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Your brand and other intellectual property (IP) are crucial to your business’ success. They can represent enormous investment amounts over time. However, as your business grows and becomes more widely known, this can open up new risks and threats to your IP. Counterfeits are a constant and irritating issue for successful brands worldwide, and New Zealand is no exception. Having a strategy to protect your IP is all-important. Your intellectual property can include copyrights, patents and trademarks you register under your business. This article will set out the risks of counterfeits to your IP, and then give some ideas for how you can monitor and minimise the harm of counterfeits to your IP.

The Dangers of Counterfeit Products

Counterfeit products are any products that look to piggyback off the brand or other IP of your own business and its popularity. They are also known as cheap knockoffs. Such products tend to compete solely on price and claim the same brand or advantages of your own product. There are two key risks of counterfeits:

  1. they can take profits away from your business when consumers purchase the counterfeits rather than your items; and
  2. low quality counterfeits can cheapen your business’ brand and tarnish your brand’s reputation. 

Your IP is a valuable asset, and it is essential to take steps to avoid these risks. 

Regularly Monitor for Infringement 

While formally registering your brand and other forms of IP is vital, it is only the first step. As the IP owner, it is your responsibility to continually and regularly monitor for any counterfeits or other IP infringement. If necessary, you may need to take substantive action. Ideally, you would have employees regularly check online and across different markets, for any counterfeit products.

Once a Counterfeit Is Identified, Send a Formal Letter

If you identify a counterfeit being sold, you should take strong and quick action as soon as possible. The first step is to send a formal letter. It is best practice to engage an IP lawyer or attorney to advise you on the wording of the letter. A legal professional can also advise on any next steps you should take. 

You and your business should send the formal letter to the person or company selling the counterfeit and otherwise breaching your IP. This letter should clearly detail your rights to the intellectual property. Further, it should describe the counterfeit product in question, and advise them that they may be breaching the law. The letter should:

  • identify the infringement; 
  • outline your IP rights (with references to any documentation if need be);
  • provide an opportunity for the other party to rectify the breach (for example, by requiring them to take certain action like an immediate halt to selling the counterfeit); and 
  • inform them of the next steps if they do not comply with your demands (typically, legal action). 

You should take some genuine steps to resolve an IP dispute before commencing litigation. Therefore, in most cases, you should always send a formal letter of this nature and give the other party a chance to stop their behaviour. Ideally, this would fix the matter and avoid further costs of litigation.

If Necessary, Commence Litigation

After sending formal letters and seeking legal advice, there may be instances where you cannot form a resolution with the other party. In such cases, you may require litigation to enforce your rights. However, court proceedings can be time consuming and expensive. That said, in some circumstances where the other party is obstinate, you may have no other option for protecting your brand. If you are successful, the court has broad powers in granting relief.

For example, a court may award you:

  • damages;
  • a share of the other party’s wrongful profit;
  • an order for the destruction of all infringing material; or
  • an injunction restraining the infringer from selling and producing the infringing goods.

Key Takeaways

Counterfeit products can be damaging to successful brands around the world. However, as the IP’s rightful owner, your business can prevent counterfeits from unfairly taking advantage of your brand. Monitoring for counterfeits online and in different markets is a key first step and is your responsibility. Being vigilant early can pay dividends later if it allows you to send a formal letter and convince the counterfeit person or company to stop infringing on your business’ IP. If a formal letter does not work, you may need to consider litigation to protect your IP.

If you need help protecting your IP from counterfeits, contact LegalVision’s IP lawyers on 0800 005 570 or complete the form on this page.

FAQs

Is it illegal to sell counterfeit products in New Zealand?

Yes. It is illegal to sell a product that is looking to piggyback off another product or brand, where legitimate IP protections are in place. You cannot take advantage of another person or company’s IP.

Is it best to send a formal letter to a counterfeiter, or sue?

While you may not have any option but to launch a lawsuit, your best option is almost always to send a formal letter asking them to cease and desist first. This may solve the issue, and at the least will show a court in litigation that you took steps to resolve the issue reasonably.

Can a court shut down a counterfeiting business?

Depending on the circumstances, a court can award a range of different remedies. These can include an order not to sell any further products that breach your IP and destroy any remaining stock the counterfeiter may have.

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