Neatkariga rita avize

July 14, 2001

Indifference towards intellectual property security

by Ilze Timbare

Foreign diplomats want to see radical reforms in Latvia's judicial system, because they feel disappointed by the inability of the Supreme Court to contribute to the discussion on the protection of intellectual property rights and related issues in Latvia.

These were the conclusions drawn by a high-ranking representative of the British Embassy, Nicholas Carter during the discussion which followed a presentation of survey results revealing an assessment of intellectual property protection given by the business executives of the Baltic States conducted by CIPR (Coalition for Intellectual Property Rights)

The survey showed that the annual losses caused by violations of intellectual property rights incurred by the three Baltic States total more than 100 million US$. Moreover, the amounts of counterfeit goods in theses countries in recent years has almost doubled. When CIPR representative in the Baltic States Romans Baumanis asked Supreme Court Judge Vanda Cirule if she had noticed a growth in the amount of counterfeit goods and to comment on the Court's capacity for coping with this issue, she gave a very laconic response, pointing out that the court was neither an institution of intellectual property rights protection, nor a regulatory agency for monitoring these rights. All rulings regarding court cases are public information, to which she had nothing more to add, even though, as lawyer Agris Bitans indicated, the court is the last available instance for protecting any kind of rights.

Recently Latvia has seen improvements in the field of intellectual property rights protection legislation; however many issues still have not been resolved. For instance, attorney-at-law Ineta Krodere-Imsa of the Grunte un Cers law offices indicated that only limited amounts of counterfeit goods are produced in Latvia. The majority are imported, meaning that they enter via a rather long chain - from the manufacturer, through customs, the wholesaler, retailer and, finally, to the consumer.

National legislation is absurd.Retailers offering counterfeit goo.

ds fill the Central Market, Sports Hall and several other places, and the fight against them seems rather unrealistic. Ms. Krodere-Imsa pointed out that to start civil proceedings against one kiosk selling a few pairs of counterfeit footwear is too expensive. The only remaining means is the Code of Administrative Violations, which has three articles regarding the protection of intellectual property rights, but each of these articles appears in a separate Chapter and none of these is qualified as a violation against the author of the intellectual property. Furthermore, only one of the articles provides for the seizure of the infringing property in addition to an administrative fine of 250 Lats. This creates a situation in which the retailer pays a fine of 250 Lats, but counterfeit goods are not seized, and he continues to sell them. The principle is very simple - the illegal goods are not to be sold en masse in great amounts. Better to deal in small amounts on a regular basis.

Ms. Krodere-Imsa explained that while counterfeiters are constantly inventing new and more effective means, for example, illegal importers of large amounts of counterfeit goods have their own recipes. There was a case of counterfeit Nike sports shoes. The traders of the counterfeit sports shoes were not punished, because there were no direct evidence against them. In Nike case the distributors made use of two versions, first, we, in fact, ordered tiles, but these sports shoes were supplied to us; second, we ordered cheap sports shoes, but got these instead. If one says that has never had the intention to trade in counterfeit goods, one is not punished.

The companies themselves should become more active.

President of the Latvian Patent Attorneys' Association Armins Petersons indicated that confusingly similar trademarks are also a source of problems in this country. He explained that many companies are inclined to design their trademarks not to be identical with the trademarks of well-known international companies, but very similar, thus causing consumers to mistakenly associate them accordingly with the well-known brand. This situation has been encouraged by the judicial system, as some smaller companies, upon seeing that court rulings go in favour of some larger imitators, understand that they can also afford to engage in such activities. For example, after it was ruled that the soft drink Fantastika produced by Cido was not a confusingly similar imitation, examples of similar trademarks are appearing on the market in increasing numbers.

Even though the discussion clearly showed that the indifference of the governments is a major reason for these unresolved problems, CIPR President Peter Necarsulmer admitted that the companies themselves should increase their activities in protecting their intellectual property. Judging by the results of the survey, businesses are not making full use of the rights guaranteed by law in the field of intellectual property rights protection.

Mr. Necarsumler admitted that he had been surprised by the answers given by the entrepreneurs to the question what they themselves had done in the course of the previous year in order to improve the existing situation.

For example, only 51% of respondents admitted that they had registered their trademarks during the last 12 months, which means that prior to that they had worked with unregistered trademarks. The registration of trademarks is only the first step in protecting one's intellectual property rights. 22% of respondents indicated that they had registered their patents in the course of the previous year, and only one in ten companies had registered their goods with the Customs Board, which helps customs officials better fight the importing of counterfeit goods; and only one in twenty companies over the course of the previous year jointly conducted research with law enforcement institutions as regards the flow of counterfeit goods. "These data are shocking. Companies must also guard their own apple orchards," said the CIPR president.

Special protection system

Company management at Spilva is of a slightly different opinion. Spilva Financial Director Martins Biezais explained that the company currently produces around 140 various products. The company's experience shows that patent registration does not always turn out to be the most effective means of protection. The process is expensive and time-consuming, Therefore, Spilva has developed an individual strategy of protection, by concluding an agreement with the packaging suppliers that prohibits any further licensing of the exclusively-shaped bottles Spilva is using to any other producer in the Baltic States. "We invested more than 15 thousand Lats in the production of this new packaging, and if anyone decides to imitate, they'll have to make substantial investments," M.Biezais explained, also adding that, unfortunately, patent registration presently does not provide a one hundred percent guarantee.

Color Illustrations and captions:

1. Table: Assessment of IPR protection and Problems which hinder business

2. Graphic: Fana confusingly similar beverage label, (caption: The shamelessness of some businesses knows no limits. Distribution of this confusingly similar imitation of the Fanta trademark was halted, but there are still beverages on sale today whose labels evoke certain associations with Fanta.