Enhancing and protecting your organisation's intellectual property are critical in today's commercial environment. In a world that increasingly recognises the value of branding, developing strategies to stop counterfeiting becomes a key part of business strategy.

Counterfeiting is happening on a massive global scale. The problem is so huge it has been estimated to be worth $600 billion worldwide. Put simply, counterfeiters are thieves who are stealing the brand and goodwill of a genuine product. "These thieves are cashing in on the value and reputation of a legitimate brand," says intellectual property partner Tracey Walker. "Organisations need to send a very clear message that they will diligently protect their brand. Before long, the counterfeiters will figure out that it isn't worth the trouble."

Counterfeits are often found in markets and low-end retail stores. If left alone, they can not only cost a business in substitute sales; they also dilute the value of the brand and its integrity. What starts as small scale counterfeiting can end up as an avalanche of cheaper, non-genuine goods swamping the marketplace.

A counterfeiter can be dealt with under criminal or civil law.

"The real difficulty is that counterfeiters are rarely charged with a criminal offence - even though what they are doing is considered a crime under the law," says Walker. "So, if the police don't take action, then the manufacturer or distributor of the genuine product is left with no option but to take civil action."

There are a number of weapons in the brand owner's arsenal to stop counterfeiters. These include:

- Customs notices: A Customs notice records your ownership of your intellectual property rights with Customs. Once notices have been filed, Customs will detain goods it suspects are covered by a notice. As the owner of the intellectual property rights, you then have 10 days to decide whether or not you will sue. (The importer might even choose to forfeit the goods at this stage.)

- Warning letters: Warning letters can be an effective way of taking action against counterfeiters where they can be easily identified, and where the scale of counterfeiting is reasonably small. One downside of warning letters is that they may simply drive some counterfeiters underground, so that the infringing conduct continues but becomes more difficult to detect.

- Issue proceedings: Proceedings can be issued in either the High Court or District Court for copyright infringement, or trade mark infringement.

- Interim injunction: This action stops the alleged infringer from continuing the alleged infringing conduct during the period between filing the proceedings and the trial taking place. Often, an interim injunction will spur the defendant to settle the whole proceeding without the need to go to full trial. Therefore, it can be a fast and less expensive way of dealing with the infringer.

- Anton Piller order: An Anton Piller order is a form of civil search and seizure requiring the infringer to allow a plaintiff to enter premises and seize relevant products and documents. The Court makes these orders without notice to the infringer. They are not lightly granted. The Court builds protections into the formal orders, service and execution of the orders must be done in the presence of an independent supervisory solicitor, and strict undertakings to pay compensation should the orders be improperly executed are required.

- Roving Anton Piller orders: A roving Anton Piller order is the same as an Anton Piller order in all respects, except that it does not name a particular defendant. Rather, the orders are aimed at situations where the existence of counterfeiters is known, but the names and identities of the parties dealing in the product are not known.

- Criminal proceedings: Police can deal with the matter at no cost to the manufacturer or distributor but police resources are scarce. Few prosecutions have been undertaken to date.

This is a general summary only and should not be taken as a substitute for specific advice.

Simpson Grierson lawyers
Web site: Simpson Grierson

For further information, please contact:
Tracey Walker, Partner, tracey.walker@simpsongrierson.com
Earl Gray, Partner, earl.gray@simpsongrierson.com
Jan Kelly, Partner, jan.kelly@simpsongrierson.com
Alan Potter, Senior Associate, alan.potter@simpsongrierson.com
John Shackleton, Senior Associate, john.shackleton@simpsongrierson.com
Lianne Young, Senior Associate, lianne.young@simpsongrierson.com

March 2001