Local Trading Standards Authorities (TSAs) are principally responsible for investigating and prosecuting IP crime in the UK. TSAs have statutory duties to enforce certain statutory offences including those set out below.

The police and crown prosecution do not generally prosecute such offences but may play a supportive role when TSAs exercise their powers of entry and search, or where there is other serious criminal activity associated with IP crime. The National Crime Agency (based in the City of London Police) are tasked with serious or organised crime. 

Although not commonly understood, private individuals or companies can bring private prosecutions in the criminal courts.  They are subject to the same obligations as public authorities and have a duty to act fairly and independently. Private prosecutions are rare but remain an option. 

UK Border Force and Her Majesty’s Revenue and Customs (HMRC) also play a role in detecting and detaining goods and may get involved if there are significant excise issues, e.g., in relation to tobacco or alcohol products.

According to statistics from the Ministry of Justice, during 2020, 180 people were found guilty of offences under the Trade Marks Act 1994 (TMA) and 1 under the Copyright, Designs and Patents Act 1988 (CDPA). This compared with 401 and 23 in the previous year. 

The most common intellectual property offences are under these statutory provisions:

• Section 92 Trade Marks Act 1994: Unauthorised use of a trade mark in relation to goods. These offences relate to counterfeit goods that infringe trade marks. A person commits an offence if, with a view to gain for himself or another, or with the intent to cause loss to another and without the consent of the rights holder, applies to goods or packaging an identical sign, or one likely to be mistaken for, a registered trade mark; sells, hires or deals in such goods, packaging or advertising etc.
• Section 107 and 198 Copyright Designs and Patents Act 1988: Criminal liability for making or dealing with infringing articles, and criminal liability for making, dealing with or using illicit recordings. These offences include making and dealing in infringing copies of copyright works, i.e., pirated goods, unlawful streaming and downloads of copyright works and recordings.
• Section 35ZA Registered Designs Act 1949 (RDA): Unauthorised copying etc., of design in the course of business. These offences relate to the intentional copying of registered designs, making and dealing in such copied products. 
• Other offences. There are no specific offences relating to patents or unregistered designs but other statutes and common law offences may be relevant. One such statute is the Fraud Act 2006, which creates offences out of making dishonest representations and for making, supplying or possessing articles used in connection with the commission of a fraud. 

Process

Prosecution of IP offences normally begins with the “laying of an information” in a Magistrates Court.  One challenge over civil proceedings is a higher evidential burden; to prove all necessary facts beyond reasonable doubt for a conviction. However, the prospect of a custodial sentence and criminal record may afford a more powerful outcome and public deterrence.   

In prosecuting offences, rights holders will be required to provide evidence to assist in proving ownership of IP rights and infringement. 

Penalties

Generally, these offences are punishable on summary conviction (i.e., at the Magistrates Court) by a prison sentence of up to 6 months and/or a £5,000 fine, or in more serious cases (at the Crown Court) by a prison sentence of up to 10 years and/or a fine. 

Confiscation Orders

After conviction the prosecution, or the Crown Court of its own motion, can institute confiscation proceedings seeking an order that the infringer pay a sum equal to the proceeds of their crime.

It may be important to bear in mind that the criminal courts are not specialised in intellectual property matters. However, the civil courts do have judges that are specialised in intellectual property with their own dedicated court lists and courts to sit in. 

The TMA, CDPA and RDA contain the provisions that apply to cases involving infringement of trade marks, copyright and registered designs respectively. Claims for infringement of each of them can be prosecuted in the Civil Courts of England and Wales. Northern Ireland has its own jurisdiction and Scotland has a different court system too. 

The Intellectual Property and Enterprise Court in England and Wales is intended to provide access to small and medium sized enterprises and individuals. It is intended for shorter, less complex and less valuable claims (less than £500,000 damages).  It has cost rules that limit the amount of recoverable costs and imposes a cap of £50,000. The Intellectual Property List and the Patents Court deal with more difficult and valuable claims, whose value exceed £500,000.

In England and Wales, the framework for civil enforcement is provided for in the Civil Procedure Rules and Practice Directions. 

The final remedies available in each court include injunction, delivery up or destruction of infringing goods, damages or (at the claimant’s election) an account of profits derived from the infringing acts, and (in some cases) publication or other declaratory relief, in addition to legal costs. Punitive damages are not generally available though there are damages available for flagrancy in cases of blatant copying. 

Applications can be made for urgent interim injunctive relief and other interim remedies are also available, such as Norwich Pharmacal Orders, to obtain the names and contact details of wrongdoers, orders for pre-action disclosure of other information against wrongdoers (or third parties), and orders for the preservation of evidence.

In prima facie cases it is possible to apply for an order allowing entry onto premises to search for and seize evidence and materials; particularly where there is a real risk a wrongdoer will dispose of these. The draconian nature of search and seizure orders means that there are strict requirements for their execution, including the supervision of an independent solicitor.

Unlike counterfeits, grey goods are authentic goods diverted from official distribution channels and sold without the trade mark owner’s consent in a different country; usually because of a price advantage in the destination country.

Rights holders / owners cannot object to the resale of goods in the EU or the UK which were first put on sale in the EU by the rights holder, or with its consent. The trade mark rights are said to be ‘exhausted’ in those two situations. This can lead to significant loss of revenue and impact brand value and perception too; particularly where goods are sold through the wrong channels or in the wrong packaging.

Following a consultation on the future of exhaustion of rights in the UK, the UK government announced in January 2022 that no imminent changes will be made to the current unilateral application of the EEA exhaustion regime. In practice this means that parallel imports from the EEA into the UK can continue but parallel exports from the UK to the EEA can be prohibited. 

Therefore, rights holders can take civil action for grey goods in the UK from outside the EEA but not from within it, although if the goods do not meet with other applicable laws in the UK (e.g. relating to product safety) separate action may be taken in those respects. 

Criminal action might also be taken in respect of unlawful grey goods, as the Court of Appeal confirmed in R v. C and others (2016) EWCA Crim 1617.

There are advantages in requiring TSAs to undertake their duty to investigate and take enforcement action against counterfeits. This is principally because these activities are at the public’s expense.  Moreover, TSAs have a broad range of investigatory statutory powers, which rights holders looking to take action do not have, such as powers to enter and search premises, inspect documents, require the production of documents or products, seize them, test them etc. 

However, where local authority budgets are under pressure it may not be easy to persuade local TSAs to take action, except in the more serious or meritorious cases.

Correspondingly, taking civil action can be relatively expensive and costs can be high, particularly when pursuing ex-parte search and seize applications. Also, the costs of proceedings may not be recoverable.

While criminal prosecutions can be quicker sometimes, the different standards of proof (beyond reasonable doubt in criminal proceedings), and corresponding care over evidential requirements, can make them more difficult than proceeding in the civil courts, where proving infringement is decided on a balance of probability.

Also, in the case of Border Control seizures, civil proceedings are a pre-requisite to the retention of goods where the seizure is contested by the importer.   

HMRC is the UK Customs Authority responsible for national policy concerning IP enforcement at the border. Border Force, part of the Home Office, implement and enforce this policy at all major ports in the UK and are responsible for controlling goods entering the UK. While the Borders, Citizenship and Immigration Act 2009 provides Border Force officers with powers to search, seize and arrest, they rarely prosecute IP crime. They do however stop and seize counterfeit goods.  

Ex-officio action in the UK

Border Force have ex officio powers to detain suspected shipments of counterfeit goods. In those cases, they look to the rights holder to act. Rights holders must submit an Application for Action (AFA) to cover seized (non-perishable) goods before they are destroyed or the goods will be released. 

Application for Action (AFA) in the UK

It is recommended rights holders submit an AFA with Border Force to assist with the identification and detention of suspected counterfeit goods on arrival into the UK. 

The AFA should include details of registered IP rights, descriptions of genuine products and packaging, details of genuine importers and exporters within the distribution network. 

When a seizure is made by Border Force, the rights holder is notified and provided with 10 working days (3 working days for perishable goods) to confirm if the goods are genuine or not. This may require parties to move quickly and arrange inspection of the goods in person.

If the goods are found to infringe and the importer consents to their destruction (or does not respond) then the goods will be destroyed. If the rights holder does not respond and the importer does not agree to destruction, then the goods will be released. 

In situations where the rights holder responds and the importer objects, then the rights holder must commence legal proceedings within the initial 10-day time frame and provide evidence of service. If no evidence is provided the goods will be released. 

Rights holders are liable for any costs incurred by Border Force on the handling, transportation, storage and destruction of suspected counterfeit goods, and give undertakings to meet these costs when submitting an AFA.

There is a small consignments procedure that applies to goods arriving at the UK by post or express courier of up to three units or which weigh less than 2kg. This allows Border Force to destroy goods without consulting the rights holder. The AFA has an “opt-in” for the small consignments procedure.

It is important to note that EU-wide AFAs no longer cover the UK, post-Brexit. Therefore, a separate UK AFA has been required since 1 January 2021. UK AFAs are free to file so rights holders may be missing out if they overlook this.

Ordinary shops remained the most significant target for IP crime investigated by UK Trading Standards Authorities during the pandemic (tobacco, clothing and alcohol being the top three counterfeit goods investigated). However, according to the UK Intellectual Property Office IP Crime and Enforcement Report for 2020/21, there was a 40% increase in online sales of counterfeit goods during the pandemic as physical retail stores were forced to close. 

The shift online created opportunities for IP crime. The UK Intellectual Property Office noted an emerging threat of counterfeiters targeting online shoppers (e.g., via Instagram and Facebook ads) and higher pricing strategies, tricking consumers into believing they were purchasing genuine goods. 

There was a growing number of small parcel seizures at small parcel points in the UK, and Coventry Postal Hub saw a steep rise in the number of counterfeit consignments during the pandemic. Border Force also noticed a decline in the detention of counterfeit goods at traditional sea and airports, supporting the view that the world had migrated online.

Civil action, including applications for injunction, can be made to restrain infringements online just as they can in relation to the sale of counterfeit and pirated goods in physical marketplaces. While action can be taken against primary infringers and third-party hosting intermediaries on notice, such measures may not be effective against those primary offenders who simply move hosting of the infringement to another place online and/or to another jurisdiction. 

Therefore, in certain circumstances rights holders may prefer to target the Internet Service Provider (ISP) responsible for providing access to infringing content or goods.  Section 97(1) CDPA provides jurisdiction for the UK courts to grant blocking-orders requiring ISPs to block access to websites and other locations online. In Twentieth Century Fox Film Corp. and others v. BT plc [2011] the court granted injunctions requiring BT to block access to the Newsbin website which contained infringing copyright material. The jurisdiction has also been used to block live-streaming infringing content in FA Premier League v. BT and others [2017]. 

ISPs may also be required to block access to websites that advertise and sell counterfeit goods as was established in the case of Cartier International AG and others v. British Sky Broadcasting Ltd and others. 

In Nintendo Co Ltd v. Sky UK Ltd [2019] the High Court also affirmed that it had jurisdiction to grant injunctions blocking websites selling devices that enabled the circumvention of technical protection measures on Nintendo’s games console.

ISPs must have knowledge of the infringement and therefore generally it is necessary to put them on notice of the infringement. Also, the duration of any order will be for a fixed period of time and the cost of implementation will be borne by the rights holder. 

One way to combat domain names used for brand abuse, to host phishing websites and/or to promote counterfeit goods is to complain under the relevant registry’s dispute policy. 

The Nominet Dispute Resolution Service (Nominet DRS) manages .uk disputes. To succeed with a complaint against a .uk domain, the rights holder must prove that the domain name is identical or confusingly similar to a trade mark that they own, and that the domain name is an abusive registration. 

A domain is considered “abusive” if it has been registered (or acquired), or used, in a manner which takes unfair advantage or is detrimental to the trade mark, but it is for the rights holder to prove this. A domain name’s registration may be abusive if it was registered to sell at a profit, or to block a subsequent domain registration, or to disrupt the business of the rights holder. Typically, a successful rights holder will seek transfer of the domain name to it. 

The threshold for success is seemingly lower than that required in domain disputes before the UDRP (where evidence that use and registration of the domain has been made in bad faith must also be provided).

In the UK, Nominet will also suspend use of a domain name if the police or other law enforcement agency provide evidence that the domain is being used for criminal activity (or when criminal activity is suspected). 

The Covid-19 pandemic, the increase in online shopping, and corresponding boom in influencer marketing, the use of new technologies such as Augmented Reality, and chat bots have elevated social media channels and online marketplaces and, in doing so, created new channels of opportunity for counterfeiters and their dealers. 

In December 2021 the UK Intellectual Property Office published the results from a pilot study conducted of 1,000 female UK consumers who use social media: 17% of participants purchased a counterfeit product online, 70% of them were aged between 16 and 33, and 10% of participants were prompted by social media influencers to buy counterfeit products. 

It follows that the use of online detection, and increased use of social media take down processes, are increasingly important features of any anti-counterfeit strategy. 

In February 2022 the UK Intellectual Property Office released a five-year strategy outlining the UK government’s commitments to tackle IP crime and infringement, promising creation of a national “centre of excellence” co-ordinating government agencies, TSAs, Border Force and police. See www.gov.uk/government/publications/ip-counter-infringement-strategy-2022-to-2027. It remains to be seen what impact that will have in the coming years.

1. What can your lawyer do to help?

Listen to you and work with you to understand the commercial priorities, key sales markets, manufacturing territories, sales and distribution channels. Review intellectual property rights to ensure they are fit for purpose, undertake a gap analysis if required, review any existing strategy, amend or introduce a new one, ensure effective border controls and online monitoring, local measures and policing of distribution networks, consult on contractual arrangements. Keep effective records, MI and review. 

2. What other important considerations are there?

Budget, best value return on investment, and being able to demonstrate each of these. In addition, ensuring brand reputation, compatibility with the high ESG standards and sustainability.