Economic conditions and the business environment in general have improved due to decolonisation, urbanisation, withdrawal of unfavourable sanctions, economic emancipation of many countries and rapidly growing middle classes. Recent research indicates that the rate of urbanisation in Africa is faster than that of any other continent – to the extent that by 2030 it will cease to be a rural continent.
This demonstrates that there is good business potential in Africa and multinational brandholders have realised that it has become imperative to trade in genuine goods in order to fully exploit their intellectual property potential and to expand their businesses and increase sales and revenue. However, these developments have created both legitimate business opportunities, as demand for genuine products across all sectors grows, as well as a growth in the market for counterfeit goods.
The sale of counterfeit goods is rife across the continent. The fundamental issues experienced include a lack of proper legislative framework – leading to weak enforcement, limited resources and a shortage of manpower within the enforcement agencies, as well as a lack of experience in IP law on the part of the agency employees. However, these challenges are not insurmountable and there are legal avenues available to effectively address the proliferation of counterfeit goods on the continent.
The trade in counterfeited goods is worth a whopping $462 billion a year, according to a recent study by the OECD and the EU’s Intellectual Property Office. A massive 63.2% of knockoffs originate from China, and American brands are the most counterfeited. In South Africa alone, an average of three raids are carried out per day in the fight against counterfeiting.
A NEW THREAT | FAST MOVING KILLERS
Over the past few years, counterfeit fast-moving consumer goods (FMCG) have developed into a thriving market. The main concern with counterfeit FMCG goods is the health and safety risk posed to unsuspecting consumers. A report by the World Health Organisation (WHO) indicates that nearly a quarter of pharmaceuticals in circulation in developing countries – including HIV/Aids, TB and malaria treatments – are of a poor and unacceptable quality. Such medication is at best ineffective and at worst deadly. Counterfeit motor vehicle or aircraft replacement parts also place innocent lives at serious risk. Another concern is that counterfeits have now filtered into the legitimate distribution channels.
FMCGs are goods that are sold quickly and at a relatively low wholesale or retail price. 20% of the most counterfeited brands in the world are FMCG brands. However they are distributed, FMCG fakes follow the same sales channels as legitimate FMCGs and so they move quickly. Generally, by the time a raid or visit is arranged, the goods have been sold or dispatched. The abundance of counterfeiters ranges from large wholesalers and retailers to street vendors.
“The emergence of FMCG counterfeiting leaves our clients with a legal conundrum,” explains Tayyiba Nalla, Associate at Adams & Adams. “We’ve had to help authorities develop new approaches to our traditional anti-counterfeiting methods – including a tiered approach that requires a combination of “soft” measures before we carry out raids. We risk losing stock that could potentially endanger thousands of lives.”
Other strategies would include the facilitation of customs education, regular amendments to packaging, as well as innovative packaging solutions such as QR codes and holograms.
AFRICA’S PUBLIC HEALTH AND SAFETY | TWO CASE STUDIES
In Ghana, the Food and Drugs Authority (FDA) is tasked with regulating and creating guidelines on the advertising and labelling of, inter alia, all processed food packaged for sale, medicines and medical devices, tobacco, herbal products and food supplements, cosmetics and household chemicals. It also creates guidelines on and regulates premises, such as restaurants. Products and premises must be registered with the FDA.
In Nigeria, the National Agency for Food and Drug Administration and Control Act (NAFDAC) was created to regulate and control, inter alia, the manufacture, importation, exportation, advertisement and sale of, inter alia, food, drugs, cosmetics, chemicals and packaged water. These products must be registered with NAFDAC before trading in these goods.
Both the FDA and NAFDAC have been in the spotlight in recent months regarding directives which they have and have not issued.
In December 2016, a video on social media showing an energy drink which had seemingly been labelled as the special Christmas edition of the 250ml Blue Jeans Energy Drink, but which label could easily be pulled off to reveal another product, went viral in Ghana.
Following the release of this video, the FDA launched investigations into the seemingly fake products and issued a directive ordering:
“Cessation of the distribution and sale of all Blue Jeans Energy Drinks; total recall from trade of the special Christmas consignment of Blue Jeans Energy Drinks with labels bearing Santa Claus (Father Christmas), and submission of all relevant documents for its examination.”
In 2016, the FDA also conducted market investigations into and released statements to the public warning about fake olive oils, the dangers of use of certain skin lightening creams, LDC (a claimed medicinal preparation for oral hygiene) and fake tomato powders found in the market.
In Nigeria, NAFDAC routinely issues directives and warnings regarding products which may be harmful, are not registered or do not meet the specific product guidelines.
In focus at present is salt and specifically the practice, against regulations, of packaging industrial salt in sizes such as 5kg, 10kg, 15kg and 20kg packs when it is only permitted to be sold in packages of 50kg. This is to avoid confusion amongst consumers between industrial salt and iodised table salt.
Also in focus in Nigeria is the volume and number of counterfeit food and drugs. In this regard, NAFDAC is involved in conducting raids on a regular basis, including recent raids on several shops at Ogbaru Relief Market in Onitsha which shops were producing, selling and distributing fake alcoholic and non-alcoholic drinks.
Adams & Adams Anti-Counterfeiting
THE ANTI-COUNTERFEITING TEAM AT ADAMS & ADAMS
Adams & Adams has the largest dedicated anti-counterfeiting team on the continent. The team is headed by Lucy Signorelli and Godfrey Budeli. They are assisted by qualified attorneys Jan-Harm Swanepoel, Tayyiba Nalla and Christoff Pretorius. Jan-Harm is a former State Prosecutor and his extensive experience in criminal litigation is hugely beneficial, while Tayyiba’s thorough understanding of technology helps fight and disrupt the non-traditional sale of counterfeit products. In addition, we have a complement of experienced paralegals, secretaries and admin staff, all of whom help ensure that our practice runs like efficiently.
Adams & Adams has been assisting clients with anti-counterfeiting actions for decades through its normal Trademark & Copyright Litigation Department. However, in 2010 we decided to create a dedicated anti-counterfeiting team to streamline the processes and to improve our efficiency and service delivery to our clients.
ADAMS & ADAMS ANTI-COUNTERING SERVICES
Our team conducts a client portfolio review to ensure that the necessary IP rights are in place and, if they aren’t, we recommend ways to fill the gaps. It’s imperative that action be instituted based on registered rights.
We make a record of our clients’ registered, well-known unregistered and copyrighted works for Customs to enable them to easily deal with suspected counterfeit goods at ports of entry.
We also conduct investigations to infiltrate the counterfeit goods market and to understand the extent of the problem. Based on the outcome, we devise an effective enforcement strategy within a client’s budget.
This may include:
- Participating in training of law enforcement agencies
- Conducting in-market surveys or investigations and obtaining test purchases
- Participating in regular search and seizure operations
- Educating the public through the media to raise awareness of IPRs, counterfeit activities and health/safety awareness
- Facilitatingco-operation between stakeholders nationally, as well as regionally and internationally, such as the WHO, WTO, WCO and Interpol.
We conduct regular in-market investigations, which help us to understand the trade channels and identify the main role players. This is an imperative exercise in our efforts to remain a step ahead and keep up to date with the changing strategies used by counterfeiters to avoid detection, detention and seizure of the counterfeit goods. We also conduct regular training sessions with law enforcement agencies in Africa to share intelligence and legislative or case law developments.