Counterfeiting and Illicit Goods

Joel BarkerAML – DetectionJune - 2014

Contents

1. Introduction – What is Counterfeiting? What are illicit good?

2. Types of Counterfeiting

3. Social and Economic Impacts

4. Major Instances

5. International, U.S. and Canadian Efforts

6. Red Flags and What to Look For

7. Closing and Resources

What is Counterfeiting?

• Traditional version of printing fake money.

• Manufacturing goods at lesser quality and selling them

under a known trade mark.

• Reproducing a good without the brand owner’s consent.

• Intent to knowingly deceive.

Counterfeiting Statistics

• $250 billion crossing boarders in 2007.

• $650 billion in total counterfeit goods estimated in 2008.

• Estimated $1.7 trillion by 2015.

What are Illicit Goods?

• Products bought and sold through illegal

channels.

• Legitimate products repackaged or

rebranded.

• Often mixed in with legal goods to pass

off as the same.

Illicit Trade Statistics

• United Nations estimates that illicit trade generated $2.1 billion.

• Illicit cigarette trade comprised of 12% of all cigarettes sold = $40 billion.

• Illicit cigarette trade affiliated with 3rd world country manufactures and organized crime.

What Is Being Counterfeited

• You name it, there is a fake of it.

• Not to be confused with legal imitation versions.

• Globalization and technology has changed the

landscape.

Common Goods being Counterfeit

• Clothing, hand bags, shoes, computers.

• Shoupie Brand, fake Ipads.

• Medication and weak drug regulation.

• Risk to human health.

Social and Economic Impacts• Trickle Down Effect• The more goods that are bought illegally the more

money goes to illegal activities.• Developing Nations continue to lose out.• Labor exploitation, dangerous work conditions, human

trafficking.

Major Lawsuits on Counterfeiting

• Fendi v. Walmart.• -Wal-mart's Luxury Problem

• Tiffany and Co v. Ebay.• -Ebay Defeats Tiffany

• Louis Vuitton Malletier S.A. v. Singga Enterprises.• -Louis Vuitton, Burberry Win in Canadian Counterfeit Suit

• Florida Razor Blade Scheme

• -Florida Man sentenced in counterfeit Gillette Razors

Organized Crime Involvement

• Estimates in 2009 have organized crime generating $870 billion.

• Specializing in Illicit trade and generating illicit trade routes.

• United Nations - UN Office on Drugs and Crime.

International Efforts

• Interpol• The Organization for Economic Co-operation and

Development• International AntiCounterfeiting Coalition• International Chamber of Commerce’s Counterfeiting

Intelligence Bureau• International Trademark Association• Global Anti-Counterfeiting Network• World Trade Organization

Canadian Efforts• Bill C-8• Canadian Anti-Counterfeiting Network• Canadian Boarder Services Agency• Security and Prosperity Partnership of North America• Canadian Standards Association • Underwriter’s Laboratories of Canada

United States Efforts• Trademark Counterfeiting Act of 1984

• Prioritizing Resources and Organization for Intellectual Property Act

• U.S. Department of Justice

• Federal Bureau of Investigations – Intellectual Property Theft

• United States Customs

• U.S. Department of State – Intellectual Property Enforcement

• FDA – Office of Criminal Investigations

Counterfeiting and Money Laundering

• Illegally sold goods create illegally generated funds.• Often counterfeit sales can be reinvested or cycled back

into counterfeiting production easily.• Electronic payments are preferred because the money is

cleaned by the payment method. • Mixing of illicit goods profits with legitimate goods

profits. • Mixing of counterfeit purchases with that of authentic

purchases.

Red Flags• Businesses trading in import goods from known

counterfeiting countries or with no reputable point of origin. • High amounts of cash in without corresponding electronic

payments.• Large patterns of wires to HRJ countries known for

counterfeiting. • Increase in sales without corresponding product movement.• Negative news affiliated with any investigated or known

counterfeiting or trademark infringement cases.

Case Study Compliments of MONEYVAL

Summary

• It has moved out of the basements and onto the internet.

• More and more of it present every day.

• As more nations become more modernized the demand will change.

Q and A

Resources• International Trademark Association. (2014). Fact Sheets Counterfeiting. Retrieved from

http://www.inta.org/TrademarkBasics/FactSheets/Pages/Counterfeiting.aspx.

• Interpol. (2014). Trafficking in illicit goods and counterfeiting. Retrieved from http://www.interpol.int/Crime-areas/Trafficking-in-illicit-goods-and-counterfeiting/Trafficking-in-illicit-goods-and-counterfeiting.

• Stempel, J. (2010, September 13). eBay defeats Tiffany in counterfeit jewelry suit. Reuters. Retrieved from http://www.reuters.com/article/2010/09/13/us-ebay-tiffany-idUSTRE68C4PQ20100913.

• Gogoi, P. (2006, June 12). Wal-Mart's Luxury Problem. BloombergBusinessWeek. Retrieved from http://www.businessweek.com/stories/2006-06-12/wal-marts-luxury-problembusinessweek-business-news-stock-market-and-financial-advice.

• Elliott, H. (2011, July 6). Louis Vuitton, Burberry Win Millions in Landmark Canadian Counterfeit Suit. Forbes. Retrieved from http://www.forbes.com/sites/hannahelliott/2011/07/06/louis-vuitton-burberry-win-millions-in-landmark-canadian-counterfeit-suit/.

• U.S. Dept. of Homeland Security. (2013). Florida man sentenced in counterfeit razor blade scheme. Retrieved from http://www.ice.gov/news/releases/1306/130614grandrapids.htm.

• Hargreaves, S. (2012, September 27). Counterfeit goods becoming more dangerous. CNN Money. Retrieved from http://money.cnn.com/2012/09/27/news/economy/counterfeit-goods/.

• OECD. (2014). The Organization for Economic Co-operation and Development. Retrieved from http://www.oecd.org/about/.

Resources• DCTA. (2014). The Digital Coding & Tracking Association. Retrieved from

http://www.dcta-global.com/about-us.html.

• WCO. (2014). World Customs Organization. Retrieved from http://www.wcoomd.org/en/about-us.aspx.

• Townsend, M. (2009, September 5). Gangsters prey on young women to smuggle cigarettes. The Guardian. Retrieved from http://www.theguardian.com/uk/2009/sep/06/cigarette-smuggling-uk-organised-crime.

• World Health Organization. (2014). General information on counterfeit medicines. Retrieved from http://www.who.int/medicines/services/counterfeit/overview/en/index1.html.

• CMPI. (2014). Centre for Medicines in the Public Interest. Retrieved from http://www.cmpi.org/about-us/mission-statement/.

• Bukszpan, D. (2010, July 13). Counterfeiting: Many Risks and Many Victims. CNBC. Retrieved from http://www.cnbc.com/id/38229835#.

• World Trade Organization. (2012). Intellectual property council discusses anti-counterfeiting pact, tobacco packaging. Retrieved from http://www.wto.org/english/news_e/news12_e/trip_28feb12_e.htm.

• Global Anti-Counterfeiting Network. (2014). What is the Global Anti-Counterfeiting Group (GACG) Network?. Retrieved from http://www.gacg.org/Home/About.

• Parliament of Canada. (2014). House Government Bill C-8. Retrieved from http://www.parl.gc.ca/LEGISinfo/BillDetails.aspx?billId=6266835&Mode=1&Language=E.

• CACN. (2014). Canadian Anti-Counterfeiting Network. Retrieved from http://cacn.ca/#worry.

Resources• Government of Canada. (2007). Security and Prosperity Partnership of North America. Retrieved from

http://www.spp-psp.gc.ca/eic/site/spp-psp.nsf/eng/00091.html.

• Government of Canada. (2014). Canadian Boarder Services Agency. Retrieved from http://www.cbsa-asfc.gc.ca/menu-eng.html.

• Underwriters Laboratories' of Canada. (2014). UL's anti-counterfeiting program. Retrieved from http://www.ul.com/global/eng/pages/offerings/services/programs/anticounterfeitingoperations/program/.

• CSA. (2014). Canadian Standards Association. Retrieved from http://www.csagroup.org/ca/en/about-csa-group.

• USDOJ. (2014). The United States Department of Justice. Retrieved from http://www.justice.gov/.

• FBI. (2014). Intellectual Property Theft. Retrieved from http://www.fbi.gov/about-us/investigate/white_collar/ipr/ipr.

• U.S. Customs and Border Portection. (2014). Retrieved from http://www.cbp.gov/.

• U.S. State Department. (2014). Intellectual Property Enforcement. Retrieved from http://www.state.gov/e/eb/tpp/ipe/.

• FDA. (2014). Inspections, Compliance, Enforcement, and Criminal Investigations. Retrieved from http://www.fda.gov/ICECI/CriminalInvestigations/default.htm.

Resources• Jacobs, A. (2013, June 11). Behind Cry for Help From China Labor Camp. The New York TImes. Retrieved from

http://www.nytimes.com/2013/06/12/world/asia/man-details-risks-in-exposing-chinas-forced-labor.html?pagewanted=all&_r=0.

• The United Nations. (2014). Transnational Organized Crime. Retrieved from http://www.unodc.org/toc/en/crimes/organized-crime.html.

• Council of Europe. (2008). MoneyVal - Evaluation of Anti-Money Laundering. Retrieved from http://www.coe.int/t/dghl/monitoring/moneyval/typologies/MONEYVAL(2008)22RRepTyp_counterfeiting.pdf.