By Robert Hawley, partner at Mathys & Squire LLP

The production and sale of counterfeit goods in the EU is rife and costs both the public and legitimate businesses billions of euros a year. The fashion industry is hugely affected, and this article examines the repercussions of selling these illegal goods in the clothing, footwear and accessories (CFA) sector.

The distribution and purchase of counterfeit CFA goods are, naively, often seen as victimless crimes – nobody is injured or killed. Surely it is just a matter of supply and demand; the distributors are merely supplying consumers with CFAs of high demand at a lower cost – how bad can the reality be? The answer is: very.

A recent study undertaken by The European Observatory of Intellectual Property Rights (The Observatory), in connection with the European Patent Office and the Office of Harmonization in the Internal Market (OHIM) found that the legitimate industry loses in the region of €26.3 billion in revenues each year. This loss, equating to nearly 10% of the sector’s total sales, translates to approximately 363,000 employment losses. These figures rise dramatically when one considers the knock-on effect to other industries: €43.3 billion in lost sales, 518,281 job losses and a loss of €8.1 billion in government in revenue.

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How can the legitimate players in the market combat the increasing number of counterfeit goods? We live in a digital age whereby the speed of technological advances often overtakes the speed of new legislation. With that and the high cost of IP litigation in mind, it is safe to say that prevention in this case would be better than cure.

But where to start? The digital landscape in which we live allows outfits to easily and relatively inexpensively advertise, market and sell their counterfeit goods online in multiple jurisdictions. The threat is constantly growing, and businesses therefore need to have everything in place to ensure that they are able to take effective action against breaches of their rights, no matter where they are in the world. Owning strong IP rights is therefore paramount.

Businesses can achieve this by:

• Registering their trade marks (names, logos, slogans) and designs (the shape and appearance of items) in all major markets of interest

• Notifying the local Customs authorities of those rights

• Keeping clear and comprehensive records of all trade marks and designs they create

• Never allowing distributors, agents, business partners, etc. to register their trade marks and designs

• Regularly monitoring the markets in which they trade, the websites of competitors and the major websites through which parties can offer products for sale

• Establishing a policy and procedure for dealing with suspected misuse of their IP rights

In our increasingly technological world, any business that does not implement these protectionist strategies is likely to find that enforcing its rights and safeguarding its commercial position is both costly and uncertain.

Robert Hawley Mathys and Squire LLPRobert Hawley is a partner at Mathys & Squire LLP, specialising in all aspects of trade mark and design work, from assisting clients with the selection and protection of their rights, through to matters of an enforcement nature

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