Despite the best efforts of the authorities, a considerable trade in counterfeit goods remains in almost all areas of business.
Well-known brands are not immune. It has recently emerged that Procter & Gamble has issued proceedings against discount store Poundstretcher alleging the sale of fake Head & Shoulders shampoo and Ariel laundry powder.
In addition to the legal costs and damages Poundstretcher faces if it is found to have been selling counterfeit goods, the impact on its brand and reputation could be significant.
Cases such as this illustrate how crucial it is for businesses to take all possible steps to prevent counterfeit goods from entering their supply chain and to take appropriate action if it is discovered that such goods have slipped in.
Best practice
I have advised various businesses and individuals on issues related to counterfeit goods and the problems faced in a world of long global supply chains.
There are some points of best practice which may help to prevent unwitting involvement in the counterfeit goods trade:
• Where possible validate/check products with a laboratory or other expert before import to ensure authenticity
• Try to gain knowledge of origin and test items through the whole product cycle, including verifying batches and serial numbers
• Implement a validation strategy for products
• Built trusted and transparent relationships with suppliers
Repairing the damage
If a batch of goods is counterfeit:
• Importers of goods will often first become aware that goods they are seeking to import are counterfeit following receipt of a notice from HMRC that suspected infringing goods have been detained. In that case, unless the goods can be shown to be genuine they will likely be destroyed.
• If the importer has other stock from the same supplier then it should be retained in storage with a view to authenticity being confirmed. Transporting, exporting, or distributing the goods could constitute a criminal offence.
• Goods should not be returned to the supplier since this could be seen as seeking to gain from goods known or suspected to be counterfeit, and potentially releasing them for distribution into the market.
• Insurance policies should be checked to see if they might cover legal costs associated with disputes with suppliers or customers in relation to counterfeit goods.
• Where goods are discovered to be counterfeit other by way of an HMRC notification, Trading Standards should be notified immediately and the goods retained in storage, pending instructions from Trading Standards or other relevant authorities.
• Legal advice should be taken to assess potential claims against suppliers or any other proceedings which may be intimated as a result of intellectual property infringement.
With counterfeit goods trading on the rise, businesses need to be aware more than ever of the steps that they need to take to prevent getting caught up in this illegal activity.
The importance of brand protection is critical for survival, and the above measures can help to prevent unwitting involvement in the counterfeit goods trade.
- Danielle Best is an Associate at national law firm Weightmans
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