The methods of identifying the counterfeited products and the fight against them.

It already makes no sense to buy a real

branded thing, because in a stuffy subway car,

the faked Breguet looks better

than the real Longines.

(Shen Bekasov. A Bank Secret)

The introductory quotation in my article has been chosen not by chance, since many people, in pursuit of clothes, watches, and fashionable devices, strive to obtain the products of well-known brands, which are often not available to a person with average earnings due to their high cost.

But one would like so much to have in the own wardrobe the clothes from a famous Italian designer, the telephone manufactured by one American fruit company or the watch with the words “made in Switzerland.”

However, it is the faked product that is, as a rule, behind a low or relatively low price of the product under a well-known brand.

The topic of this article has been chosen by me in order to tell briefly about the methods of identifying the counterfeited products and the methods of the fight against the counterfeit used by the right holders.

Most likely the term “counterfeit” is a word borrowed from English (from “counterfeit” – a fake, a forgery), however, it is thought that the roots of this term lead to the French language and that it is derived from “contrefaçon,” what also means a fake.

So it is, initially, it have been just the faked products that have been called the counterfeit, but gradually this term has acquired currently an inherent peculiarity that such fake must be necessarily accompanied by an offence of the intellectual rights.

In Paragraph 16 of Resolution of the Plenum of the Supreme Court of the Russian Federation No. 15 of June 19, 2006 “On the Issues Arose at the Courts in the Civil Proceedings Connected with the Application of the Copyright Law and Related Rights,” it was stated that: the copies of the works and the phonograms, the manufacture and distribution of which entails an offence of the copyright and the related rights shall be the counterfeited ones.

With the adoption of the Fourth Part of the Civil Code of the Russian Federation(hereinafter referred to as the C.C.R.F.) the tangible media, in which the result of intellectual activity or the means of individualization is expressed, which lead to an offence of the exclusive right to such result or to such means shall be recognized as the counterfeited ones (Paragraph 4 of Article 1252 of the C.C.R.F.).

In addition, the products, labels, packaging of the products on which the trademark or the designation confusingly similar thereto is placed illegally shall be the counterfeited ones (Paragraph 1 of Article 1515 of the C.C.R.F.).

It is worth noting that if we talk about the counterfeit product on which the trademark is placed illegally, then, in conjunction with Articles 1252, 1484 and 1487 of the C.C.R.F., the said legal provisions allow referring both the faked products and the product with a legal trademark, but imported to the territory of the Russian Federation without the right holder’ consent (parallel imports) to the counterfeited ones.

I will not dwell upon separately on parallel imports in this article, because this issue, in my opinion, refers rather to a political plane than to a legal one. I would like to put the main emphasis on identifying the faked products in the market, which have not and have never had any relation to the right holder.

Currently, the problem of the counterfeit is very acute, because it has an impact not only on the interests of the right holders, but it also has a negative impact on the consumers.

The manufacturers and sellers of the original product suffer losses, due to the fact that the businessmen appear in the market, who sell the faked products using the fame and reputation of the promoted brand or they manufacture and sell the product, in which someone else's patent or subject matter of the copyright is used, but they do not invest in scientific and research, design and experimental, and technological works.

For the consumers who strive to save money by buying a cheap, knowingly faked product, the most insignificant disappointment is a quick breakdown of such purchase, getting out of order of the product due to its poor quality, but there are the cases with a sadder outcome, when the point is about the counterfeited alcoholic products.

Large holdings, international corporations that are well-known in the world, strive to fight against the sellers and manufacturers of the counterfeit, since the figures that accompany carrying out the activity on selling the counterfeit are striking.

Thus, in 2017, the Federal Customs Service prevented the damage caused by the importation of the counterfeited products intended for the 2018 FIFA World Cup by 4.5 billion roubles.

In 2018, in the European Union, the proportion of the counterfeit increased from 6% to 8%. The losses from the counterfeit in the countries have amounted to: France – 6.8 billion euros, the United Kingdom – 9.2 billion euros, Germany – 8.3 billion euros.

The majority of all counterfeited products in the world, according to the experts of the Organization for Economic Cooperation and Development, are manufactured in China, Turkey, Singapore, Thailand and India.

If we move from a theoretical plane to a practical one, while considering the topic of this article, I would like to give some advices to the consumers, or rather to offer to pay attention before buying to several criteria that afford distinguishing an original product from a counterfeited one, namely:

– the price of the original products is always much higher than the price of the counterfeited ones, at times significantly. The Swiss watches will not cost 100 USD, no matter what promotions and discounts have been announced by the seller;

– the poor quality of the products (traces of glue, uneven seams, the different length of the pant legs, and the mismatch of the clothing sizes to the international standards);

– the use of the well-known trademarks or the designations that are confusingly similar to them (iFON, D&B, HIKE, etc.). In this case, the non-compliance of the designations’ proportions, which are placed on the product, in comparison with the original designations, occurs quite often. There are the cases, when several trademarks belonging to different right holders are placed on one product at once;

– the buyers should be on alert about that fact that the “branded” products are in kiosks and markets, at unknown sites or in the social networks groups that have nothing to do with the right holder.

The above criteria are also applied by the right holders, while identifying the counterfeited products. At the same time, the right holders, trying to protect themselves from the possible fakes, undertake the preventive measures to defend their products from fakes, use other tools and methods, which are subsequently used to separate out their products from fakes among a huge product mass and to bring the offender to account.

In order to protect themselves from faking their products or to try to minimize the volumes of these fakes, the right holders are trying to bring something that is difficult to reproduce in the product design.

As a rule, this is expressed in the fact that the defence elements, which include defensive holograms, watermarks, micro-records that are not subject to optical copying, latent images that are visible only with the help of special devices are introduced into the packaging of the product, printing the labels, the manufacture technology; the use of the individual numbers by which it is possible to track the lot of the product, the country of its destination, and others.

These tools allow the right holders dividing the product into “their own” / “alien” and they facilitate proving the fact of the offence in the court.

However, before one starts to divide and to go to the court, at first, it is necessary to identify the location of the counterfeited product; this can be done using the following tools:

• Monitoring the Internet to identify the facts of the offer for sale of the products having the features of the counterfeit, including using special software;
• Analyzing the products in trade enterprises, including with the involvement of law enforcement authorities, private detectives;
•  Including the trademark, the name of the places of origin of the products, the subject matter of the copyright (for example, a packaging design of the product) into the Customs Intellectual Property Registry (hereinafter referred to as the CIPR).

At the same time, having included their subject matters of intellectual property in the CIPR, the right holder acquires a number of tools to fight against the offenders; he may:

• send written prohibitions on the importation of the product to the Customs Authority;
• initiate through the court the adoption of preliminary interim measures in a form of arresting the counterfeited product;
• bring the offender to the responsibility under Article 14.10 of the Code of the Russian Federation on Administrative Offences through the Customs Authorities (not in the case of parallel imports);
• the materials collected by the Customs Authority in the course of the administrative proceedings may be used as evidence, when filing a statement of claim against the offender on destructing the counterfeited product and recovering compensation.

The following methods may be called as the main, well-studied and fairly predictable effective methods of the fight against the counterfeit:

The Customs Authority. The result is bringing to the administrative responsibility under Part 1 of Article 14.10 of the Code of the Russian Federation on Administrative Offences, the imposition of an administrative fine:

• on citizens – from 5,000 to 10,000 roubles;
• on officials – from 10,000 to 50,000 roubles;
• on legal entities – from 50,000 to 200,000 roubles.

It is possible to apply the penalties in the form of confiscation of the items containing an illegal reproduction of the trademark, the service mark, the name of the place of origin of the product, as well as the materials and equipment used for their manufacture, and other tools of committing the administrative offense.

            The Police. The result is bringing to the administrative responsibility under Part 2 of Article 14.10 of the Code of the Russian Federation on Administrative Offences, the imposition of an administrative fine:

• on citizens – in double the amount of the value of the product, which has become a subject of the administrative offense, but not less than 10,000 roubles;
• on officials – in triple the amount of the value of the product, which has become a subject of the administrative offense, but not less than 50,000 roubles;
• on legal entities – in fivefold the amount of the value of the product, which has become a subject of the administrative offense, but not less than 100,000 roubles.

It is possible to bring to the criminal responsibility under Article 180 of the Criminal Code of the Russian Federation, provided that this act is committed repeatedly or it has caused major damage (over 250,000 roubles).

The Antimonopoly Authority. The result is obtaining the Antimonopoly Authority decision, which prescribes to stop the offence. Bringing to the administrative responsibility under Part 2 of Article 14.33 of the Code of the Russian Federation on Administrative Offences, the imposition of an administrative fine:

• on officials – 20,000 roubles or disqualification for a period of up to three years;
• on legal entities – from one hundredth to fifteen hundredths of the amount of the offender’s revenue from the sale of the product (work, service), in whose market the offense has been committed, but not less than one hundred thousand roubles.

The Court. Bringing to civil responsibility. In accordance with Paragraph 1 of Article 1252 of the C.C.R.F., the defence of the exclusive rights to the results of intellectual activity and to the means of individualization shall be carried out, in particular, by imposing the requirements pursuant to the procedure stipulated by the present Code: The result of the consideration of the statement of claim by the court, including, but not limited to, can be a decision that instructs:

– to pay compensation for the exclusive right offence. At the same time, the methods for calculating compensation may vary depending on the subject matter of intellectual property for which defense the right holder has applied.

– to stop the acts offending the right or creating a threat of offending it. Such decision shall be made regarding the person, who commits such acts or makes the necessary preparations for them, as well as regarding other persons, who can prevent such acts.

– to seize from the circulation and to destruct, without any compensation, the tangible media, in which the result of intellectual activity or the means of individualization is expressed, in the event that the manufacture, distribution or other use, as well as the import, transportation or storage of such tangible media lead to the exclusive right offence to such result or to such means.

As you can see, the methods of identifying and the methods of the fight against the counterfeited products are quite different. The choice of one or another tool in the fight against the offenders depends on various factors such as the kind and characteristics of the product, the method it is put into the civil circulation, the tricks and contrivances of the offenders and other factors.

At the same time, the skillful use of all of the recited methods, the list of which, of course, is not exhaustive in view of the development of the means of defence, will afford fighting effectively against the counterfeit and its distributors.