Alternatives for fighting against counterfeiting in Argentina

22 March 2023

Fight against piracy is a major challenge, not only for IP rights holders but also for professionals and for the judiciary and other officials. We review the panorama of the different legal alternatives in Argentina, their respective evaluation and a synthesis of the pros and cons of each legal remedies.

22 March 2023

When we recommend that clients protect their intangible assets, especially distinctive signs, designs, inventions or works, we do so in the conviction that they constitute the most important and valuable assets of companies.

Those who have been in the arena for many years understand this and take it not as an expense but as an investment. On the contrary, those who take their first steps as entrepreneurs have budgets that are sometimes insufficient. And this leads to insufficient or non-existent protection. What happens next is that when startups flourish, they tend to be like a beacon that attracts both misappropriation of intellectual rights and counterfeiting.

We know that registration of intellectual property rights is the first step for the effective protection of the same. The second step is to enforce them. And the latter is much more expensive. However, as these assets are usually amongst the most valuable in companies, it is a step that must be taken.

There are different scenarios that the owner of an intellectual property right can find. The violation of rights can come from a formal competitor, from competitors that try to blend in, and also from other third parties that directly falsify the products.

In this paper we are going to give some guidelines on how to deal with the last of the cases mentioned, that is, counterfeiting. And it is fair to say that it is an issue that mainly affects brands.

The fight against counterfeiting is usually quite complex, long and expensive. Mainly, when it comes to a massive and fragmented counterfeiting, or rather, the fragmented marketing of counterfeit products. And of course, these are not issues that are resolved by sending cease and desist letters.

Fight against counterfeiting represents a major challenge, both for the professionals who work in this area of the law, as well as for the judicial officials, and even the security forces. In addition, it is a problem that also involves other government policies, since it is an activity that is managed outside the formal economy, and that is usually related to slave labor, and sometimes even to human trafficking. It is clearly a very complex situation.

Among the most affected items are textiles, but also cleaning products, cosmetics, perfumery, games and toys.

First option: border measures

It is not a secret that a significant amount of the merchandise that is commercialized in Argentina comes from Asia, mainly China, a situation that happens almost in every place within the globe.

Even though it is true that not all merchandise enters legally, most of it does.

As a first measure then, the suggestion is to register the marks in customs, in order to receive the alerts that are issued there in order to prevent the entry of illegal merchandise.

The procedure is quite simple and its operation, under the protection of Trip’s and internal legislation, is reasonably acceptable.

But this solution only addresses a part of the problem, the merchandise that formally enters through customs. Not the one that enters through parallel routes and not the one that is manufactured in the country.

Argentina is a country that has a fairly large installed industrial capacity. Above all, in textiles, and cleaning products. And in times of recession or crisis (which are quite common, almost normal), that infrastructure can be used for activities that are not friends with intellectual property rights.

To deal with this, it is necessary to resort to judicial actions and articulate the different tools the law provides.

Second option: legal actions

As surely happens in most of the countries, the infringement of intellectual property rights opens the door for the promotion of various actions, both civil and criminal.

Although both aim to stop the infringement, from the legal point of view they have different objectives, and that is the reason why they can be exercised simultaneously.

In both cases, sale points can be attacked (faster situation) or investigated, to try to climb up the production and/or marketing chain (it takes longer but perhaps the result is better if it is possible to reach, for example, to the warehouses of the importer, the distributor or even to the factory).

From the civil area:

We discard innovative measures, such as injunctions, since the informality surrounding this illegal activity makes it unthinkable to have the name and address of the person or entity behind the organization.

The typical measures provided by intellectual property laws are also foreseen in our internal legislation.

Therefore, inventory and seizure measures can be requested in order to obtain an order to go with a justice officer to the places where the existence of infringing merchandise is reported. Within the same request for measures, several stores or points of sale can be included.

The success of this type of measures depends on their being able to be carried out in a coordinated manner, at least those that are located in the same area or neighborhood, which usually makes proceedings take a little longer.

For this kind of measures, it is also usually essential to have the collaboration of the client’s licensee/distributor/importer, so that they can join with their people and also provide information, especially about the most important premises or points of sale or warehouse to attack.

The owners or managers of the places where infringing merchandise is found are compelled to provide information about who they purchased the merchandise from, under penalty of being considered accomplices of the wrongdoing. But the truth is that most of the time they do not do it and in other occasions they report that they are unaware of it, since these are informal operations.

The point in favor of the measures in the civil field is the speed of the procedures.

Cons of the civil claim:

1)To grant these measures, the judges require that the plaintiff (owner) settle a bond, as guarantee or deposit in case the measure is unlawfully requested. The determination of the amount is discretionary of the judge.

2)If after completing the measures it is not possible to reach any agreement with the owners of the premises or points of sale, the mediation process must be initiated. And if there is no agreement in mediation either, a trial must be initiated for each store or point of sale. Otherwise, the measures expire and are without effect.

From the criminal area:

The judges in charge of industrial property issues are the federal criminal judges, who are also the judges of the power (those who investigate and judge politicians, etc.). This circumstance must be taken into account, since it is clear that those regarding industrial property will not be amongst their priority cases.

Before criminal courts it is possible to commence by way of a denounce or a complaint. In both cases it is necessary to have a special power, which is a power granted especially for the case.

The difference between one and the other is that the mere denouncer is only limited to report the offense to the authorities. On the contrary, the complainant becomes part of the process, can follow the proceedings, make requests and prosecute the action. Therefore, when the promotion of criminal actions is the decision of the client, to file a complaint is a must. Otherwise, the most probable result is that proceedings will not move forward.

In this alternative, through the criminal courts, the action can also be directed to attack the points of sale, or to carry out a more in-depth investigation, aimed at determining some of the most transcendental protagonists of the chain that makes up the illegal activity (manufacturer, importer, distributor, etc.).

In the first case, the first thing that should be done is what in the criminal sphere is usually called intelligence work, which, despite the fact that the name sounds like something important, is nothing more than verifying with members of the security forces, the veracity of the complaint, and in particular, that in the premises or points of sale there exists illegal merchandise as reported by the plaintiff.

Once these tasks have been accomplished, the court will be in a position to issue search warrants. Then, it is a matter of coordination that can even take a few months, since the assistance of the complainant is normally required, that is, of suitable people to identify the products.

Achieving raids in a short time is a result that can serve to send a message to informal markets. However, the negative side is that justice has as its objective the elucidation of the offense. It is not here to order search after search, as an end in itself. At a certain point, an attempt will be made to move the investigation elsewhere, which, judging by the few tools and little interest of the security forces, may not have a favorable outcome.

In the second case, the bad news is that investment is needed, and in important amounts, for research purposes. Although the justice system is obliged to investigate, it normally does not do so, or does not do so in the depth necessary to obtain results, and it is the owner who must be in charge of carrying out the investigation, and then turn the results over to the justice system, and request its approval and/or validation by official security forces.

A well performed investigation can lead to obtain information on more people involved in the offense, and from there, to obtain much more significant measures than the raids at the points of sale. But it requires patience and investment that often the IP owners are not willing to be open to.

Cons of criminal actions

The cons of criminal actions are, on the one hand, the little interest that they usually arouse in judicial spheres (because they require a lot of work) and that sometimes several months can pass by without significant progress.

On the other hand, if the investigations do not provide significant information, the results of the raids may be short-lived. It is known how the informal market works, and it is also known that after a while, when calm seems to have returned, counterfeit products reappear as if by magic.

Conclusion

The positive fact is that the laws provide several tools to IP owners to try to have their rights protected.

For this reason, it should not be approached with the objective of absolute success, because in the long run there will always be some discouragement.

Aware of the efforts and sacrifices that this fight imposes, it must be faced sensibly. It must aim at what is possible rather than what is desirable, and under this principle, discern when, how and where to attack. If the market is flooded with hundreds of outlets, perhaps focus on the most important ones in terms of quantity, or the most visible ones so that the actions transcend the legal field.

The tools are there. It just takes to know how to use them beyond legal considerations, and not to generate false expectations.

5/5 - (1 vote)

Javier Alejandro Papaño

Head of the Litigation Department. Industrial property agent. Lawyer.

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