Enforcing and defending IP rights

January 2017  |  SPECIAL REPORT: INTELLECTUAL PROPERTY

Financier Worldwide Magazine

January 2017 Issue

January 2017 Issue


Although violation of intellectual property (IP) rights takes place in all territories around the globe, strategies to fight them vary from country to country and even from industry to industry. In developing economies, a person who earns a minimum wage of $70 pesos a day would hardly be able to pay $50 pesos for a ticket to go to the movies.

This is a multi-factorial and complex problem which is not just limited to economic reasons. Psychological, social and political circumstances influence individuals to acquire counterfeit products and can even account for the type of pirated product they buy.

A recent study – the ‘4th Survey on Pirated and Counterfeit Product Consumption in Mexico’ – showed that most of the people who buy counterfeits are of working age and come from a middle to upper-middle income class.

It is common to hear people claiming that genuine products are too expensive, although there are reasons that justify the cost. We are often surprised when we discover how long it takes to develop the newest gadgets and the quality processes they go through to guarantee that customers only get high quality items. In addition to the economic argument, when vendors are asked why they take the risk of selling a shirt that displays a particular design instead of a common drawing, they say that those particular products will not sell well.

Consequently, we find that the reasons given by consumers for why they purchase counterfeit products go beyond just the price. It is true that economy is part of the choice, but there are other situations that make individuals wear the latest knockoffs. It is possible that they like the idea of belonging to a certain group or society that demands certain conditions, or perhaps mass psychology may be part of the answer. Whatever it may be, the situation is compounded by the lack of credibility demonstrated by the authorities and the laws that prescribe IP protection.

Individuals are aware in many cases that they are getting a counterfeit item. They also have knowledge that this is an illegal activity. Notwithstanding the above, they accept being part of the illegal operation. People generally believe that they are acquiring an item that can be substituted for the genuine product. But then, why not just buy a simple purse or shirt instead of wishing for the latest trends?

The situation changes when it comes to medicines, food or products that may put them in risk. This means that individuals have no objection to participating in an illegal activity when there is no risk of a direct impact.

The violation of IP rights can reach unbelievable levels. It can go from counterfeiting music or movies to medicines, consumer products, food, alcohol and even tools, machinery or preservatives. We have seen all types of items and of varying quality. In some instances, the items had to be closely analysed as they look just like the original at first sight. It is worth mentioning that the conditions in which they were manufactured, stored or packed posed a health risk and also involved illegal activities such as child labour.

The differences that mark the way counterfeiters operate causes brand owners to define different objectives when choosing a strategy to fight piracy. Almost all brand owners will want to remove unauthorised products from the market. To achieve this, they will need to allocate resources to preventing piracy, as well as attacking pirated goods that have reached the market. Some years ago, it was enough to carry out raids and seizure actions, but nowadays a lot of intelligence work needs to be done in order to achieve a successful enforcement plan.

We believe that actions should not be limited to just attacking piracy but also toward preventing it. The education of consumers, as well as training and lobbying, are some of the activities that will have to be included by brand owners as part of their enforcement plans. Counterfeiters work on a daily basis to develop new ways to operate. Unfortunately, they are often one step ahead of legislation. Therefore, laws need to be dynamically amended and adapted to prevent and deter piracy.

In the past, it was common to seize full containers with illegal products. But now, unauthorised products are imported not in large numbers but in small consignments. At first sight these small shipments seem to be insignificant. However, when doing the maths, it is amazing what the final amount can be from all those small consignments. From a business perspective, rights-holders are facing an enormous trend. Successful enforcement actions can hardly be measured or evaluated.

In Mexico, for instance, there are only two legal mechanisms to enforce IP rights. However, IP violations seem not to be a priority for a government with other battles to fight, such as those against organised crime and drug cartels. No intelligence work is done unless it is directly conducted by rights-holders. Investigations and market surveys are important for getting a better understanding about the counterfeiters and how they operate.

Laws need to be amended to cover activities that did not take place in the past, such as camcording, in-transit counterfeit goods, circumvention devices, sale of mod chips and different operations that are facilitated by (relatively) recent technologies such as the internet.

Enforcement actions are important and necessary for brand owners. They must be implemented in a timely fashion to make sure that losses are not crucial and will not endanger the existence of the company. Several aspects like country, legislation, industry and consumer behaviour have to be considered carefully so that successful results can be achieved results which are in accordance with the objectives sought by each of the rights-holder.

Even when the impact of an enforcement plan is not measured in terms of results, governments must guarantee a safe environment for investment and sale of branded products. The protection of IP rights will assure the creation of new technologies and the development of not only the economy, but also of the human mind. Additionally, governments must see counterfeiting as an attack on ideas, technology and the economy, as well as on human safety, health and security. New generations need to be taught that it is worth respecting IP, alongside laws and government institutions. Authorities have an important role to play in this task, as they need to show that they are efficient and that laws should be respected.

 

Diana Karina Martínez Rodríguez is an associate at Arochi & Lindner. She can be contacted on +52 55 4170 2016 or by email: dianaka@arochilindner.com.

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