Winning Against Counterfeiters: Strategies and Insights

1. An Effective Response To CounterfeitersAvv. Carlo Alberto DemichelisVice-President, Indicam – Istituto di Centromarca per la Lotta alla ContraffazionePartner, Responsible for Trademark Area, Jacobacci & Partners S.p.A.

2. INDICAM – ISTITUTO DI CENTROMARCA PER LA LOTTA ALLA CONTRAFFAZIONE (1) INDICAM IN PILLS: • Established in 1987. • Members: • Honorary Members (3): Confcommercio, Confindustria, Confesercenti. • Collective Members (11): Category Associations. • Full Members (94): Trademark Owners, Manufacturers and Supplier Companies. • iv) Associated Members (76): Suppliers of Anti-Counterfeiting Technologies; IP Law Firms; Trademark and Patent Consultancy Firms; Investigative Agencies Specialised in IP Intelligence.

3. INDICAM – ISTITUTO DI CENTROMARCA PER LA LOTTA ALLA CONTRAFFAZIONE (2) • Indicam is the only Italian association being: Inter-sector-based, Inter-professional and active on the anti-counterfeiting scenario.

4. INDICAM – ISTITUTO DI CENTROMARCA PER LA LOTTA ALLA CONTRAFFAZIONE (3) THREE MAIN ACTIVITIES: • Development of an anti-counterfeiting culture. • Cooperation with international, European, National and Local authorities in anti-counterfeiting issues. • Facilitator between the private and public sectors in anti-counterfeiting issues.

5. THE OVERALL PICTURE (1) COUNTERFEITING IS A REAL THREAT ON BOTH THE OFF-LINE AND ON-LINE WORLD • Since counterfeiters do not publish their balances, numbers on turnovers and percentage of world trade are by definition only estimates; for example, WTO estimates that counterfeit and piracy account for some 8-10% of world trade. In 2007 OCSE considered that the total value of the transborder trade in counterfeited and/or pirated goods is in the area of US $ 200 billion.

6. THE OVERALL PICTURE (2) • What is not an estimate, but a fact, is that virtually no industry is exempt from counterfeiting and/or piracy. • According to the numbers available from Customs' seizure in Europe and elsewhere, counterfeiting activities are still on the rise. • Internet is quickly becoming the most important source for infringing products, for both counterfeiters and consumers.

7. KEY FACTORS • i) Situation awareness. • ii) Organised use of information. • iii) Systematic response through the choice of the most appropriate enforcement action, within an anti-counterfeiting program.

8. SITUATION AWARENESS (1) DETERMINE THE FACTUAL SITUATION • i) Which products are most commonly counterfeited? • ii) Where are usually sold: open area markets, street traders, events or shops, Internet. • iii) Products which are copies of the “real thing” vs. products that are not.

9. SITUATION AWARENESS (2) ACQUISITION OF INFORMATION • i) Products identification: Use of security labels. • ii) Involve licensees, sale force and clients. • iii) Apply for Customs survey of imports and exports.

10. ORGANISED USE OF INFORMATION • i) Appoint a specific responsible for the coordination and handling of all the anti-counterfeiting activities. • ii) Circulate information among all the interested players. • iii) Update constantly the information necessary to identify the authorised products.

11. SYSTEMATIC RESPONSE WITHIN AN ANTI-COUNTERFEITING PROGRAM • i) Fix thresholds and react in each and every occasion in which these thresholds are crossed. • ii) New products and new trademarks have to be designed and selected bearing in mind that they will need to be protected and enforced. • iii) There is no magic recipe, but there are cost-effective responses.

12. THERE IS NO VICTORY WITHOUT INVESTMENTS • i) Allocate budget. • ii) The budget determines the activity. • iii) Anti-counterfeiting activities are a key factor in both the on-line and off-line markets: the budget needs to be defined taking into full account the importance of both of them.

13. COUNTERFEITING IN THE ON-LINE WORLD – KEY ISSUES OF COMMON INTEREST FOR RIGHT OWNERS • i) Identification of infringing products. • ii) Identification of the sellers. • iii) Repetition of sales of the same infringing items. • iv) Responsibility of Internet Service Providers (ISP) / E-platforms.

14. IDENTIFICATION OF THE SELLERS (1) • i) Sellers identify themselves with pseudonyms and identity is hidden to both right owners and consumers. • ii) When right owners take steps to identify them, the available info and data are quite often meaningless. • iii) Sellers may have multiple pseudonyms.

15. IDENTIFICATION OF THE SELLERS (2) • iv) Suspended sellers may easily recommence operating simply by using a new pseudonym and a new credit card / bank account. • v) The above applies to both (so called) private sellers as well as to professional sellers.

16. REPETITION OF SALES OF INFRINGING ITEMS • i) No or ineffective risk profile analysis carried off-line by many ISP / E-platforms. • ii) Cross-border sales normal and widely available. • iii) Use of multiple IDs is a strong facilitator for the repetition of sales of infringing items.

17. RESPONSIBILITY OF ISP / E-PLATFORMS • Current legal framework in Europe includes exemptions of responsibility for ISP and exonerates them from a general and active duty of survey as to the contents of the on-line information: articles 14 and 15, EC Directive 2000/31; articles 16 and 17, Italian Decree Law No. 70/2003. • Exemptions of responsibility and exonerations from duty of general and active survey only regard the activities of mere conduit and hosting of information. • ISP remain responsible in all those cases in which they are conscious of the infringing or otherwise illicit nature of the activity or information and/or when they are aware of facts and circumstances which make evident the infringing and/or illicit nature of the information or activity, and/or whenever they are made aware of the above and do not immediately take the necessary steps to remove the information or to disable its access.

18. RESPONSIBILITY FOR ISP / E-PLATFORMS: A DIFFERENT LOOK INTO THE PRESENT AND FUTURE • ISP which do not only provide mere conduit or hosting services should not benefit of the exoneration from responsibility and/or exemptions from the general duty of survey and/or active survey as to the nature of the information or the activity. • In Europe, national laws are free to regulate the responsibility of ISP in connection with activities and services which fall outside the scope of the mere conduit or hosting services, within the framework of the general duty of diligence which is reasonably set forth by local laws. • Within the above limits, national rules can and should integrate the directive; but in perspective, a new and updated European wide (at least) legal framework which will take in full account the lessons learned since the entry into force of EC Directive 31/2000, is needed.

19. HOW TO NAVIGATE AS SAFELY AS POSSIBLE (1): 3 DANGEROUS PREJUDICES • i) Counterfeiting and piracy just happen. • ii) Anti-counterfeiting strategies can only be reactive. • iii) Anti-counterfeiting is strictly a matter for lawyers and investigators.

20. HOW TO NAVIGATE AS SAFELY AS POSSIBLE (2): 3 SOUND RULES Anti-counterfeiting strategies: • i) have to be dealt with as a part of the overall company strategy. • ii) have to be supported by top management. • iii) have to be funded adequately and organised into an anti-counterfeiting program.

21. HOW TO NAVIGATE AS SAFELY AS POSSIBLE (3): 3 PRECIOUS ADVICES i) Have the tightest control of your company's value – chain in all directions. ii) Make your anti-counterfeiting strategies a part of your marketing policies. iii) Involve in them all your employees and clients.

22. For further info: Avv. Carlo Alberto Demichelis cdemichelis@jacobacci.com Tel.: 0039-11-2440311 Fax: 0039-11-286300