Partner Natalia Gulyaeva, who heads the firm’s IP, Media and Technology Group for Russia / Commonwealth of Independent States (CIS), has been elected to chair the Committee and Georges Geoffroy, brand protection manager at LVMH, was elected as a vice-chair of the Committee.
During the meeting, Natalia Gulyaeva and IP associate Alexandra Bakhtiozina discussed the history of fashion law, its development and current issues. Specifically, they analyzed the new draft federal law suggesting temporary protection for industrial designs and noted that this initiative could serve as an incentive for young designers. However, at the same time, it may affect competition within the fashion industry, barring companies from producing new designs. In this interview during the event, George Geoffroy shares his unique perspective on fighting counterfeit goods in Russia and around the globe.
You have already been working with LVMH for 7 years. How did you join LVMH Group?
GG: Through an internship, to begin with. I have been fighting grey market issues for a few years now, mainly through French law. Four years ago I started working on counterfeit matters. Currently, I am managing brand protection for perfumes and cosmetics. As you can see, my career path has been broad.
LVMH Group consists of more than 70 brands in five sectors: perfumes and cosmetics, fashion goods, wine and spirits, watches and jewelry, and selective distribution. LVMH is a global leader in the luxury industry, with last year’s turnover amounting to approx. 40 billion euros. Therefore, since working here, I have had the opportunity to get an overview of the global counterfeit market worldwide and can make comparisons between different regions and countries.
How do you fight counterfeits in Russia?
GG: Over the three past years we have fought more than 128 counterfeit cases. 28 of them were initiated by customs authorities and 97 cases were initiated by Russian police. There was a significant increase in the amount of counterfeit cases compared to previous years. For example, in 2016, we were involved in approximately 20 cases, and now we are fighting over 70 cases. This does not mean there are more counterfeit goods in Russia, but, rather, that we now cooperate and coordinate better with Russian state authorities.
For example, last year we secured an important victory in Izhevsk, halting local production and manufacturing of fake cosmetics and perfumes. We have seized more than 14,000 finished goods and more than 58,000 ingredients.
Does LVMH’s anti-counterfeit strategy for the perfumes and cosmetics sector differ from other sectors?
GG: We have a zero tolerance policy against counterfeit perfumes and cosmetics. This means that we always file a formal complaint against an infringer, regardless of the number of counterfeit goods – whether it is one piece or one million pieces – for us it is all the same. We face an infringement – we make a complaint.
We also try to be proactive by participating in investigations and conducting market surveys in order to get an accurate overview of the counterfeit situation in a city, a region or a specific market. This in-depth understanding of the situation is essential for choosing the right strategy in each particular case.
We also cooperate closely with state authorities and support the police in their fight against counterfeiting. At each step of the investigation we provide all necessary information and training in order to remind authorities of LVMH brands and products, and explain how to distinguish fake cosmetics and perfumes from genuine ones.
Is Russia an important market? What was your first reaction when you learnt that you would be in charge of Russia?
GG: We are working in more than 70 countries worldwide. Wherever we are, we rigorously fight against counterfeiters. Russia is a major player in the world from an economic, diplomatic and political point of view. For LVMH Russia is an extremely important market.
Each country has its specificities, and we have to identify and adopt the most efficient strategy for each market. The Russian customs authorities and police are very active and cooperative when it comes to fighting counterfeiting. What we have to do as right holders is to support state authorities, to make them more aware of our issues, and to take time to meet and share best practices with them. For example, I met the Volgograd customs officials two years ago; and last year I had a meeting with Izhevsk’s police. Just yesterday I was in Makhachkala (Dagestan) to meet local police officers and discuss counterfeiting issues in this region.
Could you give an example of one case in Russia that has impressed you?
GG: I can think of two cases. The first was in Izhevsk. It was the first time we discovered the production of counterfeit goods in Russia. We previously believed all counterfeit goods marketed in Russia were produced in China or in Turkey. However, this time we found a significant quantity of counterfeit goods that had been produced locally. In addition, we faced an organized criminal network linked with local political authorities. Therefore, it was challenging to properly control each step of the investigation. We had to support the police by collecting evidence and providing important information they needed. It was also important to bring together the Izhevsk police, Saint-Petersburg police and Kazakhstan police so that they could cooperate.
In Izhevsk we have also faced many logistical issues. For instance, we had to send some of our employees to help the police to identify counterfeit products.
There was another challenging case in 2016. Our team investigated 23 tons of counterfeit perfumes from many brands. We had to maintain the customs process and simultaneously support the police investigation. Then, we received the decision of the first instance court, but it was appealed. The appeal court decided to return the goods to the infringer. We had to work with the bailiffs in order to prevent the release of the goods. We lodged our appeal with the cassation court in order to overturn the appeal court’s decision.
Finally, the infringers made a complaint against LVMH Group arguing that our claim was disturbing their business model. I then went to Dagestan and meet with the infringers for negotiations. The case is still pending.
So, as you can see, there are many challenging cases in Russia.
The cases you mentioned were about trademark infringement. There is a widely discussed idea that perfume should also be copyright protected. Do you think that perfumes should also be protected by copyright, or is trademark protection sufficient?
GG: From my point of view, trademark protection is enough. Copyright protection is granted to literary and artistic works. LVMH employs copyright protection for its books and videos, but relies on trademark protection when it comes to protection of its brand names and logos.
Have you ever faced illegal use of industrial designs?
Georges: Yes, infringers sometimes go as far as producing counterfeit bottles or containers. They may not mention the name of a perfume but still imitate the design of the bottle. That is why in some countries we ensure protection of the bottle outlines or silhouettes.
At the beginning of 2018, we successfully managed to prevent the import of counterfeit packaging into Russia.
Can a perfume’s formula be protected?
GG: No, a formula cannot be protected. However, companies like Dior, Guerlain, Givenchy, Kenzo invest a lot in research to ensure good quality of the products. Counterfeit producers cannot ensure the same quality.
What are some of the best anti-counterfeiting practices?
Georges: Each country has its own specificities which we need to take into account when choosing our strategy. For instance, in Russia it is very important to be in contact with state authorities, to support them in the investigations, and to run bespoke training. Of course, managing the process with customs authorities and with the police is a complex task, since Russia is the largest country in the world.
How do you prioritize your targets?
GG: We focus on the points of sale where the counterfeit goods are being sold. During our investigations we sometimes discover that behind a small shop there is a huge organized criminal network.
Authored by Natalia Gulyaeva and Alexandra Bakhtiozina
For anti-counterfeiting customs watch applications and our European Integrated IP Enforcement publication which includes a chapter on Russia and one on customs enforcement in general, download the PDF.