Counterfeits, Crime and Cartier

November 2014

October 2014 has seen both the publication of the UK IP Crime Report for 2013/14, and a land mark legal decision in the UK Courts granting web-site blocking orders in respect of websites that infringe trade marks (Cartier International AG and others v British Sky Broadcasting Ltd and others [2014] EWHC 3354 (Ch) “Cartier & ors v BSB & ors”).  

The IP Crime Report

This year the top 5 counterfeit items across the UK were clothing, tobacco, alcohol, footwear and DVDs; volumes of other products counterfeited including watches, jewellery and toys have remained static. Interestingly, whilst the types of goods counterfeited remain the same, counterfeiters are finding new routes to the market, in particular via social media.

The report also highlights the link has been between IP crime and organised crime, drug dealing and money laundering.

The report makes it clear that a joined-up, multi-agency approach to tackling IP Crime is required, and is yielding results. Over 90% of Trading Standards Authorities work alongside the Police, over 80% alongside other Trading Standards Authorities and over 60% with HMRC and across the UK have partnered with at least 100 other organisations and brands to tackle IP Crime in the past year.

Given the now proven harm that IP Crime causes to the economy, consumers, communities, as well as the link to serious organised crime, it is not surprising that more legal measures are needed to prevent and penalise the perpetrators. The report notes that the legal landscape is changing and evolving; the introduction of the Consumer Rights Bill 2014 has brought enhanced focus on securing the rights of consumers, the falsified medicines directive, the Serious Organised Crime strategy, a review of Nominet domain registration policy, and reforms to the IP Enterprise Court all serve to strengthen and make it tougher for counterfeiting to occur.

Online Counterfeits

The Online Environment is recognised as playing a large part in facilitating IP crime – the report states that “This is largely because the internet is a borderless digital superstructure that is utilised by almost 40% of the world’s population. It is estimated that there are roughly 2.8 billion people with access to the internet, while 90% of the UK population (57 million) has access. The internet is generally uncensored and unrestricted, meaning that it is an open shop to anyone wanting to access virtually anything – legal or not.” This year the report findings indicate there has been a shift to selling counterfeits via social media and that this is now a lead location for investigating IP crime, particularly for Trading Standards. In 2013/14 sale of counterfeit goods via social media rose 15% , whereas sale of counterfeit goods via online auction sites rose only 2%.

Online Counterfeits and the UK Courts

The owners of a large number of UK registered trade marks for CARTIER, MONTBLANC, IWC and other brands sought a court order that would require five ISPs with 95% market share of UK broadband users (Sky, BT, EE", TalkTalk and Virgin) to block, or at least impede, access by their respective subscribers to specific websites which were advertising and selling counterfeit goods.  

It was argued that the operators of the six websites were infringing the registered trade marks but there was no suggestion that the ISPs themselves had infringed the trade marks. 

Justice Arnold summarised that the sale of counterfeit goods is damaging to trade mark owners in at least four ways: lost sales, circulation of substandard counterfeit goods, expensive cachet eroded by the availability of cheaper replicas and damage to the market for genuine goods.

The Court ordered the ISPs to block access by their subscribers to particular websites that were advertising and selling counterfeit good which infringed the registered trade marks. The Court chose to rely upon Article 11 of the EU Enforcement Directive, even though the UK had not implemented this into domestic  law beyond copyright.  

This decision will be welcome by IP rights holders who can now rely on a new aspect of law to prevent damaging counterfeits of their brand being sold online. It is interesting to note, in line with the IP Crime report 2013/14, Justice Arnold stated that “there is also a public interest in preventing trade mark infringement, particularly where counterfeit goods are involved”.

This update was prepared by Alice Gould, Partner at our London Office. Tel: +44(0) 207 776 5100.

If you would like more information please contact Alice Gould or your usual HGF representative or visit our Contact page to get in touch with your nearest HGF office.