In a recent interview talking to ACID’s CEO Dids Macdonald,Valerie Salembier Senior Vice President of Harper’s Bazaar responded to the folowing questions in support of anti-copying:

Valerie Salembier with Raymond Kelly at The Anticounterfeiting Summit 2007

Why has a major consumer title like Harper’s Bazaar taken this initiative to raise consumer awareness about counterfeiting?

Harper’s Bazaar U.S. is the only magazine to take on the issue of counterfeiting, an insidious crime that has huge financial and moral implications and affects so many of our clients in the luxury sector. It is a $600 billion-a-year industry that supports child labor and terrorism, and we feel it is our mission is educate consumers so that they think twice before purchasing a fake.

Do you think public understanding of the issues surrounding counterfeiting is changing or is there still much work to do at grass roots to get consumer buy-in and how do you see this happening?

The more this issue is part of the global agenda, the better. At our recent Anticounterfeiting Summit in London, we heard from Christophe Zimmermann of the World Customs Organisation, who said that counterfeiting is the top priority this year for the WCO. This focus will lead to more seizures of counterfeit goods, from handbags to pharmaceuticals to car parts. And the more the public hears about these seizures in the press, the more aware they will become.

Fake handbags at The Anticounterfeiting Summit 2007

What has the response been from your readership about this unprecedented initiative by Harper’s Bazaar?

After reading the special reports we publish in the magazine, our readers are absolutely horrified to learn that when they purchase fakes they are supporting things like the train bombings in Madrid – which were proven to have been funded by the sale of counterfeits. We receive hundreds of letters and emails from our readers vowing that they will never buy counterfeit luxury goods again.

What are your plans to expand the campaign?

We have just announced the formation of the Harper’s Bazaar Anticounterfeiting Alliance, dedicated to educating consumers about the global counterfeiting crisis. The Alliance will be comprised of an advisory board of representatives from the magazine, executives from the luxury sector, and key government officials, and will include features in the magazine and a multi-purpose website, FakesAreNeverInFashion.com. We are inviting readers to design Fakes Are Never in Fashion advertisements, and one winning submission will run every month in Harper’s Bazaar. The site will include Webisodes of undercover investigations and seizures, information on how to join “Harper’s Bazaar’s Fashion Police” to anonymously report counterfeit sales operations, information on how to tell a genuine luxury product from a fake, a shopping portal called “The Real Deal,” which will allow readers to shop directly and safely for authentic luxury goods online, a contest offering consumers the chance to trade in their fakes and be entered to win an authentic luxury accessory, and more.

Valerie Salembier with Alan Drewsen

According to BBC news and IPKat, The British Phonographic Industry (BPI) representing the UK record industry has just been awarded a gigantic sum in damages against internet retailer CD Wow. This is a significant settlement for BPI in that it creates an important legal precedent to stop the unlawful importing of CDs from outside Europe. The Hong Kong retailer was found to have infringed copyright

Geoff Taylor, Chief Executive of the BPI said:

“CD Wow has been undermining the legitimate businesses of UK retailers and record companies by continuing to import CDs and music DVDs illegally from Asia, despite having given court undertakings that it would stop doing so. Illegal imports of this kind undermine the huge investments made by businesses here in homegrown musical talent. This ruling illustrates the lengths that the rogue retailer went to flout the law and maximise its profits at the expense of British musicians and record companies supporting them. CD Wow is no consumer champion; it is a rogue trader that now has to face the consequences of its actions.
We have an extremely competitive record industry and retail sector here in the UK, and at an average price of around £8.50*, CDs are better value than ever.The vibrancy of British music depends on a fair return on the investments that allow British talent to shine. This decision is an important step in ensuring that British music has a bright future. The scale of the damages awarded, over £41 million, represents a significant legal victory for the UK recorded music industry, and will serve as a major deterrent to any would-be illegal importers.

BPI General Counsel Roz Groome, who spearheaded the industry’s six-year case added:
“The BPI will use this landmark ruling to take firm action against any other retailers that import illegally.”

More information can be found on the BPI website

Patricia Jones

Patricia Jones, a partner at Hammonds, an ACID Accredited law firm, explains the main intellectual property rights relevant to the Hotel Design industry and the key issues it faces. Design is a USP for designers and hoteliers and when using the word “design” we must automatically think about IP rights. These rights are not just relevant to the designers but also suppliers and buyers. The key IP issues facing the industry are extensive:
• Reuse of plans without payment or permission;
• Copying of prototype rooms/designs at a much cheaper cost;
• Abuse of confidential information;
• Requests to make “something similar to this”;
• Common “contract” excuses: ‘we like your design, but it’s too expensive / can’t be delivered on time’;
• Designs being re – utilised without permission; and
• Altering designs.

So what can be done to protect your position?
There are 2 broad categories of IP right – unregistered and registered. The former arises automatically, with the latter requiring a positive step of registration. Within those categories the rights pertinent to the Hotel Design industry are Copyright; EC Unregistered Design Right; UK and EC Registered Designs; Passing Off and Confidential Information.

Copyright
Copyright protects “works” recorded in any form, be it on paper, computer memory (or other media), or in a model (or full-scale prototype) of a product. The right arises automatically with no need to register anything. Key copyright works for the Hotel Design industry include:
• “artistic works” – including graphic works (e.g. plans, diagrams, designs (and design documents)) and photographs (used in the design process, in catalogues or on products) and could cover items such as carpets, furniture, soft furnishings (including the weave in fabrics), fixtures and fittings (and plans for the same).
• “literary works” – again, not “high literature”, but virtually any written information more than a few words long, including data, tables, compilations of information.

Copyright lasts a long time – 70 years after the death of the author, or 25 years where a design is exploited commercially. However, copyright only gives a right to stop others copying from you. Identical works created independently or copied from another will not infringe. Although in practice this is highly unlikely to happen, the copyright owner must bear in mind that it is he who must prove infringement every time!

EC Unregistered Design Right (“EC UDR”)
An EC UDR acts as a “back-up” to copyright and is available for designs created after March 2002. Protectable designs are defined widely, for example, the “appearance” of products, including their shape, line, contour, colour, texture, materials and surface decoration/design (like copyright). The right arises automatically without registration, provided the designs are new (i.e. materially different from prior designs) and have “individual character” (i.e. produce a different overall impression on the user to that produced by prior designs). The advantage of an EC UDR is that it covers the whole of the EC, but the down side is it lasts only 3 years from the date the design is first made public in the EC.

UK and EC Registered Designs (“RDs”)
UK and EC registered design regimes “sit on top of”, and overlap, copyright and EC UDR. These rights are available for the same “designs” as qualify for EC UDR provided the design is new and has individual character. The key point is that registered designs are infringed by “use” (applying to or incorporating in products) and there is no need to prove copying! As soon as another enters your monopoly by “using what you use”, the infringement occurs, which gives you a massive advantage in enforcement.

Passing Off
This is very much a “back up” to the other rights. It prevents the goodwill attaching to a business (which brings in its custom!) being damaged by misrepresentations. Typical damaging “misrepresentations” include the use of similar trade names, furniture designs, furniture coverings, “get up”, “trade dress” or marketing styles which (1) go to the origin of goods or services – for example, customers confused as to whose products or services they are buying; (2) associate some attribute with goods/services that damages the goodwill in them – for example, that they are the same as another’s (inferior) products/services; (3) impute that another’s goods/services are in some way authorised.

Confidential Information
Confidential information is protectable provided it is kept confidential and not put into the “public domain”. Examples include manufacturing processes, uses, customer/client lists etc. However it is important to ascertain how confidential information is documented and who has access to it and knows it. Key methods of protecting confidential information are confidentiality agreements with all trading counterparties and terms of employment / engagement / commission contracts.

How to tackle the key issues
Now that we are armed with the IP knowledge, how can we tackle the key issues raised earlier?
1. Reuse of plans without payment or permission
• Be clear who owns the copyright
2. Copying of prototype rooms/designs at a much cheaper cost
• Copyright / design right ownership
• Register designs
3. Abuse of confidential information
• Confidentiality agreement
• At least agree disclosure is in confidence and confirm in writing
4. Requests to make “something similar to this”
• Make design buyers aware of the IP issues
• Indemnities
5. Common “contract” excuses : ‘we like your design, but it’s too expensive / can’t be delivered on time’
• Register your design
• Have an upfront discussion on cost
6. Designs being re-utilised without permission
• A licence agreement upfront makes clients aware of the use they can make of designs
• Consider registering a design
7. Altering use of designs
• Think infringement!
8. Use of copyright symbol etc – tell the world about your IP!
• Always make clear on your work that the IP rights in it are owned by you
• If designs are registered, make this clear on catalogues and in samples etc
To discuss any particular concerns about any of the points raised, please contact Patricia at patricia.jones@hammonds.com.

A©ID Advice
1. Create a design audit trail
2. Sign and date all design work
3. Record your ideas and designs
4. Register your rights
5. Record all third party design involvement
6. Record design discussions
7. Confirm design discussions in writing
8. Insist on signed agreements
9. Confirm your IP rights ownership
10. If your products are not accepted, following an offer or bid, request that samples and design proposals are returned

A©ID Guidelines
1. DON’T use copies of someone’s design
2. DON’T instruct someone else to copy designs
3. DO use reputable suppliers, ask for indemnities and check design origin
4. DON’T try to skirt around existing laws
5. DO produce original designs, and educate buyers on existing laws
6. DO commission designs, DON’T copy
7. DON’T defend legal cases just for the sake of it
8. DON’T argue that other designers can’t afford to sue
9. DO sign the A©ID specifier code
10. DO be different, be original. …commission it, don’t copy it!

Earlier this month, ACID Accredited law Firm DMH Stallard and ACID co-hosted a successful forum entitled “Working effectively with China”. Attendees from various different industry sectors were addressed by Simon Rodwell, Director of Hunter Rodwell Consulting, who has 28 years of experience in business, consultancy and as a government adviser in China, and by members of the Intellectual Property team at DMH Stallard. Simon spoke of the main issues affecting SME’s dealing with China in terms of the protection of their intellectual property rights and preventative measures against infringement. His clear message was that ‘prevention is better than cure’ and that there are many options companies can take to protect their intellectual property rights without the need to litigate.

The key points arising from the forum were that registering intellectual property rights, undertaking due diligence on potential partners or customers in China, and having effective commercial contracts in place can pay dividends in terms of reducing the risks of later infringement and in managing enforcement more effectively. Lunch forums are just one example of industry specific initiatives supported by ACID’s accredited law firms and provide useful member feedback which helps to form ACID’s strategy on subject specific matters in the future.

Defending your IP in China — Prevention is Better than Cure! – Simon Rodwell’s Guidelines.

As in so many spheres of commercial activity, there is a contrast between the experiences of SMEs and the large corporates in attempting to defend their IPR in a remote market. SMEs tend to bear the greater burden because they find it harder to afford advisers, lawyers and other resources to help them fight abuse. They also have fewer managers and may exert less influence on their national authorities and trade representatives in China. When problems occur many smaller companies are unable to meet the costs of taking legal or administrative enforcement action against infringers: costs which must be measured in management time as well as in money.

Some SMEs are under the illusion that China is a market where they can disregard the normal business disciplines and ‘make a quick buck’; others are so put off by the perceived dangers to their IPR that they stay away. The sensible answer is often to take a middle course: prepare, assess the risks and keep one’s eyes open when in the market.

Above all, there is a need for effective avoidance measures. These should be part of all companies’ strategies for protecting their IP, whether they are exporting or investing overseas. A high proportion of European SMEs — the EU estimates up to 80% — fail to register their IP rights, which precludes them from fighting cases through conventional means.

As well as explaining the need for adequate preparation, this presentation briefly reviews various practical methods for avoiding IPR infringement, including the necessity for commercial discipline in areas such as due diligence, documentation, contracts, staff and operating procedures, and suggests ways in which companies can obtain external assistance.

Undertaking these measures in a distant and complex market is not easy. But sensible preparation aimed at avoiding infringement can be the most straightforward – and cost-effective – means of protecting your intellectual property from abuse.

ACID Guidelines

Register your IP rights in both the EU and also in China. Seek the advice of a specialist IP lawyer based in China.

Ensure you use agreements which you can rely on in China. Find out comprehensive background information about the manufacturer, try to get a recommendation and visit their factory. The more involved you are on a personal basis with your Chinese business counterparts, the better the relationship will be

Always put detailed agreements in place with the manufacturer, be it an initial confidentiality agreement or a manufacturing agreement further down the line. Ensure you use the services of a translator who has a proven track record

Always obtain an acknowledgement of your IP rights in all agreements

Educate the manufacturer about IP law. Demonstrating a strategy for a fierce defence of IP will communicate a strong message

Monitor the market for any infringing products and enforce your rights to give signals that you are serious about your rights

Retain audit rights over their books and their factory and use these rights to conduct regular visits to their factory, especially on termination of any agreements. If you are suspicious you should consider instructing investigators to approach the manufacturer posing as a potential customer to see whether they are prepared to supply your designs to third parties

Keep written records of all commercial dealings. Keep control of physical aspects such as documents, tooling, packaging, production and especially production overruns
If your IP rights are infringed in China, it is best to bring your case to the attention of the judicial authorities and encourage them to take action by filing a private criminal prosecution, as police and prosecutors are not always keen to pursue IP cases.

One of ACID’s objectives for 2007/8 is to expand its mediation framework and broaden awareness about the positive aspects of mediation as a realistic alternative to litigation in IP disputes. ACID’s new initiative Mediate to Resolve will also be looking at mediation as a positive aspect in conflict management. Did you know that, according to CEDR (Centre for Effective Dispute Resolutions) 33 billion pounds is lost each year in the UK through time lost in conflicts in the workplace? Patricia Jones, an Accredited CEDR mediator and a partner at ACID’s Accredited Law Firm Hammonds explores the benefits of mediation.

Very often parties in dispute adopt a “let’s sue them” mentality. However, there are various methods of resolving disputes, without necessarily racing down the route of litigation, such as mediation. Mediation is the informal process whereby a neutral third party assists those in conflict to achieve an outcome that is acceptable to both parties. The main advantages of mediation over litigation include:

• Flexibility : Mediation offers a great degree of flexibility allowing for any remedy agreed between the parties, such as apologies, amendments to contracts and payments of money in instalments. In contrast, a judge is constrained in the remedies he can award.
• Selection of Neutral : The parties can select their mediator, who is often trusted and respected by both parties and an expert in his field.
• Cost and time : Mediation is considerably less expensive than litigation and occupies less management time. A mediator can bring value to the process giving the parties the best opportunity to have a constructive discussion, at an early stage before legal costs escalate and become a stumbling block themselves.
• Nothing to lose : By entering into mediation, neither party loses their right to pursue other dispute resolution methods such as litigation. It can take place at any time, including during litigation. The mediation takes place in a confidential environment, unlike litigation which is open to public scrutiny, and is ‘without prejudice’ which means that the information disclosed during mediation cannot subsequently be used in court. The settlement reached by the parties sets no precedent so is ideal if a party wants to treat the dispute as a one-off.
• Maintains relationships : Litigation by its very nature is adversarial and often irreparably damages relationships, whereas mediation encourages communication and co-operation between the parties and can often preserve relationships and generate future business.
• Court expects mediation : Recent cases have shown that the Court may deny winners at trial their costs and expenses if they have unreasonably refused to mediate.

Therefore the question is not “why mediate”, but “why not mediate”?

Commenting on the initiative, Dids Macdonald, Chief Executive said, “Many ACID members have taken action against some well known retailer names as a result of alleged copying. Often the retailers adopt a legal strategy of stonewalling challenge and perpetuating litigation. I intend to include a further clause in the ACID Code of Conduct which will include agreeing to mediate if the complainant can provide compelling evidence of registered designs to support their design ownership. It will be interesting to see how many will respond positively.”