A recent report entitled “Risks of Illicit Trade in Counterfeits to Small and Medium-Sized Firms” co-published by the European Intellectual Property Office (EUIPO) and the Organisation for Economic Co-operation and Development (OECD) has highlighted the significant threats posed by counterfeiters to SMEs, particularly for producers of innovative goods (e.g. electronics, fashion, perfumery, cosmetics, toys and games). The report suggests that 15% of SMEs who own IP have experienced infringement, rising to 20% in the case of innovative firms. However, owing to a lack of monitoring, the real rate may be as high as 40%.
The impact of IP infringement can be devastating for an SME, leading to a loss of turnover, reputational damage and the loss of a competitive edge. The report also flags that SMEs (correctly) perceive enforcement action as complex, lengthy and costly. As such, there is all the more reason for businesses to upgrade preventative IP protection from a “nice to have” to a “need to have”. Below are some of the free – or more affordable – steps that can form part of an SME’s IP protection armoury.
Registration of IP
Whilst not all IP can be registered (for example, copyright and confidential information are not registrable rights in the UK or EU), trademarks, designs and patents can be. The report identifies the strong deterrent effect that having a registered right will have on counterfeiters. Registered rights, when combined with direct negotiation, can lead to the resolution of issues quickly, avoiding enforcement action.
Market monitoring
There are numerous means by which illicit trade can be addressed at source.
- Trademark watching services: the UKIPO and/or EUIPO issue alerts to trademark owners when they are in receipt of ostensibly similar trademark applications. These alerts enable an owner to notify the applicant of an objection and/or lodge an opposition before a potentially conflicting application progresses to registration. There are also more sophisticated trademark monitoring services available on the market which enable surveillance across territories of interest.
- Application for action (AFA): this service is available, free of charge, across the UK and EU and enables IP owners to alert customs officials to their rights, so that they can detain suspected counterfeit or infringing goods. At the point of each seizure, the IP owner has the ability to assess authenticity and then issue instructions for any infringing goods to be destroyed, thereby preventing their release onto the market. A further advantage is that alerts often contain information about the location and identity of exporters and importers, allowing IP owners to build intelligence that can be used for future anti-counterfeiting strategies.
Awareness
The report identifies that many SME owners are not aware of the threat of counterfeiting. If you are still reading, then you might count yourself as better informed than others. However, becoming more alive to counterfeiting issues, and ensuring that this is the case throughout a business, will help to identify and avoid issues.
Strengthening supply chain resilience
The report includes a recommendation for policymakers surrounding enhanced transparency and engagement with key intermediaries (e.g. container ship companies, express delivery firms and e-commerce platforms). Whilst this type of action may be primarily the province of legislators and regulators, SMEs can help themselves in researching their own supply chains and ensuring their contractual protections are as strong as possible.
The above provides some ideas for anti-counterfeiting measures. Fladgate’s brand protection team are experienced in developing and implementing IP registration, monitoring and enforcement strategies, so if you would like to discuss further, then do get in touch with a member of our team.
