How To Reduce Brexit-Related Counterfeiting Risk

Lisa Wright,

The UK historically has a strong track record of seizing counterfeit goods.

According to a report [1] by the European Commission on EU customs enforcement in 2019, UK border force detained just under one million articles and the UK was placed 10th on the list of top EU member states for the overall number of articles detained. However, if regulatory alignment between the UK and EU diverges as a result of the UK leaving the EU, the opportunity for the sale and transit of fake goods could potentially increase. In this article we examine some of the Brexit-related risks for brand owners and highlight four concrete actions that you can take to grow your brand value by preventing counterfeiting.

Brexit and the status of the IP exhaustion regime 

Under the EU-wide exhaustion regime, IP holders had exclusive rights to be the first to put relevant goods on the market in the European Economic Area (EEA). Therefore, if you had a trademarked product, you could stop the non-consensual sale and movement of that product if it had been imported from outside the EEA. This is important for the free movement of goods. However, if you had first put the goods on the EEA market or allowed an agent or distributor to do so, your rights to prohibit movement were ‘exhausted’. 

For IP professionals and trademark owners, Brexit — and the subsequent EU-UK Trade and Cooperation Agreement agreed on December 24, 2020 — has a substantial impact on this scenario. 

December 31, 2020 marked the end of the transition period, with the UK Intellectual Property (Exhaustion of Rights) (EU Exit) Regulations 2019 now applying. Since January 1, 2021, the UK now has the opportunity to decide what its permanent exhaustion regime should be. According to its website, the government plans to publish a formal consultation in early 2021 and will let interested parties know of the publication date in due course. But, unless the trade agreement provides for exhaustion rights, the situation will not be mirrored within the EU.

EU/UK trade deal

Following the EU/UK trade deal,[2] most products can move between the British and EU markets free of tariffs or import duties provided they satisfy certain rules or origin requirements relating to where inputs and components come from. However, post-Brexit problems in the shipment of goods used by major supermarkets and multinational food companies have already emerged due to the application of rules relating to where goods originate. This has resulted in disruption to well-established supply chains and led to product scarcity in some well-established trading territories such as Ireland.

Higher prices and product scarcity

This development highlights the risk that — regardless of the Brexit trade deal — consumers could face higher prices and possibly some shortages as supply chains are redesigned and new customs requirements become established.

Product scarcity and rising costs also increase the risk that consumers will turn to  counterfeit goods purchased through channels such as third-party websites, online marketplaces, and social media, where they run the risk of encountering counterfeit products.

Counterfeiting solutions

Here are four enforcement options through which it’s possible to tackle counterfeits.

1. Customs enforcement

One of the most efficient options for rights holders to stop the export-import of counterfeit products is customs enforcement.

If you hold the IP rights to a product, you can defend these rights by asking customs to detain goods that you suspect may be infringing your IP at the border. This is known as making an application for action (AFA) in the EU.

 Within the customs procedure in the EU, the “Economic Operators Registration and Identification number” (EORI number) is an ID number assigned by a customs authority to any businesses or people (economic operators) wishing to import or export physical goods with countries in instances where the trade could involve tariffs being applied by customs. It is now mandatory for any new, amended, or extended customs application for action (AFA). The EORI number is unique to its owner, which facilitates quick identification and makes it easier for customs officers to identify goods suspected of infringing IP rights and take required action.

Trademark owners are advised to appoint legal representation to proactively maintain their rights with a robust trademark monitoring and enforcement strategy.

2. Technology

This rise in counterfeit trade can also be countered through the use of innovative technology such as Corsearch’s brand protection platform. Developed and updated daily by a team of dedicated in-house software specialists, our online monitoring and enforcement platform continuously processes millions of online listings, mentions, images, and other brand-relevant data points. Wherever it is on the Internet, if your brand or trademarks are misused, our brand protection solution can find the infringements and the infringers.

3. Court orders

If trademark infringement is suspected, another powerful enforcement option for IP rights owners in many territories is the ability to request the district court to grant certain orders. In many countries which do not have common law trademark rights, you need a valid trademark registration to avail of this enforcement option. This order authorizes a member of the police force to seize the suspect goods without a warrant.

The court also holds the power to grant a search warrant as long as it is satisfied by information given on oath that there are reasonable grounds for suspecting that infringing goods are on any premises.

4. Intelligence

Consider using Corsearch’s expert Intelligence department to gather accurate information and test purchases in relation to suspicious cases. An investment in intelligence can help you to decide whether to proceed with an action for IP infringement or whether you want to involve the customs authorities or the local police.

If you would like to learn more about enforcement strategies for trademark owners please subscribe to our legal podcast “Talkin’ Marks’. Our latest episode “Brexit Briefing” features guest speaker Chris McLeod, Chartered trademark attorney and Partner at Elkington and Fife LLP. McLeod is also Past President of CITMA, a member of INTA and an active member of Pharmaceutical Trade Marks Group (PTMG).

Listen to podcast

Final thoughts

Counterfeiting is a global problem. However the enormous and growing scale of the problem of counterfeiting throughout the European Union alone was highlighted in a recent European Union Intellectual Property Office (EUIPO) report which estimates that EU governments are losing €15 billion in lost taxes due to fake goods every year.

No industry is immune to Brexit-related risks when it comes to counterfeiting and trademark holders will need to plan their brand protection and anti-counterfeiting strategies carefully to account for the fluidity that Brexit will bring to stakeholders over the coming months.

If you would like assistance with your brand protection and anti-counterfeiting strategy, please get in touch and contact us today! Find out how Corsearch can help you grow your brand value and reduce risk even during the most challenging of times.

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* This is an informational opinion article of Lisa Wright of TrademarkNow, a Corsearch company. The views and opinions expressed in this article are those of the author and do not necessarily represent official policy or positions of TrademarkNow or its clients.

[1] https://ec.europa.eu/taxation_customs/sites/taxation/files/ipr_report_2020.5464_en_04.pdf (Annexe 1, OVERVIEW OF CASES AND ARTICLE DETAINED PER MEMBER STATE,  Page 19)

[2] 2020 Trade and Cooperation Agreement; Part 2 Trade, Transport, Fisheries and Other Arrangements; Chapter 2 — Rules of Origin