Globalization result of  reducing international barriers also have created new opportunities for illegal trade. Since demand is one of key drivers in a market, some researchers conclude that consumer demand for counterfeit product is one of the leading cause of the existence and upsurge in growth of the counterfeiting phenomenon[1].  The US International Trade Commission define counterfeiting as “unauthorized duplication of a product protected by one or more intellectual property rights”. World Customs Organization research gave conclusion that product counterfeiting have detected in widespread area in 140 countries in 2008. The businesses cost whose products are counterfeited have great effect include: loss of optimum sales; loss of competitive disadvantage  because free-ride on the research and development by ilegitimate enterprises; possibility of future liability caused by defective imitation products; loss prestige and goodwill of the brand; and expense of monitoring the market and instituting legal proceedings against infringers[2].

The first Cosmetics Harmonization and International Cooperation (CHIC) meeting was held in Brussels, Belgium .The meeting attended by U.S. FDA; the Japanese Ministry of Health, Labour and Welfare (MHLW); Health Canada; and the Directorate General III of the European Union discuss broad cosmetics topics and arrange international memorandum of cooperation[3]. The CTFA created the Consumer Commitment Code, which highlight the proactive and responsible approach to product safety supported by cosmetic companies. The code gives a degree of assurance of safety for consumers and transparency for government regulators. It also reinforces existing company practices and introduce some new practices for the development. The Council’s Board of Directors unanimously approved the development of the Consumer Commitment Code to provide consumers, regulators and other interested parties with a clear outline of the specific commitments by cosmetic companies to ensure the continued safety of all cosmetic products[4]

            This paper consist of french law about counterfeiting and the ACTA agreement. We also include the case study about international cosmetic counterfeiting and cosmetic counterfeiting in france . The cause and reason for buying counterfeit product in the retailer opinion and consumer opinion in Korea and Bangladesh are explained to makes sure the reason for buying counterfeit product as Korea Represent the develop countries and Bangladesh as represent of developed countries. 

Source: http://www.ijmra.us/project%20doc/IJPSS_JULY2012/IJMRA-PSS1424.pdf

The graphic above are adapted from the research of retailer opinion that conducted in the Korea and Bangladesh by Islam Md. Monirul  and Jai Hun Han, Phd about about cross cultural counterfeit characteristic and anti – counterfeit strategy. It shown that the biggest cause in the retailer opinion  and consumer opinion to buy a counter feit product  is because it gave them lower price than the original one. Also in the retailer opinion because the cunterfeit product are in lower price it can give them more margin to their profit. The reason because there is absence of law and it implementation are following after  lower price and high margin reason. Thus in consumer mind they are willing to buy the conterfeit product if it give the same quality and lower price.

ACTA is an international trade agreement for the purpose of establishing international standards of protection for intellectual property rights. This agreement took place to reduce differences and protect the rights of different countries bringing them to common rules. It created minimum levels of protection that each government that has ACTA members should provide them with intellectual property rights.The parties of this agreement are the Switzerland, Mexico, the United States, Canada, Australia, New Zealand, Japan, South Korea, Singapore, and Morocco. The objective of this agreement is:

The proposed Anti-Counterfeiting Trade Agreement used for combating intellectual property rights (IPR) infringement. The ACTA negotiated  in October 2010 and negotiated parties released the final text of the agreement in May 2011[6]. ACTA  intended to build on the IPR protection and enforcement obligations set forth in the 1995 World Trade Organization (WTO) Agreement on Trade-Related Aspects of  Intellectual Property Rights (TRIPS Agreement) and emerging IPR issues, such as IPR infringement in the digital environment. The ACTA  was negotiated outside of the WTO, focuses primarily on trademark and copyright enforcement. It establishes a legal framework for IPR enforcement, which contains provisions on civil enforcement, border measures, criminal enforcement in cases of willful trademark counterfeiting or copyright piracy on a commercial scale, and enforcement in the digital environment for infringement of copyrights or related rights.It also provides for enhanced enforcement best practices and increased international cooperation          

ACTA give significant concerns for consumers’ privacy and civil liberties but also  pose threats to free-flow of digital marketing on counterfeit products  through internet . There are three important step to achieve that goal. Process, confidentiality negotiated without any disturbance from policymakers, national parliaments or citizens. Provisions,  required  by issuing new restrictive rules for the Internet use and raise significant concerns for privacy, innovating ability, users’ free speech, etc in  signatory countries. Enforcement, creating  "ACTA Committee", that constitutied non-elected members to control ACTA implementation and interpretation.[7]

           

In September 2007, L’Oreal which has become the world largest cosmetics group and the century of expertise in cosmetics challenged eBay, the worlds online market coming from America which operates worldwide,  in France and the other four European countries like Belgium, Britain, France, Germany, and Spain, over the sales of its counterfeit cosmetics[8].  It denounced to the French Court (Tribunal de Grande Instance Paris), for the failure caused by eBay in  combating and fighting against counterfeit goods that are mainly distributed and promoted through its online auction accessed by people worldwide conducting buying and selling quite a lot varieties of goods and services. In relation with its challenge towards eBay, L’Oreal has been facing an increasing volume of illicit trade in counterfeit cosmetic products and fragrances caused by some online auction sites including eBay to protect its costumers, keep the quality of its selective luxury distribution network and  defend it trademark reputation, L’Oreal decided to take a legal action.

 French newspaper called Liberation reported that L’Oreal suffers about 3.5 million euro in France for the damages done to its business by the sale of its counterfeit goods sold through eBay[9]. Xavier herfroy, the L’Oreal’s head of anti-counterfeiting said, “eBay was not a victim because it gets a cut from each transaction and advertisement, real or fake”. Moreover, L’Oreal has also taken such similar legal actions in Germany, Britain, Spain and Belgium as what have been mentioned before. This was not the first time that L’Oreal litigated towards eBay. L’Oreal also litigated for one of its brands Lancome,  in order to stop eBay giving unlawful offers from being posted on its auction site and for the damages caused by the fraudulent goods sold via eBay. Lancome suggest that eBay should conduct research on advertisement posted on its site means that the common law of liability should apply. But in this case, the court finally dismissed L’Oreal’s case in June 2008. The court ruled that eBay had no duty or obligation to monitor what was being offered or advertised on its site. The court ruled that eBay was a hosting site on which sellers could post their advertisement, belonged to the liability exemption under community and Belgian Law. The court also noted that eBay has cooperated with companies to protect the intellectual property rights by acting diligently when notified by the company of the infringing products.

Back to the case in which L’Oreal challenged eBay to litigate on French Court (Tribunal de Grande Instance Paris), the court awarded the decision that eBay as the auction site is only a hosting site which is defined in French law on implementing the e-commerce directive (LCEN – Loi Pour la Confiance dans L’economie numérique) and not an editor and thus it is not liable for the contents of the website[10]. The court also considered that eBay has done significant efforts in fighting and combating online counterfeiting and fulfilled its obligation of loyalty to other operators on the market as well.

The court also suggested a mediator for the two parties and asked the both parties to corporate and collaborate closely to find adequate measures to fight against perfumes and cosmetics[11]. The hearing on this case was scheduled on 25 May 2009. eBay was pleased with the award considering that various parties involved should work together and share responsibility in this matter in combating counterfeit goods especially perfumes and cosmetics in this case. The decision of the Tribunal de Grande Instance Paris was the victory for eBay and consumers. The CEO of eBay France , Alexander von Schirmeister said, “Fight against counterfeiting cannot be the sole responsibility of eBay. This is a shared responsibility, stakeholders must work together”. [i]

Facts and Problems

Solutions