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Intellectual Property Rights (IPR)

Extent of the phenomenon

Intellectual Property Rights (IPR) offences now affect everything that is manufactured and has a commercial value, touching all sectors from horticulture to the auto industry to pharmaceuticals. The offenders keep pace with the latest technology and with trends in the global market. The objectives are profit at any price and maximum cost-effectiveness, with total disregard for humanitarian considerations, an objective perfectly in keeping with the criminal and terrorist organizations which use the highly lucrative counterfeiting and piracy industry to finance their activities.

Nowadays, the means of production used by counterfeiters are equivalent to those employed in the licit product market, and are based on the latest technology. The counterfeiters adopt an industrial approach, enabling them to improve both the quality and the quantity of counterfeit goods.

Many of these products expose the public to serious health and safety risks. There have been cases of pharmaceutical products and prescription medicines manufactured from poisonous or inferior constituents or containing no active ingredient, auto parts which do not meet safety standards, aircraft parts assembled upside down, and computer central processing units which have had their processing speeds artificially enhanced, making them much more prone to crash under intensive use. The latter example serves as a worrying reminder of how dangerous counterfeiting can be, particularly if the counterfeit part is an essential component of an automated air traffic control system.

In the past, the distribution of counterfeit goods was confined to fly-by-night networks, street-corner vendors, street stalls, etc., with no real organization. This distribution model limited the market penetration of counterfeit goods. Distribution has now been diversified. Technical advances such as the Internet offer traffickers new distribution opportunities and make their illicit products accessible to the global marketplace. E-commerce has led to a huge increase in the number of transactions for which it is difficult to identify the vendors, who are able to hide behind pseudonyms. The distribution network involve large numbers of intermediaries, and increasingly innovative methods are being used to disseminate the goods.

The phenomenon is by no means confined to the counterfeiting of trademarked goods; all kinds of rights are targeted. Patents, designs and models, as well as copyright, are all falling victim to attacks which are becoming increasingly difficult to detect.

Economic impact

The impact of the counterfeit goods traffic on the global economy is becoming greater every year, and is affecting all those involved in international trade.

Counterfeiting causes serious economic and social damage to countries, in particular by discouraging inward investment.

Manufacturers, distributors and entrepreneurs are looking for a fair trading environment in which their products or trademarks will receive adequate protection against unfair competition. International companies are tending to reduce the number of their manufacturing and distribution sites, with the result that they are extremely selective about which countries they eventually invest in. The amount of trouble States go to in order to create a fair trading environment for these markets is therefore a crucial factor.

Customs administrations play an important and legitimate role, by providing an effective line of defence against the risk of intellectual property rights violations. By promoting licit trade, they will contribute to the prosperity of their countries’ economies and protect the public against goods of inferior quality, which are so often dangerous.

The role of Customs in combating counterfeiting

  • Customs in the front line

Customs carries out an essential function in the fiscal area, but as import duties fall its mission of protecting society and ensuring compliance with trade rules, and its role in achieving a fair and equitable international market, are assuming increasing significance.

As a result of its position at land, sea and air borders, Customs is the public service which is best placed to protect the external borders. The Customs officers of today have to deal with a very wide range of offences and frauds in relation to, in particular, illicit drugs, endangered species, nuclear materials and hazardous goods, cultural heritage items, and goods whose importation, exportation and carriage contravene intellectual property rights (IPR) legislation.

This places Customs in the front line of the battle against counterfeiting, as the figures show: Customs makes 90% of all seizures of counterfeit goods in Europe, and more than 70% worldwide.

  • TRIPS Agreement

In the framework of the negotiations and of the Convention establishing the World Trade Organization, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was signed on 15 April 1994. Part III, Section 4 of the TRIPS Agreement describes the role and responsibilities that Customs administrations are called upon to assume with regard to the application of the IPR regulations. In this new millennium, many Customs administrations of developing countries which have joined the WTO are therefore required to implement the TRIPS Agreement in full.

  • Prerequisites

The primary responsibility for taking measures to protect trademark and copyright lies with the right holders themselves. The model legislation establishes that the role of Customs is to help ensure that intellectual property rights are complied with. Therefore, the prerequisite for Customs intervention is that companies must protect what they have created. If their intellectual property has not been registered with a recognized official body (national, regional or international), it will then be difficult to take legal proceedings against an alleged counterfeiter.

The second stage involves the right holder lodging a written application for intervention by Customs, asking the latter to seize the goods. The advantage of the application for intervention is that it provides Customs services with a sufficiently detailed description of the goods to which the intellectual property right applies, and with the particulars needed to contact the right holder at any time. Unfortunately, not all companies will protect their intellectual property adequately, and systematically lodge an application for intervention with Customs.

Nevertheless, Customs can intervene on its own initiative, by suspending the clearance of goods where there are grounds for suspecting that intellectual property rights have been infringed. However, in this specific area Customs officers do not always have sufficient experience and information to be able to identify IPR-infringing goods.

The counterfeiters and those behind their activities operate in various ways and are not short of imagination. The two parties – industry and administrations – have understood that the internationalization of these offences, along with their development and their sophistication, make it impossible for a company to tackle the problem successfully on its own.

The WCO’s IPR Programme

  • The Customs/business partnership

The WCO Programme starts from the premise that nothing effective can be achieved in isolation. It is based on Memoranda of Understanding (MOUs) drawn up in a true spirit of partnership and signed between the WCO and key trade bodies.

Customs is able to enhance the effectiveness of its operations by having real-time access to the commercial data and strategic information needed to detect counterfeit goods.

For their part, legitimate businesses benefit enormously from working in partnership with a Customs administration which, through having a greater awareness of the needs of business, is in a better position to facilitate licit trade. It is also encouraging to see that the work being done in this field at international level is resulting in the adoption of corresponding measures at national level.

  • Training

The WCO has developed a joint Customs/business training programme on IPR. This is an innovative partnership operating with due regard for economic necessities.

The WCO’s basic policy involves helping Member administrations to enhance their effectiveness so that they can progress at their own pace towards the development and implementation of an operational set-up which suits their environment.

The new e-learning module on the protection of intellectual property rights was launched at the Second Global Congress on Combating Counterfeiting and Piracy (November 2005, Lyon - France). These e-learning modules, used by the WCO’s 171 Member administrations, help Customs officers to target and improve their IPR-related strategies and activities. The new e-learning modules include detailed lessons and case studies dealing with the phenomenon of counterfeiting and its impact world-wide, the TRIPS Agreement which establishes an international legal framework, Customs procedures and risk management.

  • WCO Actions

The activities of G8

In 2005 we witnessed the emergence of new prospects in the battle against counterfeiting, firstly with the enhancement of co-operation between the United States and Europe and of collaboration between the public and private sectors, and secondly with the work of the G8, which recommended tangible measures including, in particular, greater international co-operation, better information about seizures, the introduction of risk analysis, targeted technical assistance, officer exchanges and the establishment of a dedicated Web site in each G8 country.

The WCO strategy

At the June 2006 Council sessions, Members of the WCO recognized that Customs administrations had a major role to play in IPR protection, and every effort should be made in that regard. Pragmatically, the WCO needed to offer a tangible response giving practical effect to Customs’ position as leader in the field of anti-counterfeiting activities. Therefore it was proposed to create a set of standards which would deal with enforcement of intellectual property rights (IPR) by Members.

The WCO provides customs administrations with a set of intellectual property rights best practices (IPR) to promote respect for IPR at borders by building customs capacity and strengthening cooperation between Customs and its international partners as well as rights holders.

This implementation tool which is designed to assist WCO Members in implementing the provisions of the WTO TRIPS Agreement predicates the implementation of an Action Plan that consists of actions to be undertaken in the areas of:

  • technique and methods used in combating counterfeiting and piracy,
  • cooperation with rights holders;
  • international cooperation among customs administrations, and between customs and their partner international organisations;
  • training programmes.

The WCO has now established a Counterfeiting and Piracy Group (CAP) to provide a platform for its members to exchange best practices and discuss their views and experiences on IPR related issues.

In the fight against counterfeiting and piracy, Member Customs administration will make use of and improve existing WCO tools such as the:

  • WCO Model IPR Legislation
  • WCO Risk Management Guideliness for more effective controls
  • IPR Diagnostic Survey
  • WCO IPR e-learning module
  • Proposals aimed at strengthening co-operation with the private sector,
  • Working methods tailored to suit the specific nature of anti-counterfeiting activities.
  • Customs Enforcement Network (CEN) and its communication tools

Innovative initiatives

The WCO plan provides for the publication of an annual statistical report identifying the main trends and enhanced training on the legislative aspects; it also incorporates the CEN (Customs Enforcement Network), risk analysis, workshops on how to detect counterfeits, and the e-learning modules. A diagnostic tool on capacity building needs will be made available to Members; it will cover the legislative aspects, enforcement, statistics and data transmission.

Finally, where international co-operation is concerned the WCO is strengthening its partnership with WIPO, Interpol, OECD, the European Commission, WHO, WTO and the Council of Europe in order to avoid duplication and ensure that the efforts of all the stakeholders’ come together in pursuit of a collective cause – the fight against counterfeiting and piracy – which lies at the heart of the economic, commercial and social preoccupations of States.

WCO priorities

  • Make good use of the knowledge acquired through co-operation with our partners, in order to contribute to a sustainable improvement in the effectiveness and cost-effectiveness of Member administrations' interventions in the field of combating IPR infringements.
  • Encourage strong mobilization and global consumer policy awareness, in order to bring about sustainable behavior
  • modification with regard to this 21st Century phenomenon which is the “black sheep” of globalization.

Information Repository of Legislation on Border Measures for Counterfeiting and Piracy- 2012 edition updated 

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