News

How Kenyan firms can guard against counterfeit traders

counterfeit

ACA officials inspect fake smart phones during a raid in Mombasa. FILE PHOTO | NMG

Summary

  • The counterfeiting problem is the price Kenya is paying for its success as East Africa’s largest market and its position as the region’s trading hub.
  • Business and government agencies are estimated to have lost Sh36 billion to counterfeiters in 2013, according to the Enforcement Manual to Combat Illicit Trade in Kenya for that year.
  • By 2014, the last time the manual was published, the estimated losses had rocketed to Sh70 billion — Sh50 billion in losses to business and Sh20 billion to government.
  • Organisations, whose products are targeted need not take this lying down.
  • Not only is Kenya’s Anti-Counterfeit Agency (ACA) becoming more effective, but companies themselves can take steps to shield themselves from counterfeiters.

Consumer good manufacturers are losing money hand over fist to counterfeiters, who are making millions trading in a wide range of fakes, including food, mobile phones, clothing as well as cosmetics and pharmaceuticals.

The counterfeiting problem is the price Kenya is paying for its success as East Africa’s largest market and its position as the region’s trading hub.

Business and government agencies are estimated to have lost Sh36 billion to counterfeiters in 2013, according to the Enforcement Manual to Combat Illicit Trade in Kenya for that year.

By 2014, the last time the manual was published, the estimated losses had rocketed to Sh70 billion — Sh50 billion in losses to business and Sh20 billion to government.

Organisations, whose products are targeted need not take this lying down. Not only is Kenya’s Anti-Counterfeit Agency (ACA) becoming more effective, but companies themselves can take steps to shield themselves from counterfeiters.

First and foremost, businesses must ensure they register their brands in Kenya as the ACA cannot assist any person or entity without a trademark certificate.

Registration of brands is extremely important if suspected counterfeiting is to be investigated and culprits brought to book.

With a beefed-up budget and a footprint that now extends beyond the capital city of Nairobi, the ACA has been holding public “destruction” events where seized goods are burnt.

The most recent destruction event was in June 2017 when Sh500 million worth of fake goods, including mobile phones and DVD players, went up in smoke.

While this is only the tip of the iceberg, the ACA has had considerable success in raising public awareness about counterfeiting and economic losses associated with it.

Many more consumers in Kenya seem to be aware of the counterfeiting problem, and increased awareness will hopefully result in more discerning shopping habits.

The ACA has also established a reputation for being quick to respond when companies lodge a counterfeiting complaint. All the necessary forms are on the ACA’s website and it is just a matter of downloading them.

The agency’s response times are usually relatively fast, and it is possible to lodge a complaint and see the ACA conducting a raid on the same day.

Preliminary investigations deliver results

However, the best results come when clients have commissioned their own preliminary market investigation and engaged the ACA before lodging a complaint.

Whenever Bowmans has conducted a preliminary investigation and engaged the ACA on behalf of clients, ACA raids have been conducted successfully. On the other hand, without a preliminary investigation and expert engagement with the ACA, things have been known to go wrong.

In one case, a client contacted the firm after 29 raids had already been conducted and only nine of these raids had yielded counterfeit goods. A significant amount of damage control then had to be done.

Kenyan law on seized goods

Companies should be aware that Kenyan law requires seized goods to be returned within three months unless criminal proceedings are instituted. This underlines the importance of verifying the facts before the ACA conducts a raid.

Furthermore, it is imperative to monitor seized goods to ensure they are not taken back to the market instead of being destroyed.

An anti-counterfeiting case can only be considered closed when each and every item seized can be properly accounted for and disposed of.

Counterfeiting in Kenya will not be eradicated overnight but measures can and are being taken to end the crisis.

While the ACA has a leading role to play, there is much that companies targeted by counterfeiters can do to protect their brands.

Syekei is the Head of Intellectual Property at Bowmans Kenya, a Nairobi-based legal firm