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Improvements in the International Legal Framework for Criminal Sanctions Against the Offense of Trademark Counterfeiting





June 20, 2007

Sponsoring Committee: Anti-Counterfeiting & Enforcement Committee (ACEC)


Resolution

WHEREAS, the implementation of TRIPS Agreement requirements in national laws has proven to be insufficient to combat trademark counterfeiting which often involves organized criminal groups;

WHEREAS, trademark counterfeiting, which directly affects property rights, is increasing significantly despite the best efforts of right holders, enforcement agencies and other government authorities, and therefore, out of necessity, there have been several national and international initiatives placing greater emphasis on criminalization and international cooperation to combat trademark counterfeiters that operate in more than one jurisdiction and through safe havens like free trade zones;

WHEREAS, the Organization for Economic Cooperation & Development (OECD) is recommending in its global study on the economic impact of counterfeiting and piracy that a multilateral agreement on IPR enforcement, which builds upon existing minimum standards, has the potential of becoming a key instrument in combating counterfeiting and piracy; and

WHEREAS, the issue of counterfeiting is assuming higher priority for the G8 leaders who have the ability to influence the global agenda and regime for combating counterfeiting.

BE IT RESOLVED, that the International Trademark Association urges all governments and relevant international institutions to develop policies in the international legal framework for criminal sanctions against the offense of trademark counterfeiting in order to:

Recognize counterfeiting, in some instances, as a transnational organized crime, the detection whereof is becoming increasingly difficult, because: (a) it is committed in more than one country; (b) it is committed in one country, but a substantial part of its preparation, planning, direction or control takes place in another country; (c) it is committed in one country but may involve an organized criminal group that engages in criminal activities in more than one country; or (d) it is committed in one country but has substantial effects in another country;

Criminalize the laundering of proceeds from counterfeiting to ensure that counterfeiters are not profiting from their crimes and strengthen confiscation regimes that provide for the identification, freezing, seizure and confiscation of funds and property acquired through counterfeiting;

Remove jurisdictional gaps such as those that enable fugitives to find safe havens by moving between countries or engaging in acts in the territories of more than one country, such that no serious trademark counterfeiting crime goes unpunished and all parts of the crime are punished wherever they take place; and

Establish international harmonization of sanctions against trademark counterfeiting so that a harmonized minimum level of deterrence is applied throughout the world.


Background

There is a growing consensus that the problem of trademark counterfeiting is increasing significantly and that the best efforts of right holders, enforcement agencies and other government authorities are having only nominal impact. The implementation of the TRIPS Agreement into national laws has proven to be insufficient and shortcomings of the existing international framework for intellectual property enforcement have become more defined. There have been several national and some international efforts to increase the effectiveness of criminal sanctions against intellectual property crimes. All of those initiatives recognize the weakness in treating trademark counterfeiting almost solely as a trade issue and, therefore, place greater emphasis on criminalization and international cooperation. There is an emerging consensus among governments and international government organizations that something more needs to be done, especially about the involvement of organized crime.

The Anticounterfeiting & Enforcement Committee (ACEC) believes that it has become necessary to promote and engage in dialogues exploring the options for improvements in the international legal framework for criminal sanctions against counterfeiting. Taking up this issue from the international criminal law perspective is more tenable and justifiable in the context of the anti-globalization or anti-consumer arguments.

The ACEC acknowledges that the main options resulting from future dialogues at the international level might take any form – for example, a new international treaty or protocol to an existing treaty – but through this resolution, INTA should urge governments and relevant international institutions to consider the following important objectives when entering into a dialogue for improvements in the international legal framework for criminal sanctions against counterfeiting:

A. Recognize Counterfeiting as a Transnational Organized Crime
Right holders have witnessed a rise in the activities of counterfeiters, who often are organized as criminal groups and bring about significant negative financial and human consequences virtually worldwide. Because these counterfeiting criminal groups cross national borders and frequently affect many countries at once, the need to coordinate investigation and prosecution at an international level and harmonize laws is obvious and essential. Therefore, INTA urges that counterfeiting be treated as a transnational crime because in many instances: (a) it is committed in more than one country; (b) it is committed in one country, but a substantial part of its preparation, planning, direction or control may take place in another country; (c) it is committed in one country but may involve an organized criminal group that engages in criminal activities in more than one country; or (d) it is committed in one country but has substantial effects in another country.

B. Criminalize Laundering of Proceeds of Crime Resulting from Counterfeiting
Counterfeiting activities can lead to a significant accumulation of wealth through illegal means. To enjoy the benefits of such activities, the counterfeiters must hide the illicit origin of their funds. That hiding constitutes money-laundering, which is technically defined as the concealment or disguise of the illegal origin of the proceeds of crime. In the context of globalization, counterfeiters take advantage of the ease of capital movement, advances in technology and increases in the mobility of people and commodities as well as the significant diversity of legal provisions in various jurisdictions. As a result assets can be transferred very quickly from place to place and, through exploitation of the existing legal asymmetries, eventually appear as legitimate assets available to serious offenders and criminal organizations in any part of the world. These assets can be, and are, used to finance criminal operations, reward past crimes and serve as an incentive for future crimes. Therefore, INTA urges the criminalization of the laundering of the proceeds of crime resulting from counterfeiting to ensure that counterfeiters are not profiting from their crimes.

The criminalization of the conduct from which substantial illicit profits are made does not by itself adequately punish or deter professionally organized counterfeiting groups. Even if arrested and convicted, some of those offenders will be able to enjoy their illegal gains for their personal use and for maintaining the operations of their criminal enterprises. Despite some sanctions, the perception is likely to remain that crime pays in such circumstances and that governments are ineffective in removing the means for the continuation of activity by criminal groups even if individuals are convicted and incarcerated. Practical measures to keep offenders from profiting from their crimes are necessary. Therefore, INTA urges that strong confiscation regimes are put in place that provide for the identification, freezing, seizure and confiscation of the money and property acquired as a result of trademark counterfeiting.

C. Remove Jurisdictional Gaps Over Counterfeiting Offenses
In the context of globalization, counterfeiters frequently try to evade national regimes by moving between countries or engaging in acts in more than one country. Jurisdictional gaps enable fugitives to find safe havens. In cases where a professionally organized counterfeiting group is active in several countries which may have jurisdiction over the conduct of the group, there is a lack of any mechanism for those countries to facilitate coordination of their respective efforts. Therefore, INTA urges the removal of jurisdictional gaps such as those that enable fugitives to find safe havens by moving between countries or engaging in acts in more than one country. This will increase the possibility that no serious trademark counterfeiting crime will go unpunished and all parts of the crime are punished wherever they take place.

D. International Harmonization of Sanctions Against Counterfeiting
Harmonizing legal provisions governing transnational crimes committed by organized counterfeiting groups, along with detecting the offenses, identifying and arresting the culprits, enabling jurisdiction to be asserted and facilitating the smooth coordination of national and international efforts are all indispensable components of a concerted, global strategy against organized counterfeiters. Yet these components alone are not sufficient. After all of the foregoing steps have been taken, it is also necessary to ensure that the prosecution of and penalties applied to counterfeiters around the world are comparatively symmetrical and commensurate to the harm inflicted and the benefits derived from their criminal activities. Currently, the penalties provided for counterfeiting differ significantly from one jurisdiction to another, reflecting different national traditions, priorities and policies. Therefore, INTA urges the international harmonization of prosecution, adjudication and sanctions against trademark counterfeiting so that a harmonized, minimum level of deterrence is applied throughout the world.