Verslo zinios

August 1, 2001

More actively fighting trademark violators

by Laura Neciuniene

According to the results of a survey by the Coalition for Intellectual Property Rights (CIPR), trademark violations in the Baltic states cost businesses upwards of $100 million USD. In Lithuania this year, where a new law on intellectual property protection is taking effect, well-known anti-counterfeiting institutions are turning to the judicial branch for protection.

"In this connection, by tax evasion alone, the customs departments of the three Baltic states have lost the greatest amount of revenues. During this period sales and consumer trust in well-known trademarks have fallen considerably, affecting the private sector most of all," affirmed CIPR President Peter Necarsulmer.

In his opinion, this is also one of the reasons for losing a great deal of foreign investment.

The survey of 102 Latvian, Lithuanian and Estonian business executives revealed that trademark and patent violations are one of the greatest obstacles to doing business in the Baltic states. Every fifth respondent expressed the opinion that counterfeit goods are also being produced in the Baltic states.

Otilija Klimaitiene of the AAA patent attorneys' offices objects to such a view, however: "Counterfeit goods tend to be mostly of Chinese origin, at least among those products discovered and seized by the authorities. There are not enough opportunities in Lithuania to mass produce counterfeit goods in imitation of well-known global enterprises." In her opinion, many companies have already begun to fight against counterfeiters this year, given passage of the law on intellectual property protection for imported and exported goods, as well as increased attention to cases involving seized counterfeit shipments.

"Last year we won 12 court cases involving just one trademark counterfeiting case, but this year every week we hear from 2-3 companies requiring our services. Trademarks are most often protected by global manufacturing concerns producing a wide variety of brand names, because the process from seizing counterfeit goods to the court hearings themselves can take a long time and cost a great deal of money," explains Ms. Klimaitiene. In her view, it is not in a company's interest to openly provide information about seized counterfeit goods, because that can have a negative effect on product sales and consumer trust.

In connection with the new law, customs officials have been given greater initiative to detain products suspected of being counterfeit or otherwise in violation of intellectual property rights.

"In the event of a seizure, operations must be swift, involving immediate contact with the trademark owners or their representatives, who would submit a request for customs to seize the goods, pay a nominal fee of 100 litas and within ten days rightfully file suit in the courts. However, to find the proper defender of foreign intellectual property rights is sometimes overly complicated, moreover quite often large foreign companies don't pay attention to such warnings," reports Ilona Rozeniene, senior inspector with the Lithuanian Customs Service Department of Control and Statistics.

According to Ms. Rozeniene, the easiest way of fighting counterfeits is when the trademark owner makes a timely official request for customs to interdict a suspected cargo. Such a request costs a fee of 500 litas, but may be extended at the end of the calendar year.

"Last year there were 10 requests submitted from trademark owners and 24 seizures of suspected shipments involving counterfeit goods, 20 of them led to court cases, and all of these, except for one trial still in progress, ended to the benefit of the trademark owner," reports Ms. Rozeniene.

This year requests to detain counterfeit cargo shipments have been submitted by three companies.

"Manufacturers must have new trademark registrations for their products and patents in order to protect them properly. Based on my experience I can stress that it is possible to achieve this in Lithuania, only the process can take up to two years. We will turn to the courts immediately regarding the use of the patented caramel candy Gotina by several Lithuanian enterprises, including the importation of a similar product with the same brand name," reports Jurijs Maculevics, Commercial Director for Lithuanian company Vilniaus pergale. Maculevics claims this has caused the company to suffer losses between 20,000-30,000 litas.

The company Alita also claims it has lost between 1.1-1.3 million litas annually because it was unable to register the trade name for the sparkling drink Muskats, which is a very popular name. Alita Finance and Administrative Director Vilimants Peciura stated: "We created this product, but when it was launched into production, the name Muskats was already being used by other manufacturing companies. Right now Muskats made by Alita has conquered 25% of the market, but the owners of the counterfeit product labels made great profits off the sales."

Lithuanian courts suggest that manufacturers make more frequent contact with judges in planning their new trademarks and registering them with the patent authorities, because this provides greater opportunity to protect their products.