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.

 

Online services of intellectual property offices in South-East Asia

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WRITTEN BY XUAN NGUYEN

Digitalisation has changed the way intellectual property (IP) offices operate, and made them more effective. During the Covid-19 pandemic, when many IP offices were physically closed, online systems played an essential role. Thanks to this, filing and processing services avoided disruption.

Photo source: https://pixabay.com

Photo source: https://pixabay.com

Let’s explore how the South-East Asian IP offices improved, and are still improving, their online systems and what type of online services are currently available!

  1. Brunei

To increase efficiency of the services, the Brunei Intellectual Property Office (BruIPO) has recently launched an e-filing portal for patents, trade marks, industrial designs and post-filing. For more information on how the e-filing works, check out here.

There is also an online database (here) that allows companies to search for IP rights such as patents, trade marks and industrial designs which have been registered or applied in Brunei.

  1. Cambodia

Cambodia launched an online filing system for trade mark registration in 2017. Following recent updates to reduce the need for in-person filings during the Covid-19 pandemic, the Department of Intellectual Property (DIP) has urged applicants to make use of the e-filing system as much as possible. The DIP expanded the e-filing system to include post-registration services such as renewals, the submission of affidavits of use/non-use, responses to refusals, and the appointment of a new agent.

To use the system you must create an account with the DIP and also possess a local bank account. It is only open to domestic applicants and registered IP agents. The portal can be accessed here.

In addition, a trade mark search can be conducted online via the Cambodia Trademark Database, here.

  1. Indonesia

The Indonesian Directorate General of Intellectual Property (DGIP) officially launched a new, mandatory e-filing system in 2019. Online filing has been continuously improved and covers almost all aspects of the registration process, from searching or filing to post-filing for patents, trade marks, designs and copyrights. For further information, please click here.

  1. Laos

An online system providing information and services has been developed, it was launched in February 2019 and is now operational. Although the e-filing services are not yet functioning, the trade marks database can be accessed. The Department of Intellectual Property (DIP) has begun to publish the Official Gazette for trade marks and geographical indications (GIs) on a regular basis. Detailed information can be found here.

  1. Malaysia

The Intellectual Property Corporation of Malaysia’s (MyIPO’s) offers online searches and filing services for patents, trade marks, industrial designs and GIs. This system also allows applicants to check the status of their pending IP applications. For more detailed information, please click here.

  1. Myanmar

Myanmar recently launched an e-filing system for trade marks. However, the system can only be used by IP agents. For more details, please click here.

  1. The Philippines

The e-service portal of the Intellectual Property Office of the Philippines (IPOPHL) is very comprehensive. It covers almost all aspects of the process, from searches or filing to post-registration steps for patents, trade marks, designs and copyrights. Further information can be found here.

  1. Singapore

The Intellectual Property Office of Singapore (IPOS) provides comprehensive IP databases. You can use the e-services portal here. It provides effective and comprehensive functions for searching, filing, amending and renewing patents, trade marks and designs. In addition, you can also download the IPOS Go app for on-the-go access to key functions for new trade mark applications, IP renewals (trade marks, patents and designs) and IP searches.

  1. Thailand

The Thai Department of Intellectual Property (DIP) introduced an e-filing system for copyright, patents and trade marks in 2016. The system, however, needs substantial improvements as it is quite unstable, and the e-filing portal is displayed in Thai only (no English version is currently available). For more information, please click here.

  1. Vietnam

The National Office of Intellectual Property of Vietnam (NOIP) launched an Online Public Service portal that covers both filing and post-filing tasks for patents, designs and trade marks. The services are open for both local agents and applicants domiciled in Vietnam. However, the NOIP now only grants account access to applicants who have already been assigned an electronic signature. Check it out here.

Conclusion

The online systems of IP offices in South-East Asia have been hugely improved over the past few years, especially during the Covid-19 pandemic. More improvements are expected in the upcoming years.

Photo source: https://pixabay.com

Photo source: https://pixabay.com

It is worth noting that the online filing systems in South-East Asian countries can only be used by local IP agents or companies with office addresses in the country in question (except for Myanmar where only agents can use the e-filing portal). If a foreign applicant does not reside or carry out their principal business in the country, a local IP agent must be appointed to work with the IP office on their behalf.

For more information about IP in South-East Asia, check out our website at https://www.southeastasia-iprhelpdesk.eu/.

The South-East Asia 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.

IP Considerations for the Automotive Industry in South-East Asia

shift-1838138_1920 In today’s blog post we are taking a closer look at IP protection in South-East Asia for the Automotive Industry, which continues to offer many business opportunities for the European SMEs. You will learn about patent protection and when it would be wiser to relay on trade secrets instead. We will also discuss how you can protect the design of your products and how to take care of your brand. 

The automotive industry in South-East Asia has exhibited robust growth over the last few years. According to the latest statistics from the ASEAN Automotive Federation, combined motor vehicle sales in 7 major ASEAN countries (Indonesia, Malaysia, the Philippines, Singapore, Thailand, Vietnam and Brunei) reached 3.16 million in 2016[1], almost double the sales figure in 2006. Underpinned by increasing disposable income throughout the region and increasing demand for motor vehicles South-East Asia’s automotive market is expected to continue to grow rapidly. This also means that there will be promising business opportunities for European SMEs whose expertise and technology are especially sought after.

Taking into account the constant innovation that is at the forefront of the automotive industry, the importance of intellectual property as well as its protection and enforcement, are undeniable. Thus, when exploring the possibility of investing or expanding into the South-East Asian markets, European SMEs should be aware of the IP risks that they will face when operating in this region, in particular with respect to the new technologies and the ability to protect these technologies from local competitors. A comprehensive IP strategy is needed for succeeding in South-east Asia’s markets. Continue reading “IP Considerations for the Automotive Industry in South-East Asia” »

IP Considerations for ICT Industry in South-East Asia

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The ICT sector is considered to play a pivotal role in supporting regional integration and connectivity efforts between the countries in South-East Asia. The latest ASEAN ICT Industry Masterplan 2016-2020 aims to propel ASEAN towards a digitally-enabled economy that is secure, sustainable, and transformative and to enable an innovative, inclusive and integrated ASEAN Community[1]. The ICT industry is one of the sectors presenting major business growth opportunities for EU SMEs in South-East Asia.

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Continue reading “IP Considerations for ICT Industry in South-East Asia” »

Copyright Protection in Myanmar

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Country’s Background for European SMEs

Myanmar is an emerging market showing steady growth rates since the country set itself on a course of political liberalisation. Despite being one of the poorest ASEAN nations, the country’s economy grew at around 8.5% in the 2014/2015 fiscal year, with economic reforms bolstering consumer and investor confidence. The service sector was the main driver of growth thanks to expansions in telecommunications and transportation. Myanmar is an emerging economy with a GDP of $64.3 billion, which is attracting more and more foreign investments. Its 53.4 million strong population is mainly occupied in the agricultural sector. However, the garment and mining industries, as well as wood products also take up a significant part of the economy.

EU imports for Myanmar are dominated by the textile industry, accounting for nearly 80% in 2011, making it the 29th largest trading partner for the EU for clothing. Agricultural products also play a significant role in Myanmar’s exports to the EU. EU exports to Myanmar on the other hand are dominated by machinery and transport equipment. EU exports to Myanmar have risen steadily since its increasing political liberalisation.

Continue reading “Copyright Protection in Myanmar” »