HOUSE OF LORDS October 2008

“IMITATION = IRRITATION !”

TIPLO’S annual event hosted by its chairman, Lord Hoffman, at the House of Lords, was very well attended on Thursday 2^nd October 2008. The theme adopted by the speakers was;

“A view from the “coalface” - experiences, problems, and policies and dealing with anti-counterfeiting measures and punishment.”

His Honour Judge Michael Fysh of the Patents County Court opened proceedings as Chairman. He commenced by thanking TIPLO Chairman Lord Hoffmann for hosting the event and warmly congratulated newly appointed High Court Judge - Richard Arnold who was present as a guest. Mr Justice Richard Arnold will join Mr Justice Christopher Floyd his former colleague at 11 South Square as the most recently appointed specialist patent Judges. TIPLO hopes to tempt the new Patents Judges to contribute to forthcoming TIPLO events in the near future.

Judge Fysh indicated his own general view of the recent surges of counterfeiting problems made him feel rather depressed. He had first hand experience of the Russian Market in particular and feels it is difficult to see light at the end of the tunnel. He reminded the audience that it is not only fake luxury branded and fashion items which flood the market but also fake spare parts and counterfeit pharmaceuticals, which carry with them enormous health and safety implications. He also warned of the stimulation of funding for criminal activities and possibly terrorism connections with the “pirate economy”. From his own experience of “regular” civil court penalties (including injunctions and destruction on oath) he recognised that there was room for improvement.

 

The first main speaker was Elizabeth May a former Solicitor with Field Fisher and now an in house attorney Richmont. Richmont are associated with the luxury brands such as Dunhill, Cartier and Mont Blanc. Elizabeth’s wide ranging experience in tackling piracy and counterfeiting made for a stimulating and interesting talk. She is also a leading member of INTA and is a member of one of INTA’S 25 committees made up of voluntary members. Elizabeth serves on the ACEC committee which is the Anti-Counterfeiting & Enforcement Committee.

Apparently INTA was founded in 1878 by 17 merchants who felt the need to develop a group specifically to assist traders, and brand owners. It has grown enormously and now has members from 190 countries. Apparently 27% of INTA members are European although the headquarters is based in New York.

A theme of Elizabeth’s address was the need for greater international co-operation. She and INTA believe that more needs to be done to strengthen the framework to prevent such crimes, and address harmonisation of criminalisation for counterfeiting activities and criminal sanctions. In particular she said that counterfeiting and piracy should be recognised as a transnational organised crime. There should be a standardisation to criminalise the proceeds of crime gained by counterfeiting, and basic sanctions and punishment should be increased so that a minimal penalty level applies globally on a harmonised basis. Currently the vagaries and discrepancies do create havens for counterfeiters and penalties simply do not effectively work as sufficiently strong disincentives.

Elizabeth also stressed the need for increased awareness and Education of the policy issues associated with counterfeiting. Apparently the negotiators of ACTA (The Anti-Counterfeiting Trade Agreement) have met and are in early stages of progressing matters. At their next meeting it seems that criminal enforcement will be discussed. At present it is not clear how the ACTA initiative will develop.

Elizabeth also pointed out that, leaders in the industry and others with an interest in anti counterfeiting need to put pressure on the EU Commission to progress draft directives striving towards international harmonisation.

Elizabeth commented on how high profile initiatives have caught the public’s imagination. In particular she cited the example of Jackie Chan the Martial Arts Hollywood star who fronted up a Hong Kong Based “stop fakes” initiative and the well known fashion magazine Harpers Bazaar who have encouraged readers to shun counterfeits, highlighting in particular the shameful child labour problems associated with many fashion counterfeit products.

Finally Elizabeth talked the audience through her recent specific experiences in dealing with counterfeits in the Dubai market. As she explained, Dubai is a luxury Centre and a tourism hotspot. It is rapidly developing and acts as a trans-shipment hub close to both the source of many counterfeit markets and the outlets markets of Europe.

 

The second main speaker of the evening was Paul Bannister a Senior Trading Standards Officer based in West Lanarkshire, Scotland. Paul initially pointed out that as an Englishmen he effectively has a foot in both camps, with experience of trading standards issues and Criminal Law, both north and south of the border. He reminded the audience briefly of the peculiar History of the Scottish legal system dating back to the 12^th Century and the particular continental influences that have moulded the Scottish legal system. In particular and despite the Act of Union of 1707 the Scots have retained an independent legal system.

Unlike the criminal system of justice in England and Wales which permit private prosecutions to be brought, in Scotland only the Procurator Fiscal is permitted to prosecute. Further, and in contrast to the system in England and Wales, Scottish prosecutions require corroborated evidence on all material fact. The particular requirement for corroborated evidence makes it harder for trading standards officers in Scotland than England, particularly in areas where there is only a single trading standards officer responsible for a particular geographical area.

Further, the very busy Courts in Scotland create an increased backlog and delay in finally resolving matters. Paul pointed out that sanctions and sentencing are not always equally applied across the entire jurisdiction and despite a massive increase in counterfeiting activities unfortunately the trading standards own officers and resources have decreased. The lack of resources is compounded in Scotland where trading standards departments cannot bid for POCA proceeds (unlike in England and Wales.) However, despite such difficulties , Paul described an active and resourceful trading standards dynamism in Scotland; as he put it by adopting a “can do attitude” positive results can be achieved. He particularly recited a case dating back to 2006, which interestingly still awaits a date for its full trial and resolution, in which an EBAY trader and courier company selling counterfeit clothing and other items were found to be linked. The businesses in question were found to be associated with over a £ million worth of turnover in counterfeit goods .

By engaging in a joint operation and co-operation with the local police forces and acting on rapid intelligence gathering techniques , Paul was able to co-ordinate and be involved in a successful operation which utilised the resources of 36 officers from trading standards and the Police. As a result financial restraints were placed on pay-pal accounts and 6 Bank accounts. Paul’s success in this operation was in part due to the excellent level of co-operation with other law professionals but also by adopting the old adage of “follow the money” to achieve the result .

Paul reminded the audience of the importance of having excellent evidence gathering skills and personnel in particular in relating to trap purchases and the provision of invoices. He indicated how IP owners could help trading standards officers by providing up to date information of product examiners, bulletins regarding the trends in crime, up to date contact details and an indication if there are any particular problems related to specific e-businesses, such as GUMTREE or EBAY.

On a more positive note, Paul indicated that a recent initiative to trial so-called “Scam Buster Teams” in local areas has been successful and such initiatives are to be imposed across Scotland shortly. However he did call for a national service in the future with dedicated enforcement units and Cyber crime officers. Echoing the earlier speaker he also stressed the importance of education in particular to encourage the public to understand that IP theft is wrong counterfeiting is bad and has negative social and economic implications for all, in particular those venerable groups that are often forgotten.

The question session at the end provoked some interesting commentary, in particular from a member of ACID, and a Practitioner with recent first hand successful experience of bringing a private anti-counterfeiting prosecution within the English Courts.

His Honour Judge Fysh brought matters to a conclusion with his own closing comments which echoed many of the issues raised by the speakers. A consensus seemed to be that a key issue is the persuasion of members of the public that supporting the pirate economy is not simply a “harmless matter” to be considered in a light hearted manner, but is a seriously wrongful act and has damaging social and economic implications.

 

Denise McFarland (UK Barrister)Three New Square Intellectual Property Chambers –Lincoln’s Inn - LONDON

www.3newsquare.co.uk