Who’s in Charge?

One element that is vital for effective enforcement is a clear understanding of where responsibility sits.

Ms. Punch observed that in the Caribbean, one issue is “a lack of empowerment” of Customs officials. Even when the legislative environment allows them to act, “there seems to be a lack of understanding of what they can do, and a lack of detailed data on what they’re following, which means they’re not in the know about the key counterfeit goods coming in,” she said.

Furthermore, there are challenges with inter-agency communication. Customs officials “don’t liaise with police or the Bureau of Standards,” Ms. Punch noted. “There needs to be a catalyst, whether it’s government or industry.”

South Africa has tackled this problem by more clearly defining who has responsibility for anticounterfeiting. The Commercial Crimes Unit within the South African Police bears responsibility for investigating and prosecuting counterfeiters, for example.

Customs officials and Border Police can both seize suspected counterfeits at the point of entry. If Border Police act, they can open a docket on seizure and ask for collaboration from rights owners. If Customs conduct the seizure, the rights owner can reach out to the Commercial Crimes Unit to pursue the case.

A similar unit exists in Nigeria, namely the IP Enforcement Unit within the Nigerian Customs Service. “This is made up of wonderful officers who are committed to stopping the counterfeit goods,” opined Mr. Aponmade.

However, the unit is somewhat hampered by being based in Abuja, far away from the ports where counterfeit goods arrive. “When we have to take action regarding imports, we let the IP Enforcement Unit know, but they are not involved in the day-to-day enforcement of customs legislation,” noted Mr. Aponmade.

He suggested that while Customs high command is “committed” to tackling counterfeiting, “the same cannot be said of those who are at the borders. Their responsibility is to make money for the government.”

What Attorneys Can Do

It is a truism of anticounterfeiting efforts that brands and their counsel should be training Customs officials to recognize counterfeit products and act accordingly, whether through an ex officio seizure or by notifying the brand owner or representative. This can certainly be effective.

In China, said Mingyue Dun, partner at Dentons (China), companies should record their rights with Customs in order to ensure they watch both imports and exports for potentially infringing products.

However, she said, “a hot issue” right now is whether goods to be exported to a country where the consignee has a trademark registration should be considered counterfeits, when the brand owner in China is different from the consignee in the destination.

To date, Chinese courts, including China’s Supreme Court, have taken different views on this point.

In looking for possible solutions, Ms. Dun also noted that brand owners should conduct training for Chinese Customs officials to teach them how to identify counterfeits.

In Mr. Budeli’s view, however, training can’t solve the problem on its own. He noted that up to 3,500 containers arrive per day in Durban, and Customs are able to inspect only between 2 and 5 percent of those. “There simply isn’t the manpower to check each and every consignment,” he said.

That said, in South Africa, developed and established training programs for Customs officials have a powerful impact.

“We have very good relationships with Customs, and we work with them on a daily basis,” said Mr. Budeli. “In addition to that, our Customs local offices have good relationships with neighboring states.”

At Adams & Adams, Mr. Budeli organizes a significant number of trainings with South African Customs, who in turn invite their counterparts from across the borders—an integral add-on since South Africa has 72 separate border crossings with neighboring countries.

Additionally, attorneys representing different brands or law firms operating in South Africa come together on platforms such as WhatsApp to flag potential problematic consignments, especially because a given container might contain counterfeit products covering a range of different brands’ intellectual property rights.

For Mr. Aponmade, in Nigeria, getting clear information on shipments in advance is a vital element of protection. This is because no matter how much training you do for Customs, he said, it may still be ineffective.

“Customs are reliant on rights owners to train them,” he said. “When that is done, the Customs officials are supposed to contact the rights owners when they suspect counterfeiting.”

But in practice, he relayed that he has clients that have invested in training, but notification does not follow. “It can be like throwing money into the gutter,” Mr. Aponmade declared.

Far better, he suggested, is to invest in investigations. Understand what your counterfeit problem looks like through market surveys on the ground, and then, “if you know there are a lot of counterfeits, invest your money in getting information about shipments. Let your counsel know before the goods arrive, so they can be proactive and contact Customs high command.”

Ms. Punch agreed that training isn’t the whole solution, but suggested that brands should nonetheless undertake it as part of a wider proactive effort to build relationships with Customs in the Caribbean.

Additionally, brand owners and their counsel should “keep the pressure up” at the international and regional level, whether through conferences or organizations. “The more the conversation keeps going, the better,” she said.

One thing that gives Ms. Punch hope is the recent push toward international standards for anti-money laundering. With counterfeiters, “there are going to be false declarations about tax,” she said, and “that may be a trigger to spark Customs or encourage them to act.”

Mr. Budeli also highlighted the value of international organizations: he works with the World Customs Organization and Interpol to organize training at a regional level.

INTA also regularly conducts regional customs training, in partnership with law firms and brands. During the pandemic, this training was delivered virtually, including, in 2021, in Southeast Africa.

Knotty Problems

How much these efforts matter, not just in the jurisdictions directly concerned, but in the wider region and further afield, should not be underestimated. As Ms. Punch noted, the Caribbean is an important region for the flow of trade into and out of North and South America.

“There’s a clear benefit for brand owners to engage with authorities in the region, and value in expending time and focus in the area to stop the flow of counterfeit goods,” she said.

Brands operating in Nigeria and South Africa face an additional problem: the number and size of each country’s land borders pose further challenges for enforcement.

Nigeria has some of the world’s most porous land borders and areas where the country has security problems. As such, there is little appetite on the part of law enforcement to focus on counterfeits where security cannot be guaranteed, according to Mr. Aponmade.

The challenge is less acute in South Africa, but nonetheless significant. Mr. Budeli explained that transshipments—where cargo lands at a port in South Africa but is destined for a country sharing a land border—provide a potential “loophole” for counterfeiters.

“Because we are not the final destination, our Customs can’t deal with it,” he said. And yet, especially when transit through South Africa is occurring by road as opposed to rail, consignments tend to “fall off the truck” and find their way into the South African market, he explained. These counterfeiters have not paid duty or taxes on import, and so can make a huge amount of money.

One strategy to tackle this problem is to use investigators to effectively follow the consignment, especially when it is suspected of being a high-value shipment, according to Mr. Budeli.

Things to Watch

Unfortunately for brand owners and their counsel, counterfeiters adapt their practices to the environment they face and are often able to adapt far more quickly than legislators and enforcement agencies can keep up. “Counterfeiters are often ahead of the game,” said Ms. Punch.

The COVID-19 pandemic has accelerated this trend, and a proliferation of cybersquatting sites have allowed counterfeiters to develop new means of accessing customers, often resulting in smaller shipments of counterfeit product through the postal service.

In South Africa, Mr. Budeli has worked with the Postal Service alongside Customs to tackle the 600,000 to 1 million smaller packages per day that enter the country.

It is a difficult task, but brands do have options.

“When you record your trademarks with Customs, they will ask you to provide a minimum quantity threshold that you will act on,” he said. That is, Customs will contact a brand owner only if a certain number of potential counterfeit items are suspected in a given shipment, and that number is defined by how many items the brand owner would be willing to take enforcement action over.

“Usually we advise clients to set the minimum quantity threshold as low as possible, at 10 items,” he added. In that case, brands will hear about relatively small quantities of infringing products entering the country, and allow them to build a fuller picture of how the threat is manifested.

Counterfeiting will never be completely eliminated—it’s too lucrative for that. But with the right approaches and collaborations, and by being proactive, brands can protect themselves and minimize the cost to themselves and their consumers, today and in the future.

For more insights into border protection as part of brand protection programs in key jurisdictions, attend Best Practices and Challenges in Customs Enforcement: What Every Brand Protection Professional Needs to Know (presented by the Anticounterfeiting Committee) (today, November 17, 11:15 am–12:15 pm EST).

Moderator: Fanta Punch, attorney, M. Hamel-Smith & Co. (Trinidad and Tobago)

Speakers:

• Bienvenido Marquez, partner, Quisumbing Torres (Philippines)
• Kevin McPherson, senior director Brand Protection, corporate counsel, Otter Products LLC (US)

Video courtesy of Envato Elements / Songkhla Studio