Tag / counterfeit

by Mike Poverello

“In Vino Veritas” – In Wine there is Truth!

Italian police have broken up a network producing counterfeit Bolgheri Sassicaia, a Tuscan red wine which can sell for hundreds of euros a bottle.

The Guardia di Finanz (GDF) have arrested two people and are investigating 11 other suspects in connection with the “sophisticated and accurate” falsification of bottles of Sassicaia wines, which come from the coastal region of Tuscany.

The bottles and labels were identical to genuine articles, according to GDF officer Fario Sopranzetto, who noted that even the weight of the tissue paper used to wrap them was the same. The scam only came to light when a case of the fake wine fell off a truck last year and was discovered lying on the roadside.

In the case was a note with two mobile phone numbers, the first tangible leads in an operation that came to be known as “Bad Tuscan”.

The investigation culminated in a raid on a warehouse near Milan, which uncovered some 4,200 bottles of wine – reportedly inferior produce from Sicily – in bottles sourced from Turkey and with labels and cases originating from Bulgaria.

Some of the bottles claimed to be a rare 2015 vintage that had been classified as one of the best in the world by Wine Spectator in 2018, with others claiming to be from various years from 2010.

The counterfeiters are thought to have been producing around 700 cases a month, which would have brought in around €400,000 in sales, according to the investigators. They were being sold at a 70% discount to genuine bottles, around €500, with customers already secured in China, South Korea and Russia.

A report published by the Organization for Economic Cooperation and Development (OECD) in 2018 estimated that counterfeiting costs Italian food and drinks manufacturers €4.2bn euros in lost sales.

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by Mike Poverello

Illicit cigarette use declines in EU but production rises

The consumption of illicit cigarettes fell below 8 per cent of total cigarette use last year, but was still equivalent to nearly 39bn smokes and €9.5bn in lost tax revenues, says a new report.

The latest edition of the annual study – carried out by KPMG on behalf of tobacco giant Philip Morris International – also found that imports of illicit cigarettes from non-EU countries such as Ukraine and Belarus declined in 2019, with law enforcement reports suggesting there are “increasing volumes from illegal factories within the EU.”

Illicit ‘whites’ with no country specific labelling – i.e. legally produced cigarettes that are smuggled and traded illegally, often through free trade zones (FTZs) – remain the largest element of the counterfeit and contraband (C&C) category, representing 23.1 per cent of total EU illicit consumption or 9bn cigarettes.

Counterfeit of brands owned by manufacturers participating in empty pack surveys grew to 7.6bn cigarettes, an increase of more than 38 percent over 2018’s figure, and is the highest level ever recorded by KPMG. Counterfeit consumption was the highest in the UK and Greece.

The overall picture is one of increasing sophistication by the criminal networks behind the illicit trade, with multiple production units to compensate if one is raised, and increasingly high tech manufacturing equipment. New groups are also emerging that are focusing specifically on smuggling raw and fine cut tobacco.

“Illicit manufacturers are producing counterfeit, established and new illicit white brands to order at scale for organisations and smugglers who can arrange distribution of large volumes, either in large shipments or increasingly via high frequency, low volume shipments,” says KPMG.

Criminal groups are exploiting new distribution channels, such as rail, as it is faster than traditional shipping routes, as well as courier packages which are small and hard for law enforcement to detect, according to the report.

“The continued decline of illicit tobacco trade in the EU is a positive development and reinforces the importance of supply chain control measures, strict enforcement, and collaboration in combating this issue,” said Alvise Giustiniani, vice president of Illicit Trade Prevention at PMI.

However, while considerable efforts have taken place to stem contraband cigarettes from flowing into the EU, “we are once again seeing criminal organisations shifting their operations to stay one step ahead of anti-illicit programmes, according to the company.

Source: Phil Taylor, Securing Industry, 26 June 2020

by Mike Poverello

CBP – e-Commerce Strategy to address online shopping and growth of illicit goods

E-Commerce Strategic PlanCustoms and Border Protection has developed an e-commerce strategy in a bid to tackle the increase in online shopping and growth of illicit and counterfeit goods shipped as small packages.

The strategy, which notes that CBP must “adapt” to the new e-commerce landscape, seeks to address emerging threats posed by the global change in commerce habits and ensure CBP has the means to enforce violations.

Under the new e-commerce strategy, CBP will, among a number of measures, look to enhance data collection and intelligence, develop and utilise state-of-the-art techniques and technologies, review its existing legal and regulatory authorities, seek to strengthen partnerships with the private sector, facilitate international trade standards for e-commerce, and educate the American public of the risks, both as consumers and as importers, associated with non-compliant products.

The crackdown and new emphasis for the CBP reflects the shift from traditional methods of importing via large, containerised shipments to small, low-value packages as direct-to-consumer business becomes more common. This has presented new inspection and data challenges for CBP, especially as the volume of these small packages has increased.

In addition, transnational criminal organisations are increasingly shipping illicit goods to the US via small packages on the belief there is a lower risk of interdiction and less severe enforcement consequences if caught. CBP said this illicit activity poses a risk to the health and safety of Americans and compromises US economic security.

The new e-commerce strategy also follows a report last month by the Government Accountability Office, which reviewed the enforcement efforts by CBP and US Immigration and Customs Enforcement in light of the increase in online shopping and sale of counterfeit goods. The report found that CBP had conducted a limited evaluation of its efforts, suggesting its activities were not the most efficient or effective, and recommended it evaluate its activities to enhance intellectual property enforcement.

The new strategy has a strong focus on data, which is one of the current limitations around enforcement of small packages. For instance, according to the strategy document, CBP will strengthen partnerships with stakeholders and encourage information sharing, proposing benefits for those parties who share advance electronic data and other information and will penalise those who are not compliant in this area.

The agency will also increase its operational efficiency and effectiveness by using data analytics, data mining, and an array of powerful analytical tools. In addition, CBP will expand its existing advance electronic data pilot in the international mail environment to include additional foreign postal operators.

Potential technology options include mobile applications and an e-commerce resource library, the strategy notes. CBP will also develop a portal that contains a database on importers that CBP has vetted and deemed “trusted”.

Source: USCBP and Securing Industry, online article 2018.03.28

by Mike Poverello

US Customs seizes fake Gucci and Louis Vuitton handbags

USCP Counterfeit stuffThousands of counterfeit designer handbags have been uncovered by federal officers in a shipping container at Miami’s seaport.

Customs and Border Protection officials say a recent review confirmed there were 1,200 fake Gucci handbags and 1,195 Louis Vuitton handbags in the container. The bags were initially seized Aug. 19 in a shipment from China.

Authorities say the handbags are worth more than $1 million if sold as legitimate.

Investigators began examining cartons containing the handbags after noting that they were not declared on any import documents. The shipment included 825 other cartons of clothes, shoes and similar apparel.

Last year CBP seized more than 23,000 counterfeit items nationally worth about $1.2 billion.

by Mike Poverello

Counterfeit luxury products not simply a question of trademark infringement

stock-photo-intellectual-property-and-related-words-in-word-collage-100324247Smart, Biggar, and Fetherstonhaugh, a Canadian law firm practising exclusively in intellectual property and technology law, advises that deterring counterfeiters is particularly important to luxury brand owners. For this reason, they should always keep in mind that augmented damage awards may be available when seeking concurrent relief for copyright infringement as well as trademark infringement. Similarly, brand owners in copyright industries should keep this in mind and consideration should be given to seeking both copyright and trademark relief in all counterfeiting and pirating scenarios in Canada. Considering the question from the point of view of luxury brand owners exemplifies the point.

Copyright aims to protect against the unauthorised reproduction of original literary, dramatic, musical and artistic works. Logos and designs or patterns used by luxury brands may constitute artistic works in which copyright subsists in Canada. Further, in the case of a counterfeit item, such works are clearly reproduced without the consent of the copyright holder.

Smart & Biggar states that even though trademark and copyright law each protect different interests, they are not mutually exclusive and in many cases the sale and distribution of a counterfeit product or a pirated copyright work may constitute both trademark and copyright infringement. In such circumstances, they recommend brand owners to be mindful of the possibility of claiming both trademark infringement and copyright infringement not only to maximise their damages but, ultimately, to have an increased deterrent effect on counterfeiters [in Canada]. Source: Smart & Biggar/Fetherstonhaugh