Reed Smith Client Alerts

Intellectual property (“IP”) is often the DNA of a business. A brand can be integral to reputation, revenue streams and goodwill. However, protecting IP is becoming increasingly difficult, particularly with the proliferation of online sales. The Internet has created an ideal and, often, an almost anonymous selling place for sophisticated counterfeiters of products.

In this series of articles, we will examine the ways in which you can protect your trade marks, design rights and patents including by:

  1. strengthening your anti-counterfeiting strategy;
  2. registering your rights with relevant customs authorities and dealing with detained goods;
  3. taking civil action against the manufacturer, exporter, importer and ultimate seller of counterfeit items; and
  4. involving authorities who can take criminal action on your behalf.

We are looking at these issues specifically in the context of counterfeit products, but many of the points covered will be just as relevant for the protection of IP in other guises.

Why should you protect your IP? According to a 2013 report by PricewaterhouseCoopers, the value of the global impact of counterfeit goods and illicit trade is estimated to be US$650 billion per year. That is US$650 billion of lost revenue for brand owners, authorised manufacturers, distributors and retailers of genuine goods.

Ignoring the infringement of IP rights when it arises can dilute the strength of the right itself, undermining distinctiveness (in the case of a trade mark) and the ability to stop future infringement. This has a knock-on impact on the value of goodwill of a business.

The cure? Many businesses elect to protect their IP by registering trade marks, design rights, and patents with the relevant authority (whether that is a national authority, such as the Office for Harmonisation of the Internal Market (“OHIM”) or the World Intellectual Property Organization (“WIPO”).

For instance, for a registered trade mark in the UK applications to the Intellectual Property Office are often straightforward; they can be submitted online and a relatively small fee is required. If there are no objections, marks can be registered in a few months. Alternatively, a company that has international business interests may consider a Community Trade Mark registration at the OHIM, which would protect the trade mark in all EU countries, or registration at WIPO, which would cover any of the 187 contracting states that the proprietor designates. There are advantages and disadvantages to both of these registrations and this should be discussed with your trade mark attorney or legal counsel.

In the case of a trade mark, once registered, the owner has a statutory right of exclusive use, and an infringement claim is often more straightforward than a claim based on a trade mark which is not registered. The latter may involve a more costly and drawn-out ‘passing off’ action under the common law.

Anti-counterfeiting business strategy There are many ways to protect IP and the strategy used should be tailored to the relevant products and business in each case. Suggestions of ways in which a brand can strengthen its position vis-à-vis counterfeiters include the following:

  • Create a strong brand identity, using the same logos, designs, packaging etc., consistently across product lines.
  • Use security features, such as stickers, serial numbers, holograms or mylar/security strips in products to help aid detection of counterfeit goods. These details will also assist in monitoring the security of your manufacturing, distribution and retail processes.
  • Create an authorised manufacturing, distribution and retail network for products.
  • Make each entity in your manufacturing, distribution and sales chain subject to contractual obligations to protect your IP and report to you any instances where it has become aware of possible infringement, either by itself or a third party. 
  • Register your IP with relevant national customs authorities to enable them to detect and detain counterfeit goods that are imported and exported, allowing you to take action, where appropriate. 
  • Periodically collect and review information about any counterfeit goods that are discovered. You may choose to employ a ‘watching’ service to assist with this monitoring. This information will help you identify jurisdictions and territories where counterfeit goods are being produced as well as any weak links in your manufacturing, distribution and sales chain and the common distinguishing features of counterfeit goods.
  • Clearly allocate responsibility within an organisation for dealing with infringements and maintain a portfolio of relevant information so that documents such as registration certificates, precedent letters of complaint and text for witness statements are easily accessible.
  • Follow takedown procedures available on certain websites. 


Client Alert 2014-193