LP Magazine EU

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INDUSTRY FOCUS

From Knocking On Doors to Knocking In Doors

The new Director General of the Anti-Counterfeiting Group on the challenges of fighting IP infringement. 

by John Wilson, Executive Editor

The ubiquitous expression “fake news” refers to uncorroborated and unchallenged stories that have become an integral part of the daily media landscape. It can be simple gossip that spreads across social media platforms, or it could be deliberately and maliciously placed misinformation by organised criminals or state agents to target or influence certain demographics, or even entire electorates, as was the case with alleged Russian interference with the 2016 US election.

Outraged citizens and legitimate news outlets have rightly been exercised by the deception and duplicity because it devalues the truth and underlines the very fabric of democracy. However, what happens if you swap the word “news” with “goods”—the billions of pounds, dollars, and euros lost to treasury incomes, not to mention the undermining of the integrity and safety of products and damage to international brands through counterfeiting and IP (intellectual property) infringement? In these circumstances, you draw a very different (some would argue almost indifferent) response from citizens, the media, and even some members of the law enforcement community, despite more than circumstantial evidence that the proceeds of selling fake goods fund more serious crimes including drugs and people trafficking.

LP Magazine Europe highlighted some of the issues raised by the Asian Coalition Against Counterfeiting and Piracy (ACACAP) in the spring 2018 issue where links have been established between fake goods and the funding of international terrorism. There has been a plethora of fake news around Britain’s imminent departure from the EU and the impact on free movement of goods, services, and people and the all-important cooperation required to achieve frictionless trade with the other twenty-seven countries that comprise the European economic zone.

Deal or no deal, the polite and euphemistic language of Brexit is shorthand for how much the divorce is going to cost in terms of trade, the possibility of cross-border tariffs, and the unpicking of the EU regulations and cooperative associations the UK will no longer be part of after March 29 next year.

A Seat at the Table

Law enforcement and cross-border intelligence sharing around tackling IP infringement is one such arrangement where Britain currently has a seat at the table of the European Intellectual Property Office (EUIPO) in the fight against highly organised counterfeiters who are flooding European markets with fake goods.

The new director general (DG) of the membership-driven Anti-Counterfeiting Group (ACG), Phil Lewis, who took up his new post at the end of July 2018, said, “In terms of Europe, the Brexit issue has not helped. If the UK Government and the EU do not come to an arrangement over issues including the Irish border, our customs people will be cut off from the important work that they do.

“This is not the time to lose our voice at the table. It is the intelligence sharing that helps with the coordination and packaging of cases for the enforcement agencies. We helped set up the European Observatory to share information and best practice between public-sector, enforcement-related bodies, and private industry. The observatory includes some of the world’s most prestigious bodies, including the OECD [Organisation for Economic Co-operation and Development], Europol, and the United Nations Interregional Crime and Justice Institute. The biggest worry now is that, without a withdrawal agreement, it is likely that the UK will be treated as a third country outside of the EU at a time when the flow of counterfeit goods is getting worse, especially when China is ambitiously setting up its One Belt One Road initiative (OBOR), which could potentially see record levels of counterfeit goods following across European borders.”

He was referring to a $5 trillion project and the land and sea-based collection of interlinking trade deals and infrastructure projects crisscrossing sixty-four countries across Eurasia and the Pacific, impacting 4.4 billion people and accounting for 40 per cent of global turnover and including a train line stretching from eastern China to London.
However, China is already recognised in the world of IP protection as a leading home for the global counterfeit market, and OBOR could provide the silk road with even more forged goods flooding into Europe.  So it is ironic that at a time when the EU and the UK want to establish frictionless and light-touch trade and customs arrangements as part of a softer Brexit, the IP community would benefit from a more rigorous border enforcement regime underpinned by a robust trading standards strategy to halt the flow of counterfeit merchandise, which is why organisations such as the ACG require a seat at the European table as part of the front line defence against IP infringement.

Lewis, who has been a key member of ACG since 2014, took over from Alison Statham, who led the group for thirteen years. A Welshman who still lives in Aberdare, Lewis said, “I am honoured and excited to have been selected to lead ACG. We have a wide membership base, a solid reputation, and a winning strategy that has enabled us to grow strongly. Building further on our success is a challenge I accept with confidence, determination, and fierce ambition. I am passionately committed to placing the brands and consumer safety at the centre of everything we do.”

Lewis also said, “I have always been driven to combat criminality, through the power of partnerships, and this has been my driving ambition—to create collaborative public-private sector structures that will give us shared expertise and intelligence, so we can make the right choices about how we target and use our precious enforcement resources. I get hugely frustrated that I have been unable to have as much impact as I would have wanted, and this is a continual driving force.

“I believe intelligence is the golden thread that links everyone in the fight against criminality. My job is to use a wider range of intelligence and information gained from our operational work to identify those companies who may be unaware they are being targeted by counterfeiters and then bring them into our community.

“I will also strive to use this information to raise levels of awareness about the growing threats we face and use it to assist policy makers and enforcement decision takers to make the right choices. I am hopeful that this will convince businesses that so far have not been able to gain traction at high levels, that the ACG is the right organisation to represent them in discussions with local, regional, national, and international Government authorities.”

Knocking On Doors

Lewis joined the Intellectual Property Office (IPO) in 2001 as senior policy advisor on intellectual property crime and was responsible for developing and leading on the UK’s first national IP crime strategy.

Later in 2008, he became senior national expert at the European Commission, where he helped develop the commission’s strategy against counterfeiting and piracy. During this time he also conceived and developed the European Observatory on Infringements of Intellectual Property Rights. The observatory has become the pivotal European network of experts engaged in shaping more effective IP enforcement policies and strategies.

Since joining ACG in 2014 as policy and strategy adviser, Lewis has developed the ACG manifesto and been at the forefront of ACG lobbying in the UK and Europe, ensuring the body has had a voice at major meetings and events including at the recent Europol IP Conference in Budapest. Such cooperation is something he fears could be under threat as Brexit redefines the political and economic lay lines of Europe.

Synthesis Report

The EUIPO has produced a “synthesis” report bringing together findings of research carried out since 2013 on the scope, scale, and consequences of intellectual property rights (IPR) infringements in the EU. Key findings are that the total contribution of IPR-intensive industries to the EU economy accounts for approximately 42 per cent of GDP €5.7 trillion and 38 per cent of employment. IP sectors also pay higher scales of salaries and generate a trade surplus of approximately €96 billion.

The report estimates that every year this success is being hugely challenged by IP infringements. In a series of sectorial studies, EUIPO has estimated that counterfeiting alone has led to lost sales of €100 billion per year in just thirteen business sectors. The growing value and breadth of products being counterfeited, lenient sentences, and high returns on investment have become strong incentives for criminal gangs to become more and more involved in counterfeiting. The report highlights criminal business models and identifies how organised crime networks are using a broader range of complex international supply chains. These include the use of the Internet to promote and distribute physical goods and illegal digital content across the world. Internet sites and social media are being increasingly used to provide additional benefits to criminals from advertising revenue. This adds to the dilemma facing genuine brands and legitimate websites, which find their reputations and credibility being extensively damaged.

In addition to analysing the supply of counterfeit goods and pirated products, the EUIPO has also studied the demand side. This work has included an in-depth study on the attitudes of EU consumers and their willingness to engage and purchase fake goods and content. The results reveal that key reasons for citizens to buy and access infringing products are lower prices of counterfeit goods and a perception that illicit online content is more available and easy to access.

Phil Lewis said, “The world has become a place for bargain hunting. Whereas before counterfeit goods were easily identifiable because they were being sold so cheaply that they could not have been anything other than counterfeit, now the criminals are selling them just below the guide price, so they are passing on shoddy trash under our very noses. Much of it is harmful. It is the oldest trade, and it is worth somewhere in the region of €460 billion, which is the equivalent of the total GDP of Ireland and the Czech Republic put together.”

Finally, the EUIPO report highlights key actions being taken to protect and enforce IP rights. This underlines work being carried out by a huge range of rights owners and the EUIPO’s growing partnership with Europol to provide wider responses to IP crime. It also outlines wider policy work being carried out by the European Commission to “follow the money” being accumulated by criminals and its continuing efforts to address the supply of counterfeit goods in third-world countries.

Knocking In Doors

There is knocking on doors to try and influence the counterfeiting narrative either inside or outside the EU, and then there is the day-to-day “knocking in” doors to secure arrests and prosecutions. For example, on Sunday, 24 June 2018 ACG and its members joined forces with officers from the Metropolitan Police, Wandsworth Trading Standards, Immigration Service, London Regional Asset Recovery Team (RART), and London Government Agency Intelligence Network (GAIN) to conduct raid actions at ten stalls operating at Nine Elms Market, Wandsworth, seizing thousands of counterfeit goods with a street value of over £100,000. The action was conducted as part of the National Markets Group’s (NMG) Operation BIG BEN, which aims to work with law enforcement agencies and market operators to reduce the availability of counterfeit goods at markets and car boot sales across the UK.

The GAIN London region coordinated the raid following intelligence and evidence collected by ACG and its member representatives over several months. The products seized included counterfeit clothing, footwear, designer handbags and accessories, watches, jewellery, batteries, chargers, and perfume, many of which were potentially unsafe and placed shoppers at risk from serious injury. This is the end game for ACG, the doorstep reality and the result of shared intelligence and high-level discussions with Government and EU spearheaded by Lewis and his team and directed by the members.

Lewis, a widower and father to two daughters, is a highly respected and regarded IP enforcement professional. He cites his late wife as his great hero: “Her courage and drive is always a constant beacon to me and my guiding force in wanting to be better. As a new DG, I thought I would make the usual start by trying to get a better understanding of how the ACG works and then trying to meet as many members and stakeholders as possible.

“Acting as an adviser to ACG on strategy and Government policy for four years, I’m clearly not new to the group, and it would have been easy to think I knew how the whole organisation works. However, I soon grasped how much I didn’t know! This was particularly true of the work of our secretariat and our intelligence coordinator, Graham Mogg, and how they all interact with our members and stakeholders. Frankly, I have been blown away by the commitment and professionalism that this small team shows.

“So I clearly needed to take time to properly understand the whole landscape in far more depth. That meant starting off as if I was completely new. The one thing to my advantage is that I’m not new to anti-counterfeiting work. I’ve actually been involved for almost twenty years, both as senior policy adviser at the IP Office and then six years at the European Commission. During this time I realised that no single body could ever tackle this huge problem on its own. Partnerships are vital, and for fourteen years I tried my best to build structures that would allow public and private stakeholders to work together to develop common aims.

“Sometimes this worked, and sometimes it didn’t. But generally the outcome was down to people, and I was fortunate to have worked with some of the most dedicated and conscientious people in the world. Many are amongst our membership and our key stakeholders, and I have the utmost respect for their longstanding enthusiasm and allegiance.

“From now on my big task will be meeting our members and primary stakeholders who enable us to function and then working with them all to build what I hope will be truly lasting and effective relationships. On some of our principle partners, we all realise that our enforcement authorities face continual challenges to do more with less. They are often under huge pressure trying to balance competing priorities. In this respect, I see the ACG as a primary ‘enabler’ in trying to ensure these precious resources have the right intelligence, training, and support to allow them to make the right choices when it comes to targeting the criminals involved in counterfeiting and piracy.

“I believe this can only be achieved by working together to build an even greater understanding of where the risks, challenges, and our combined strengths lie. Clearly, we also need to better inform high-level policy makers and decision takers to understand the threats. This is particularly true as we move into a more uncertain trade environment. IP has to be at the forefront of future agreements. It has to receive full respect if we are to meet the forthcoming competition and challenges on the world trade stage. If we are seen to be less than respectful of IP, I fear potential partners might lose confidence in us or even begin a race to the bottom in terms of protection and enforcement.”

So what of the future of fighting fake goods in an uncertain world? There has never been a more important time to be part of collaborative partnerships fighting IP infringement as they provide the intelligence and front-line defence against the counterfeiters. But there exists a clear and present danger that the knowledge can’t be shared after 29 March, unless of course this is purely fake news on the future of fake goods.

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