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Fashion & Retail Group: Doing Business in Style is published by Mishcon de Reya’s Fashion & Retail Group.If you have questions about any of the topics, please speak with the person named at the foot of each article or ask your regular Mishcon contact to put you in touch with one of our specialists.

TWO NEW WEAPONS TO CURB THE COUNTERFEITERS AND COPYCATS

Sadly, infringement of intellectual property rights (IPRs) by counterfeiters and other copycats is rife.

Fashion industry brands battle against the combined attack of both counterfeiting and design right infringements by copycat ‘designers’. These issues cause not only initial financial loss, but also potential longer-term damage to brand names and reputation. Figures put the total cost of counterfeiting to the EU’s GDP at €8 billion a year and the ICC estimates that 7% of all world trade is in counterfeit goods.

The fashion industry is justifiably frustrated by the infringers’ consistent undermining of its business and, no doubt, by the perceived cost of taking action.We have heard on many occasions that brand owners believe these problems are endemic in the industry and that little can be done. Despite this, brand owners are increasingly seeking to protect their IPRs, by taking action against both high street infringers and larger scale counterfeiters, and beginning to recognise that there are ways both to recover money and to deter infringers in the future.

The key aim and outcome of actions against counterfeiters and copycats is recovering money and lost profits directly from those infringers, using all the weapons available in the civil courts.

This both redresses the losses of the brand owners caused by such infringements and acts as a deterrent to infringers in the future.

Two new EU developments have given brand owners additional weapons in their armoury, particularly in relation to deterring counterfeiters and copycats from future infringements.

The recent EU IP Enforcement Directive enables successful claimants to compel defendants to publicly ‘name and shame’ themselves by placing adverts (at their own cost) in leading trade magazines or other press. Such a public admission of guilt will no doubt be a deterrent, particularly to those established and otherwise reputable companies that are found to have engaged in copycat activity. Mishcon de Reya was the first law firm to successfully apply this new directive on behalf of Microsoft when the Firm obtained a Court order that compelled a software counterfeiter to publicly ‘name and shame’ itself in a leading trade magazine.

Secondly, the European Parliament has approved, in principle, a new directive that will criminalise any deliberate infringements of IPRs across the EU. It suggests maximum penalties of hundreds of thousands of EUROS and/or four years imprisonment for serious organised crime, such as large scale counterfeiting or piracy. Other possible penalties include confiscation of pirated goods/destruction of property, potential closure of the company involved and a temporary or permanent ban on commercial trading.

While we recognise the fashion industry’s frustration with the serious losses such infringements consistently cause its brands, there are increasing measures that can be taken to recover damages and costs, providing a real return on investment and also acting as serious deterrents to such infringers in the future.

For further information, contact:
Jeremy Hertzog
+44 (0)20 7440 7264
jeremy.hertzog@mishcon.com