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Trade in fake goods can be combated with improved supply chain vigilance, group says

Out-Law News | 09 Nov 2011 | 11:18 am | 3 min. read

The IP Crime Group has issued "step by step" guidance on what product manufacturers can do if they encounter fake products during stages of the chain of supply for goods to consumers.

The Group said organisations involved in the supply chain of goods to the consumer had to ensure they were vigilant to the threat of fake products entering the market as international trade grows and counterfeiting and piracy increases.

The IP Crime Group was formed by the UK Intellectual Property Office (IPO) in 2004. The group coordinates with Government, law enforcement agencies and industry groups to combat against piracy and counterfeiting activity.

"As counterfeiters and pirates look for new ways to expand their illegal businesses, the security of business supply chains becomes increasingly important," the IP Crime Group said in its 'Supply Chain Toolkit' guidance (36-page / 396KB PDF).

"Businesses must respond by using best practice to manage their communications and transactions efficiently. Investing in greater vigilance in supply chains offers more security, better efficiency, safer markets and can reduce costs in the long term. Among other things it helps to: protect against counterfeiting and piracy and other forms of theft; detect criminal activity early; improve business-partner and customer satisfaction; and manage inventories better and reduce costs," the Group said.

Organisations should ensure that their goods are protected under intellectual property law with sufficiently detailed packaging and product design to make it difficult for counterfeiters to replicate, the Group said.

Manufacturers should ensure that their suppliers trade legitimate parts for using in products and that overseas suppliers deliver parts in "sealed, secure and tamper-proof" containers and packaging, the Group said. Manufacturers should also make sure customers can buy their products from legitimate retail outlets or distributors, ensure that those outlets know what is expected of them and develop checking procedures to monitor sales, it said.

Product makers should also "make clear, in contracts or conditions of trading with sellers, subcontractors and distributors, that it is not acceptable for them to deal in fake goods as it may affect your reputation," and destroy or recycle waste products, the Group said.

The Group also advised manufacturers to devise systems that would identify fake goods prior to them reaching consumers. It said businesses should consider introducing "a system of formal processes for reporting problems (for example, specific phone numbers, e-mail addresses and report sheets); incentive schemes to reward awareness; seminars on IP crime – provide educational material about IP laws and give staff updates in newsletters; and use research teams to carry out ‘mystery shopping’ to make sure your IP rights are not being infringed".

"Unfortunately, many companies and rights owners only realise that their IP has been stolen (that is, counterfeited or pirated) when the fake goods appear on the street. An ‘early warning’ system is vital. Raising awareness and educating colleagues, including sales staff, distributors and retailers can help to tackle problems early," the Group's guidance said.

If counterfeit goods are identified organisations must be able to act quickly, providing detailed information about products to law enforcement and trusted business partners to ensure fakes are identified, the Group said.

"Apply for Customs protection directly if you think that goods in international trade may infringe your rights. Give them as much information as you can about the products, licencees, how products are transported and the possible methods used to abuse your IP rights. It will be too late for Customs to act once infringing goods are in free circulation within the European Community," it said.

The Group further recommended that businesses educate "colleagues, employees and partners" on IP laws and conduct checks on those individuals. It said IP rights should be registered, recorded and licensed effectively and that product makers should develop good links with lawyers and enforcement bodies to be able to act quickly if fake replicas are being traded.

"The cost of weak links in supply chains is too high to ignore. It is essential that businesses realise the importance of security and work together to keep the supply chain strong," the IP Crime Group said.

"All the links in the supply chain must work together to develop business models that protect products, destroy waste and avoid duplicated effort. If this does not happen and good practice is not maintained, it will be difficult to learn from each other and the risk from criminals will increase," it said.