparel• Spare Parts • Luxury Products

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Counterfeiting

Hunton & Williams LLP © 2013

Counterfeit Pharmaceuticals

Health & Safety Risks• Substandard Drugs

• Poor quality raw materials• Under-dosage• Inadequate storage or transportation• Not following Good Manufacturing Practice

• Harmful Ingredients• Boric acid• Brick dust, chalk dust• cement powder, talcum powder • Floor polish, shoe polish• antifreeze

• Adverse Drug Reactions


Examples of Counterfeit Pharmaceuticals

Country: Panama Date: 2006Product: Deadly Cough SyrupDetails:

– 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: 2012Product: Counterfeit Cancer DrugDetails:

• Avastin® - Injectable medicine used to treat cancer• Counterfeit version did not contain any of the active

ingredient.


Counterfeit Consumer Goods

Examples:• Toothpaste• Toys• Cigarettes• Beverages

Health & Safety Risks• May include poor or tainted toxic chemicals (lead,

arsenic, antifreeze, methanol)


Examples of Counterfeit Consumer Goods

Countries: Mexico, United States

Date: 2007

Product: Toothpaste

DetailsThe 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.


Examples of CounterfeitConsumer Goods

Countries: South America, United States

Date: December 2012

Product: Toys

Details

• Fake Thomas the Tank Engine toys were seized• Confiscated toys had lead paint that can cause long term

injury


Counterfeit Consumer Electronics

Examples: • Smartphones• Computers• DVDs

Health & Safety Issues• Quality• Wrong parts• Fakes have potential to overheat or cause fire


Countries: United States, India, China Date: 2009Product: 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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Example of Counterfeit Consumer Electronics


Counterfeit Apparel

Impact• Poor quality• Consumer complaints directed to the

brand owner


Country: Argentina Date: April 2008Product: 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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Example of Counterfeit Apparel


Counterfeit Spare Parts

Health and Safety Risks• Equipment failure• Improper construction• Poor quality


Example of CounterfeitSpare Parts

Country: United States Date: October 2012Product: 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.


Counterfeiting

Leads to:• 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


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.


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


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 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 acounterfeit 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?


What Should You Do?

Multi-Faceted Anti-Counterfeiting Program• Education

• Partnership

• Practical Measures

• Enforcement


• Raise awareness of the dangers of using counterfeit products

• Provide information on your company website about how to identify and avoid counterfeit goods

• Provide product authentication training

• Provide access to facilities for identifying counterfeit products

• Provide information on those engaged in the illicit trade of your company’s brands

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Education


• Police, Customs and Taxing Agencies − Educate, train, offer samples of your product− Offer use of your company’s labs or facilities

• Industry Organizations− Work to ensure authenticity of raw materials and

component parts

• Clients− 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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Partnership


• 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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Practical Measures


• 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

• Identify bad products, persons involved

• Participate in international efforts to combat counterfeiting activity

• When appropriate, take court action

34

Enforcement


• 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

35

Summary


Thank You!

J. Michael Martinez de [email protected]

804-788-7216


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