BRINGING MORE UNDERSTANDING TO THE COUNTERFEIT QUESTION

When we planned for the First Parliament Expo on Counterfeits which was held at the Members Lounge of the Parliament of Uganda on the 26^th April, 2017, nothing fully prepared us for the issues which we eventually met at the Expo.

You could tell from some speeches and murmurs at the Expo that there was considerable difficulty in distinguishing a counterfeit from a substandard good. Many thought that the fight against counterfeits was disguised as an effort to protect interests of multinational corporations only and discourage local innovators. Others needed to be reminded that counterfeiting of a trademark was an offence under both International and Local Laws.

At ACN, we understand that bridging the knowledge gaps between different stakeholders who affect and are affected by counterfeits is essential in the fight against counterfeits. This article is another step in helping stakeholders gain more understanding in the counterfeit debate.

In simple terms, a Counterfeit is a product which is made to look like the original and it tends to make it difficult for the Consumer to distinguish the fake from the original/genuine products. This Counterfeit product is made without the authorization of the Intellectual Property Rights holder (IPR)/ original product owner with a dishonest or illegal purpose of profiting from the innovation/works of the IPR holder.

We cannot promote local innovation and local products through counterfeit activity which is criminal in Uganda under the Penal Code Act Cap 120, Trademark Act 2010, in Kenya under the Anti-Counterfeit Act No. 13 of 2008 and in Tanzania under the Fair Competition Act 2003 among others. We have IP legislation which our genuine local innovators can use to create and protect their products without duplicating trademarked brands.

Substandard goods on the other hand are goods which fail to meet the requirements of the relevant industry standards. These standards were first created during the industrial revolution (18^th - 19^th Century) when the lack of standardization between and amongst numerous manufacturers was hindering trade and development. Standards for goods and services have now become a recognized signature of product quality and the International Standards Organization (ISO) and National Agencies emerged to enforce standards worldwide. So countries enforce standards as part of their obligation in the community of civilized nations.

According to the Uganda National Bureau of Standards https://www.unbs.go.ug//content.php?src=what-are-tandards?&pg=content, standards are documents that contain technical and other requirements that products and services have to comply with. These requirements could include design, material, performance, manufacturing and testing requirements including packaging and labelling. This means that products could be substandard in respect of weight, measurement, nutritional content, gauge, shelf life etc.

Whereas there is some symmetry between counterfeits and substandard goods, the two are governed by entirely different principles. The former is governed by the principle of intellectual property ownership whereas the latter is governed solely by the principle of meeting set industry standards. Protection against counterfeits revolves around infringement of IPRs whereas protection against substandard goods revolves around infringement of set industry standards.

Though technically speaking, a substandard good may also be counterfeit and vice versa, the two remain distinct and different creatures. Any confusion about the two undermines the fight against both and yet the fight against both should be complimentary to each other.

The claim that the fight against counterfeits protects only the interest of Multi-national corporations obscures the point. The fact of the matter is that most brands which care about IP protection are foreign. In Uganda, the recently validated National Intellectual Property Policy shows that out of the 2666 Trademark rights registered in 2015, ¾ were foreign owned. However this doesn’t make the Counterfeit problem in Uganda a foreign problem, neither does it mean that the local brand owner businesses are not affected by counterfeits.

For as long as Counterfeit continue to flourish on the Ugandan and East African market, they will affect all products and consumers. It does not advance our common national interest to neglect the menace of counterfeits which undermine the safety of products we consume, innovation and legitimate business, Government revenue etc because of the country of origin of the counterfeited product.

At another level, we should appreciate that foreign IPRS often come along with the Foreign Direct Investment (FDI) which we perennially seek to boost our economies. The reason we remain low income countries is partly because of our low level of industrialization which is caused in turn by low capital inflows. Significant capital inflows in East Africa are sustained by FDIs. According to the Word Bank (www data.worldbank.org), the FDI in Kenya stood at US$ 1. 4bn, for 2015 US$1.9bn and US$ 1.0bn, for Tanzania and Uganda respectively for the same period. A lot of this FDI was absorbed in the manufacturing sector.

Since manufacturing is recognized as an essential determinant of growth, the World over, it is not sound for us in East Africa to promote a counterfeit policy which undermines this much needed FDI. Not fighting counterfeits is another way of fighting the flow of FDI which we are struggling to attract. Whichever way you look at it, no argument is strong enough to jolt the anti-counterfeit campaign.

                                                         Dated: 9th May, 2017.

                 The article “Bringing more understanding to the counterfeit question” 
                     by Fred Muwema  (Director Legal and Corporate Affairs, ACN)
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