The Product Piracy Nightmare . Atlantic International University: bachelor, master, doctoral degree

Intellectual property rights are exclusive rights to creations of the mind of an artistic and commercial nature. Counterfeiters use the reputation of a trademark, which brand manufacturers have built up on the basis of the quality of their products, to fool consumers about the true origin and quality of the goods. Counterfeiters engage in imitations because it does not cost them as much time and finances as compared to the original innovators of the product. The original innovator invests in research and development, the initial licensing costs, product positioning and distribution amongst other costs.

A recent report by the organization for Economic Cooperation and Development (OECD) indicates that up to 200 Billion U.S. Dollars of international trade could have been in counterfeit and pirated goods in 2005 making up two percent of the world’s trade.

It is concerning that it has been claimed that some counterfeits may even have been produced in the same factories that produce the originals without the knowledge of the trademark owner.

It is also concerning that the debates around product piracy seem to be mainly focused on manufactured goods and developed artistic works while deliberating separating and giving lesser focus to the inclusion of biopiracy and biprospecting of biodiversity in the debate. The main practitioners of bio piracy and bioprospecting are multinational that are the prime beneficiaries of profits gained from natural biodiversity and traditional knowledge practiced by various host indigenous communities across the globe.

If piracy is to be tackled with equity across the globe and respect for international conventions upheld, then there needs to be comprehensive , all inclusive and harmonized policies as well as approaches in order to address piracy in all its forms.

Noting, that most counterfeiting units are established amongst neighborhoods and biopiracy takes place amongst marginalized indigenous rural communities, there is need for community witness protection programs, inculcating a culture of community responsibility and community policing needs also to be inculcated across the globe to safe guard their biodiversity and on guard on counterfeiters as well as blow the whistle on them without fear of intimidation and avengement from the counterfeiters.

Chapter 1

Definition of Product piracy and Intellectual property rights

Product piracy is the illegal use of signs, names, logos (brands) and business names that brand manufacturers use to distinguish their products. Product piracy means illegally imitating or copying goods for which the lawful manufacturer holds rights for the invention, design or a particular process. Counterfeiters and pirates exploit technical know-how without permission - know-how that companies have acquired through years of extensive work and by investing huge sums in order to leverage it for their products.

Counterfeiters use the reputation of a trademark, which brand manufacturers have built up on the basis of the quality of their products, to fool consumers about the true origin and quality of the goods. This means right-holders have to develop timely responses and protect themselves with every possible means.
Intellectual property rights are exclusive rights to creations of the mind of an artistic and commercial nature. Artistic creations are protected through copy right laws while industrial or commercial creations such as forms, designs or styles are protected through industrial properties.

A patent may be granted for a new, useful, and non-obvious invention, and gives the patent holder a right to prevent others from practicing the invention without a license from the inventor for a certain period of time. A trademark is a distinctive sign which is used to prevent confusion among products in the marketplace.
An industrial design right protects the form of appearance, style or design of an industrial object from infringement. A trade secret is non-public information concerning the commercial practices or proprietary knowledge of a business. Public disclosure of trade secrets may sometimes be illegal.

Intellectual property rights give creators exclusive rights to their creations, thereby providing an incentive for the author or inventor to develop and share the information rather than keep it secret. The legal protections granted by IP laws are credited with significant contributions toward economic growth.

Intellectual property rights are considered by economists to be a form of temporary monopoly enforced by the state or enforced using the legal mechanisms for redress supported by the state.
Intellectual property rights are usually limited to non-rival goods, that is, goods which can be used or enjoyed by
many people simultaneously - the use by one person does not exclude use by another.

Counterfeiting is probably as old as money and trade itself. In the early ages counterfeiting was used a form of warfare between nations. In the case of money the idea is to overflow the enemy's economy with fake bank notes, so that the real value of the money plummets.

Why engage in piracy?

Counterfeiters engage in imitations because it does not cost them as much time and finances as compared to the original innovators of the product. The original innovator invests in research and development, the initial licensing costs, product positioning and distribution amongst other costs.

The counterfeiters find ways of cheaply prototyping the product, its labeling and packaging in large volumes, gets it onto the market secure their windfalls and re-investing their illegitimate gains in the same business or diversifying their imitations or up scaling them or investing in legitimate business such as the stock exchange or real estate.

Therefore counterfeiters do not create their own trends in the market and face minimal market failure risks because they hijack other manufacturers’ intellectual property to make huge financial savings in production and distribution.

Current Status

The spread of counterfeit goods has become global in recent years and the range of goods subject to infringement has increased significantly. A recent report by the organization for Economic Cooperation and Development (OECD) indicates that up to 200 Billion U.S. Dollars of international trade could have been in counterfeit and pirated goods in 2005 making up two percent of the world’s trade.

It is concerning that it has been claimed that some counterfeits may even have been produced in the same factories that produce the originals without the knowledge of the trademark owner. Part of the staff conspire and order intentional reruns and over runs, producing more copies for the market than had originally been intentioned.
It is also evident that the global trend of counterfeiters who set up factories intentionally and deliberately to gain illegitimately through product piracy and currency counterfeiting is increasing at alarming rates in various parts of the world.

Why citizens may conceal well known counterfeiters amongst them?

Lack of or inadequate witness protection programs by the intelligence units

Most counterfeiting units are owned by rich criminals who set up their illegitimate industries in very poor and marginalized communities and neighborhoods in order to acquire cheap labor

The poor citizens earn their livelihoods from these illegitimate industries and prefer to earn merger wages rather than informing the authorities of the illegitimate operations

Citizens have witnessed the killings of their fellow citizens who have attempted to expose these illegitimate operations

Some of the government authorities are key collaborators and beneficiaries of these counterfeit operations therefore citizens know speaking or acting against them is of no use.

In cases of fake labels put on clothes, shoes, handbags and accessories sold as originals to citizens who have no means of ever affording the real labels, such citizens see no harm in spending much less amounts to dress up in near- perfect look alike labels.

Music piracy is astronomically rampant as most youngsters desire entertainment and have no means of earning money to purchase dozens on every changing music trends and ever increasing new artists thus the booming business in cheap copying and downloading of CDs

Jobs cuts due to loss of projected income from infiltrated markets

Undermining of brand names causes customer shifts leading to loss of markets and investment returns

The loss of returns on investment at the company level lead to loss in national taxes eroding the Gross Domestic Product of a nation especially if the piracy syndicates are extensive and causing consistent losses thereby indebting the original company that innovate the products

Fake pharmaceutical may cause serious health effects and sometimes death may occur

Fake cosmetics may cause irreparable skin damage to consumers

Ingestion of fake food products and juices or drinks may cause ill health

Ingestion of baby products that have been tampered with such as baby formula can cause lifelong deformities or death

Ingestion of counterfeit drugs by pregnant mothers can cause unintended abortion and sometimes stillbirths amongst other complications

Purchase of counterfeit machinery parts and spare parts can cause accidents in factories, on the road and plane crashes resulting to mass injuries and death

Utilization of counterfeit fertilizer and pesticides or fungicides can cause crop failure, animal death and damage to the soil that may take longer time to reverse.

Indigenous intellectual property is an umbrella legal term used in national and international forums to identify indigenous peoples' special rights to claim (from within their own laws) all that their indigenous groups know now, have known, or will know. It is a concept that has developed out of a predominantly western legal tradition, and has most recently been promoted by the, World Intellectual property rights organization as part of a more general United Nations push to see the diverse wealth of this world's indigenous, intangible cultural heritage better valued and better protected against probable, ongoing misappropriation and misuse.

In the lead up to and during the United Nations International Year for the World's Indigenous Peoples (1993) then during the following United Nations Decade of the World's Indigenous Peoples (1995-2004) a number of Declarations and statements were made;

Brazil July 1988, Declaration of Belem; "Mechanisms [ought to] be established by which indigenous specialists are recognized as proper Authorities and are consulted in all programs affecting them, their resources and their environment"

"Procedures must be developed to compensate native peoples for the utilization of their knowledge and their biological resources"

Brazil, May 1992, Kari Oca Declaration reaffirmed in Indonesia, June 2002; "99. The usurping of traditional medicines and knowledge from Indigenous peoples should be considered a crime against peoples .."

"102. As creators and carriers of civilizations which have given and continue to share knowledge, experience, and values with humanity, we require that our right to intellectual and cultural properties be guaranteed and that mechanisms for each be in favour of our peoples.."

"104. The protection, norms and mechanism of artistic and artisan creation of our peoples must be established and implemented in order to avoid plunder, plagiarism, undue exposure, and use.."
New Zealand, June 1993, Aotearoa, Mataatua Declaration Under Section 2 of the declaration State, National and International Agencies to are specifically asked;

"2.1 Recognise that Indigenous peoples are the guardians of their customary knowledge and have the right to protect and control dissemination of that knowledge.'

"2.2 Recognise that indigenous peoples also have the right to create new knowledge based on cultural tradition"

"2.3 Accept that the cultural and intellectual property rights of Indigenous peoples are vested with those who created them."

Biopiracy is the negative term for the appropriation, generally by means of patents, of legal rights over indigenous knowledge particularly indigenous biomedical knowledge without compensations to the indigenous groups who originally developed such knowledge. This contributed to inequality between the technologies rich developed multinationals in mostly Europe and the Americas that exploit these resources to develop pharmaceuticals that they patent gaining vast resources and the developing countries that host the biodiversity.

Bioprospecting describes the search for previously unknown compounds in organisms that have never been used in traditional medicine and also is used by supporters of the commercialization of such indigenous knowledge and biodiversity.

The Convention on Biological Diversity (CBD) came into force in 1993. It secured the rights to control access to genetic resources for the countries in which those resources are located. A key objective of the CBD, is to enable lesser developed countries to better benefit from their resources and traditional knowledge. Under the rules of the CBD, bio prospectors are required to obtain informed consent in order to access the resources and to share any benefits with the country that hosts the bio-diversity. However critics have claimed that the main problem is the failure of the CBD to establish appropriate regulations to prevent bio-piracy and the failure of Governments to implement Laws that appropriately address the provisions of the CBD.

The CBD has been ratified by all countries in the world except for the U.S.A, Somalia, Iraq, Andorra and Brunei. The 1994 Agreement on Trade Related Aspects of Intellectual Property Rights and the 2001 International Treaty on Plant Generic Resources for Food and Agriculture are other related agreements, If not carefully implemented may foster biopiracy and bioprospecting.

An ethical debate on bio prospecting contracts has sparked a new branch of international patent and trade law. Bioprospecting contracts lay down the rules, between researchers and countries, of benefit sharing and can bring royalties to lesser-developed countries. However, the fairness of these contracts has been a subject of debate as there questions are fielded on who is the rightful owner of the earth’s resources and if modifying of biodiversity ethical or not. These debates are focused on the UPOV and CBD.

Who owns the earth’s biodiversity?

The rights at issue in the biopiracy debates are primarily ownership rights. Under current international law, national governments exercise a degree of physical control over the biological resources within their country, just as they control mineral rights. However, it is less clear that governments have the right to control knowledge of the application of biological resources, nor are governments able in practice to control the extraction of biological resources in small amounts for research purposes.

Regardless, of this theoretical and legal approach, high biodiversity tends to occur in the least developed regions. National governments tend to represent the more developed and urbanised populations of a country. Ethnic and historical gaps between governmentally well-represented groups and the populations of the least developed regions are not infrequent. The knowledge at issue in the biopiracy debates is the knowledge of these local communities, not the knowledge of their governments.

Many a time these communities are least educated in the formal education but highly knowledgeable in traditional medicinal education which they hold as a collective knowledge for the good of the community and humanity, thus place no monetary value for its exchange.

Arguments that favor the local communities who possess the traditional biomedical knowledge indicate that they should benefit from the commercial use of such knowledge. Ownership rights should be attributed to these communities in order to safeguard their interests.

The ethical basis of intellectual property thinking is that knowledge is a public good over which a monopoly is only temporarily granted to any specific possessor of that knowledge. Patents and copyrights expire, and rightly so, so that everyone can eventually benefit. If one applied this thinking to the ownership rights of local communities, must be the first beneficiaries through royalties for maintaining their biodiversity and must collectively be the sole grantors of access to their intellectual property rights. Their Governments need to be machineries of protection of this rights and platforms for ensuring redress in case powerful actors such as multinationals infringe on the intellectual property rights of these host communities.

A classic case is that of the Rose Periwinkle also known as the Madagascar Periwinkle. Research into the plant was prompted by the plant's traditional medicinal role and resulted in the discovery of a large number of biologically active chemicals, including vincristine a lucrative agent useful during leukemia chemotherapy.. A method for purifying vincristine was initially patented and marketed byEli Lily and Company. It is widely reported that the country of origin, Madagascar did not receive any payment.

In 1995 the U.S. Department of Agriculture and a pharmaceutical research firm received a patent on a technique to extract an anti-fungal agent from the Neem tree (Azadirachta indica), which grows throughout India; Indian villagers have long understood the tree's medicinal value. Although the patent had been granted on an extraction technique, the Indian press described it as a patent on the Neem tree itself; the result was widespread public outcry, which was echoed throughout the developing world. Legal action by the Indian government followed, with the patent eventually being overturned (2005).

Importantly, the pharmaceutical company involved in the Neem case argued that as traditional Indian knowledge of the properties of the Neem tree had never been published in an academic journal, such knowledge did not amount to “ Prior art” (prior art is the term used when previously existing knowledge bars a patent).

In response to biopiracy threats such as this, India has been translating and publishing ancient manuscripts containing old remedies in electronic form. The texts are being recorded from Sanskrit, Urdu, Persian and Arabic; they will be made available to patent offices in English, German, French, Japanese and Spanish in 2006. The aim is to protect India's heritage from being exploited by foreign companies. Hundreds of Yoga poses are also kept in the collection. The project has been criticized by a spokesman for the pharmaceutical industry as "a solution in search of a problem".

The Enola bean is a variety of Mexican yellow bean, so called after the wife of the man who patented it for the variety's distinct shade of yellow in 1999. The patent-holder subsequently sued a large number of importers of Mexican yellow beans with the following result: "...export sales immediately dropped over 90% among importers that had been selling these beans for years, causing economic damage to more than 22,000 farmers in northern Mexico who depended on sales of this bean."A law suit was filed on behalf of the farmers, and on April 14, 2005 the US-PTO ruled in favor of the farmers. An appeal was heard on 16 January 2008, and the patent was revoked in May 2008.

The Hoodia cactus originates from the Kalahari Desert of South Africa. For generations it has been known to the traditionally-living San people as an appetite suppressant. In recent years (2004 onwards) there has been sensationalist media coverage of the cactus. Derived products may be introduced into developed countries as a cure for obesity. The long-term benefits are controversial.

Chapter 4

Practical legitimate control measures
To avoid occurrence of product piracy companies may have the various parts of an item manufactured in independent factories and then limit the supply of certain distinguishing parts to the factory that performs the final assembly to the exact number required for the number of items to be assembled or as near to that number as is practicable and/or may require the factory to account for every part used and to return any unused, faulty, or damaged parts.

Investments in import and export systems to ensure items entering or leaving a country are registered legitimately and have no tampered trademarks.

The internationalization of list of infringing companies, highly pirated commodities and names of directors or executives involved in piracy of products and biodiversity to mitigate their mobility and ease of closing up and setting up operations.

Noting that the key financiers of product piracy and technologies that go with it are well connected individuals making huge profits, there is need to engage and enlist international banks in the search for a concrete solution in product piracy.

Efforts can be made to identify and distribute of names of these infringing companies, the names of their directors, affiliating shippers and conspiring government authorities to financial institutions to freeze their assets and impede any financial transactions.

A name and shame campaign can be undertaken to list all persons and institutions engaged in product counterfeiting and biopiracy, and black listing they travel documents across nations to impede their travel and that of their families and affiliates.
To ensure the control measures are not wrongfully used various jurisdictions can pass various laws which are designed to prevent trademark owners from making wrongful threats of trademark infringement action against other parties for defamation or undermining their leverage.
Merchandise coding may be helpful but knowing that most consumers do not understand these codes, how can they choose between the correct original code and a slightly differentiated code of the same product. It is essential to enlist “community watch dogs” train them as well as train distributors, their staff and customs officials on identifying pirated products especially as most of them do are not aware of the vast varieties of each product range and its origin.

Intensive use of media as investigation mediums and channels of exposing product piracy and biopiracy practitioners, their financers and protectors as well as mass education to build the capacities of citizens to differentiate a pirated product and a product that has been developed based on biopiracy.

In conclusion, every year malaria, tuberculosis and AIDS kill around 6 million people, almost all of them in the developing world. Developing countries have argued that these premature deaths are a reproach to us all. They are also a huge blow to countries’ hopes for development. Countries have had to make a choice between producing generic drugs and break some international agreements or uphold those international agreements and watch their people die. Most have chosen to save the lives of their people no matter the trade related consequences they may face.

One promising idea is differential pricing; pharmaceutical companies would charge less for drugs in poor countries than in rich ones. This is consistent with the TRIPS agreement and is backed by, among others, the World Health Organization, the European Commission, Médecins sans Frontières and some industrialists and is already starting to happen.

To address product piracy effectively, it is essential that the consumer education focuses on their protection of the consumer who may choose a cheaper pirated product than the protection of jobs abroad and the need for innovating companies to recoup their return on investment. The education needs to focus more on the harm that such pirated products may cause and in the case of artistic products it would be significant to identify niches such as loyalty to your star artist, that may appeal to consumers not to purchase pirated arts and to be keen whistle blowers on entities that pirate them .

Approaches aimed at curbing product piracy that tend to emphasis on the recouping of investments and maximizing of the innovators’ profits tend to invoke a “ what do I have to do with it” attitude from the ordinary citizens and communities who might be the day to day witnesses of such product piracy.

Communities that are witnessing biopiracy of their biodiversity and traditional knowledge may be unable to undertake appropriate action against the perpetrators, due to lack of knowledge of how to tackle the issues, sometimes they hardly notice that their intellectual property is being exploited and sometimes such communities have taken up the issues with relevant authorities and been frustrated or sometimes some have won hefty compensations. The challenge of international legal systems and resources required in engaging such redress mechanisms are way out of the reach of the indigenous communities. Some times their host governments have been known to intimidate, harass and conspire against their communities much to benefit of the bio-prospectors or bio-pirating companies and their nations.

Student Publications Author: Hope Gertrude Muli Title: The Product Piracy Nightmare Area: Country: United States Program: Avialable for Download: Yes

Student Publications
Author: Hope Gertrude Muli
Title: The Product Piracy Nightmare

Area:
Country: United States
Program:
Avialable for Download: Yes