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Products Piracy/ Brands Piracy – horak Attorneys at Law, Germany

The imitation of products has become a true mass-phenomenon in the recent years and is threatening the success of many companies. Often companies realize the fact that their know-how is not sufficiently protected, only when the damage has already occurred and the imitation has already been put on the market. In this context, products and brands piracy can often be mitigated by means of particular trademark, design and patent protection instruments or as well as via border seizure applications.

Digital media and luxury goods have been at the centre of the counterfeit products market in the last few decades; however, this market has deeply increased in the last couple of years, concerning objects such as technological machines and systems /electronic devices. 

As product piracy, product counterfeiting or brand piracy, the reproduction of products is thought with the aim to participate in the economic success of an original product. In doing so, the infringement of intellectual property rights is generally calculated from the legal proprietor of the original protective rights.

Imitations are common in all areas: software, watches, clothing, medicines, and cars ‘pieces up to the complete motor of the vehicles. Spare parts of machines and investment goods are also copied really often.

At the same time, the quality of the copies continues to increase: While a few years ago, the imitations could usually be easily identified as inferior, nowadays has become really difficult to identify those copies as they are  more and more similar, if not identical, to the original product.  Particularly emerging nations, such as China and India, are expanding their technological capabilities at a very high speed.

The consequences for the companies concerned are drastic. They not only are forced to express themselves in a lower-profile sales figures and cheaper prices, but often also in a deteriorated brand image and reputation.

Import of counterfeit branded products

From the brand-name watch, the designer handbag up to the luxury sunglasses: shopaholics from all around the world are increasingly offered to buy alleged branded products at suspiciously low price. But that could be a clear sign of warning! Many bargains quickly turn out to be cheap counterfeited products. In order to prevent the trade of copied branded products, the German Customs also seized imported counterfeited products from non-EU countries. The prerequisites, however, is that a commercial character is recognizable as counterfeited at the moment of the importation.

Online counterfeited products ´trading

Thanks to the huge range of goods on the Internet, counterfeited products are now even sent directly to your home. The virtual markets offer cheap goods from all around the world. And just as on the real marketplaces, it is so easy to find a black sheep in international trading.

Those luxury products from overseas, which appear so favourable at first, can lose their splendour very quickly, namely, if it is a counterfeited or an unauthorized parallel imported object. Parallel imports are products, which the original manufacturer can sell for a particular market, for example the USA, and which are imported to Germany against his will/awareness.

A claim for damages can be filed from the original manufacture. We handle all cases of product piracy/counterfeiting. We are also active in the field of preventive product piracy:

  • Piracy-safe design of products as well as product creation and sales strategy;
  • Identify products and systems for monitoring and tracking along the value-added chain;
  • Development of protection concepts against product piracy: we can show you methods and tools that can be developed on the basis of a company-specific weakness and risk analysis.

Product piracy, slavish imitation, plagiarism, product counterfeiting, pirated products & “me-too”

In the event of product piracy, a distinction is made between:

  • Slavish counterfeiting: Here, the imitator tries to propose a product that is the exact copy of the original product. The packaging and the brand name are often the same. In the case of cosmetic or pharmaceutical products, the ingredients may even be identical.
  • Plagiarisms bear a slightly change in the brand name, e.g. anagrams like “McDnoald's” or visually similar as “SQNY”. In part, these product names are based on slavish counterfeits and partly on products that the original manufacturer does not (or do not) have. In China, the copying culture is known as Shanzhai (Shan Zhai).
  • Classic counterfeiting: Here an identical packaging and the name of the manufacturer are used. On the other hand, the ingredients, processed materials and / or processing are mostly (but not necessarily) inferior and sometimes not present or harmful to the human health.
  • Pirated products: These terms are understood to mean unlawfully produced or widespread copies of copyrighted material. The designations refer mostly to products from the media sector, which can be reproduced by means of innovative reproduction techniques.

In a gray zone between legality and illegality are those companies that distribute copied products from other manufacturers under their own brand name. This matter is often the object of legal disputes but this is actually not considerable a product piracy.

This is especially widespread in the area of ​​products whose value is (to a considerable extent) in the aesthetic characteristics, for example, clothing. If the shape of these products is not protected by design or utility model patents, there is generally no legal concern; otherwise, manufacturers often try to circumvent legal action by minimally changing the shape or design of a product. In these events, experts also have difficulties in foreseeing the possible outcome of relevant court trials.

The manufacture and distribution of imitative products is theoretically allowed. Among imitative products (also referred to as “me-too products”) are products which are adapted to a successful innovative original product in many features and are also launched shortly after the first supplier.

Imitations are similar to the original but if the similarity is much more of a mere similar copy, the “me-too” product is quickly considered a plagiarism.

Protection against product piracy

1. Registration of technical novelties as patents and utility models

-Patent and utility models/registered design: for technical solutions to existing problems

2. Registration of new designs as utility models/registered designs

-Registered design: protection of form and colour, whereby a certain peculiarity must be present

3. Registration of product brand names as trademark – word, figure, word/image, tone, colour trademarks

-Trademark: the protection of products names

4. Artistic works are protected under Copyright Act

-Copyright: the exclusive right of an author to protect his work (no actual registration take place, the work is considered created and owned with the publication).

Protection through technical and/or organizational measures

The above-mentioned measures are technical and / or organizational measures applied to protect the products of a company against possible imitation or to prove that a supposed original part is not the original, but a replica / plagiarism / fraud. As a rule, the imitation is not initially impeded from being reproduced, but in the case of legal claims (such as, e.g. in case of damage) the original can be clearly distinguished from the copy / counterfeit. The following list clearly shows a variety of ways to counteract the imitation of certain technical and organizational barriers:

  • 2D-3D Barcodes
  • After Sales Management
  • Change Management
  • Biometrics
  • Chemical markers in connection with “up conversion-marker”
  • Chromogenic system
  • Digital watermarks
  • Performance reviewing and monitoring of the market
  • Mutual authentication of components
  • Secrecy throughout the production
  • Design of characteristic and spare parts
  • Offer hybrids products
  • Carry out an information research
  • Optimize innovation process
  • Smart packaging
  • Internet monitoring though detective systems
  • Isotope labelling
  • Protect the labelling rights
  • Labelling through the DNA
  • Use particular communication strategies
  • Increase the complexity
  • Cooperation between production and distribution
  • Cooperation between production and legal consultancy
  • Offers of Long-term Service Agreement
  • Trademark and competition monitoring
  • Mass customization
  • Micro colour codes
  • Nano-biotechnology labelling
  • Organisation
  • Distribution logistic
  • Organization replacement-parts and disposal logistics
  • Organization Information Logistics
  • Supplier valued-add
  • Organization of the  production
  • Organization of the production logistic
  • Organizational protection through embedded software
  • Authenticity labelling (hologram, colour pigment codes, security threads, digital watermarks and pattern surface area).

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© German lawyer Michael Horak 2002-2017

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