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Fight the fakes: four ways to safeguard your company from IP theft

Photo by Scott Graham on Unsplash

Oscar Wilde got it wrong. Imitation isn’t the sincerest form of flattery – at least when it comes to your business partners. When your supplier starts to make a knock-off version of your flagship product, the betrayal can hurt almost as much as the lost revenue.

For a growing number of businesses, having somebody copy their products can cause reputational damage and potentially cost their bottom line. Just ask Brompton Bikes, whose managing director, Will Butler-Adams, recently spoke of its “war of attrition” against copycats producing cheaper lookalikes of its famous folding bicycles. Or maybe James Dyson, of vacuum cleaner fame, who has condemned the “treachery” of brands that try to replicate devices that are the result of years of innovation.

But what makes one product a “copycat” or “knock-off” and not just a different take on the same idea? The answer is intellectual property (IP) rights. These protect your commercial and artistic creations against duplication and let you reap the rewards of your hard work through sales or licensing fees.

Know your rights
The type of action that can be taken against infringers depends on what IP rights are violated and where. With that, the five basic kinds of IP are patents (protecting inventions), trademarks (indicating the origin of products or services), designs (relating to the decorative appearance of products), copyrights (covering creative expressions) and trade secrets (concerning confidential information).

Of course, someone peddling fake goods could be stepping on a combination of IP rights. Take Dyson’s Airblade hand dryer, for instance. The technology underpinning this device is covered by a number of patents around the world. If someone in one of these countries was to build and sell an exact replica without permission from Dyson, they would be infringing on the patent and design registered there. However, if they sold the offending dryer using labels and packaging that imitates Dyson’s own, they are also potentially committing trademark infringement.

Such counterfeit goods aim to deceive a consumer by appearing to be the genuine product – and this can even extend to healthcare, with potentially deadly consequences. Both Interpol, which leads worldwide police cooperation, and the World Health Organization have warned of criminal gangs selling fake Covid vaccines and personal protective equipment (PPE).

“Protecting your brand isn’t just a matter of preserving your reputation – it’s essential to both business survival and consumer safety. From hazardous fake products to brand impersonators, the threats in today’s fast-paced, hyper-connected world are real and relentless,” says Olivier Lombardo, head of trademarks Luxembourg at IP law firm Dennemeyer & Associates. “From professional experience, a comprehensive IP protection strategy is the foundation of any successful business, regardless of size or industry.”

Put your stamp on everything you do
Lombardo goes on to explain that defending against counterfeiters requires multiple IP rights for maximum coverage, especially when dealing with your own supply chain. It stands to reason that registering your trademarks where you trade is essential. But the entire production cycle needs to be taken into account.

Registering and maintaining your IP rights in those parts of the world where you source manufacturing could be the difference between holding pride of place in (digital) shopfronts and being lost in a deluge of low-grade replicas. Since trademarks identify the commercial origin of goods and services, deceptively similar packaging from third parties is strictly prohibited. Particularly egregious behaviour could even amount to fraud and incur hefty penalties.

“Securing trademarks is typically the first part of your overall IP protection strategy. But when you deploy various anti-counterfeiting measures throughout your product supply chain, such as digital watermarks, QR codes and other end-to-end tracking systems, you make the lives of counterfeiters that much more difficult,” says Tomislav Hadzija, managing director at Dennemeyer & Associates Croatia. “Authenticated products not only safeguard your brand image but also empower you to take stronger legal recourse against offenders.”

Think global
“I often see business owners making the mistake of assuming that registering and renewing their trademark in one country is enough to shield them from infringement everywhere. But the truth is, trademark protection is territorial, and without proper registration in each country you do business, you’re leaving yourself vulnerable,” says Hadzija. This means filing a trademark in the UK will only safeguard your brand here – if you’re seeking more robust brand protection, you’ll need to register it in all territories where you operate.

Registering a trademark can be a fairly complex process, requiring proof of its use in commerce or your intention to use it. This could include promotional material or affidavits. Having to apply in multiple jurisdictions makes things more daunting, especially when it comes to keeping up with local requirements and regular maintenance payments. Thankfully, a worldwide network of trademark experts and external partners means Dennemeyer is well versed in these procedures; handling complex cases is the company’s bread and butter.

Because many of these counterfeited goods are unlikely to be made in line with health and safety regulations, they can be dangerous, even lethal. Fake medicines have caused arsenic poisoning and accidental fentanyl overdoses, while faulty electrical goods are often responsible for fatal electric shocks and house fires.

But why is the problem still so rife? “I often remind my clients that obtaining a patent or trademark is just the start of their IP protection strategy. While it can’t prevent counterfeiting, a carefully crafted and detailed patent or trademark filing can limit the manoeuvering room of infringers,” says Raluca Judele, director at Dennemeyer & Associates Romania. However, she adds: “To those who still attempt to profit from our clients’ effort and ingenuity, we bring the full brunt of the law to bear, delivering the compensation legitimate businesspeople deserve, while discouraging future violations.”

What can I do if my IP is infringed by my manufacturer?
Prevention is better than cure, so there is no reason to ignore a thorough vetting of potential business partners. Airtight non-disclosure agreements (NDAs) signed beforehand allow you to hold shifty suppliers to account if you have shared your vital trade secrets with them. In the event the unthinkable happens, your first port of call should be an IP lawyer, who’ll help draft a cease-and-desist letter, before serving it to the offending party.

Because penalties for counterfeiting and infringement can be quite severe, this should often solve things. Should that fail, it’s time for you and your IP lawyer to file a lawsuit. But even this might not be possible if the counterfeiter is working as part of a larger criminal gang or in a country with weak IP administration. This is when you will need to escalate by reporting the crime to the appropriate national and international law enforcement agencies.

“Navigating the IP landscape alone is not worth the risk,” says Judele. “But with the right partner by your side, you can safeguard your critical IP assets and have peace of mind to focus on the core aspects of your business.”

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