March 7, 2005
Sponsoring Committee: Anticounterfeiting & Enforcement Committee (ACEC)
WHEREAS, since the early 1980’s INTA has continuously advocated and supported policies for strong measures against trademark counterfeiting;
WHEREAS, it is in the interest of trademark owners to have the strongest enforcement mechanisms possible to protect their trademarks from potential infringement, counterfeiting and fraud;
WHEREAS, it is in the interest of countries to have the strongest enforcement mechanisms possible to protect the investment climate and labor markets and reduce the loss of tax revenues that are directly affected by the lack of efficient enforcement mechanisms and protections against trademark counterfeiting;
WHEREAS, the implementation of TRIPS Agreement requirements in national laws has proven to be insufficient to combat trademark counterfeiting;
WHEREAS, the involvement in trademark counterfeiting by organized criminals connected with terrorism, drug trafficking and money laundering is time and again being highlighted at every forum;
WHEREAS, counterfeit goods not only lead to consumer deception but, owing to their poor quality, often pose a threat to the health and safety of consumers around the world;
WHEREAS, a number of issues in various jurisdictions have arisen that require identification for policy advocacy by INTA since they are repeatedly revisited in discussions with and among government officials, policy makers, trademark owners, practitioners and consumers.
BE IT RESOLVED, that the International Trademark Association supports the implementation of the following measures to combat trademark counterfeiting:
1. In order to increase the deterrent impact of fines, governments should develop calculation methods that lead to fines against counterfeiters commensurate to the harms caused by them; and impose sanctions, such as contempt of court, for failure of counterfeiters to pay such fines.
2. Governments should establish prohibitory regimes against exports of counterfeits; eliminate bond requirements imposed on trademark owners as a condition to processing counterfeiting cases by customs; and take appropriate steps to reduce or eliminate the burdens on trademark owners of suffering costs of storage and destruction of counterfeit goods. Governments should also take appropriate steps to ensure that all counterfeit goods are compulsorily destroyed, definitively removed from channels of commerce, or disposed of with the rights holders’ consent where there is no health or safety risk.
3. Governments should amend their trademark laws to allow courts to award significant statutory (or “pre-established”) damages against counterfeiters in recognition of situations where it is difficult for the trademark owners to prove their measurable monetary damage.
4. In regions where counterfeiting poses serious challenges, governments should establish specialized intellectual property crimes investigation and prosecution units within their law enforcement and prosecution structures, respectively. Governments should also allocate sufficient resources towards training judges and customs officials, and ensure the submission of litigated trademark cases to judges specializing in or having substantial experience in trademark matters.
5. Governments should revise their rules and procedures to provide prompt and reasonable access by trademark owners to relevant documents and information gathered by governments on counterfeiters for the trademark owners’ use in conducting private investigations or the filing of complaints to the courts or other government agencies.
6. Governments should not consider administrative enforcement to be sufficient to satisfy their obligations under Article 61 of the TRIPS Agreement to provide access to criminal enforcement in counterfeiting cases on a commercial scale, nor should administrative proceedings be considered as a substitute for criminal enforcement of intellectual property rights.
7. In order to ensure that trademark owners have sufficient time to commence a proper action pursuant to a seizure/suspension of clearance by customs authorities so that instances of counterfeits being released by the customs authorities can be eliminated, the governments should provide in their laws a time period of at least 20 working days or 31 calendar days, whichever is longer, to trademark owners to commence such action.
In accordance with INTA’s Anticounterfeiting Strategy of 2004, the Anticounterfeiting & Enforcement Committee (ACEC) has recommended the above resolution that identifies the following issues to be included in INTA’s efforts to combat trademark counterfeiting.
Building upon INTA’s policies in the area of anticounterfeiting since our late 1990’s board resolutions on TRIPS, WCO and WIPO Model Provisions, the above recommended resolution identifies a number of issues that have arisen in various jurisdictions and require identification for policy advocacy by INTA since they are repeatedly revisited in discussions with and among government officials, policy makers, trademark owners, practitioners, and consumers. A brief discussion of the recommended issues follows.
Calculation and Procedures for Collection of Fines Against Counterfeiters
The first recommendation relates to calculation methods and procedures for collection of fines against counterfeiters. ACEC has noted that WTO members have considerable discretion to determine how to apply these standards and, particularly, to establish which are the crimes of comparable gravity in the national context. It is clear that countries have had very different approaches with regard to the application of criminal penalties in cases of Intellectual Property Rights (IPR) infringement.
In many countries, fines imposed by courts, police, customs and other administrative bodies are not collected, and due to concerns that they will not be collected, authorities sometimes do not impose them at all. Again in many countries, the maximum fines set out in the law are adequate, but deterrent fines are not imposed due to the lack of standards in the law that provide a predictable method for calculating minimum fines.
Therefore, in order for punishment of fines to be deterrent, the ACEC notes that the method of calculation of fines and the procedures for collection of fines is of prime importance. The ACEC, therefore, recommends that governments develop calculation methods that lead to fines against counterfeiters commensurate to the harms caused by them; and impose sanctions, such as contempt of court, for failure of counterfeiters to pay such fines.
Customs Enforcement Against Cross-border Trafficking of Counterfeit Goods
The ACEC has noted that customs enforcement obligations established in the TRIPS Agreement only apply with regard to the importation of counterfeit goods and in order to obtain the suspension of release, the right holder must prove that he “has valid grounds for suspecting” that infringing goods are being imported. The trademark owner must also show that there is prima facie an infringement. Simultaneously the trademark owner is also required to furnish a security, bond, undertaking or equivalent assurance the purpose whereof is to ensure collection of damage claims in case of improper seizures, as well as to ensure recovery of the costs of storage and destruction of fake goods after they are determined to be illegal.
The ACEC also noted that disposal of counterfeit goods outside the channels of commerce is not the proper mode of ensuring that goods are not used by consumers. The ACEC also noted that the TRIPS Agreement does not require governments to provide enforcement by customs against exports of counterfeits.
Therefore, in order to ensure a more effective customs enforcement regime against cross-border trafficking of counterfeit goods, the ACEC recommends that the governments should provide more stringent protection against exports of counterfeits; eliminate bond requirements imposed on trademark owners as a condition to processing counterfeiting cases by customs; and take appropriate steps to reduce or eliminate the burdens on trademark owners of suffering costs of storage and destruction of counterfeit goods. Governments should also take appropriate steps to ensure that all counterfeit goods are compulsorily destroyed, definitively removed from channels of commerce, or disposed of with the rights holders’ consent where there is no health and safety risk.
The ACEC has noted that amount of civil damages awarded in counterfeiting cases is insufficient to adequately cover the costs and harm to trademark owners. This is largely due to the fact that relevant evidence of prior production and/or sales is routinely unavailable.
To address these realities, the ACEC recommends that governments amend their trademark law to allow courts to award significant statutory (or “pre-established”) damages against counterfeiters. Where methods of calculation of such damages are provided in legislation, they should be based on the suggested retail price or domestic resale value of the legitimate product, or in case of willful counterfeiting to award statutory damages even up to three times of such suggested price or value. Such statutory damages should not be in lieu of any actual damages that the trademark owner may be able to prove.
Specialized Judiciary, Training of Customs, and Greater Allocation of Resources to Police and Prosecutors
ACEC has noted that the lack of trained intellectual property (IP) judges or specialized IP courts also undermines enforcement efforts against counterfeiters. ACEC has also particularly noted that this issue was discussed in detail at the Second Session of WIPO’s Advisory Committee on Enforcement in June 2004, where the global importance of continued judicial training in the field of intellectual property was emphasized. In this regard, INTA adopted a policy in 2001 supporting the submission of litigated trademark cases to judges specializing in or having substantial experience in trademark matters.
Further the ACEC also noted that criminal investigation against counterfeiters is limited by the insufficiency of resources available to the police (and other investigating authorities) and the prosecutors. Further, ACEC also noted that on account of low priority accorded to enforcement of trademark rights, the police officers and prosecutors do not get as much public recognition for pursuing trademark counterfeiting cases as they would pursue offenses such as terrorism, murder, celebrity crime, etc.
Therefore, the ACEC recommends that in regions where counterfeiting poses serious challenges, governments should establish specialized IP crimes investigation and prosecution units within their law enforcement and prosecution structures respectively. Government should also allocate more resources towards training of judges and customs officials, and ensure the submission of litigated trademark cases to judges specializing in or having substantial experience in trademark matters.
Trademark Owner’s Right of Access to Information
The ACEC notes that incidental to enforcement work by various government authorities in counterfeiting cases, information is generated that can be useful for investigating the identity and role of other parties, including suppliers of goods and accessories. Due to limitations of resources, government enforcers are not always able to use such documents and information in the course of their own investigations following an initial seizure of goods, documents or other evidence. However, trademark owners can utilize such documents and information in the course of private investigations.
Therefore, in order to ensure that the trademark owner has prompt access to information regarding counterfeits and the counterfeiter, the ACEC recommends that the governments should revise their rules and procedures to provide prompt and reasonable access by trademark owners to relevant documents and information on counterfeiters for the trademark owners’ use in conducting private investigations or the filing of complaints to the courts or other government agencies.
Administrative Enforcement Does Not Equal Criminal Enforcement
The ACEC notes that Article 61 of the TRIPS Agreement requires governments to provide access to criminal enforcement for counterfeiting and copyright piracy offences where violations take place on a “commercial scale”. Many countries supplement criminal enforcement with administrative enforcement measures, including customs, which are deemed cost-effective. Some of these governments believe that administrative enforcement is equivalent to criminal enforcement, since the same sorts of penalties -- seizures and fines -- are imposed. Consequently, many governments allocated most -- and in some cases, virtually all -- government resources in anti-counterfeiting to administrative enforcement infrastructure. INTA members are supportive of administrative enforcement, but they believe that excessive reliance on administrative channels creates a loophole for infringers, as more serious counterfeiters are rarely deterred by mere economic sanctions. Criminal enforcement creates much greater deterrence, in part through the creation of stigma and criminal records against infringers, and in part through the threat of incarceration.
Therefore, in order for criminal enforcement procedures to lead to deterrence, the ACEC recommends that administrative enforcement does not satisfy the obligations of WTO member countries under the TRIPS Agreement to provide access to criminal enforcement measures against counterfeiting and should be considered only as complement to and not as a substitute for criminal enforcement of IP rights.
Time Limitation for Commencement of Trademark Infringement Action
The ACEC understands that time limits for commencement of trademark infringement action following seizures of counterfeits goods by customs authorities were recommended by the TRIPS Agreement because certain goods are perishable. However, the ACEC has noted that in certain countries time limits are too tight for a number of reasons, including:
1. where the counterfeit goods are not of perishable nature and the trademark owner needs additional time to obtain from customs a sample for checking and testing;
2. where full information/documentation about the source of the goods is to be investigated, for example, an overseas address needs to be investigated;
3. where the trademark owner is trying to negotiate a voluntary forfeiture of goods by the importer and then take action if negotiations are not successful (or if the trademark owner is unable to contact the importer);
4. where notarization and legalization requirements are imposed which require significant additional time to complete.
Therefore, in order to ensure the trademark owners get sufficient time to commence a proper action pursuant to a seizure/suspension of clearance by customs authorities so that instances of counterfeits being released by the customs authorities could be eliminated, the ACEC recommends that a longer fixed period should be provided in this respect. INTA specifically recommends that the time limitation to commence proceedings should be within the range of 20 working days or 31 calendar days, whichever is longer. This issue has also been addressed in the identical fashion by article 9(5) of the Enforcement Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights.