Have yourself a counterfeit-free Christmas…

The lead up to Christmas is always a busy time for everyone, as we are thinking of the family and friends we are going to see, the food that needs to be prepared and the gifts that we need to buy. But how often do we really think about the origin of the gifts that we buy?

Christmas is a key time for counterfeiters to take advantage of busy consumers, with an increase in fake designer products and toys entering the country and making their way onto the high street or online retailers. The number of counterfeit goods entering the UK has surged in the last decade, helped in particular by the growth in online sales, which have increased 13.9% year-on-year (IMRG Capgemini e-Retail Sales Index). Such counterfeit goods are available online through fraudulent websites themselves, or through respected, and extremely popular, online retailers (e.g. Amazon, eBay), as third party sellers.

However, with all the hustle and bustle and excitement, consumers are not always considering the possibility that their purchases could well be counterfeit, instead focusing only on how to get the best possible deal at a costly time of year. Consumers may well be paying less, but that does not mean they are getting a good deal; counterfeit goods are almost always of lower quality than the real deal and generally have dubious safety standards. Therefore, it’s not just the brands that suffer, counterfeit goods are bad for everyone. 

The two key intellectual property issues that arise out of counterfeit goods are trade mark infringement and passing off.

Trade Mark Infringement:

It is an infringement of a registered trade mark to use: 

• a sign which is identical to that registered in respect of identical goods or services;  
• a sign which is identical or similar to that registered mark in respect of identical or similar goods or services, where there exists on the part of the public, a ‘likelihood of confusion’; or
• a sign which is identical or similar to that registered mark, where the registered mark has a ‘reputation’ and the use of the identical or similar mark in respect of any goods or services takes unfair advantage of, or is detrimental to the distinctive character or repute of the earlier mark.

A successful claim for trade mark infringement makes a number of remedies available to the registered trade mark owner. The remedies that can be obtained are an injunction (preventing the use of the mark), damages or accounts of profit (profit made during the unauthorised use of the registered trade mark), order of erasure/removal of the registered mark from the infringing goods or an order of delivery up and destruction of the infringing goods.

Passing Off:

A claim for passing off relates to unregistered trade mark rights. One has unregistered trade mark rights in a sign if they have acquired ‘goodwill’ in that sign, by reference to the goods and services sold under it. It can be difficult to clearly ascertain what amounts to goodwill and prove its existence, which means that pursuing counterfeiters under passing off is generally tougher and more expensive than under trade mark infringement. The test used to identify whether passing off has taken place is: (i) goodwill is attached to the goods or services; (ii) a misrepresentation (whether intentional or not) has been made to the public, deceiving them into believing that the goods have come from the claimant; and (iii) that the misrepresentation has caused damage to the claimant as a result. 

If all the criteria are met, then it is possible that a passing off claim could be made by a trader against an infringer. A trader could seek remedies in the form of damages for loss of profit, and damage to goodwill and reputation, which are commonly sought together. Injunctions, account of profits and delivery up of the infringing goods are also available as remedies to the claimant. 

Although a higher threshold to achieve due to the establishment of goodwill, the law holds the rights of the owner in high regard. So, even though the mark may not be registered, there may well be rights attached to it. 

Commentary:

Counterfeiters seek to use both registered and unregistered trade marks in order to take advantage of the brand’s position within the market to deceive consumers, having the potential to make thousands of pounds in profit. Whilst the law holds the rights of the brand owner in high regard (as seen by the range of remedies that are available to them), the scale of and size of counterfeit markets are such that even the most well resourced brand owners will struggle to police them. If consumers were better educated, or more conscious as to their actions when purchasing products this Christmas, perhaps there would be less scope for the infringers to operate, and therefore fewer dangerous and sub-quality goods on the market.

So, the advice this Christmas is (as ever) if you see a deal that is too good to be true, it probably is! 

For more information please contact Anna Sowerby on +44 (0)20 7438 2285 or at anna.sowerby@crsblaw.com.