The fight against counterfeiting

Counterfeiting is an infringement of an intellectual property right held by a third party, whether an individual or a company, and can have very serious consequences for the economic actors concerned. It can lead to a loss of market share and damage the company’s image due to the poor quality of the products sold.

This is a particularly worrying issue for today’s economic players, who must remain vigilant with regard to this well-oiled machine that is the counterfeiting industry, which is constantly growing and finding new ways to escape detection and punishment.

The purpose of Law No. 2014-315 of March 11, 2014 strengthening the fight against counterfeiting is to supplement and reinforce the provisions of the Law of October 29, 2007 (Law No. 2007-1544 of October 29, 2007 on the fight against counterfeiting), which itself transposed the Directive of April 29, 2004 (Directive 2004/48/EC of the European Parliament and of the Council of April 29, 2004 on the enforcement of intellectual property rights), by offering more effective means of fighting against counterfeiting to rights holders, both in terms of copyright, intellectual trademarks, patents, plant variety certificates or geographical indications.

The provisions of the 2014 law all tend, in one way or another, towards a better assessment of the damage suffered by the injured holder, particularly through the improvement of the right to information and the strengthening of the means of action of customs, among others.

The surge in e-commerce during the pandemic may have highlighted the problems associated with counterfeiting on the Internet, which continues to proliferate. However, French legislation on counterfeiting is having trouble adapting to the development of online commerce.

While the volume of counterfeiting is already difficult to assess, because of its clandestine nature, online counterfeiting is even more difficult as the distribution network is not necessarily identifiable, and even less so the instigator. It is also impossible to carry out a seizure if the infringer cannot be located. At the very least, an online purchase report can be made.

According to a joint study by the EUIPO (European Union Office for Intellectual Property) and the OECD (Organisation for Economic Co-operation and Development) (” Trends in Trade in Counterfeit and Pirated Goods “), France was in 2019 one of the main victims of counterfeiting, coming in second place behind the United States.

Based on these findings, a bill to modernize the fight against counterfeiting was adopted on first reading by the National Assembly on November 25, 2021 (Proposition de loi n° 4555 visant à moderniser la lutte contre la contrefaçon), which has not yet been enacted. In its initial version, it was composed of 23 articles, but in the adopted version, they are only 7.

The central idea of the 2014 law: the rules for setting damages

The purpose of the law is to improve compensation for intellectual property rights holders.

Under the 2007 law, in order to assess the extent of the damage and thus determine the amount of damages due in compensation, whether for trademark, geographical indication, plant variety, patent, design or copyright infringement, the court had to take into consideration : “the negative economic consequences of infringement, including :

• the loss of earnings, suffered by the injured party,
• the profits made by the infringer and,
• the moral prejudice caused to the owner of these rights as a result of the infringement (former articles L.521-7, L.615-7, L.623-28, L.716-14 and L.722-6 of the Intellectual Property Code). “

The 2014 law clarified that, in setting damages, the court must consider these three injury factors ” distinctly,” or independently of each other.

The Act also broadened the test for adverse economic consequences of infringement to expressly include, in addition to lost profits, the loss suffered by the injured party.

Finally, it is also specified that when, at the request of the injured party, a fixed amount is awarded as damages, this ” is not exclusive of compensation for the moral prejudice caused to the injured party. “(Article L.331-1-3 of the Intellectual Property Code).

Tools for an accurate assessment of damages

To this end, the legislator provides litigants with concrete tools for action that allow for a precise evaluation of the harm suffered:

1. A simplification of the right to information procedure

The right to information is one of the main provisions of the 2007 law that allows an intellectual property owner, who has been the object of infringing acts, to obtain by order of a judge the communication of information on the origin, the distribution networks and the extent of the sales of the infringing products, and thus to evaluate precisely the damage suffered.

For all that, this right was still unclear, and the 2014 law clarified its content.

This law confirms the competence of the pretrial judge and of the summury applications judge to order such measures, which had been widely discussed in doctrine and in case law, the latter having eventually declared itself in favor of it (Cass. com., Dec. 13, 2011, n° 10-28.088 ; TGI Paris, ref., May 3, 2013, No. 13/52886).

Indeed, the articles applicable to the procedure of seizure of counterfeit (articles L.331-1-2, L.521-5, L.615-5-2, L.623-27-2, L.716-7-1 and L.722-5 of the Intellectual Property Code) have been added. The terms “ on the merits or in summary proceedings “to assert the jurisdiction of the summary judgment judge, and ” argued ” or ” allegedly “This implies the competence of the pre-trial judge, when the infringing character of a product is not yet established.

On the other hand, the 2014 law also removed the list of documents or information that could be subject to this measure in order to prevent it from being interpreted as exhaustive and therefore limiting.

Thus, the procedure must be able to concern any information or document deemed relevant, without any particular limit, as long as it is related to the infringing acts.

A court seized of an infringement action may ” order, if necessary under penalty, in order to determine the origin and distribution networks of the allegedly infringing products that infringe the plaintiff’s rights” , the production of documents or information held by :

• respondent;
• any person who has been found in possession of allegedly counterfeit products;
• any person who provides services used in alleged counterfeiting activities or ;
• any person who has been identified as being involved in the production, manufacture or distribution of such products or the provision of such services;

subject to the confidentiality of certain information or documents (articles L.521-5, L.615-5-2, L.623-27-2, L.716-4-8, L.722-5).

Article¹ of the 2021 bill provides for the reinforcement of the INPI ‘s scope of intervention by assigning it a mission to collect data useful for the quantification of counterfeiting.

This same article also provides that the INPI will be responsible for regularly collaborating with professional organizations and the National Anti-Counterfeiting Committee in the context of an “objective analysis of the economic consequences, both national and sectoral, of counterfeiting practices”.

2. A strengthening of the means of action of customs

Beyond the right to information, the law of March 11, 2014, extends the powers of customs authorities, who can act on rights relating to geographical indications or appellations of origin, and to seize infringing goods in transit.

The customs authorities thus cover a wider range of products, namely import, export, but also transshipment.

In order to strengthen the action of customs, Article 4ter of the 2021 bill provides for the preparation of a report (government report that should be submitted to parliament within 6 months of the enactment of the law of November 25, 2021) on the appropriate  use of blockchain technology (technology for the centralized storage and transmission of information via a registry of databases shared simultaneously with its users, whose specific rules of use are set by a secure computer protocol) by the customs services.

This technology is now used by some luxury brands to ensure the authenticity of products to their customers.

As part of the fight against counterfeiting, this technology would make it possible to reinforce the tracking of products by assigning them a unique ID. The report would specify, among other things, the conditions for setting up this certification blockchain.

3. Clarification of the seizure procedure

The bailiff is solely empowered to carry out seizures against counterfeiting, during which he proceeds ” either to a detailed description ” of the allegedly counterfeit products, sometimes with the taking of samples, ” or the actual seizure of the allegedly infringing objects as well as any related documents “(Article L. 521-4 of the Intellectual Property Code).

The judge may also order any necessary investigation measure even in the absence of a prior seizure. However, if this novelty is interpreted in the light of Article 6 of Directive 2004/48/EC, which it transposes, as well as Article 146 of the Civil procedure Code, to which it refers, the holder will always have to provide eat least ” reasonably available and sufficient evidence to support its allegations “(Directive 2004/48/EC on the enforcement of intellectual property rights).

The 2021 bill provides, on an experimental basis, for the municipal policeto be empowered to record the purchase and sale of cigarettes on the sly (These offenses can currently be recorded and reported only by the national police (art. R. 664-3 and 446-1 of the Penal Code). This extension would be for the tattle tale a “new level of action” against counterfeiting in the public space.

With regard to trademark infringement, this bill also aims to facilitate the initiation of actions by rights holders. Based on the model’s system provided for copyright (Article L.331-2 of the Intellectual Property Code), Article 3 of the proposal gives authority to agents sworn in by the minister responsible for intellectual property to record infringements of trademark law.

In order to allow for certain offences to be punished without clogging up the courts, Article 2 of the 2021 bill also provides for a fixed fine of 200 euros (reduced by 150 euros and increased by 450 euros) for the offence of possession of counterfeit goods without legitimate reason.

4. Update on the prescription

The 2014 Act also harmonized the statute of limitations applicable to civil infringement actions involving the rights of industrial property with that of the common law of article 2224 of the Civil Code, namely the five-year period which runs ” from the day when the holder of a right knew or should have known the facts allowing him to exercise it. “(Articles L.615-8 and L.623-29 of the Intellectual Property Code and Article 2224 of the Civil Code).

This is a longer period of time and therefore more advantageous for the victim of an act of counterfeiting, particularly in matters of patents, plant varieties or trademarks, which were previously set at only three years. The time limit for an action for copyright infringement was already five years, as it was already subject to the statute of limitations under common law.

From now on, all civil infringement actions are time-barred after 5 years. However, criminal infringement actions are subject to a separate statute of limitations, initially set at three years, then extended to six years by the law of February 27, 2017 (Law n°2017-242 of February 27, 2017 reforming the statute of limitations in criminal matters), and this for all rights of intellectual property.

The law of March 11, 2014 therefore offers more concrete prerogatives to the rights holder in order to assess their damage with precision and more facilities, even if some have been criticized by the doctrine as to their relevance. In addition, some articles have also been slightly modified subsequently, in particular by the PACTE law of May 22, 2019 (Law No. 2019-486 of May 22, 2019 on the growth and transformation of companies), without any change in their scope.

5. Mobilization of intermediaries to fight against online counterfeiting

The modernization bill aims at strengthening the efficiency of blocking social networks and infringing e-commerce sites. It provides for two new measures in this regard, namely:

• Blocking an infringing site for which the owner is not identified

To date, the Intellectual Property Code does not allow the judge to order blocking measures if the author of the infringement is not identified.

This difficulty was circumvented by a court order in 2020 (TJ Paris, Order of summary proceedings, January 8, 2020, n° 19/58624) in a case of counterfeit watches opposing the famous luxury house Cartier to the companies Bouygues Telecom, Free, Orange and SFR.

Under the former version of article 6.I.8 of the French law ‘ Loi pour la Confiance Dans l’Economie Numérique'(LCEN), a trademark owner could act in summary proceedings or upon request to obtain from technical intermediaries the blocking of infringing sites, subject to demonstrating the impossibility of acting effectively and rapidly against the hosts, or with the authors or publishers of the sites to stop the damage.

However, this article was recently modified by the law n°2021-1382 of October 25, 2021 (Loi n°2021-1382 du 25 octobre 2021 relative à la régulation et à la protection de l’accès aux œuvres culturelles à l’ère numérique) so that blocking measures can now only be requested during an accelerated procedure on the merits.

The Modernization Act provides for the possibility of obtaining the deletion of domain names or social network accounts that infringe a trademark or any other measure that may prevent access to them.

This action could be brought against the owners of the site or the technical intermediaries (are qualified as such the telecommunication operators, the access and hosting providers within the meaning of articles 6 I.-1 and -2 of the law for confidence in the digital economy (LCEN).

An application decree will specify the terms of implementation of this measure.

• The deferral of the infringer, the deletion or suspension of his domain names and social accounts

Following the example of the procedure provided for in consumer law (new article L. 521-3-1 of the Consumer Code, which makes it possible to sanction practices that mislead the consumer (see for the first application the case of the deferral of the wish.com website – TA Paris, Order of December 17, 2021, n° 2125366/2), the bill provides for the possibility for customs officers, following the observation of the sale of counterfeit products on an online platform, to inform the intermediary and to collect its information. In the absence of a satisfactory response, Customs officials may list the intermediary on a public list. If the acts of infringement by the intermediary’s services persist, customs officers may request its deferral, deletion or suspension of the domain names and social network accounts associated with that intermediary.