How can an entrepreneur deal with counterfeit products?

Counterfeiting a product means illegally imitating it (e.g. by infringing trademark or patent law, etc.). In this article we will focus on:

1. What to do in case of counterfeiting?
2. The seizure of counterfeit goods and other urgent measures;
3. Reporting on the e-commerce website;
4. Reporting to the Customs Agency;

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1. What to do in case of counterfeiting?

Acting quickly should be the mantra for an entrepreneur who realises that his products
have been copied. In order to get this stopped and to limit the damages, the first thing to do is to contact an intellectual property lawyer.

At an initial appointment, we usually assess the problem through a set of questions:

• What type of product has been imitated/counterfeited?
• What is the degree of similarity between the original product and the counterfeit product?
• What is the territorial extent of the infringement?
• Had the holder defended the product by registering trademarks, patents, designs or other means?
• Have other regulations been infringed (e.g. false “Made in Italy”, CE marking)?
• Is there any information available on the identity of the counterfeiter?

It is only after collecting all the relevant information that a decision can be made on how to act to stop the counterfeiting and obtain compensation.

In most cases action is taken starting by issuing a legal warning. A solicitor’s letter of formal notice (i.e. legal warning) can be used to prompt the infringer to spontaneously cease his illicit behaviour. However, it may be more advisable to act without prior notice to prevent the infringer from making the evidence of his guilt disappear. In the following, we will explain the practical details.

2. The seizure of counterfeit goods and other urgent measures

In order to prevent the infringer’s conduct from causing irreversible damage, the law provides for the possibility of applying for special precautionary measures in court. As mentioned above, precautionary measures can also be requested inaudita altera parte, i.e. without prior notice. They target the infringement at its source and are:

• injunction;
• seizure;
• description.

An injunction consists of a judge’s order to cease counterfeiting. It is often accompanied by a penalty to be paid by the infringer in relation to each day of delay and/or each counterfeit item produced or distributed after the judge’s injunction.

The more aggressive the seizure, the more effective it is. At the same time, it allows the counterfeit to be blocked and the evidence of the infringement to be retained. The counterfeiter’s accounting records can also be seized to determine the extent of the infringement in quantitative and economical aspects.

Eventually, the description allows the offence to be ‘described’. It provides a clearer picture of the infringement and verifies its actual constitution. This is widely adopted in the patent field.

Following the precautionary phase, aimed at containing the infringement, a claim for damages may also be filed. 

We will now examine the additional containment measures that can be activated.

3. Reporting on the e-commerce website

In the event of flagrant online infringements concerning trademarks, patents, design, copyright, etc., a report can be submitted directly to the website that sells the counterfeit goods. The person in charge of the marketplace or e-commerce website, although not the material author of the imitation, is liable in his capacity as “hosting provider”.

Should the hosting provider fail to act promptly to eliminate the infringement, it will be held responsible. This has been clearly established by case law in several rulings and, in particular, by the Italian Supreme Court (Cass., I sez., sent. 19.03.2019, no. 7708).

This is precisely the reason why companies such as Alibaba, Amazon, Ebay, etc. tend to intervene quickly when the infringement clearly involves a registered trademark or design. Reporting is increasingly one of the activities we deal with, and in most cases leads to the removal of counterfeit goods from the website.

After the process has been completed, the platform operator removes the infringing material and provides us with a confirmation of removal.

4. Reporting to the Customs Agency

The Customs Agency provides for the possibility of making a special report, the so-called “application for action”, aimed at obtaining the detention of suspicious goods. When submitting the application on behalf of our clients, we describe the infringement thoroughly by specifying

• the certificate of registration of the allegedly infringing trademark or model (design);
• a photographic set depicting the original and the counterfeited product;
• the territorial area affected by the infringement and the area for which intervention or surveillance is requested;
• the list of persons involved in the infringement.

When the Customs Agency suspects that the goods are actually counterfeit, it notifies us immediately. Applicants then have 10 days to inform the Agency whether the stopped goods are deemed to be original or counterfeit. 

Upon confirmation, the Customs Agency seizes the goods and initiates criminal proceedings against those involved in the offence. 

Since the applicant is entitled to know the origin and destination of the counterfeit goods, customs surveillance represents an essential tool for gathering information on the offence, stopping it, and initiating proceedings for compensation.