ELZABURU Blog - Industrial and Intellectual Property

Tag Archives: Piracy

Counterfeit medicines: a serious threat amid the COVID-19 pandemic

Medicamentos falsificados: una amenaza grave en plena crisis por el covid-19

The European Union Intellectual Property Office (EUIPO) and the Organisation for Economic Co-operation and Development (OECD) have published a report on the trade of counterfeit pharmaceutical products worldwide.

Said report, based on the analysis carried out in 2019 but focussing on the pharmaceutical sector, confirmed that the imports of counterfeit and pirated products rose to 509,000 million dollars in 2016, accounting for around 3.3% of global trade.

Counterfeit medicines: a serious threat amid the COVID-19 pandemic  

In 2016, the international trade in counterfeit pharmaceuticals reached 4,400 million dollars, accounting for 0.84% of the world trade in pharmaceutical products.

Counterfeits imply not only possible economic damages for this sector, but also significant health threats, since fake medicines are often not properly formulated and may contain dangerous ingredients.

This report, covering the period from 2014 to 2016, proves that the counterfeits seized included medicines for serious diseases, such as malaria, HIV/AIDS and cancer. These also included antibiotics, lifestyle-related treatments, anaesthetics, diabetes treatment drugs and central nervous system medications.

India remains the main provenance economy of counterfeit pharmaceuticals, being the origin of 53% of the total seized value of counterfeit pharmaceutical products and medicines worldwide in 2016. India was closely followed by China (30%) and the United Arab Emirates (4%).

Among the countries most affected by the trade of counterfeit pharmaceutical products are the United States, the United Kingdom, France, Austria, Germany and Switzerland. In the specific case of pharmaceutical products sent to the European Union, India continues to be the main provenance economy, being the origin of 47% of the total value of pharmaceutical products and medicines seized by EU customs authorities, followed by China with 37%.

In the period from 2014 to 2016, mail, postal services and courier services were the main modes of transport for pharmaceutical products and fake medicines exported to EU economies, both in terms of their value and their volume.

Among the factors que encouraging the sale of counterfeit pharmaceutical products and medicines are its profitability, sometimes with a profit margin of 7.900%; the low risk of detection, as customs officials do not always have access to simple field tests that would help them to triage suspect products; the low risk of prosecution, since most counterfeits are only detected when they reach retailers or patients and it is frequently difficult to trace them back through complex supply chains, or to prove where criminal activity occurred; and weak penalties, with average incarceration periods of 6 years for trademark infringement worldwide.

In relation to the impact of counterfeit medicines, the report shows the serious harm the use of falsified medicines can cause.

The World Health Organization, one of the sources consulted, indicated that that fake, substandard anti-malarial medication might be responsible for the death of 116.000 persons in sub-Saharan Africa.

Counterfeit medicines not only affect private individuals, but also have a direct impact on legitimate producers of pharmaceuticals, these suffering consequences such as loss of revenue, damages caused to their brands and increased costs of security measures.

Governments and industry have been working hand-in-hand to combat counterfeit, substandard and falsified pharmaceuticals. As an example, it should be highlighted that the MEDICRIME Convention, which entered into force in 2016, was developed by the Council of Europe and provides countries with a model legal framework for dealing with falsified medicines and other types of pharmaceutical crime that threaten public health.

This treaty calls for multilateral collaboration across nations, disciplines and sectors, and lays the ground for co-operation with and between international bodies such as INTERPOL, Europol, UNODC, the WCO and WHO, in order to put a stop to this international threat to public health.

In essence, society as a whole always has the compelling, absolute and unavoidable need to fight against the counterfeiting of medicines. Regrettably, the current world crisis resulting from COVID-19 will unveil proof of the serious damages caused by the sale of falsified pharmaceutical products and of the urgent need to end this type of practices at global level.

 

Author: Alberto Gallo

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Spain in 3rd place among the top ten EU countries regarding detention of counterfeit products at customs in 2018

Innovation and creativity are the drivers of our economy. Therefore, it is important to provide rightholders with the certainty that their inventions will be duly protected. The competitiveness of European companies depends on it.

The enforcement of intellectual and industrial property rights by European customs is a priority for the European Commission and for Member States.

The European Commission published the “Report on the EU customs enforcement of intellectual property rights: Results at the EU border 2018” on 24 September 2019. The report shows that the number of interceptions of counterfeit goods imported to the EU increased in 2018 as a result of the large quantity of small packages in express postal traffic. The figures for detentions of these shipments increased from 57,433 in 2017 to 69,354 in 2018, although the total amount of articles detained (almost 27 million in 2018, with a market value of almost 740 million euros) fell by 15% compared with 2017.

The main categories of items detained were cigarettes (15% of the total amount of items detained), followed by toys (14%), packaging material (9%), labels and stickers (9%), and clothing (8%). Products for daily use, such as body care articles, medicines, toys and electrical household appliances, constituted almost 37% of the total amount of articles detained.

China remained the principal country of provenance of goods infringing intellectual property rights. North Macedonia was the main country of provenance for counterfeit alcoholic beverages. Turkey was the main source for other beverages, perfumes and cosmetics. EU customs detected a high number of fake watches, mobile telephones and accessories, ink and toner cartridges, CDs/DVDs, labels, tags and stickers from Hong Kong (China). India was the main country of provenance for computer equipment, Cambodia for cigarettes, and Bosnia-Herzegovina for packaging material.

The number of cases of detentions in air and sea transport have fallen, while the cases of detentions in courier and postal shipments increased, the latter amounting to 84% of the total number of cases, consisting mainly of consumer goods purchased via e-commerce. Sea transport remains in first place (54.29%) in terms of the means of transport with the highest number of articles detained.

Spain is in third place among the top ten European countries, which jointly account for 90% of all detention cases, with a total de 3,934 cases in 2018 compared with 3,740 cases in 2017 (+ 5%). However, Spain holds the 11th position in the ranking of articles detained, with 1,305,972 articles detained in 2018 in comparison with 1,776,405 articles in 2017 (- 26%), practically level with Belgium in 10th position, with 1,307,944 articles. Spain therefore joins the leading group of the 4 top ten countries in the EU in terms of the number of detention cases and articles detained.

For Spain it will pose a great challenge to maintains its leading position in the EU top ten in relation to customs detention in defence of intellectual and industrial property rights.

Author: Juan José Caselles
Visit our website: http://www.elzaburu.es/

Criminal conviction for storage for commercial purposes of goods infringing copyright, even in storage facilities separate from the place of sale

Source: Pixabay

The judgment of the CJUE (Case C-572/17) of 19 December was issued within the context of a request for a preliminary ruling from the Swedish Supreme Court in criminal proceedings brought by the Public Prosecutor’s Office of this Court against Mr. Imran Syed concerning the infringement of trade marks and infringements of copyright in literary and artistic works. 

Mr Syed ran a retail shop in Stockholm (Sweden) in which he sold clothes and accessories with rock music motifs. In addition to offering the items for sale in that shop, Mr Syed stored such goods in a storage facility adjacent to the shop and in another storage facility located in Bandhagen, a suburb of Stockholm. It is established that Mr Syed’s shop was regularly restocked with merchandise from those storage facilities.

The issue arising was whether goods stored by someone in a warehouse and bearing a protected motif could be considered as being on sale whenever there are identical goods on sale in a retail establishment run by such person.

In this judgment the CJUE recalls that such an act can constitute an infringement of the exclusive distribution right (Article 4(1) of Directive 2001/29) even if that act is not followed by the transfer of ownership to a purchaser of the protected work or a copy thereof (expressly citing its judgment of 13 May 2015, Dimensione Direct Sales and Labianca, C‑516/13). Therefore, an act prior to the actual sale of a work or a copy thereof protected by copyright, which takes place without the rightholder’s consent and with the objective of making such a sale, may infringe the distribution right. Although carrying out the sale is not a necessary element for the purpose of establishing an infringement of the right of distribution, it must nonetheless be proven that the goods concerned are actually intended to be distributed to the public without the rightholder’s consent, inter alia by their being offered for sale in a Member State where the work at issue is protected.

The fact that a person, selling goods bearing copyrighted motifs in a shop without the rightholder’s authorisation, stores identical goods, may be an indication that the stored goods are also intended to be sold in that shop and that, accordingly, that storage may constitute an act prior to a sale being made, which is liable to infringe that rightholder’s distribution right.

Although the distance between the storage facility and the place of sale may constitute evidence that can be used in seeking to establish that the goods concerned are intended to be sold in that place of sale, that evidence cannot, on its own, be decisive. It may, on the other hand, be taken into account in a concrete analysis of all the factors likely to be relevant, such as, for example, the regular restocking of the shop with goods from the storage facilities at issue, accounting elements, the volume of sales and orders as compared with the volume of stored goods, or current contracts of sale.

The judgment finally rules that the storage by a retailer of goods bearing a motif protected by copyright on the territory of the Member State where the goods are stored may constitute an infringement of the exclusive distribution right when that retailer offers for sale, in a shop without the authorisation of the copyright holder, goods identical to those which he is storing, provided that the stored goods are actually intended for sale on the territory of the Member State in which that motif is protected. The distance between the place of storage and the place of sale cannot, on its own, be a decisive element in determining whether the stored goods are intended for sale in the territory of that Member State.

Once more, with this judgment the CJUE imposes order regarding the problem of copyright-infringing acts or means, prior to the sale of goods, that regrettably and painfully affect creators far too frequently.

  Author: Juan José Caselles

Visit our website: http://www.elzaburu.es/en

Fashion Law: Counterfeiting in the fashion sector (VII)

ELZABURU has had the pleasure of working together with the publisher Thomson-Reuters Aranzadi on Fashion Law, a pioneering work in Spain on the subject of fashion law, which was presented on 16 April.

In these short weekly summaries, the professionals at ELZABURU who participated in the work offer us a brief outline of their contributions:

Counterfeiting in the fashion sector

For some years now we have been witness to the ongoing integration of national economies (Spain’s included) into a single global economy. The many opportunities this opens up to producers, companies, and consumers often go hand in hand with the market’s flexibility being turned to the advantage of international criminal gangs to place illicit goods in far-away destinations.

The broad extent of crimes against intellectual property in Spain is due, in no small part, to the mild penalties these activities have traditionally elicited and to a widespread lack of awareness both by society as a whole and even by judicial authorities.

Like other production and consumption sectors, the fashion industry too has not been spared the scourge of counterfeiting.

One fashion counterfeiting statistic of great concern is that in 2015, 46 % of all goods detained by Customs in the EU were fashion-related items, more specifically, athletic shoes, handbags, purses, watches, and clothing.

In 2016 Spanish police forces seized nearly 800,000 fashion-related articles in Spain, namely, footwear, jewellery, watches, leather goods, accessories, perfumery, cosmetics, and textile goods.

Online selling has opened up to the fashion industry both a new distribution channel and a way to attract consumers, but counterfeiters have put the anonymity offered by the web, the vast numbers of potential buyers, and the multinational nature of the Internet to good use in running their criminal businesses.

A quick Internet search on “fake bags” plus the name of any luxury brand returns hundreds of thousands of hits.

This attests to the vast tendrils of counterfeiting that have broadly infiltrated fashion e-commerce, certainly posing a challenge to law enforcement and to protecting the rights of brand-owners, who bear the actual brunt of the economic impact in the form of, for instance, reduced earnings, fewer jobs, and damage to brand image and reputation.

Still, it is not all bad news in this sector. A series of reforms to the law in Spain have ushered in significant changes in the definition of offences against intellectual property that will have a positive effect on the fight against counterfeiting.

The main example of recent changes to the law is the long-awaited scaling of penalties to the severity of the conduct carried out by infringers (importing, wholesaling, street vending, etc.), which opens up the possibility of dealing with offences against industrial property more fairly and more proportionately.

Author: Tránsito Ruiz 

Visit our website: http://www.elzaburu.es/en

Blog entries in the series Fashion Law:

1.Trademark protection in the fashion sector (23.04.2018)

2.Design protection in the fashion sector (30.04.2018)

3.Patent protection in the fashion sector (07.05.2018)

4.Protection of fashion through copyright (21.05.2018)

5. Image rights in the fashion sector (28.05.2018)

6.Fashion Law. Data Fashion (04.06.2018)

7.Counterfeiting in the fashion sector (11.06.2018)

8.Exhaustion of rights in the fashion sector (18.06.2018)

9.Corporate reputation in the fashion sector (25.06.2018)

10. Protection of the commercial imagen of a fashion brand (04.07.2018)

11. Websites, Apps & Social Networks (13.07.2018)

12. Valuation of intangible assets (17.07.2018)

13. Licensing (06.09.2018)

OECD Alert to Governments in report entitled “Governance Frameworks to Counter Illicit Trade”

On March 1, 2018, the OECD published the report “Governance Frameworks to Counter Illicit Trade”.

In this report, the OECD has introduced a new phase in its efforts to help countries fight against piracy and to protect the market, consumers and businesses. The reasons for these increased efforts are, among others, inconsistent penalties, lack of control over small shipments and a lack of information and coordination across borders and in free trade areas.

This means that criminal networks traffic billions of dollars’ worth of fake goods each year. The OECD report shows that, on average, 2.5% of internationally trade goods are counterfeit, rising to almost 7% for IT and communications products.

The victims of these fraudulent practices are not just trademark or patent holders, but also consumers and governments themselves. In the words of Marcos Bonturi, Director of Public Governance at the OECD: “trade in fake and prohibited products can be dangerous for consumers and costly for companies and governments. This affects industries in all OECD countries and increasingly from emerging markets as well. Tackling policy gaps can start to increase the risks and lower rewards of illicit trade for criminals.”

The OECD study shows how criminal networks avoid detention and enforcement “thanks to” miscommunication and a lack of cross-border coordination.

The report also explores how the use of postal and courier services and online sales is increasing, making it easier to trade in illicit small shipments.

This is a major warning to Governments on the need to cooperate with one another in the fight against the international trade in counterfeit goods.

  Author: Juan J. Caselles and Alberto Gallo

Visit our website: http://www.elzaburu.es/en

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