COVID-19 and counterfeit goods: Criminals exploiting a health crisis
Provided by Adams & Adams
Adams & Adams is an internationally recognised full-service corporate law firm, based in South Africa. Our leadership position as one of the largest intellectual property law practice’s in the southern hemisphere, and a... more
12 May 2021
During the global COVID-19 pandemic, governments around the world implemented national lockdowns to contain the spread of the virus. As a result, borders were closed to passengers but cargo and retail goods for certain essential products and supplies were permitted.
Despite these restrictions on movement of people and freight, criminals have been one step ahead of law enforcement and the counterfeit goods market has continued to thrive. Criminal enterprises or syndicates have simply devised new strategies to evade law enforcement and exploit transhipment loopholes to avoid customs duties and the detection of counterfeit products moving from one country to the next. These strategies include transporting counterfeit goods through charted aircrafts that can land during the night at obscure airports where customs inspection controls and clearance are usually relaxed. Free trade zones, such as that of the African Continental Free Trade Area (AfCFTA), heightens the risk of illicit trade due to less rigid tax and customs regulations.
Many of these counterfeit goods have been COVID-19-related, such as counterfeit soaps, sanitisers, thermometers, testing kits, personal protective equipment (PPE), pharmaceuticals and now vaccines.
Traditionally, counterfeit goods originated and flowed from Asia to Africa. However, with the pandemic, demand for PPE fluctuated from one country to another depending on the rise or decline in the number of COVID-19 infections. Interestingly, a large flow of PPE products from certain African States to Europe, specifically UK, Spain and Italy, was observed.
In South Africa, customs and South African Health Products Regulatory Authority (SAHPRA) officers seized many consignments of unregistered and prohibited medicines, as well as unauthorised antiviral medication at airports and warehouses after the implementation of the national lockdown. In November last year, police seized 2 400 fake COVID-19 vaccines, large quantities of counterfeit N95 face masks and footwear, originating from China, from a warehouse in Germiston. Since then, Interpol has issued a global alert to law enforcements across its 194 member countries warning them to prepare for organised crime networks targeting COVID-19 vaccines, both physically and online.
With the rise of e-commerce during lockdown, consumers are more vulnerable to counterfeit goods available online. Websites, social media and the dark web can be used by organised criminal groups, where anxious buyers do not question the origins of goods that they are offered. Furthermore, encrypted digital platforms and communication applications have made it easier for organised criminal groups to directly target businesses and consumers from remote locations anonymously, making it near impossible for law enforcement agencies to investigate and criminally prosecute.
The COVID-19 pandemic has once again shown us that criminals are quick to grab opportunities, adapt to market changes and invest in infrastructure for their own gains. But the trade in COVID-19 related counterfeit goods is more than just an illicit activity, it poses a massive threat to public health and safety globally, as well as loss of revenue to companies that own the Intellectual property (IP), loss of government taxes and potentially discourage innovation. Before the pandemic, it was estimated that the value in global trade of counterfeit goods would exceed US$4.2 trillion by 2022, with this figure now predicted to be even more.
Many countries in Africa do not have proper legislative framework or dedicated enforcement agencies or courts to mitigate the dangers posed by the counterfeit goods trade. Strengthening collaboration and a co-ordinated response amongst relevant stakeholders at international, regional and local levels is therefore critical. In addition, many international enforcement agencies, like Interpol and the World Customs Organisation, need to be allocated resources and capabilities to combat this type of organised crime. Follow the funds approach is a must to dismantle cross-border organised crime, including money-laundering.
Equally, brand holders must unite and collaborate in the fight against the counterfeit goods market. Sharing of information and joint intelligence driven operations are key in dismantling criminal enterprises. Through the services of specialist legal professionals, brand holders can ensure the protection of their IP rights, the routinely monitoring of infringing activity, intelligence driven search and seizure operations and civil and criminal litigation avenues.
The lack of proper legislative framework, weak border and in-market enforcement, limited resources, corruption and other challenges should not deter brand holders from enforcing their IP rights to protect their brands and the consumers. These challenges are not insurmountable and legal avenues are available to effectively address the scourge and proliferation of counterfeit goods in each country in the African continent.
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Godfrey Budeli is a partners in the Trade Mark Litigation department and is currently heading up the Anti-Counterfeiting team. He holds a LLB degree from the University of Pretoria and... Read more about Godfrey Budeli