Destruction of Counterfeit Cigarettes in Latvia
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Holmes Report

Destruction of Counterfeit Cigarettes in Latvia

On December 10, 2001, the Coalition for Intellectual Property Rights (CIPR), a public-private sector non-profit organization co-founded by The PBN Company in 1999 to improve the legislative and enforcement climate for intellectual property rights.

Paul Holmes

On December 10, 2001, the Coalition for Intellectual Property Rights (CIPR), a public-private sector non-profit organization co-founded by The PBN Company in 1999 to improve the legislative and enforcement climate for intellectual property rights (IPR) in the countries of the former Soviet Union, assembled key Latvian government and law enforcement officials, trademark owners and diplomats to send a strong signal to the rest of the world: “Counterfeits are not welcome in our country.”

The event marked the first large-scale destruction of seized counterfeit products in the region, demonstrating Latvia’s firm commitment to the rule of law and war on counterfeiting. Altogether, 25 million fake Benson&Hedges, Marlboro, and Marlboro Lights cigarettes, well-known trademarks belonging to Philip Morris and British American Tobacco, were destroyed in a public incineration, raising awareness of IPR issues among media and consumers as well as key stakeholders in government, law enforcement and business at a critical time for Latvia’s national reputation.

Challenge or Opportunity. 

Latvia is a major transit point in the pipeline of counterfeit goods bound for western European markets. The illegal trade in counterfeit goods is a global problem of growing magnitude.  Even in a country as small as Latvia, counterfeits represent a multi-million dollar business, posing a threat to the economic, social and public health of the nation. The seized shipments of counterfeit cigarettes were viewed by many as a litmus test of the Latvian government’s resolve to uphold free trade under rule of law before the eyes of the international community.

While police and customs officials had done their work in seizing the fraudulent goods and impounding them in the specially authorized warehouse, further criminal investigations were halted because of lack of evidence. While Latvia law allows authorities to destroy counterfeit goods, it has never been done before without judicial order. The PBN Company, who serves as CIPR’s representative in the Baltic States, worked with government leaders, law enforcement authorities and trademark owners to expedite the destruction of the counterfeit cigarettes to send a strong signal to the world that Latvia was committed to the fight against counterfeit and to upholding the rule of law.

Research, Planning and Objectives. 

The PBN Company identified the opportunity to deliver a strong anti-counterfeiting message by holding a public destruction of the seized cigarettes.   The firm had just released findings from CIPR’s benchmark opinion survey of Baltic business on IPR issues, which reflected an admission on the part of the corporate sector that it was not doing enough to help the governments in Estonia, Latvia and Lithuania develop effective IPR protection and enforcement regimes.  Among the research and planning steps taken by The PBN Company were:

Accessed Finance Ministry statistics reflecting significant shortfalls in the collection of duties on excise tax goods, including tobacco, correlating this data with other stories of specific IPR violations in the Baltic media as diverse as sportswear, pharmaceuticals and information technology industries beset by counterfeiting.

Interacted closely with contacts in law enforcement, hearing firsthand their accounts of the procedural obstacles and politically sensitive considerations keeping them from effecting the just destruction of these goods as expected by the trademark owners.

Established a thorough understanding of the facts of the case for presentation to important target audiences, including the diplomatic community, government, business leaders and the media.

Framed against this persuasive factual background, The PBN Company carefully honed the IPR protection and anti-counterfeiting message that would be central to the destruction of the cigarettes:
· The imperative of public and private partnerships in stemming the tide of counterfeit and contraband products throughout the Baltic States.
· The Government of Latvia’s commitment to the rule of law and to international standards of intellectual property rights protection and enforcement.
· A collective pledge of cooperation and bold action among the Latvian government, law enforcement, trademark owners and the international community to stop the production and transportation of counterfeits in the Baltic States.

Strategic Approach. 

The PBN Company facilitated meetings between the trademark owners and the state agencies involved in the seizures and investigations of the counterfeit shipments. As a result of this liaison work, the Security Police Chief made the bold decision to proactively order the destruction of these seized counterfeits and, in the process, set an important new extra-judicial precedent for trademark protection and enforcement. The chief of the Riga Regional Customs Department followed suit and ordered the goods seized under his jurisdiction to also be destroyed. Cooperation and consultation between CIPR, key officials from the relevant state authorities and representatives of trademark owners Philip Morris International and British American Tobacco expedited the order to destroy the fake cigarettes without the customary recourse to the courts.  Latvian officials, the trademark owners and CIPR also strongly supported The PBN Company’s recommendation that the pending destruction action be conducted in public to send the message: Latvia will not tolerate the trade in counterfeits. 

Campaign Execution. 

The special event involved a multi-faceted government affairs and media relations approach.  For this event, The PBN Company:
· Closely coordinated with law enforcement authorities to identify the most effective location for the event to incinerate the large consignments of fake cigarettes and to accommodate a unique gathering of VIPs to witness the public destruction.
· Amassed the necessary political support from a host of pertinent government leaders and state agencies, including the Saeima (Parliament), the Ministries of Interior, Economy and Finance, the State Revenue Service and Customs Board, the State Prosecutors’ Office, and the State Patent and Trademark Office, to name a few.
· Briefed officials from the embassies of the US, UK, Lithuania, Estonia, and Russia on the regional and international implications of the event, persuading several key ambassadors to attend the destruction to show their support for Latvia’s anti-counterfeiting efforts.
· Garnered the interest of other industries that confront counterfeit trade and also face challenges in achieving the destruction of faked goods infringing their trademarks.
· Finally, CIPR’s extensive media relations program guaranteed that the journalists covering the event would have a full understanding of the background before telling the actual story.

Summary of Results. 

The event was one of the first cooperative anti-counterfeiting actions coordinated by the Latvian government, law enforcement officials, trademark owners and the international community. It was attended by members of the Presidential Administration, key ministries and the Parliament as well as law enforcement authorities from the State Security Police, Revenue Service and Customs Department and senior diplomats from the embassies of Lithuania, Estonia, the Russian Federation, Sweden, the United States, United Kingdom and the European Union.  It received broad coverage in both Latvian- and Russian-language print and electronic media.

Not only did the action demonstrate the benefits of interagency coordination on the domestic level, but also underscored the importance of cross-border cooperation among neighboring states and trading partners in combating this complex and growing global threat.  Finally, the action served also as a meaningful public education initiative, sending the anti-counterfeiting message not only to the media and consumers in general, but also specifically to the counterfeit goods smugglers and their local and regional accomplices. This public incineration event served as an example to inspire and sustain other successful battles pending in the global war against counterfeiting.

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