Eradicating counterfeit goods in the South African market is essential to its economy. The practical consequence of not taking action against the sale of counterfeit goods in the market results in loss in sales and profits of genuine goods and brands. Furthermore, the existence of counterfeit goods in the market may pose a massive health risk to the public as the pharmaceutical, medicinal and food industries are increasingly being targeted by counterfeiters who deal in inferior and in some instances toxic counterfeit goods.
The following article provides for a basic understanding of counterfeit law in South Africa – considering that South Africa is one of the few countries in Africa that has implemented effective counterfeit laws through its Counterfeit Goods Act.
What are counterfeit goods?
Goods, often of a lower quality, that are manufactured or sold under a third party's brand name or trade mark without the brand owner's authorisation.
Intellectual property rights afforded protection under the Counterfeit Goods Act?
The Counterfeit Goods Act affords protection to intellectual property owners that have:
- registered trade marks;
- unregistered well-known trade marks;
- copyright works (provided that the subsistence of copyright in the work is proven); and
- prohibited marks under the Merchandise Marks Act.
What constitutes dealing in counterfeit goods?
- the possession of infringing goods in the course of business; or
- manufacturing, making or producing infringing goods for non-private or domestic use; or
- selling, hiring or exchanging infringing goods; or
- exhibiting infringing goods for the purposes of trade; or
- distributing infringing goods for the purposes of trade, or any other activity or action that may prejudice the rights of an intellectual property owner; or
- importing infringing goods into or through South Africa, except if doing so for private or domestic use.
Avenues available to combat counterfeiters?
There are three commonly used remedies to take action against counterfeiters in South Africa, briefly summarised as follows:
Action by the South African Police Services (the SAPS) or an Inspector appointed by the Department of Trade and Industry (DTI)
Intellectual property owners that identify counterfeit goods in the market can immediately take action by conducting what is known as a discrete "test purchase" which serves as proof that the infringer is in fact dealing in counterfeit goods.
Thereafter, a complaint that an offence of dealing in counterfeit goods has been committed can be lodged with the SAPS or an Inspector. The official will apply to the relevant Court having jurisdiction over the matter for a search and seizure warrant if such official is convinced that the complained of offence has been committed.
Should the warrant be granted, the goods will be confiscated from the identified premises, and stored at a counterfeit goods depot until the case is finalised. Hereafter, criminal and / or civil proceedings can commence.
Action by Customs
An intellectual property owner seeking to protect a brand may apply to the Department of Customs and Excise to record such intellectual property rights on Customs' "watch" database.
Customs will then be alerted to identify and seize all suspect counterfeit goods imported and exported through South African borders, airlines and harbours and report such suspect goods to the intellectual property holder or its legal representatives to clarify whether such goods are in fact counterfeit. Again, criminal and / or civil proceedings may commence hereafter.
Civil Action by Intellectual Property Rights Owners
Application by an intellectual property right owner may be made to the relevant Judge to obtain an order directing the Sheriff (or any other authorised official) to search, seize and confiscate counterfeit goods and documents relating thereto as evidence of counterfeit activities.
The relevant Judge will need to satisfy himself/herself that the owners' rights to inspecting goods or documents will be prejudiced in that they may be destroyed if action is not taken on an urgent basis.
Penalties and consequences of dealing in counterfeit goods
Apart from obtaining a declaratory court order that counterfeit goods, packaging and tools used in the manufacturing process of such goods be destroyed, the act introduces the following strict penalties upon convicted counterfeiters:
First time offenders – are punishable by a maximum fine of R5 000 per article or item, or imprisonment for a maximum period of 3 years, or both depending on the circumstances and severity of the offence.
Subsequent / repeat offenders – are punishable by a maximum fine of R10 000 per article or item, or imprisonment for a maximum period of 5 years, or both depending on the circumstances and severity of the offence.
Counterfeit law in South Africa offers quick and effective results that ordinarily take years of court proceedings to conclude. The procedure allows for a complainant to confiscate goods reasonably suspected to be counterfeit pending the outcome of the dispute. This can significantly minimise damage to brand owners before the case is finalised.
Both criminal and civil proceedings can be instituted against infringers, allowing the complainant two opportunities to hold offenders liable for their unlawful actions. As evident from the above, convicted counterfeiters face hefty penalties for their actions.
In conclusion, intellectual property brand owners should seek the advice of anti-counterfeit specialists that adopt a zero-tolerance approach utilising all available avenues to combat counterfeiting to send a clear warning to infringers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.