COUNTERFEIT GOODS ON RISE
COUNTERFEIT goods are a growing problem in the Western Cape and throughout much of SA, costing companies millions of rands each year.
Michael Bagraim, president of the Cape Chamber of Commerce and Industry, said counterfeit goods had an enormous impact on SA’s economy as they negatively affected licensed traders, importers, manufacturers, wholesalers, retailers and the public.
Bagraim said that the chamber had noticed a growth of counterfeiting in the Western Cape.
“We got complaints from retailers and wholesalers. Counterfeit goods cheat everyone, from the manufacturers, to the wholesalers, retailers and the public. There is no comeback with regard to counterfeit goods and most of them are not usable and consumer-friendly. The government also loses out as they don’t receive any tax,” said Bagraim.
He added that consumers ran the risk of being accused of criminal activity and had no protection under the Consumer Protection Act when buying counterfeit goods.
Oupa Magashula, commissioner of the SA Revenue Services (Sars), said during a customs modernisation programme last year, that the organisation had taken strong action against a variety of alleged smugglers, and 149 criminal cases were referred to the National Prosecuting Authority for prosecution. During that period, 56 cases went to court and a number of convictions were obtained. There were also eight civil matters relating to clothing and textiles.
Magashula said Sars has prioritised and increased its raids and seizures with a view to removing illicit goods from the market. Goods worth R180 million were seized during raids and R16m in revenue was collected as a result during the 2010/11 period.
He said Sars also made headway in curbing other illicit goods such as cigarettes, CDs and DVDs totalling R1 billion. This included almost R100m worth of contraband cigarettes and about one million counterfeit CDs and DVDs. As well as more than 750 000 pieces of under-declared or illegal clothing confiscated worth R483m and more than two tons of hard drugs, in joint operations with other agencies.
Kathy Lee, an associate at law firm ENS’ (Edward Nathan Sonnenbergs) Intellectual Property department, said there was a huge demand for high-end Western labels in emerging economies and authorities were clamping down on infringements and issuing severe penalties in response to the increasing problems faced by luxury goods manufacturers.
CLONING IS NOT REQUIRED FOR A PRODUCT TO BE REGARDED AS COUNTERFEIT
She said the Counterfeit Goods Act of 1997 defined a counterfeit as a “substantially identical” copy or a “colourable imitation” that is calculated to be confused with the protected product.
Lee said that the important factor for manufacturers to note was that cloning was not required for a product to be regarded as a counterfeit.
“In fact, a product can be deemed a counterfeit even if the manufacturer of the copied product has never manufactured goods of that type, provided that such goods are covered by the manufacturer’s trade mark registration.
For example, if you copy the Puma trade mark but apply it to a type of shoe that Puma doesn’t even make, it’s still a counterfeit.”
Lee added that infringements of intellectual property rights are usual- ly dealt with in the civil courts, with the owner of the right suing the infringer for an interdict and possibly damages.
“But there are a number of criminal offences too. The Counterfeit Goods Act provides that it is an offence for anyone to manufacture, possess, sell, exhibit in public, distribute for the purposes of trade, or import counterfeit goods if they knew, or had reason to suspect, that the goods were counterfeit.
“The penalties that can be imposed can be severe. For a first offence an offender can be charged a fine of R5 000 or sentence to a prison term of up to three years per article.
“In the case of subsequent offences for acts involving counterfeit goods, these penalties go up to R10 000 or five years imprisonment per article.”