With Euro 2012 adverts showcasing Ukraine’s culture, sport prowess and it’s host cities that have undergone a major facelift to fulfill UEFA’s requirements beginning to air internationally thousands of fans are being enticed to book their tickets, experience the country’s charms and buy souvenirs and trinkets galore. Unfortunately, entrepreneurs employing unfair practices consider production and distribution of counterfeit goods a profitable business which guarantees surplus profit due to abuse of the reputation of a well-known producer, without any considerable costs attributable to purchasing quality materials, advertising and product promotion.
The laws of Ukraine define counterfeit products as goods or works of art, audio and video records which are released, reproduced, published, distributed, or sold, etc., in violation of intellectual property rights.
There is no doubt that mass production and distribution of counterfeit products considerably prejudices the intellectual property rights holders, on the one hand, and the consumers and generally the state, on the other hand. Thus, producers and distributers of counterfeit goods, apart from undermining the reputation of the real producer and ousting the original products from the market, also mislead the consumers and evade state taxes and other duties which explains the intense urge to fight production and distribution of counterfeit goods.
The issue becomes particularly serious during sport events and competitions. Taking advantage of sport fan booms during high-profile sports events, unfair market players produce and sell souvenirs, sports equipment, clothes and accessories illegally using copyrighted items, trademarks and industrial models on such goods.
The market is often abundant with souvenir magnets, pocket books, mugs, T-shirts or sports balls of questionable quality bearing the logos of the sports event or sports club, photos of sportsmen, trademarks of sports event sponsors, etc. However, under the applicable laws, the use of such intellectual property placed on the goods is only possible if the copyright holder has consented to such use.
There are two principal ways for counterfeit products to enter the market of any country: (1) goods are imported from another country, or (2) goods are produced on the territory of the country. So, a strategy for combating counterfeit practices must be developed with due account for how the goods arrive on the market.
For instance, the prevention of counterfeit goods from being transported across the customs border of Ukraine is one of the functions of the State Customs Service of Ukraine. The holder of copyright or neighboring rights, trademarks rights, rights to industrial models and geographical indications who has grounds to believe that his intellectual property rights are or may be infringed when the goods are transported across the customs border of Ukraine, is entitled to file an application with the State Customs Service of Ukraine seeking to support the protection of its rights to the intellectual property items by way of introducing respective information (description of the intellectual property, description of goods bearing such intellectual property, details in respect of the rightholder and the persons authorized to import goods, available information on the counterfeit goods, etc.) into the customs register of intellectual property.
In the event that the State Customs Service of Ukraine decides to include the intellectual property item into the customs register, customs authorities, acting on the basis of the data contained in the register, shall take appropriate measures to prevent transportation across the Ukrainian customs border of the counterfeit goods which may bear intellectual property items protected by the laws of Ukraine.
If pursuant to the information from the customs register of intellectual property the customs authority discovers any facts indicating an infringement of intellectual property rights in respect of the goods presented for customs control and customs clearance, then the customs clearance of such goods shall be suspended and the goods shall be put in temporary storage warehouses or warehouses of the customs authorities. Not later than the next business day after the decision to suspend the customs clearance is made the customs authorities shall inform the holder of the intellectual property rights of the fact that the goods have been presented for customs clearance.
Within a period of up to 15 calendar days, the rightholder must apply to court seeking protection for its intellectual property rights or give its authorization for the customs clearance of imported goods.
Therefore, when clearing goods which include an intellectual property object registered in the customs register, customs authorities shall be guided by the principle according to which only the rightholder and the persons specifically authorized by him have the right to import such goods.
If counterfeit products are imported to the territory of Ukraine bypassing the control of the State Customs Service (for example, by way of smuggling) or are produced directly within the territory of Ukraine, counteraction to the distribution of counterfeit products, in particular counterfeit sport products, can involve the following stages:
- Detection of counterfeit Products. The typical characteristic features of counterfeit products are their low price (compared to the price of original products), questionable quality, spelling errors in verbal trademarks, poor quality of printed logos and images, etc. To effectively detect counterfeit products offered for sale, a special anti-counterfeiting team responsible for monitoring counterfeit products available on the market should be set up at business or storage facilities of a sports organization (association). Such services are now also provided by special organizations. It is also worth involving consumers in the process of detecting counterfeit products and notifying the owners of intellectual property objects.
- Application to Government Authorities Seeking Protection of Violated intellectual property Rights. The laws of Ukraine provide, in particular, for criminal liability for the illegal reproduction and distribution of the objects of copyright and neighboring rights and for the illegal use of trademarks and trade names, if such use causes damages exceeding by twenty and more times the minimum non-taxable household income (standing at present at UAH 9,410). In this case, the rightholder has the right to report a crime to prosecution or law enforcement authorities. This option appears to be one of the most effective means of protection in the event of active distribution of counterfeit products on the eve of important sporting events, as it ensures rapid response to violations and prevents further sale and concealment of counterfeit products. The rightholder also has the right to file a claim with the court seeking discontinuation of an infringement of intellectual property rights by and recovery of damages from the manufacturer/distributor of counterfeit products.
- Bringing the Offender to Liability; Destruction of counterfeit Products. Under the Criminal Code, the illegal reproduction and distribution of the objects of copyright and neighboring rights and the illegal use of trademarks and trade names are punishable by fines, corrective labor, imprisonment, as well as confiscation and destruction of respective counterfeit products and the tools and materials that were used specially to produce such products. It is important to mention in this context that the confiscation and destruction of counterfeit products are an important stage in the process of counteracting the production and distribution of goods in violation of intellectual property rights, as they prevent a repeated introduction of the same counterfeit products into civil circulation.
Subject to the foregoing, the fight against the production and distribution of counterfeit products can only be effective if based on active interaction between the rightholders, government authorities and consumers, and therefore, it should be the priority task of any rightholder to create a favorable environment for such interaction.
Oleksandr S. Mamunya and Yulia V. Chyzhova