The UK Intellectual Property Office published its annual report on intellectual property (IP) crime in September. The report reviews current and emerging threats in the field of IP crime and provides details of the enforcement activities undertaken in the UK over the past year.
The overall picture is an encouraging one in terms of the targeted enforcement activity being carried out by specialist agencies, often working together, and the increasing range of tools at the disposal of rights owners for pursuing criminals. However, it appears that illegal activity, particularly on the internet, remains a significant issue which is difficult to police.
The report highlights a continuing trend in the use of the internet by consumers to source pirated content, illegal streams and counterfeit items.
It reveals that, in the period from May 2014 to the publication of the report, the Police IP Crime Unit suspended 3,426 rogue websites selling fake luxury goods. In particular, it appears that there is a growing threat from activity on social media sites. The Anti-Counterfeiting Group’s Facebook initiative “Operation Watch” identified the availability of over 30,000 individual images of counterfeit goods in just one day in 2014. The misuse of social media has required targeted enforcement activity. Operation Jasper (which brought together Trading Standards teams, police officers, industry bodies and government agencies to tackle counterfeiting and piracy on social media sites) carried out a campaign in which it took down 4,300 Facebook listings, 20 Facebook profiles, issued over 200 warning letters and delivered 24 cease and desist letters in just a few weeks.
In addition, the Federation Against Copyright Theft has reported a marked rise in cases involving illegal access to subscription pay TV services, which now account for 18 per cent of the investigations that it carries out each year. The Anti-Piracy Unity has also highlighted a significant increase in the number of instances of websites and software offering stream-ripping services, which are seriously undermining the subscription-based streaming model and the remuneration returned to rights holders. From July 2014 to June 2015, the Police IP Crime Unit diverted over 11 million views from pirate TV/film/music websites to an official police warning page.
This sort of activity on the internet remains a challenge for the various enforcement agencies to police, and their projects continue.
Sales on the ground
On the ground, the report suggests that seizures of counterfeit goods from markets are decreasing. There was a very successful operation at the Barras Market in Glasgow between August 2013 and March 2014 in which over £2million worth of goods were seized and 32 individuals were arrested. A full-time police officer has now been allocated to oversee all IP crime in Glasgow and there has been a significant reduction in criminal activity.
However, there is still a lot to do. It appears that the infringers are increasingly dealing in high-value counterfeit items, with an increase in the sales of items such as handbags, watches and electrical items. The report reveals that over £3million worth of fake goods have been seized since September 2013. One member of the Anti-counterfeiting Group seized 75,000 of its products (with a retail value of £2.5million) from criminals.
There is also significant action at the borders. The UK Border Force detained over 1.6 million infringing items in 2014/15, the retail value of which, if genuine, would have been in excess of £65million. The predominant source country for goods seized at the UK border continues to be China, together with its special administrative region, Hong Kong.
Despite the continuing infringing activity on the internet and the high value of the items that are being traded, the report suggests that there has been an overall reduction in the instances of IP crime being reported to Crimestoppers, and in the number of individuals receiving cautions and being found guilty of criminal acts. It is unclear whether this results from a reduction in criminal activity, or if the activity is becoming harder to identify or less likely to be reported.
Notwithstanding this general trend, there have been some notable successes in tackling the criminals. Thirty seven arrests were made by the Police IP Crime Unit in the period from May 2014 to June 2015 and the two individuals behind “Dancing Jesus”, an illegal music forum, were sentenced at Newcastle Crown Court to four years and five months in prison.
The Intellectual Property Act 2014 introduced new criminal offences in relation to intentionally copying registered designs, which will offer rights owners a new avenue for enforcing their rights.
The impact of IP crime and strategies for dealing with it
As discussed in the report, IP crime brings about social, economic and reputational harm to the UK. Criminal activity undermines the genuine retail market, restricts the revenue to the UK Treasury and, in some cases in which unsafe counterfeit goods are sold, threatens the safety of the consumer. There are links to organised crime, with profits being redistributed into other activities such as drug supply and money laundering. It is therefore vital for owners of IP rights such as design rights and trade marks to have as many options available to them as possible for dealing with criminal activity.
In our experience, putting in place border detention measures can be a very effective way of preventing counterfeit goods from entering the country in the first place. Once counterfeit goods are available on the ground, it can be difficult to control them. Trading Standards authorities are often financially stretched, which means that they have very limited resources for pursuing criminal prosecutions, except in cases where the volumes of goods are very large, or where there are health and safety issues at stake. It is open to individual rights holders to commence private prosecutions against criminal infringers, but these cases are rare in the UK. In the circumstances, we would advise right holders to file applications for action with the Customs Authorities to cover their key IP rights. If the “simplified procedure” is followed, this can be an efficient way of having the infringing products destroyed without the need to commence legal proceedings.
We also recommend that rights holders put in place measures to monitor infringing activity on the internet. This can be a more effective method of tracking down the source of the products and the key operators than carrying out investigations on the ground. Once the key infringers have been identified, it should be possible to put in place a focussed attack on them and to consider whether or not it would be appropriate to pursue criminal sanctions.
It is a difficult battle for rights owners to fight, but this report shows that it is possible to restrain the activities of criminals. Each success will hopefully send a message to the market place that this activity will not go unchallenged and, in a world where technology is enabling criminals to become ever more sophisticated, it is simply not an option to do nothing.