Understanding the Impact of Product Counterfeiting on Businesses in Nigeria

Introduction to Counterfeiting

Counterfeiting refers to the act of manufacturing or producing imitations/copies of an existing product with an intention to deceive, such that novice buyers are unable to different the original product from the (substandard) copy of the product. In other words, counterfeiting entails copying products with an intention to deceive buyers into thinking that they are buying the original product rather than the substandard copy. Often counterfeiting is usually quite skillfully done, making differentiation difficult except for trained eyes scrutinizing these products in the market. Buyers of such counterfeit products are usually deceived into thinking they are buying the genuine product rather than the unoriginal copy of same. A lot of products and materials can be counterfeited, including currency notes, perfumes and related cosmetic products, drugs, machinery, clothing, electronics, mobile phones and associated devices, laptops, credit and debit cards, amongst a whole host of other consumer and manufacturing products available in the market(s).

Prevalence of Counterfeiting in Nigeria

In Nigeria, product counterfeiting is very high, particularly in Pharmaceuticals. From luxury brands goods, to fast-moving consumer goods, to business-to-business goods like expensive machinery and equipment, products are counterfeited at a very high rate within the Country. This is because Nigeria is the most populous nation in Africa, and thus has a very large market, with high incidences of penetration of fake products into its markets. An online platform Chekkit, in a publication, identified some commonly counterfeited products in Nigeria, thus: packaged foods, pharmaceuticals, footwear, clothing, leather goods, automotive parts, cosmetics, alcohol and jewellery.

Many have estimated that as much as 70% of goods being sold are counterfeits.

Negative impact of Counterfeit products on businesses and brands

Businesses with good products that are a market fit are almost always the target of counterfeiters who make fake copies of their products, slap the companies’ trademarks on them, then put them out to the market. The consequences of such product knockoffs are far-reaching because legitimate businesses suffer significant financial and market losses due to reduced sales (people go for the fake products which are more rampant in the market than the originals), brand reputation damage, and loss of consumer trust. For the last aspect, with consumers being unable to identify the real from the fake, they lose trust in the legitimate brands and possibly look for other products to use. Moreover, counterfeit products undermine the economy by stifling innovation, discouraging foreign investment, and depriving the government of tax revenue. This makes it discouraging for Businesses to offer their products to the buying segment of the economy that require their products.

Legal Remedies for Counterfeiting in Nigeria

To combat knockoffs of products, there is need for concerted efforts between the government (and its agencies especially NAFDAC and SON), law enforcement bodies (police), industry associations, and businesses/brand owners. Some initiatives that can help in the fight against fake products include:

Criminal Prosecution: 

There are laws that prescribe punishments for counterfeiters. Thus, Counterfeiters can be prosecuted under various Nigerian laws, such as the Counterfeit and Fake Drugs and Unwholesome Processed Foods (Miscellaneous Provisions) Act, the Nigerian Copyright Act, the Trade Marks Act, and the Counterfeit Currency Offenses Act. In the events counterfeiters are apprehended, brand owners can have these offenders face criminal charges, with punishments that includes prescribed fines and/or imprisonment for stated periods. In the event they are prosecuted, convicted and sentenced, this can serve as a deterrent to other counterfeiters making fakes/knockoffs of original products.

Civil Litigation

Owners of Intellectual property who own registered trademarks, designs, or whose works are copyright-protected under extant Copyright regulations in Nigeria can file civil lawsuits against counterfeiters. They can seek injunctions to stop the production, distribution, or sale of fake goods. They can also claim damages for losses suffered as a result of counterfeiting. They can further have those knockoff products ceased and destroyed as appropriate. Ceasing and destroying such goods could potentially serve as a deterrent to others who might be considering creating knock-offs of a brand’s products for quick gains.

Customs Enforcement

A lot of goods and products that hit the Nigeria retail markets are largely imported into Nigeria through its borders, whether by land, air or sea. The Nigerian Customs Service (NCS) plays a crucial role in combating counterfeiting at the borders. If the Nigerian Customs Service play up their role, they have the potential to be of great service to brand owners as their powers enables them to seize and detain suspected counterfeit goods at the point of entry. We consider it important that brand owners engage the Nigerian Customs Service and seek ways of better fostering a stronger support from them over the imports of goods and products befoer they’re cleared for pathways into Nigerian markets.

Collaboration with Law Enforcement Agencies

Intellectual property owners surely know the routes their products are sold within target markets, and constituting a watch service that will enable them to monitor their goods can quickly showcase which markets carry knockoffs of thier products. In that instance, they can collaborate with the Nigerian Police Force on sting operations to investigate and apprehend counterfeiters and seize the fake products these counterfeiters are making using their brand equity and good will.

Anti-Counterfeiting Measures: 

To effectively set up anti-counterfeiting measures, it is important to note that the use of technological systems is invaluable. The use of holograms, security labels, unique packaging features which are detectable by special devices, et cetera, can actually help consumers quickly identify genuine products even from the point of sale. This can immensely deter counterfeiting as these counterfeiters will be unable to sell their knockoff products when the means of detecting a product’s genuineness or fakeness are swift and instant. 

Strengthening Intellectual Property Laws

Nigeria already has a robust legal and regulatory framework for deterring counterfeiters  and protecting brand owners for their brands, trademarks, and associated IP rights. However, with the rapid continuing development across  the world in the world of IP, it is imperative that continued efforts to strengthen intellectual property laws in Nigeria should remain underway, as this can enhance the legal framework for combating counterfeiting. This includes amendments to existing laws to introduce newer innovations and ensuring effective enforcement mechanisms.

Ready to protect your products and fight against counterfeiting? We invite you to contact our Product Registration and Anti-Counterfeiting practice groups for more information on how to secure your intellectual property rights and ensure brand integrity.

Kingsley Ani