How is Philips's anti-counterfeiting team structured?

We have a localised anti-counterfeiting structure. This work used to be done centrally but we changed that system some time ago. Doing it locally has a number of advantages. People can communicate easily with local officials in their language, and there are shorter reporting and communication lines. In the past, if enforcement officials had any questions then they had to be translated and directed to the central office. That meant we lost time, and that's not something that we can afford to do. Local employees can also negotiate better prices with the specialist investigation firms that we use and are better able to set and judge key performance indicators. They are also better aware of local cultural issues. For example, I once flew overseas to attend a raid, which was conducted at a factory one morning. The negotiations with the managers went on all morning but when we came back from lunch we found that the factory owner had taken the enforcement officers for a meal and they were no longer quite as helpful. You need to know how to communicate with officials and local staff are better placed to do that.

Philips Intellectual Property and Standards has around 450 people who deal with all aspects of IP, from searches, registrations and renewals to counselling, handling IP in M&A deals and anti-counterfeiting. Our trade mark work is handled on a regional basis and the trade mark counsel in each area handle anti-counterfeiting. But we have additional people within the south-east Asian team who specialise in this work – there are five people who deal with anti-counterfeiting in China, for example.

Can you share any particularly successful anti-counterfeiting strategies that you have employed as a company? What advice do you have for counterparts in other companies?

Your strategy has to be a long-term one. Don't do it on a job-on, job-off basis. We started really taking the issue very seriously in the early 1990s, which was the time that the company started doing a lot more business in Asia, Chinese exports began to take off and China relaxed its rules on investigation firms working there.

You should work closely with local staff for the reasons I've already mentioned. You also need to work with the public to make them aware of what fakes are – otherwise people will be tempted to buy cheap counterfeited stuff. It's very important to conduct public awareness campaigns.

We've also found it very helpful to work with the authorities whenever we can. For example in China we support, with the so-called IP Academy, two universities in Beijing and one in Shanghai. We have people from the company who teach in their law departments and we fund scholarships and IP courses. We have also funded exchange programmes between professors in China and the EU. Philips also believes strongly in the importance of giving the media information about the problem of counterfeiting so we have set up an IP Media Club that provides background about IP and aims to give journalists whatever information they need. It is vital to create an awareness of the value and role of intellectual property, as well as focusing on the problem of fakes.

Finally, IP owners also need to establish good relations with local Customs officials. We run training sessions for them and let them know to come to us with any questions.

No company has unlimited resources — so how do you decide how to prioritise your anti-counterfeiting work? Has this changed over time?

Undoubtedly the growth of the internet has had the biggest impact. The offering of counterfeit goods has changed dramatically. People are offered a lot of fakes online, and they can also find answers to the question: "I want to buy a fake Philips product. When can I get one?"

We have devoted more resources to tracking B2B websites. Some estimates suggest that there are more than 250 of these and some of them are so-called closed ring sites that can be very difficult to enter. We have to spend a lot of time and resources to get access to these websites. But we have been working with software companies and are now starting to develop better tools that allow us to do more targeted searches to find fakes on the internet. You always have to invest to keep up with technological developments.

What kinds of trends have you seen in counterfeiting over the past, say, five years? Within that time do you think enforcement agencies have become more effective?

There has been a lot of attention on counterfeits in Europe and in the G7. But there are also countries that like to downplay the scale of the problem. Customs officials in Europe can be very effective but they are under pressure over the question of goods in transit. Although we can stop goods at the EU border, we run the risk that when the new Customs Directive is drafted, we will no longer be in a position to stop them if they are simply passing through Europe. The problem for many brand owners is that goods supposedly in transit can quite quickly become goods destined for the EU market. We are also concerned that brand owners have to bear the costs of storing counterfeit goods that are seized, even though we make no money from fakes. We would like to see more obligations on shipping companies to ensure that the information they have on the identity of the shippers is correct. Too often we discover that they have used false names and addresses.

What enforcement agencies (and where) have been the most effective allies in your global anti-counterfeiting work?

I think that many agencies have made big improvements. In China, for example, we have found the [administrative enforcement agency] AIC to be very approachable. We recently had a big problem with shadow companies, which used the word Philips in their names to imply that they had a legitimate relationship with us when they were actually trading in counterfeits. We, along with other companies in the [IP owner's group] QBPC lobbied for changes in the Chinese regulations and we have been very successful in forcing companies to change their names. It showed that the AIC had the power and political will to do it. Chinese Customs have also been very effective. They have the power to check exports as well as imports and although we don't stop many goods in China at the border, doing so can be a very successful strategy. Again, it is really important to train Customs officials about your products so they can identify fakes.

European Customs are generally very effective, but we would like them to be given a database tool that would allow them to retrieve information about the IP owner and see photos of genuine products. IP owners would be able to add data about the shipping routes they normally use and information about the manufacturer and so on. At the moment Philips produces a Customs toolbox, but some companies make DVDs and others provide manuals for Customs staff. It would be much more effective if we all had just one tool that each of the enforcement agencies could refer to. It would be good if it was hosted by OHIM as it could use some of their data so that Customs could be sure that they are taking action based on up-to-date registrations. I think that setting up this kind of database would be a very good use of OHIM's cooperation fund. If we made it best practice in Europe, then we could look at rolling it out internationally. I know the US is interested in doing something similar. IP owners in Europe shouldn't be obliged to provide information in 20 languages to all the different Customs authorities in the EU. Having a harmonised system would be a huge advantage. At the moment the system is frustratingly piecemeal.

Many companies are still reluctant to talk about the problem of fakes in case their brands are somehow tarnished. Do you think this is changing, and if so, is it changing fast enough?

I think companies are becoming more open. Of course brand owners don't go on the TV and tell people not to buy this product or that product because it may be fake – that would obviously damage their brand. But all of us have a responsibility to society and one part of that is to take action against counterfeits.

What one legal change do you think would be most effective in the fight against fakes?

I think the legal system is generally OK. The question is how it is enforced. That can often be rather different. Of course Customs never have enough resources. Less than 2% of containers are checked and so I would very much like to see Customs being given more financial support. Things are changing slowly as people around the world die as a result of taking fake medicine or using counterfeit machinery but the problem of fakes isn't being dealt with quickly enough. I would also like to see judges applying tougher sentences against counterfeiters. The trade in fakes is as lucrative as the trade in drugs but without the same penalties. As long as we fail to confiscate counterfeiters' assets, as we do with drug smugglers, the problem will continue.

I don't just want to focus on the problem of counterfeits though. Part of our job as IP owners is to help create an environment where judges really understand the importance of intellectual property. We want to think positively. _n

Jef VandeKerckhove

Jef Vandekerckhove graduated in 1985 from the University of Brussels as a lawyer and then obtained the DESS Accords et Droits de Propriété Industrielle from the University of Strasbourg. He joined Philips as a trade mark attorney in 1989, serving as trade marks, designs and domain names portfolio manager at Philips Intellectual Property & Standards (IP&S) before becoming vice-president IP Creation and Counseling in 2006. In March 2009, Jef became vice-president country manager IP&S Netherlands, which in October was extended to the EU. Philips Intellectual Property & Standards is responsible for the creation, management, counselling and value capturing of the total Philips IP rights portfolio. Philips owns 55,000 patent rights, 12,000 patent families, 33,000 trade mark rights, 49,000 design rights and 2,600 domain names.