• Report sets out best practices for landlords to prevent sales of counterfeits
  • Calls for sustained efforts and increased education from enforcement agencies
  • Doubts over prospect of landlords becoming partners in fight against fakes

A new paper from the International Chamber of Commerce’s Business Action to Stop Counterfeiting and Piracy (BASCAP) addresses a number of challenges that landlords face in stemming the flow of counterfeit products. It also provides guidance to enforcement agencies on how to best engage with property owners and encourages increased co-operation between landlords and brand owners. However, market experts have expressed scepticism over the prospect of landlords becoming proactive partners in the fight against fakes.

The report identifies a number of actions that landlords should take, including – first and foremost – the implementation of due diligence checks so that they know who their tenants are on a basic level. This would involve, at a minimum, screening prospective occupants’ backgrounds and financial information. The paper adds that lease agreements should include provisions expressly prohibiting the sale and storage of counterfeit goods, with property owners urged to maintain a publicly visible “No Counterfeit and Pirated Products Policy” sign on relevant notice boards and websites. It also proposes landlords proactively monitor their tenants’ stores for fakes as part of their regular safety and compliance checks.

BASCAP is also calling on law enforcement organisations to do their part: it stresses the importance of regular and sustained enforcement, and the need for recurring, systematic raids for more notorious markets. Crucially, attention needs to be paid not only to people renting to sellers, but also to those who provide a place for criminals to manufacture, package and store fake products. The expectation is that enforcement agencies will educate property owners as well, with the paper emphasising: “Voluntary efforts are most successful when landlords understand they can avoid prosecution, penalties and loss of property value, or when they see that they can attract customers by marketing their place of business as a ‘counterfeit-free’ marketplace.”

Landlords are also advised to establish collaborative working relationships with brand owners, although James Bikoff, partner at Smith, Gambrell & Russell, observes: “Landlords have generally not been co-operative in anti-counterfeiting efforts, which is why so many have been brought into litigation.” On this, BASCAP acknowledges: “A recent increase in the number of prosecutions confirms that landlords who are not vigilant about the activities that are taking place in their premises, are becoming victims of counterfeiters and incurring a dramatic increase in costs in damage penalties and legal fees.” This has been accentuated by legal developments around the world, which have thrust intermediaries into the limelight.

This pressure on intermediaries may be the leverage rights holders need, though, to foster better working relationships. Bikoff explains: “Going after intermediaries has become an effective avenue of enforcement, so I do think there is a better opportunity now for brands owners to work with landlords. It is important to bring counterfeit sales to the attention of the property owner as soon as possible and demand action to be taken, since landlords who don’t act on it will be putting themselves at risk – there’s enough legal precedent now that they know they will be liable if they don’t co-operate.”

However, Roxanne Elings of Davis Wright Tremaine is more sceptical about the long-term prospects of landlord engagement: “In theory it’s a great idea, but in practice we shall have to wait and see how that develops. It can be really tough to work with landlords on a local level. Landlords generally aren’t big players in the counterfeiting chain, so the money they stand to make often outweighs the risks.” Elings also questions the level of co-operation one can expect in jurisdictions that don’t exert as much pressure on landlords: “In Asia, for example, you wouldn’t expect them to be co-operative in counterfeiting efforts.” She believes that while landlord liability is necessary, “it’s not as important as it was in the past, especially as the spotlight has mostly shifted to online sellers”.

Still, Elings remains hopeful that rights holders and landlords can come together to tackle counterfeits: “There’s certainly potential, and it never hurts to try. For brand owners with specific problems [in physical marketplaces], it can definitely help to open up a dialogue with landlords. But this is an ongoing problem and these types of developments can take years.” BASCAP’s paper concludes that criminal actors can be effectively denied commercial premises if rights holders, trade inspectors and landlords all work together – but whether this is feasible as a widespread solution remains to be seen. What is clear is that something needs to be done and the hope is that landlords do at least consider implementing the best practice outlined in the BASCAP paper.