Procedures and strategies for anti-counterfeiting: United Kingdom
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Key national legislation includes:
- the Trademarks Act 1994, which covers trademark infringement and criminal offences in relation to anti-counterfeiting;
- the Fraud Act 2006, which provides for various criminal offences in relation to fraud; and
- the Proceeds of Crime Act 2002, which provides for the recovery of assets and proceeds obtained through IP crime.
Key EU legislation includes:
- the EU Trademark Regulation (2017/1001), which covers trademark infringement in relation to EU trademarks; and
- the EU Customs Enforcement Regulation (608/2013), which covers the enforcement of IP rights by customs authorities in the European Union.
In the United Kingdom, the government authorities responsible for the UK borders are Her Majesty’s Revenue and Customs (HMRC) and Border Force. HMRC is responsible for the national policy governing enforcement of IP rights at the border, while Border Force is the law enforcement command that implements these policies and carries out customs controls for goods entering the United Kingdom.
EU Customs Regulation sets out the border procedures to be adopted by all EU customs authorities in order to enforce IP rights. These procedures are implemented by Border Force in the United Kingdom.
While, at the time of writing, the position on Brexit is unclear, according to a 4 June 2018 notice from the European Commission, EU rules on customs enforcement of IP rights will no longer apply to the United Kingdom following its EU withdrawal date. EU customs applications can longer be submitted to UK Customs and such applications already granted by UK Customs will no longer be valid in the remaining member states. Existing EU applications filed in one of the remaining member states will remain valid in EU member states, but not the United Kingdom.
Draft customs regulations are currently before the UK Parliament (Draft Customs (Enforcement of Intellectual Property Rights) (Amendment) (EU Exit) Regulations 2019). These create a new scheme for the enforcement of IP rights at the UK border, mirroring the current EU scheme, in the event that there is no withdrawal agreement. However, the draft regulations are unlikely to pass in time for there to be consistent border coverage for rights holders, which will likely result in gaps in UK border protection for most rights holders between the United Kingdom’s exit date and the date by which new UK customs applications are filed and accepted. As the UK regulations are in draft form only, the advice below is based on current procedure under the EU Customs Regulation.
Application for action
While Border Force may seize items suspected of infringing an IP right (including counterfeit, infringing or pirated goods) ex officio, this is quite uncommon (rights holders would still need to submit an ex officio application for action to secure destruction). Border Force will usually seize only such items where a rights holder has a customs application for action in place.
Applications for action covering the United Kingdom can be based on a number of rights, including registered trademarks, design rights, patents and copyrights. When filing the applications for action, rights holders must provide:
- details of the relevant IP rights and proof of ownership;
- contact details for the applicant and authorised representative;
- contact details for a technical and administrative contact; and
- detailed information regarding the goods to be monitored (which is made available to Border Force staff) – for example, details, photographs and a description of authentic goods (including market value), countries of genuine production, information regarding distinctive features of authentic goods and details of other companies involved (eg, authorised importers and suppliers which must be kept updated).
Further information, such as known routes or distribution channels used by counterfeiters and comparison photographs showing genuine and counterfeit products, can also be provided. Proof of renewal must be submitted if the IP rights included expire during the year covered by the application for action.
Rights holders can update the application with new IP rights or information, as well as submitting ‘red alert’ forms (notifying Customs about urgent, specific information) and ‘new trends’ forms (flagging new trends relating to particular products or brands).
While there is no official fee for filing a customs application, rights holders agree to bear all costs incurred by Customs from the storage and destruction of goods.
The procedure for seizures is as follows:
- If Border Force identify suspected counterfeit, pirated or infringing goods, such goods will be detained for 10 working days (which can be extended for a further 10 working days). Perishable goods are detained for only three working days.
- Border Force will notify the deemed owner of the goods (usually the importer) and the rights holder, providing information regarding the quantity and nature of the goods, consignee/consignor information and deadline.
- The rights holder must complete a form confirming whether the goods are counterfeit and, if so, request destruction or release. This form must be returned before the deadline or the deadline must be extended.
- The owner of the goods must then confirm whether they agree to destruction. The owner’s failure to respond by the deadline will be deemed as consent to destruction.
- If the owner of the goods consents to destruction, or if they do not respond, the goods can be destroyed under the simplified procedure without any further input from the rights holder.
- If the owner of the goods objects to destruction, Border Force will release the goods unless the rights holder can prove that it has commenced legal proceedings to determine whether the goods are infringing. Border Force will detain the goods until the case is decided.
Other key points include the following:
- Rights holders can opt in to the small consignments procedure for postal and express courier consignments of up to three units or under 2 kilograms, although the rights holder will receive only nominal information regarding the consignment.
- While information relating to the detention can be used to some extent by rights holders (eg, to contact the importer and seek their consent to destruction or initiate proceedings), there are restrictions in the EU Customs Regulation on broader use of this information, including for more general investigative purposes.
- Following the new Trademark Regulations 2018 (SI 2018/825), rights holders are entitled to prevent potentially infringing goods from outside the European Union passing through the United Kingdom without being released for free circulation, unless the holder of the goods can show that the rights holder is not entitled to stop the goods being marketed in the final destination country. This reverses the burden of proof, placing it on the holder of the goods.
While criminal prosecution can be a lower cost way of removing goods from the market and deterring potential infringers, limits to law-enforcement authority budgets and time make it necessary to gather clear and strong evidence before approaching authorities. The burden of proof in criminal prosecution (beyond reasonable doubt) is higher than that in civil prosecution (balance of probabilities) and the evidentiary requirements are stricter.
Section 92 of the Trademarks Act 1994 lays out the criminal offences relating to infringement of UK registered trademarks. A person found guilty of an offence under this section is liable to imprisonment and/or a fine. Where there are reasonable grounds for believing an offence has been or is about to be committed, a search warrant may be issued under Section 92A.
Under this section it is an offence for a person, with a view to gain for themselves or another, or with intent to cause loss to another, to do the following without consent of the trademark owner:
- apply to goods or its packaging, sell or let for hire, offer or expose for sale or hire or distribute goods which bear, or the packaging of which bears, a sign identical to or likely to be mistaken for a registered trademark (Section 92(1) has been held by the UK Supreme Court to have broad application, applying beyond pure counterfeit goods to also cover leaked and grey market goods);
- possess, have custody or control in the course of a business any such goods with a view to doing any of the aforementioned activities;
- apply a sign identical to, or likely to be mistaken for, a registered trademark to material intended to be used for labelling or packaging goods, as a business paper in relation to goods, or for advertising goods;
- use in the course of a business material bearing such a sign for labelling or packaging goods, as a business paper in relation to goods or for advertising goods;
- possess, have custody or control in the course of a business any such material with a view to doing any of the aforementioned activities; or
- make an article specifically designed or adapted for making copies of a sign identical to, or likely to be mistaken for, a registered trademark, or possess, have custody of or control such an article in the course of a business, knowing or having reason to believe that it has been, or is to be, used to produce goods, or material for labelling or packaging goods, as a business paper in relation to goods or for advertising goods.
It is a defence to the above offences if a person can show that they believed on reasonable grounds that the use of the sign was not an infringement of the registered trademark (eg, if they made enquiries regarding the goods).
If successfully prosecuted, it may be possible to bring an application under the Proceeds of Crime Act 2002 in order to trace and confiscate any of the defendant’s money and assets obtained through IP crime. Provisions of the Fraud Act are also often enforced in criminal trademark prosecution cases, given IP crime often involves fraudulent conduct.
Crown Prosecution Service
The Crown Prosecution Service (CPS) is the principal public prosecuting agency for conducting criminal prosecutions in England and Wales. After carrying out investigations, the police will send cases of Section 92 offences to the CPS, which will be in charge of bringing a prosecution.
Trading Standards is a government authority delivering national and regional consumer protection enforcement, including the protection and enforcement of IP rights. Brand owners will usually work with the relevant regional Trading Standards. While Trading Standards does not have powers of arrest, it does have extensive investigative powers. It can also issue statutory notices and cautions, and bring criminal prosecutions for, among other things, trademark and copyright infringement.
Police Intellectual Property Crime Unit
The Police Intellectual Property Crime Unit (PIPCU) is a world-leading specialist IP crime unit within the City of London Police responsible for investigating and deterring serious and organised IP crime in the United Kingdom. The PIPCU has a number of ongoing operations, including Operation Ashiko (for disrupting counterfeit product websites) and a particular focus on IP crime in relation to physical goods with an online nexus and digital content. Rights holders can refer IP cases with clear evidence to the PIPCU for consideration. When determining whether a case will be investigated, the PIPCU will consider a number of factors (eg, crime type, harm and ongoing criminality).
The PIPCU works with other government enforcement agencies and will not accept cases already investigated by another law enforcement or Trading Standards agency (unless referred by that agency). The PIPCU works closely with the CPS and has powers to criminally prosecute. It also works with Europol on Operation in Our Sights (a cross-border operation mirroring Operation Ashiko).
Individuals and legal entities can bring private criminal prosecutions (eg, if Trading Standards does not have resources to bring an action) which allow rights holders to assert greater control over the case. These can be expensive and should be used only in the right circumstances.
The UK courts have a wide range of remedies that can assist rights holders in relation to anti-counterfeiting. Civil litigation can be beneficial when dealing with large-scale counterfeiters or repeat offenders, or where disclosure may provide access to helpful evidence (eg, further information regarding the broader counterfeiting network). Further, the burden of proof is lower in civil litigation than criminal litigation.
The choice of venue will depend on factors such as claim complexity and value or size of the parties. As the Intellectual Property Enterprise Court has a damages and costs cap, this can be a suitable venue for lower-value cases (a small-claims track is also available), whereas more complex or higher value cases should be brought in the Chancery Division of the High Court.
Section 10 of the Trademarks Act 1994 sets out non-criminal provisions relating to infringement of UK registered trademarks (set out in Article 9 of EU Regulation 2017/1001 in relation to EU trademarks). This legislation provides that use of an identical sign in the course of trade in relation to goods or services which are identical with those for which the sign is registered constitutes infringement. In such an identical mark/goods case (usually the case for counterfeit products), there is no requirement to demonstrate likelihood of confusion. Following the Trademark Regulations 2018, preparatory acts (eg, affixing an identical sign to packaging or labels) will also be considered infringing.
Use of a sign includes:
- affixing it to goods or packaging;
- offering goods or services for sale under the sign;
- importing or exporting goods under the sign; or
- using the sign in advertising.
Before bringing civil proceedings, a rights holder should usually send a pre-action letter to the infringer; however, this will depend on the urgency and remedy sought. If urgent action is not required (eg, interim injunctions or search and seizure orders) proceedings may be started following such pre-action correspondence. Where liability is clear, rights holders may consider bringing an action for summary judgment or judgment in default (if no defence is filed in time).
Interim injunctions, with or without notice, can be granted by UK courts including:
- prohibitory injunctions requiring the defendant to refrain from specific acts; and
- freezing injunctions which prevent the defendant from disposing of or dealing with its assets.
An applicant must give an undertaking in damages and such interim injunctions will be granted only in certain circumstances (ie, where the case is serious, damages will not be an adequate remedy for the applicant and the balance of convenience favours granting the injunction).
A search and seizure order can be sought, allowing the applicant’s representatives to enter the infringer’s premises (without notice) to search for, copy and/or seize relevant material. While such orders can be useful, they can be quite difficult and expensive to obtain and are therefore generally used only where the applicant has knowledge that the infringer has material evidence in their control that they are unlikely to disclose.
It may also be possible to obtain a Norwich Pharmacal order which requires a third party related (though not a party) to the proceedings to disclose relevant documents or information. However, once again, such orders are made only in limited circumstances.
Available remedies include:
- an order for delivery up or destruction of the infringing products;
- an order for the payment of damages or an account of profits;
- permanent injunctions prohibiting future infringement; and
- a contribution to legal costs.
The sale and marketing of counterfeit goods online is increasing and counterfeit operators are using increasingly complex means for advertising and selling counterfeit goods outside online marketplaces and auction websites.
The PIPCU is focused on stopping online IP crime and can bring actions in relation to online counterfeiting, although such action would be taken only on a national basis. Operation Ashiko is a joint initiative between the PIPCU and Nominet (a British domain name registry) to tackle IP crime being committed on ‘.co.uk’ addresses. Under this initiative, the PIPCU sends a notification to Nominet which will work with the registry to suspend the domain.
In order to tackle online infringement effectively, rights holders may need to rely on multiple disruptive National Fraud Investigations Bureau (NFIB) enforcement actions. Actions include site notice and takedown procedures (the efficiency of such procedures varies, and products and accounts often resurface soon after the original notification), targeting egregious sellers through cease and desist letters, requesting that payment processors suspend payment accounts and attempting to recover infringing domain names.
Involving IP law enforcement agencies (eg, the PIPCU, the National Trading Standards eCrime Team (which was set up to investigate online scams and support e-crime investigations) or the NFIB) can be good resources for assisting with combating online counterfeiting.
If a ‘.co.uk’ domain name infringes a registered trademark, proceedings can be brought under Nominet’s domain name dispute resolution service. Rights holders must file a complaint (which can cover multiple domain names registered by the same infringer) with supporting evidence. If successful, the domain name may be cancelled or transferred to the rights holder.
Further, the UK courts can grant blocking orders requiring internet service providers (ISPs) to block websites hosting infringing content (under Section 97A of the Copyright, Designs and Patents Act 1998) or advertising/selling goods infringing registered trademarks (under Article 11 of EU Directive 2004/48). In principle, the rights holder should indemnify ISPs acting as mere conduits for their reasonable compliance costs.
There are a number of preventive steps and measures that rights holders can take in order to protect their brand against counterfeiting, including the following:
- Cooperate with national anti-counterfeiting agencies – given the powers that such enforcement agencies have, it is important for rights holders to engage with and assist these agencies and ensure that they are ready to act on new intelligence. Rights holders should also be aware of the UK Anti-Counterfeiting Group which works alongside brands, representatives, government bodies and enforcement agencies to steer effective policy and promote intelligence sharing.
- File an application for action with Customs – filing a detailed application for action and using the ‘red alert’ and ‘new trends’ alerts maximises the shipments that are stopped by Customs.
- Create product guidance – guidance detailing how to distinguish genuine products from counterfeits (including clear photographs) is extremely useful for Customs and enforcement agencies. This should be updated when new products launch or new counterfeiting trends are identified.
- Proactively monitor – one of the most important strategies is regular monitoring of online activity (eg, domain name registrations and auction platforms) to identify links between accounts/infringers and gather information about market trends. There are third parties which offer such monitoring services.
- Maintain detailed intelligence records – it is important to record any intelligence received to identify market trends in counterfeiting (eg, common goods infringed and common counterfeit indicators), identify repeat offenders and build a picture of the supply chains and physical routes used. It is important to ensure that these records are data protection compliant.
- Contractual relationships with third parties – it is important to ensure that third-party contracts (eg, licensing and manufacturing) adequately cover anti-counterfeiting (eg, some contracts may prohibit sales on certain platforms or oblige the third party to notify the rights holder of any actual or suspected infringement).
- Use technology – technology such as track and trace or authentication tools can be useful where appropriate.
- Educate the public – rights holders may wish to take steps to educate consumers as to how to ensure they are purchasing genuine products (eg, checking for any security features). However, providing too much detailed information may assist counterfeiters in developing more sophisticated counterfeits. Rights holders may also provide methods for the public to alert them to possible counterfeits.