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ACTA anti-counterfeiting treaty offers knitwear sector new weapon against fakes.

THE KNITWEAR sector, especially at the higher end of the market spectrum, is a prey for organised counterfeiters. Sophisticated illicit manufacturers, especially in emerging markets, create copies of established brands, that can be high enough quality to fool, but poor enough to disappoint the consumer after a few wears. This kind of insidious threat really undermines a brand.

Of course, knitwear is not the only industry to face these problems. An as a result, the United States, Australia, Canada, the European Union (EU) and its 27 member states, Japan, Mexico, Morocco, New Zealand, Singapore, South Korea, and Switzerland have negotiated an Anti-Counterfeiting Trade Agreement (ACTA).

This plurilateral agreement is now all but approved and is designed to protecting knitwear and other manufacturers against illicit copies through tough criminal penalties for counterfeiters. An agreement was forged at ACTA talks in Tokyo last month (October) on all major outstanding issues.

Welcoming the progress, US Trade Representative Ron Kirk hailed the deal as "tremendous progress in the fight against counterfeiting and piracy." He added: "The leadership shown by our ACTA partners in reaching solutions on tough issues should send a strong message to pirates and counterfeiters that they have no place in the channels of legitimate trade."

Once the agreement is finally approved (and a few details still need to be ironed out before that happens), it will bind signatories--initially developed economies--to "provide for criminal procedures and penalties...[for] willful trademark counterfeiting or copyright or related rights piracy on a commercial scale." This would be punished with fines and imprisonment "sufficiently high to provide a deterrent." Under ACTA, law enforcement authorities would be able to choose on their own volition to seize and destroy counterfeit goods. The agreement defines such organised counterfeiting as involving the illicit affixing of a trademark on goods or packaging for products that are usually sold under this branding.

ACTA also insists that signing countries allow companies to use civil courts to secure orders that pirated copyright goods and counterfeit trademark goods are destroyed, except in exceptional circumstances, without compensation. And it insists that their courts have the authority to order the seizure and destruction of any machinery or equipment used to make these copies. It also insists signatory countries allow rights-holders to sue counterfeiters for damages, which can cover "lost profits, the value of the infringed good or service, measured by the market price, the suggested retail price."

The idea is that ACTA becomes a global standard, adopted by major emerging economies, such as China, who are the source of so many counterfeit goods. And indeed, its existence follows the failure of global talks at the World Intellectual Property Organisation (WIPO) to create such a deal, which would have included China, India and other key emerging markets. ACTA countries will be hoping that as they remain the world's largest markets for consumer goods, their commercial clout will be translated into ACTA standards becoming the world's standards. But will they? And what exactly will ACTA mean for the international knitwear sector? And what does the knitwear sector have to lose if the battle against counterfeiters is not won? Stephanie Le Berre, head of legal and social affairs at EU clothing and textile federation Euratex, said that the quantity of counterfeit apparel and textiles entering Europe has been increasing steadily over the last few years.

"Things are getting worse and worse at the border in regards to counterfeits passing through," she said. "The big problem is that customs controls at national borders are not very efficient in several countries."

In 2009, ready-to-wear clothing accounted for 27% of registered cases for detainment of goods at frontiers across Europe. Le Berre said that the number of items detained does not even come close though, to the huge number of items probably let through because of European borders are so porous.

"There is a great lack of human resources and financial resources to stop the counterfeit product," she said.

Although there is no data to indicate specifically what percentage of counterfeit garments are knitwear items, Le Berre said that knitwear and crocheted wear might have an advantage when it comes to avoiding counterfeiting. "Knitwear is a lot harder to produce than a [woven fabric] t-shirt, for example, and it is usually of a much higher quality," she said.

"Customers who are buying high-end knitwear are very particular about quality." But her view is not universal. Ken Edgar, technical director at UK-based personalised school wear manufacturer Rowlinson Knitwear, said, reversely, that because branded knitwear products usually do have a reputation for very high quality, they are at an especially high risk for counterfeiting.

"Knitwear is, in many ways, a higher value product, so the incentives are very high for counterfeiters to copy a branded knitwear item," he said.

High-end knitwear manufacturers are aware of the counterfeiting risks they face, and many employ special strategies to try protecting their products against falling victim to knock-offs. Italian luxury knitwear brand Loro Piana, for example has "too often" been the subject of illegal copying, said spokeswoman Louisa McCarthy. She said that in order to discourage falsifications, the brand attaches an anti-counterfeiting seal to knitwear items: an engraved, identifying serial number engraved on a logo-bearing metal ring, which can trace the product back to the original batch of yarn that was used in its fabrication.

Jeffrey P. Hardy, coordinator for the International Chamber of Commerce's Business Action to Stop Counterfeiting and Piracy (BASCAP) said that while many companies have anti-counterfeiting strategies in place, "there is virtually no product sector that is immune to counterfeiting and piracy," he said. "If it can be produced, then it can be faked."

Copyright infringement causes a huge problem for small and medium-sized brands in Europe especially, said Le Berre, since there is a big cost associated with destroying counterfeit goods in Europe. Since the right holder has to pay for the storage and destruction of goods, smaller brands often do not have the financial means, thus counterfeits pass through the border and sell.

With this, Le Berre said the most positive thing about ACTA is "the fact that it wants to enforce procedures on exports and imports and create more effective controls at the border."

Le Berre said that at the moment, the main problem as regards to counterfeiting in Europe is that there is a contradiction between what is being said at political level and what is actually happening at the borders. "There is always talk about intervening and trying to stop the counterfeiting problem, but on the other side, governments are reducing investments and appropriate control to stop the product."

Handley Brustad, lead officer, intellectual property at the Trading Standards Institute in the UK, said that since Britain already has "quite stringent legislation" in place when it comes to protecting consumers from counterfeiters--such as the Proceeds of Crime Act--he does not think that ACTA will have much of an impact in his country.

However, in the United States, where there is fairly stringent legislation in place too, apparel was still fourth on the list of most counterfeited products in 2009. It accounted for 8% of all counterfeit products seized at the border, and over US dollars USD21 million. Kurt Courtney, manager for the American Apparel and Footwear Association's Brand Protection Council and on counterfeiting said that "ACTA is not really going to change anything in U.S. counterfeiting laws, but the agreement itself really provides a good framework in regards to international enforcement."

Xavier Gueant (NOTE--SPELLING IS CORRECT) works in the legal department at Expertise Textile, the consulting bureau of La Federation de la Maille et de la Lingerie. He, on the other hand, thinks that ACTA will make a big impact on reducing counterfeiting in France, where nearly a quarter of seizures each year relate to textile products. "To date, we find that the TRIPS Agreement has shown its limits," said Gueant, in regards to the multilateral agreement on intellectual property.

Gueant said that despite much scepticism about ACTA, the fact that certain countries who are notoriously bad for counterfeiting are taking part in the negotiations means that things may actually change a great deal. "South Korea, Morocco, Mexico and Italy, are countries that have been identified as harboring sites of production of infringing products,"

he said. While ACTA hopes to eventually become a global standard, though, there are doubts that it will ever be able to extend its reach to the countries that act as major counterfeiting hubs.

Rebecca Chiang, Executive Director of the Malaysian Knitting Manufacturers Association said that she does not really see China becoming a part of the agreement anytime in the near future. "The majority of counterfeit culprits are from China--even if they signed the agreement, whether they would really abide by it and enforce it is another question," she said. Meanwhile, Hardy said it is important to think of ACTA as a valuable international initiative, rather than an ultimate solution. "It is just one piece of the overall legislative puzzle to help solve the problem of counterfeiting."

"It won't take one agreement to resolve the problem of counterfeiting, but baby steps definitely help," Courtney agreed.

He said that another side of the counterfeiting issue is something that laws cannot change, though "it has to come down to the customers themselves." He added: "Counterfeiters will always try and find ways to sell their products, no matter what laws are in place, so customers need to be educated and aware of this issue."
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Author:Deschamps, M.J.; Nuthall, Keith
Publication:International News
Date:Nov 1, 2010
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