Crackdown on fake goods

In his inaugural speech, President Noynoy Aquino gave explicit marching orders: for Agriculture Secretary Proceso Alcala to put up farm trading centers to eliminate layers upon layers of middlemen that jack up food costs, and for the feisty Justice Secretary Leila de Lima to focus on running after big-time crooks, both past and present.

Responding to the President’s directive, De Lima vowed during the July 2 turnover ceremonies at the Department of Justice that the DOJ would henceforth give priority to running after smugglers and tax evaders.

De Lima said task forces on anti-smuggling and tax evasion will be at the forefront of their efforts against the backdrop of governmental policy to replenish and protect government coffers and eliminate deficit.

One unsolicited advice for the new DOJ secretary is for her to fine-tune this vow by casting a wider net to include big-time traders selling counterfeit goods. Aside from being virtual smugglers themselves in importing ersatz goods and passing them off as authentic ones to the detriment of Filipino consumers, these unscrupulous businessmen are likewise guilty of tax dodging as they are misdeclaring their true profits in selling phony products.

For starters, De Lima should probably look into the nefarious activities of one major importer-distributor of Swedish-made hand tools that is conning both Filipino consumers and his supplier in unloading in the domestic market the fake versions of products that are supposed to be coming from its overseas supplier.

This case has formally reached her office before she took over as DOJ chief. A local intellectual property rights expert filed last June a complaint before the DOJ against Herco Trading and its president and majority stockholder Wilfred Co for allegedly selling counterfeit products of this company’s Sweden-based supplier.

In his complaint-affidavit, Jairius Abiera accused Herco Trading and Wilfred Co. of violating Republic Act 8293 for trademark infringement with damages in connection with this company’s alleged distribution and sale in the country of counterfeit versions of hand hacksaw blades and claw hammers that are being manufactured by Herco’s own supplier, the Swedish company Kapman Aktiebolag (Kapman AB).

Kapman AB is a private limited liability company that is the registered owner of the “BAHCO” trademark and the “FISH & HOOK” device marks of hand hacksaw blades and claw hammers.

It is part of the Snap-on Group that is a leading innovator, manufacturer and marketer of tools, equipment, diagnostics, repair information and systems solutions for professional users. Snap-on is a US-based, 90-year-old umbrella corporation of 96 companies represented in 36 countries worldwide.

Abiera described himself as the “duly authorized attorney-in-fact” of Kapman AB who is empowered to take legal actions against persons or businesses suspected of infringing the Swedish company’s trademarks and IPR.

Securities and Exchange Commission (SEC) records show, he said in his affidavit, that Herco Trading’s president and majority stockholder is Wilfred Co.

Herco Trading accounts for at least 60 percent of all BAHCO HHSB sales in the Philippines, with total annual sales of about $6 million, Abiera said.

He claimed in his affidavit to have “represented the interests of more than 10 trademark owners in the Philippines” and “assisted in the conduct of more than 100 enforcement actions against possible (IPR) infringers.”

Since he started representing Kapman AB three years ago, Abiera said he has undergone extensive training on identifying counterfeit Snap-on hand tools bearing the BAHCO and FISH & HOOK marks, and has thus far conducted six investigations for the company on suspected IPR violations.

According to his complaint-affidavit, one of these investigations was prompted by information reaching him in mid-2009 that fake BAHCO and FISH & HOOK blades and hammers were circulating in the domestic market, and that “Herco Trading Inc., one of Snap-on’s biggest authorized importers and distributors, as the source of these counterfeit products.”

After conducting several months of investigation and surveillance of Herco’s various offices and warehouses, he said he was convinced in March 2010 that Herco was indeed engaged in such illicit activity.

He then sought the assistance of the Philippine National Police, and, on March 26, he, along with market researcher Renato Antonia and Chief Inspector Julius Caesar Mana of the Bulacan Criminal Investigation and Detection Team conducted a “test buy” of BAHCO and FISH & HOOK hand tools at Herco’s warehouse in Marilao, Bulacan.

Abiera said his team was given a receipt bearing the heading of a certain SPI Marketing Inc. for the claw hammer and hacksaw blade they had bought at the warehouse for P250 and P32.50 apiece, respectively. However, a check with the mayor’s office showed, he added, that “Herco Trading, Inc./Co Willy” was the registered owner of the said warehouse as so declared in its business permit.

After he eventually attested that the products that they had bought were fake, Mana sought search warrants from the RTC in Guimba, Nueva Ecija on April 12, and then led a search of the said warehouse last April 19.

Among the items seized during the court-authorized search were: Kompass Hydro Indenting and GF Hot Stamping Printing equipment bearing either the FISH & HOOK labeling dye or FISH & HOOK markings; 11 fake claw hammers with FISH & HOOK markings; 89 pieces of fake hacksaw blades with BAHCO and FISH & HOOK markings; and 238 empty carton boxes with FISH & HOOK markings.

It was obvious that the seized machines were being used to brand or stamp products with the FISH & HOOK device mark, Abiera said, because “Snap-on Singapore certifies that all products bearing the BAHCO and/or FISH & HOOK device marks are imported into the Philippines as finished goods, already complete with all brandings.”

He pointed out that Snap-on does not have any manufacturing operations in the Philippines and neither does it have any branding or stamping of brand operations in the Philippines, adding that these facts are known to Herco Trading Inc. as it is one of two of the biggest importers and distributors of Snap-on Singapore in the Philippines.

Present during the search that was conducted in an orderly manner were Roberto Capuchino and Lennie Koa, the respective logistics officer and warehouseman of Herco Trading; and Paulino Macaraeg, the barangay complaint action man of Barangay Sta. Rosa II in Marilao.

This case indeed merits the attention of the DOJ in keeping with the new administration’s vow to run after big-time crooks.

Observers say there is really something fishy in Herco’s domestic operations on behalf of Snap-on/Kapman AB because while its domestic sales of FISH & HOOK and BAHCO products averaged $6 million annually in 2007 and 2008, such yearly sales plummeted to $1.6 million in 2009 or a staggering 75 percent sales drop.We are wondering what the governments of the US and Sweden are doing about this case of IPR infringement.

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