Member Article

The authorities seem to have gone on the offensive on the issue of counterfeits. In the run-up to Christmas, the Department of Trade and Industry (DTI) has called on South Africans not to buy counterfeit goods, even if they are cheaper than the originals (as they invariably are). This call has been supported by the Companies and Intellectual Property Commission (CIPC), the Southern African Federation against Copyright Theft (SAFACT), the South African Police Service (SAPS) and Proudly South African.

In a recent article that appeared in Bizcommunity entitled DTI Wages War on Pirated Goods, the DTI warned South Africans of the perils of buying counterfeit goods, not only for themselves, but also for the country as a whole. Trade and Industry Minister, Rob Davies, made the point that counterfeit goods – invariably made abroad – deprive South African workers of an income, especially those who are employed in the creative industries.  Davies said that if you’re involved in counterfeits – be it in manufacturing, importing or selling – you’re effectively ‘taking food out of the mouths of honest businesses, up-and-coming artists, entrepreneurs and their families.’ Hard-hitting stuff! He summed it up with this fancy bit of alliteration: ‘Piracy perpetuates poverty.’

The article made the point that piracy costs South Africa billions. It said that the methods used by illicit traders to evade customs and other government agencies include identity theft, falsification of documents and ghost businesses. It said that South Africa is a major dumping ground for pirated goods. And it said that in 2012 SARS conducted some 25 000 seizures and confiscated goods valued at some R2.6 billion - most of these busts occurred at airports, harbours and other entry points, and for the most part the goods comprised illicit cigarettes, clothing, CDs and DVDs.

Davies ended by saying this:   ‘However, the success of our enforcement agencies is undermined by the continued demand for these illegal products by us consumers. We must say no to pirated goods and illegal imports. By buying pirated goods, consumers are not just saving a few rands - they are effectively supporting a worldwide franchise of criminal activity.’

Davies’ call was echoed by Proudly South African chief executive officer, Advocate Leslie Sedibe, who said: ‘As Proud South Africans, we cannot allow our creative industries to continue bleeding while criminal scavengers illegally benefit through stealing the work of our artists and creative minds. Pirated goods rob the original creators of their future. This also robs the government of tax revenue and ultimately has a negative impact on South Africa's economy.’

These initiatives are certainly welcome, especially at a time of year when sales of counterfeit goods are likely to be very high. But the sad reality is that cash-strapped South Africans are likely to be looking for cheap alternatives to the products they want for some time to come. This means that intellectual property (IP) owners are likely to be using the procedures introduced by the Counterfeit Goods Act for some time to come. These, of course, include the option of requesting the customs authorities and police to conduct raids and seize counterfeit goods, thus allowing the authorities to bring criminal proceedings and the IP owner to bring civil proceedings.

As long as the demand remains, so will the supply.  So we obviously need to tackle the issue of the demand. One of the problems is that many people still see counterfeiting as a relatively harmless activity, one that involves nothing more than clothing, CDs and DVDs.  Few realise that it extends to goods like cigarettes, medicines and car parts - goods where counterfeiting poses serious risks to the public. Few people realise that counterfeiting is not just about the (often poor) people who sell the stuff on the side of the road or in informal markets. Counterfeiting is about organised crime. It’s the demand problem which makes the issue of what to do with confiscated counterfeits a vexed one – there are those who say that it’s ridiculous to destroy them and that you should give them to the needy, whereas others argue that this simply raises awareness of counterfeits and stimulates demand. There are of course other issues too – are the counterfeits even safe, is a giveaway of confiscated goods harmful to the reputation of the brand (and can that be cured by removing the label?), and are the goods likely to find their way back into the market?

Another problem, of course, is that the understanding of IP is very limited, especially in a developing country like South Africa. How many people really understand that IP stimulates economic growth? That the company which has legal protection – be it for its creativity, its technology, its product design or its brand name – is more likely to prosper than the company which has no legal protection? That the company which prospers is more likely to employ people than the company which struggles? A serious hearts-and-minds approach is required, and it’s not only government that has a role to play here. Everyone who’s involved in IP should be educating the public on the benefits of IP and the dangers of counterfeit goods. At ENSafrica we’re very happy to be involved in that process.