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Counterfeit & Substandard ICT DevicesITU Headquarters

Geneva, 17 November 2014

The Fight Against Counterfeiting and Piracy:

The Contribution of the WTO's TRIPS Agreement

Roger Kampf

WTO Secretariat

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Economic Relevance (1):Mobile Cellular Subscriptions

(% of population)*

*Source: World Bank World Development Indicators

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Economic Relevance (2):Active Trademarks in Selected Sectors*

*Source: WIPO Global Brand Database (viewed on 11.11.2014)

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Trademark Applications Since 1995* Status: Active

*Source: WIPO Global Brand Database (viewed on 11.11.2014)

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Active TMs by Selected Origin*

*Source: WIPO Global Brand Database (viewed on 11.11.2014)

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Enforcement under TRIPS

• TRIPS = first international treaty with detailed section on enforcement

• Objective = make available (→ private rights) effective tools to guarantee application of substantive rules, including:– Expeditious remedies to prevent infringements

– Remedies constituting a deterrent to further infringements

• Application of basic principles:– Minimum level of protection, but not harmonisation

at multilateral level– Freedom to determine appropriate method of

implementation– Non-discrimination rules– WTO dispute settlement

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All Types of IPR Infringements• General obligations characterized by search for a

balanced regime:

• Prompt and effective provisional measures must be available

Right Holders Users

Effective enforcement Procedures not to become barriers to legitimate trade

Remedies: injunctions, damages, other

Built-in safeguards against abuse of procedures, including

indemnification of defendantRight of information

All Stakeholders: Principles of Due Process

Fair and equitable procedures

Decisions on the merits of a case

Opportunity for review by a judicial authority

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Counterfeiting and Piracy:Additional Obligations

Border Measures Criminal procedures

Conditions/safeguards•adequate evidence•detailed description of the goods•security or equivalent assurance•indemnification

Conditions:(i)wilful act(ii)of trademark counterfeiting or copyright piracy(iii)on a commercial scale

Procedures•notice of suspension•10 working days to initiate proceedings•right of inspection and information

Remedies:•destruction•disposal of infringing goods outside channels of commerce

Remedies:•imprisonment and/or •monetary fines sufficient to provide a deterrent

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Counterfeit: Definition / Scope

• Counterfeit TM:– slavish copying of

TM– deliberately gives

impression of being genuine product

– fraud usually involved since confusion between genuine product and copy is intended

• Ordinary TM infringement:– infringer’s mark is

sufficiently close to registered mark

– leads to likelihood of confusion

Art.51 Fn. 14(a):•defines « counterfeit trademark goods »•Establishes clear link with trademarks•Distinct from other forms of TM infringements

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Members’ Legislation and Practice• From a narrow to a broader meaning ?• Some Members laws and practice link term to

other IPR categories in addition to trademarks– EU Communication (IP/C/W/471):

• « counterfeiting of medicines has also undergone considerable mutations (…), commercial shipments are being discovered to contain hundreds of kilos of products infringing patent rights, whereas a while back they would have infringed trademark rights. »

• « confining the scope of customs intervention to trademark or copyright goods is no longer appropriate, (...). Fraud rings (...) now prefer to counterfeit patents, geographical indications or plant varieties (...). »

• Consequence of « loose usage » of terminology:– EU Commission Report on Customs Activities on

Counterfeit and Piracy 2007: Switzerland as main source of counterfeit medicines ?

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Selected Optional Provisions

• Border measures with respect to:– IPRs other than counterfeit trademark

and pirated copyright goods– exports and goods in transit– parallel imports– de minimis imports– ex officio action

• Criminal procedures with respect to:– IPRs other than counterfeit trademark

and pirated copyright goods

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How to Handle Goods In Transit (1):The EU Example

• Nokia Corporation v HM Commissioners of Revenue & Customs, High Court, England and Wales, 27 July 2009:– Customs detained suspect telephones/accessories

• Bearing Nokia trademark• Shipped from Hong Kong, China to Colombia• Nokia confirmed that telephones were fake

– Justice Kitchin:• No threat of goods being released on the Union market• Hence, not to be treated as counterfeit goods • But recognition that result is not satisfactory: “I can only hope it

provokes a review of the adequacy of the measures available to combat the international trade in fake goods by preventing their transhipment through Member States.”

– Appeal by Nokia:• Question referred to CJEU for preliminary ruling• Reason: divergent interpretation of EU Customs Regulation in

other EU member States (Sisvel v Sosecal, Court of The Hague, 18 July 2008 and Philips v Far East Sourcing Limited, Antwerp Court of First Instance, 4 November 2009)

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How to Handle Goods In Transit (2):The EU Example

• EU Customs Regulation 1383/2003:– Extended to goods in transit– Commission Communication 2005: controls, including

during transhipment protect not only the EU but also other parts of the world and, in particular, LDCs

• CJEU Decision (joined cases C-446/09 and C-495/09, Philips/Nokia, Dec.2011)

• Commission Guidelines (Feb. 2012)• Regulation 608/2013:

– Recital (11): substantial likelihood of diversion of medicines onto EU market to be taken into account

– Nothing is said about handling of other products• Trademark reform: right holders to be entitled to

take action against infringing goods, regardless of release for free circulation

• Remember: coverage of goods in transit optional under TRIPS

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Ad hoc discussions in TRIPS Council• Communications EU, US, CH, Japan (2005-07):

– Called for information exchange, awareness raising, examination of TRIPS compliance and best practices

– Suggested focus on border measures, based on right holders’ involvement, Customs coordination

• Communication US (2012):– Set out initiatives to secure supply chains– Reported on infringing mobile phones as representing

one-third of seized consumer electronic goods in 2011• Communication Japan (2012):

– Reported on trends in Customs seizures and action taken to enhance Customs officers’ expertise

– Mobile phones / accessories represented 2% of the total number of cases of suspension by Customs

– Number of cases almost doubled in six years (563 cases in 2011, as compared to 289 cases in 2007)

• In-transit generic medicines (2009-10)• FTAs/RTAs/ACTA

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Enforcement Provisions in RTAs

• Survey of 245 RTAs with IP provisions notified to the WTO as of Feb.2014

• Provisions on border measures covered by:– 100% of RTAs between developed countries– 62% of RTAs between developed-developing countries

• Source: Valdés/McCann, IP Provisions in RTAs, WTO Staff Working Paper (June 2014)

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Useful Sources of Information at WTO• Review of TRIPS implementing legislation• Checklist of Issues on Enforcement:

– Responses submitted by 104 Members– But: not regularly updated by all Members

• Use of Article 63.3 to gather information• Notification of contact points (Article 69):

– Exchange of information on trade in infringing goods– Promotion of cooperation between customs authorities

with regard to counterfeit trademark / pirated copyright goods

– Objective: elimination of international trade in goods infringing IPRs

• TPR reports - example of Chinese Taipei (2014):– Cell phones among main imported commodities

infringing trademarks – general trend = decreasing– Counterfeit mobile phones also lead export

commodities infringing trademarks – general trend = increasing

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Dispute Settlement Cases (1)

• China - Measures affecting the Protection and Enforcement of IPRs (WT/DS362):– Customs measures:

• Goods destined for exportation: application of remedies in Art.59 not mandatory

• Imports:– auctioning/donation of infringing goods not prohibited

(Art.59, 46 first sentence)

– note US reference to counterfeit mobile phone batteries and related risk of donating defective or dangerous goods

– but sale of goods after simple removal of trademark inconsistent with Art.59, 46 fourth sentence TRIPS

– Criminal procedures and sanctions (Art.61):• Criminalization of all copyright / trademark

infringements not required

• Meaning of “commercial scale”

• Thresholds not endorsed, but lack of evidence

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Dispute Settlement Cases (2)• EU and member State – seizure of generic drugs

in transit: consultations requested by India (WT/DS408/1) and Brazil (WT/DS/409/1)

• Measure at issue:– EU Customs Regulation 1383/2003 and other EU / Dutch

legislative provisions, as well as Dutch Court decisions

• Requests refer, among others, to:– GATT: Art. V (freedom of transit), Art. X:3

– TRIPS:• Art. 28 in conjunction with Art.2 and Art.4bis Paris

Convention, para.6(i) of August 2003 Decision (limits to patent rights conferred)

• Art.41, 42 (barriers to legitimate trade)

• TRIPS interpretation and implementation in light of Art.7 and 8, Doha Declaration on TRIPS and Public Health, as well as International Covenant on Economic, Social and Cultural Rights

• Both cases pending

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Beyond TRIPS: TBT Committee• 2011 Measure - conformity assessment

procedures for mobile phones in Viet Nam:– Import only through three international seaports

– Additional Customs documentation with consulate approval in exporting countries

• Concerns raised in TBT Committee (June 2011- June 2012):– US et alia: measures create new requirements, such

as submission of quality control certificate; designation of specific ports of entry; selection of products?; non-discriminatory application?; etc.

– Viet Nam: measures aim at preventing smuggling and import of counterfeit mobile phones, protecting consumers’ safety and health; cosmetics, alcohol and mobile phones among largest group of imported counterfeit products

• TPR report (2013): – Measure abrogated with effect from 1 January 2013

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• TRIPS Agreement can contribute– To fighting counterfeit ICT equipment– Not to combating substandard ICT equipment

• Need for a sector-specific debate on counterfeit ICT equipment in TRIPS Council?

• And if so, what are the lessons to learn from earlier discussions, in particular regarding counterfeit health technologies:

– Potential health impact of counterfeit products

– Link between affordability and marketing of counterfeit products

The Way Forward (1)

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• Need to ensure:

– Concise use of terminology:

→ substandard ≠ contraband ≠ counterfeit

– Coherence at all levels

– Adequate capacity building and awareness raising: to begin with collaboration among relevant IGOs

• Is there a need to:– Cover other types of IPR infringements?

– Address the «secondary» impact of counterfeit and substandard ICT equipment, e.g. where used to trace other counterfeit products (medicines)?

– Gather additional facts and empirical data?

The Way Forward (2)