Counterfeit goods in South-East Asia: Saving money may risk your health

Facts and trends

Over recent decades, counterfeiting has been causing serious harm, not only to the global economy but also to consumer health and safety. The huge, quickly generated profits made from illicit trading (comprising counterfeiting activities) has encouraged counterfeiters to find new ways to evade the detection and restriction of their illegal activities and to speedily adapt to changing circumstances. Booming e-commerce, the intensive use of social media platforms and most recently, the Covid-19 pandemic, have all driven the counterfeiting issue to become a critical concern.

Photo source: www.pexels.com

Photo source: www.pexels.com

In a report published in 2019 by the Organisation for Economic Co-operation and Development (OECD) and the European Union Intellectual Property Office (EUIPO)[1],  half of countries in South-East Asia (SEA), such as Singapore, Thailand, Malaysia, the Philippines and Vietnam, are listed among the top 25 economies for the provenance of counterfeit and pirated goods between 2014 and 2016. In this article, we will take a look at how counterfeit trading activities are evolving in SEA as well as the explicit and implicit consequences on human health of using counterfeit products.

In many areas in the world, including the South-East Asian region, the Covid-19 outbreak has caused the authorities to apply strict restriction measures, such as lockdowns, social distancing, working from home, etc. During the crisis, online shopping has become an efficient way to fulfil people’s need. E-commerce platforms, including Shopee, Lazada and Tokopedia, or social media platforms, such as Facebook, TikTok and Instagram, are popular places where people make millions of orders every day. A joint e-Conomy report in 2020 by Google, Temasek and Bain emphasised significant changes in the digital life of the region: 36% of digital consumers were new to the online services due to Covid-19 and 94% of them intend to continue using digital services going forward[2].

Moreover, the Covid-19 crisis caused a sharp slowdown in the 2020 GDP growth of major countries such as Indonesia (-2.1%), Malaysia (-5.6%), Myanmar (-10%), the Philippines (-9.6%), Singapore (-5.4%) and Thailand (-6.1%)[3]. Given the current environment of uncertainty and fear, and the real threat of significant declines in income, many consumers are now unable to purchase branded goods and services. Consequently, buying cheap counterfeit products is a tempting option for consumers with low budgets.

Amid the chaos, counterfeiters have promptly taken advantage of the new situation and, unfortunately, they are often one step ahead of authorities and policy. Recently, an overwhelming number of counterfeits being sold on e-commerce sites, social media platforms and dark-net markets have been detected, warned about, and reported by authorities, brand owners and consumers.

IEO-charts-IPV-Reports-as-of-Sept-2020_stFor instance, according to the IP Violation Reports from the Intellectual Property Office of the Philippines (IPOPHL), from January to September 2020, IP complaints lodged at the IPOPHL increased to 135, surpassing the total of 129 complaints received in the previous 5 years (from 2015 to 2019)[4]. Among those, the majority of violators were operating online.

In 2020, the General Department of Market Surveillance in Vietnam checked more than 5 000 suspected cases, uncovering about 4 500 violations. This resulted in monetary fines that came to a total of VND 30 billion (approximately USD 1.3 million). The value of counterfeit goods, and goods without a certificate of origin infringing IP rights, recorded in the first 7 months of 2020 by this department was VND 40 billion (approximately USD 1.74 million)[5].

Furthermore, according to the enforcement statistics of the Department of Special Investigation and Customs, Royal Thai Police, the number of seized items from January to May 2021 increased by 83.33% compared to the same period last year[6].

More importantly, the Covid-19 pandemic has made people seriously anxious about getting sick. Many people stockpiled medicines, testing kits, and protective equipment (such as face masks, medical devices, disinfectants, sanitisers, etc.), causing a dramatic surge in demand for those products. During the peak crisis, global transportation was seriously affected, resulting in higher prices for raw materials. There were not enough products originating from genuine sources to meet the huge spike in demand. Consequently, broken supply chains, a strong demand for essential products, and the high level anxiety among consumers, have accelerated the surge in illicit trade and counterfeiting. ‘When the supply does not meet the demand, it creates an environment where poorer quality or fake medicines will try to meet that demand,’ said Pernette Bourdillion Esteve from the World Health Organization (WHO)[7].

A report by Check Point Research[8] revealed that there has been an alarming increase of fake Covid-19 vaccines available on the dark web since November 2020 – when the positive news about vaccine trials and the imminent availability of vaccines was released. Phrases such as ‘available corona virus vaccine $250’, ‘Say bye bye to COVID19=CHLOROQUINE PHOSPHATE’ and ‘Buy fast. CORONA-VIRUS VACCINE IS OUT NOW’ were used to tempt people into buying fake medicines. Check Point’s expert also noticed that a dark-net search for Covid-19 returned multiple results, including hundreds of advertisements – an increase of over 400% since early December 2020.

Photo source: INTERPOL

Photo source: INTERPOL

Recently, INTERPOL (with the support of local police, customs and health regulatory authorities) carried out Operation Pangea XIV in 92 countries, targeting the sale of counterfeit and illicit medicines and medical products. The operation resulted in 113 020 web links, including websites and online market places, being closed down or removed. This Operation oversaw the seizure of 9 million medical devices and illicit pharmaceuticals (fake and unauthorised Covid-19 testing kits accounted for more than half of those) and 277 arrests worldwide during one week of action (18–25 May 2021). The potentially dangerous pharmaceuticals seized during the operation had an estimated value of more than USD 23 million[9].

The health and safety consequences of counterfeits

Using counterfeit products, especially fake medicines, can cause serious harm to health and safety for consumers, as they are more likely to contain dangerous ingredients than authentic goods. Furthermore, counterfeit products usually do not go through the required consumer compliance and safety tests before being put on the market.

Recently, some alarming figures related to counterfeiting were released in the EUIPO’s Qualitative Study on Risks Posed by Counterfeits to Consumers[10]. This study clearly displays the extent of the dangers to health posed by counterfeit goods, as evidenced by the alerts submitted by EU market surveillance authorities (MSAs) using the European Commission’s ‘Rapid Alert System for dangerous non-food products’ (RAPEX system). The report concentrates on the seven most common risks reported: chemical, injuries, strangulation, choking, electric shock, damage to hearing and fires.

An analysis of RAPEX alerts carried out from 2010 to 2017 pointed out that:

  • A total of 97% of the dangerous counterfeit goods recorded were assessed as posing a serious risk.
  • Toys are the most popular type of product, followed by clothing, textiles and fashion items. In fact, the end-users of 80% of the goods reported as being dangerous and counterfeit (toys, childcare items and children’s clothing) were children. The most common danger reported (32%) was related to exposure to hazardous chemicals and toxins that could cause acute or long-term health issues (from both immediate or long-term exposure).
  • A total of 24% of the dangerous products recorded as counterfeit posed more than one danger to users.
  • The causes of the risks identified ranged from poorly constructed products or the use of inferior supplies and components, to a lack of understanding of regulations or safety mechanisms.

With counterfeit medicines, the impact can even be life-threatening. According to a WHO study on public health and the socioeconomic impact of substandard and falsified medical products[11], many counterfeit drugs contain undeclared active ingredients that might have serious unwanted health consequences. These can pose very serious threats to consumer health and public systems, such as:

  • adverse effects (for example toxicity or lack of efficacy) from incorrect active ingredients;
  • failure to cure or prevent future disease, thereby increasing mortality, morbidity and the prevalence of disease;
  • contributing to the progression of antimicrobial resistance and drug-resistant infections;
  • a loss of confidence in health-care professionals, health programmes and health systems;
  • an increase in individual and health system spending on health care;
  • lost income due to prolonged illness or death;
  • lost productivity costs to patients and households when seeking additional medical care, the effects of which are felt by businesses and the wider economy, etc.
Photo source: www.pexels.com

Photo source: www.pexels.com

According to the report from the United Nations Office on Drugs and Crime (UNODC), many South-East Asian people are at risk as the amount spent by consumers in this region on falsified medicines is estimated to range between USD 520 million and USD 2.6 billion per year[12]. The report also pointed out that ‘some of the falsified medicines manufactured in South-East Asia involve mainstream companies that cut corners by deliberately diluting products with substitute or cheaper chemicals or by altering the expiration dates on packaging. Others are produced as the result of insufficient mixing, contamination and degradation, and other simple sloppiness, as evidenced by some samples containing more than the specified dose’. For example, during Interpol’s Operation Pangea VIII in 2015, Indonesian authorities detected that criminals were altering the expiry date or the amount of the active ingredient on packages of counterfeit, expired and unregistered medicines at the warehouse and returning them to pharmacies for sale. Other follow-up investigations in Indonesia uncovered counterfeits in 37 medical facilities across 9 provinces, including counterfeit imported child vaccines for hepatitis B, tetanus, measles and polio. More than 20 individuals, including 3 health professionals, were arrested due to their involvement in these illegal operations[13].

Illegal trading and counterfeiting have negative consequences, not only for the economy (decrease of revenue and profits, erosion of brand confidence and reputation) but also for consumer health and safety. The boom of e-commerce and the extensive use of social media platforms, along with the recent Covid-19 outbreak, have been creating fertile ground for the production, distribution, and consumption of counterfeit products. To tackle this threat, continuous actions, efforts, and financial resources are required from the authorities, agencies, and IP owners to track, monitor and stop the illegal activities of counterfeiters.

But above all else, it is the responsibility of the consumer to adopt a wise attitude and to avoid buying and using counterfeit products. Purchasing counterfeit goods may instantly save some money, but paying with our health means a higher cost for all of us.

The South-East Asia IP SME Helpdesk developed and published a Guide on How to Remove Counterfeit Goods from e-commerce Sites in South-East Asia (link here), an E-commerce Infographic (link here) and IP Country Factsheets (link here).

For more information about IP in South-East Asia, check out our website at https://intellectual-property-helpdesk.ec.europa.eu/regional-helpdesks/south-east-asia-ip-sme-helpdesk_en.

The South-East Asia IP SME Helpdesk is an EU initiative that provides free, practical IP advice to European SMEs in relation to SEA. EU companies can send questions to question@southeastasia-iprhelpdesk.eu and will receive replies within 3 working days.

Author: Xuan Nguyen, SEA IP SME Helpdesk

LOGO LA IP SME HD_EC ENE-21 lr

[1] https://www.oecd-ilibrary.org/docserver/g2g9f533-en.pdf?expires=1617871694&id=id&accname=guest&checksum=5A2965E4B201677AA07AB112CEE181F9

[2] https://www.bain.com/globalassets/noindex/2020/e_conomy_sea_2020_report.pdf

[3] https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG

[4] https://www.ipophil.gov.ph/news/jan-sept-2020-reports-complaints-on-ip-infringement-surpasses-2015-2019-total/

[5] https://vir.com.vn/preventing-counterfeit-during-explosive-e-commerce-growth-during-pandemic-84285.html

[6] http://www.ipthailand.go.th/en/ipr-enforcement-operation/item/total2021.html

[7] https://www.bbc.com/news/health-52201077

[8] https://blog.checkpoint.com/2020/12/11/covid-19-vaccines-touted-for-just-250-on-darknet/

[9] https://www.interpol.int/en/News-and-Events/News/2021/Thousands-of-fake-online-pharmacies-shut-down-in-INTERPOL-operation

[10] https://euipo.europa.eu/tunnel-web/secure/webdav/guest/document_library/observatory/documents/reports/2019_Risks_Posed_by_Counterfeits_to_Consumers_Study/2019_Risks_Posed_by_Counterfeits_to_Consumers_Study.pdf

[11] https://www.who.int/medicines/regulation/ssffc/publications/SE-Study_EN_web.pdf?ua=1

[12] https://www.unodc.org/documents/southeastasiaandpacific/Publications/2019/SEA_TOCTA_2019_web.pdf

[13] Ibid.

 

Trade mark search: Why it is important and how to conduct it properly

WRITTEN BY XUAN NGUYEN

Trade marks (brands) represent one of the principal assets of a company. Trade mark is crucial to your success because it allows clients and consumers to easily identify and find products and services. Protection comes with a price, and startups and SMEs often have limited budgets. However, in the digital economy, trade mark protection is well worth the investment. It secures legal certainty and prevents others from illegally copying or using your mark to take advantage of your reputation. Strong trade mark protection enables you to stay competitive and nurture a safe environment for thriving cross-border expansion.

search-2951638_1920(Photo source: https://pixabay.com/)

Trade mark searches are an integral part of any trade mark protection strategy, but many companies do not routinely perform them or do not do so thoroughly enough. In this article we will provide you with a full rundown of the importance of trade mark searches and how to effectively conduct them.

1. Why are trade mark searches needed?

A pre-filing trade mark search

By finding out what other trade marks are out there, you will learn whether there is room for the trade mark you want to protect. A pre-filing trade mark search allows you see if there are any pre-registered/pre-filed trade marks that are identical or significantly similar to yours (which may lead to their registration being refused). If the search results reveal the existence of trade marks that are likely to block your trade mark registration, at least you have a hint before taking further steps, for example by changing the proposed trade mark or removing prior trade marks if feasible (this may be achieved via amicable negotiations or by cancellation actions, which are usually attempted with the support of a trade mark expert). As a result, these searches will help businesses to avoid wasting significant time and resources preparing and filing an application for a trade mark that may not be available for registration.

Watch out for potential infringements

Owning a registered trade mark does not automatically guarantee that someone else do not use it, or register a similar trade mark. Regular trade mark monitoring is highly recommended, as it can result in the early detection of potential infringements such as counterfeits, copycats, bad faith registrations, etc.

In practice, copycats usually operate in the same industry as the trade mark holder; by using your marks they can easily mislead consumers about the quality and origin of their products and services. Consequences can include damaging your reputation, decreasing your revenue and preventing your expansion plans. The early detection of infringement allows you to quickly initiate a proper solution to stop or mitigate the violations and to notify your clients in a timely fashion, thereby avoiding brand dilution or misleading messages.stop-634941_1920

(Photo source: https://pixabay.com/)

Moreover, trade mark protection is territorial: protection exists only in the country where you have registered your trade mark. Developing an efficient brand protection plan for cross-border markets has been seen as a big challenge for many businesses, especially SMEs. In fact, like many other countries, most South-East Asian countries apply the first to file principle for trade mark protection, which gives priority to those who first file an application to register the trade mark. This rule, unfortunately, opens the door for bad-faith registration practices i.e., a third party (a trade mark squatter, local company or any other party) intentionally files a trade mark application in a particular country before the trade mark owner to become a legal owner of the trade mark. By successfully registering your trade mark, they can take advantage of your successful business for commercial gain in your target market – this can have various consequences, from damaging your reputation to excluding you from the market. However, after a trade mark filing, intellectual property (IP) offices will usually publish the trade mark application for public inspection for a specific period of time, to allow third parties to file an opposition (for example, oppositions can be filed in Cambodia within 90 days, in Singapore within 2 months and in the Philippines within 30 days of the publication date). Detecting bad faith registrations promptly allows you to react in a timely fashion.

2. Where to search?

There are many sources that a brand owner can use to run a trade mark search. Some suggestions are detailed below.

a) Trade mark databases

Global Brand Database 

The Global Brand Database, administered by the World Intellectual Property Organization (WIPO), automatically uploads trade mark records sent by national, regional and international collections – for example from Madrid – The International Trademark System (details of database content sources here).

Through the Global Brand Database, you can:

  • conduct a search to cover multiple sources simultaneously in a large number of countries;
  • search by text, class, goods or services, holder names, countries and even images (using AI search-by-image filter functions).Screenshot 2021-07-01 13.29.51

National trade mark databases

Although the Global Brand Database covers a large number of trade mark collections, it depends on how often national offices communicate updated information to the WIPO. Also, some national databases are not available on the Global Brand Database, Myanmar is one example. Therefore, it is also advisable to run simultaneous and additional searches in the database of your target national IP office to get the latest updates on applications that have been filed/registered.

In South-East Asia, SingaporeVietnamIndonesiaMalaysiathe PhilippinesBruneiLaos and Cambodia are the countries in which trade mark databases are available in English.

b) The internet, e-commerce platforms and social media networks

A comprehensive trade mark search should not only review trade mark databases, it should also detect unregistered marks that are being used by third parties on the market and may be infringing your trade mark rights. Conducting searches of multiple sources that counterfeiters, copycats and other criminals may be using to take advantage of your marks is always recommended. Searches should be conducted on the internet, e-commerce platforms and prevailing social media networks.

pexels-photomix-company-230544

(Photo source: https://www.pexels.com/)

With over 87% of the search market share, Google is a dominant search engine worldwide and its share is even higher in South-East Asia (over 90% for most countries in the region)[1]. Conducting a Google search can take you to numerous websites, links, apps and networks that may contain signs of potential infringement. The Covid-19 crisis is accelerating the already thriving digitalisation process, driving more and more businesses and consumers online. Amid this overwhelming wave of online activity, e-commerce platforms have become vital market places to fulfill people’s needs. In South-East Asian countries, Shopee, Lazada, Tokopedia, Bukalapak, Tiki, etc. are the most-visited e-commerce sites[2] where you can find various types of fake products in different price ranges. Using social media networks such as Facebook, Instagram or TikTok in order to reach out to consumers and sell counterfeits is also quite common in the region.

3. Conclusion

Some popular methods that businesses can use to run trade mark searches have been outlined above. However, consulting a trade mark specialist to obtain better search results and practical advice is usually recommended. Comprehensive trade mark searches should take various factors into account. As well as names, key words and images, translations and national phonetic variations of the search terms should be included. Many South-East Asian countries, such as Thailand, Laos, Cambodia, Indonesia, and Myanmar, have their own alphabets, which do not use Roman characters. Using a local specialist to help with trade mark searches is advisable, as they will maximise the search effectiveness by avoiding any gaps.

Moreover, when the results come in, expertise is required in order to carry out a proper analysis. For example, when considering the likelihood of identical or similar marks being confused with one another, an experienced trade mark specialist will know how to assess the situation by properly reviewing the similarity of the products and services that the marks are being used for. They can provide you with a practical assessment of the likely success of your registration application or if you will be able to take actions against potential infringements.

Trade mark searches are vital for your brand protection strategy, especially in the fast-paced digital economy. Being well informed will save you a huge amount of time and resources, and secure a safe way for your business to grow and thrive.

The SEA IP SME Helpdesk developed and published a Guide to Trade Mark protection in South-East Asia (here) and How to Remove Counterfeit Goods from e-commerce Sites in South-East Asia (here).

For more information about IP in SEA, check out our website at https://intellectual-property-helpdesk.ec.europa.eu/regional-helpdesks/south-east-asia-ip-sme-helpdesk_en.

The SEA IP SME Helpdesk is an EU initiative that provides free, practical IP advice to European SMEs in South-East Asia. EU companies can send questions to question@southeastasia-iprhelpdesk.eu and will receive a reply within 3 working days.

[1] https://gs.statcounter.com/search-engine-market-share/desktop/worldwide

[2] https://www.campaignasia.com/article/the-top-10-most-visited-southeast-asia-ecommerce-sites/468523

Intellectual property violation in Thailand and the Philippines thriving during Covid-19

Quote

WRITTEN BY XUAN NGUYEN

Due to the social distancing measures imposed during the Covid-19 pandemic, people are massively relying on the internet for both their work and their leisure activities. Online shopping has dominated the market as a result of quarantine and isolation.

The Covid-19 emergency has engendered many challenges for intellectual property (IP) protection thanks to the rocketing increase of counterfeit goods being offered for sale on the internet. This is especially prevalent among products in high demand, such as facemasks, hand sanitisers, antiviral medication, vitamins, pharmaceuticals, foods, beverages, household products, electronics, DIY tools, entertainment technology, etc.

In this article, we present some updated statistics reflecting the alarming rise in IP infringement during the crisis in some South-East Asian countries.

Thailand

According to the latest IP Enforcement Statistics for Thailand, the number of raids and seizures between January and April 2020, compared to the same period in the previous year, has risen acutely (by 31.82% and 1 967.6%, respectively).

Thailand

Philippines

The Intellectual Property Office of the Philippines (IPOPHL) recently published 2019 vs 2020 IP rights violation data showing the dramatic surge in complaints that they received in the first 6 months of 2020 compared to the previous year.

Philippines

Suggestions for protecting your IP during the crisis

  • Proactively monitor e-commerce and social media platforms. As counterfeiters overwhelming use online platforms to sell their products, regularly checking to detect fakes and initiating early interventions will save you a lot of money and time. Online shopping makes payments cashless; this also enables companies to easily track and investigate the sources of fake goods. This is a big advantage when it comes to stamping out counterfeiting.
  • Conduct online trainings and encourage the community to report fakes. Providing trainings to consumers on how to distinguish between authentic products and fake ones, and on where they can buy the real ones, is worthwhile. Companies should also encourage the community to report cases of counterfeiting and make online tools available so people can easily submit complaints.
  • Take-down notices. If you have reliable evidence of counterfeit goods being sold on e-commerce or social media platforms, prepare a take-down notice (with the supporting documents necessary) asking the operators to immediately remove the infringing products.
  • Inform the competent authorities. For larger cases, you can consider to inform the competent authorities to promptly stop the infringement, for example by blocking the importation of the counterfeit goods or by seizing them.
  • Seek advice from local IP experts. It is always advisable to consult local experts with experience in enforcement to be sure you are doing things the right way; in South-East Asia, neither the law nor business practices are the same as in Europe.

 

The South-East Asia IPR SME Helpdesk is an EU initiative that provides free, practical IPR advice to European SMEs in South-East Asia. EU companies can send questions to question@southeastasia-iprhelpdesk.eu and receive a reply within 3 working days.

In Vino Veritas: Getting Practical; Market monitoring and alternative enforcement strategies

wine label-05Today we have a guest article, kindly written for the Helpdesk by expert counterfeit investigator and old China hand Nick Bartman.

Nick has over 25 years of experience personally investigating and putting a stop to counterfeiting activities, 20 of which he has spent working in China for some of the biggest brands and household names. Over the last 6 years he has worked almost exclusively to expose wine counterfeiters and spread the word throughout the wine industry and has developed an extensive knowledge of the strategies and methodologies used by wine counterfeiters in China today.

Continue reading “In Vino Veritas: Getting Practical; Market monitoring and alternative enforcement strategies” »