2. Trafficking in Fakes How the Starfish Model Works Against You and How It Can Work For You By: Edward J Kelly Intellectual PropertyLawyer Chair, SISHA USA (www.sisha.org) JPAA ASEAN SEMINAR September 14-16 2011
7. SE Asia as Trafficking Center – Why? - Example of SE Asia as Trans-shipment hub: vulnerabilities and determining factors Loose visa rules and relaxed “rule of law” Geography: Control of land route from China to Singapore “Indochina” central location between India and China Miles and miles (4863 KM) of open borders between Thailand, Myanmar, Laos, Cambodia and Malaysia- just lines on the map Extensive river networks (Mekong Delta) rife with smuggling Smuggling routes developed over centuries (narcotics, human smuggling, arms, contraband) Close family ties between 2nd and 3rd generation local Chinese businessmen and southern Chinese merchants (Pearl River Delta region) Systemic Corruption Availability of Slave Labor Result: Hub for Moving People and Moving Fakes
8. Traditional Enforcement Strategies No Unfair Competition Law Trademark – Almost exclusively criminal remedies sought Fastest, Most Cost-Effective Tool Disadvantages: Cannot Settle. Corruption Risk. Scapegoating Patent – Almost exclusively civil remedies sought Exception – design patent (motorcycle example) Anton Pillar Orders – Capture the Evidence Long slow expensive process with many disadvantages Difficult to prove damages. No discovery. Injunction is rare. Copyright – Almost exclusively criminal remedies sought. Software Owners (CAD/CAM) very active. But also “work of applied art” (general purpose engine example) Primary Advantage: Settlement Possible with Great Leverage Arbitration/Mediation in the Thai Culture – the Middle Way Disadvantage : Infringer Plays Games
9. Thailand’s Need to Reform Need to Implement Paris Convention and Enact Unfair Competition Law Trade Dress Needed Make Counterfeiting a Predicate Offense to the Anti-Money Laundering Law Make Counterfeiting a Predicate Offense to the Cybercrime Law Landlord Liability Law Needed Eliminate Scapegoating Injunctive Relief Simplified Damages: Proof, Awards and Collection Deterrent Penalties Imposed on Offenders
10. “Fear & Loathing”: New Strategy Traditional Strategy: Maintenance. Enforcement. Government Outreach and Training. Public Education. Scaring the Consumer with Messaging about Criminality – Does that Work? Replica Watch/MPAA Example Need to Focus More Resources on Public Education – Educate Consumers on the Social Harm Associated with Fakes -Public Health Hazards/Risks (Fear) -Showing Counterfeiters to be Pariahs (Loathing) - Appeals to Conscience, Personal Responsibility and Social Justice (our Better Angels) -Understanding what Motivates Consumers – Is it “Cool”? Cost/Benefit? Social Utility?
13. The best opponent for a starfish organization is often another starfish
14. Change has been so rapid that industries and governments have found themselves employing outdated strategies.
15. This is a lean approach . . . In counterfeiting, the large decentralized network of buyers/sellers wreaks havoc on the market. Fight fire with water (not fire)
16. Small is better. Distribute authority and know how across the neural network. Information and intelligence sharing is key.
17. Need to be cross-disciplinary and to network in cross-disciplinary way :
28. 13 Case Study Case Study: Auto Parts DaimlerChrysler Mercedes Benz, GM, BMW, Honda and Department of Special Investigation (“DSI”) 50,000 plus goods seized, machinery attached, bank accounts frozen, foreign owner arrested, tax avoidance charges filed (example of piling on to create deterrence) DSI : “largest operation ever discovered in SE Asia”; investigating money laundering, funding for terrorism activities, illegal labor practices, immigration charges
33. Criminal Enforcement Police authorities Royal Thai Police Economic and Technological Crime Suppression Division, Central Investigation Bureau Metropolitan Police Bureau Provincial Police Bureau 1-9 Department of Special Investigation 18
34. 19 Law Enforcement Department of Special Investigation (“DSI”) Economic Crime Police (“ECOTECH”) Royal Thai Police Crime Suppression (“CSB”)
35. 20 Criminal Raid Action with Assistance from Department of Special Investigation : DSI Established on October 3, 2002 under the jurisdiction of the Ministry of Justice (DSI = US FBI)
42. 28 DSI - Bureau of IP Crime Commander YongyootDirector DSI
43. 29 Royal Thai Customs Watch List Ex-officio action Fines for violations imposed by Customs Authority are higher (4X value of seized goods) than the fines imposed by the Courts for TM Act violations (Maximum 400,000 Baht) Cost-effective (no need for private investigation) Shipping documents can generate leads in source or destination countries (better intel) Seizures can lead to civil actions against importers, generating compensation to fund additional anti-counterfeiting measures
