201810.09

EU Customs Report 2017 on Counterfeiting: Highlights

This report is based on the EU Customs 2017 results (Report on the EU customs enforcement of intellectual property rights: Taxation and Customs Union. Results at the EU border, 2017).
For the most part, the counterfeit goods seized continue to come from China, including Hong Kong. However, it appears that in some countries counterfeiters have specialized in particular sectors. For examples, the report cites Moldova and the United States for beverages and Turkey for the textile industry (Report, p. 6).
EU Customs report 57,000 seizures representing 31.4 million items with an estimated market value of more than 582 million euros. It’s less than the year before. In 2016, customs had intervened 63,000 times to intercept 41.4 million items with an estimated total market value of 673 million euros (Report, p. 9).
However, these figures do not necessarily mean that counterfeiting is declining. Indeed, the report is based on the number of detention cases. But, like any underground economy, we must consider many variables.
Firstly, it goes without saying that counterfeiters do everything to escape customs and justice. Everything is done to reduce transparency to nothing:
  • undeclared work;
  • under-reporting of income;
  • the use of opaque means of payment;
  • the “division of labor” (manufacture here, assembly there, affixing the brand elsewhere and packing in another place);
  • the use of loopholes left by free trade zones (IPTwins.com, ” Free Trade Zones as Means to Facilitate Counterfeiting, March 25, 2018);
  • the mobility of the means of production;
  • recurring changes in accounts on online marketplaces or social networks;
  • production within the European Union in order to escape customs controls.
Secondly, the resources allocated to the fight against counterfeiting by States and the level of investment that right holders are able to devote to this phenomenon must be taken into account. To understand the figures of the EU Customs report, the number of requests for applications for action issued (nearly 35 000 in 2017) must also be taken into account. The latter was relatively stagnant in 2015 (33,191), 2016 (35,815) and 2017 (34,931) (Report, page 8). Admittedly, in the absence of an application for action, customs officers can act ex officio if they suspect that goods are counterfeit, but this is rare (in less than 2% of cases) (ibid.). It should also be noted that last year, less than 11% of detention cases gave rise to legal proceedings (Report, page 11), ie 7,831 procedures. However, these procedures involved more than 30% of all items held (ibid.). It can legitimately be inferred that right holders generally prosecute counterfeiters when the detention concern a volume of items of which is large enough to guarantee compensation for the costs of the proceedings. With some exceptions, most of these proceedings concern port and airport cases. This strategy, however understandable, poses a certain difficulty because, in 2017, the detention of items that were sent by post and express mail still represented 37%, in value (more than 220 million euros, Report, p. 28).
Finally, the actions carried out upstream of the distribution, with the help of online brand protection systems (of which those offered by IP Twins), make it possible to interrupt the chain of delivery of the counterfeits. In this regard, the report indicates that 76% of detentions involve goods that have been ordered on e-commerce platforms and have traveled by post and express mail (Report, p. 6).
Traditionally, and in the consciousness of consumers, counterfeiting concerns the textile industry and leather goods. This is no longer the case. The most affected sectors are the agri-food industry, toys, cigarettes and cosmetics (Report, Chart 7, p. 13). This trend, which has been going on for several years, is becoming increasingly alarming. It goes without saying that the elements that make up these goods carry risks to the health of consumers. For example, high-lead toys are not just fiction (John Grisham, The Litigators, Doubleday, 2011). One should remember that in 2007, Mattel had to recall millions of toys for this reason (New York Times, August 15, 2007). And we cannot expect counterfeiters to recall toys imbibed with paint that has an unacceptable lead level. Last month, US border officials seized thousands of toys at the Canadian border containing lead levels above the legal threshold (see our press review, Sept. 2018). The figures in the report are all the more alarming because in 2017, in the European Union, the 179 criminal proceedings initiated (or 0.2% of detention cases) involved only 170,379 items, that is to say, 0.54% of items. Counterfeit goods that were detained include:
  • 3,440,108 toys (Report, 21);
  • nearly 8 million products in the agri-food sector (including beverages) (Ibid.);
  • nearly 2 million cosmetic products (Ibid.);
  • nearly 3 million cigarettes (Ibid.);
  • nearly 600,000 products in the medical sector (Ibid.).
In the future, it is to be hoped that the dangerousness of the counterfeits which are in circulation or which are trying to enter the territory of the European Union will incite the authorities to pursue systematically on the penal level.

About IP Twins

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