Fake Internet Goods Raids

[george]

Raids in Thailand Highlight Growing Problem of Fake Goods Sold on Internet

BANGKOK: -- Fake merchandise displayed on the streets of developing countries has long been a draw for shoppers -- and a headache for owners of respected brands as well as law enforcement authorities.

Lately, the headache has been compounded by the proliferation of the same goods offered to buyers worldwide through the Internet, saving shoppers the trouble and expense of a trip abroad.

The sites are similar to many commercial web sites, except the goods on offer usually are half the price of legitimate products. The specific sites that were offering the products were www.kitshirts.com, www.designershirts.net, www.team-shirt.com, www.hotf1.com and www.tshirtsbymail.com.

The sites are now closed and their operators are being investigated by police officers from the Economic Crime division. Ironically, the site operators are Western nationals from countries where intellectual property rights are widely respected.

Recently, the law firm of Tilleke & Gibbins, in association with investigators and police, took legal action against the owners of the above-mentioned web sites after an eight-month investigation.

Police raids conducted over three days led to the arrests of four British nationals along with their Thai wives, and one Ukrainian. All had been living in Pattaya.

It is believed that the foreign operators worked together by linking to each other's sites as they dealt in the distribution of fake goods from Pattaya.

The raid came after international sports merchandise companies hired Tilleke & Gibbins in Bangkok to investigate the case last year.

At the suspects' houses in Pattaya, police seized samples of fake goods along with computer records, mail service receipts and processed orders.

It was the first case in Thailand involving the seizure of fake goods sold on the Internet.

According to an attorney from Tilleke & Gibbins, some of the sites were earning in excess of US$1,000 per day.

The sites' major customers were sports fans who believed the products were genuine.

"Due to this case, our clients [international brand owners] believe intellectual property violations in Thailand are getting worse. The distribution channels are developed and more complicated and the counterfeit goods can easily move to other countries," said the lawyer, who asked not to be named.

The law firm and brand-owning companies so far have not released estimates of the damage caused by the illicit trade.

However, the attorney said that the figure would be huge because the items involved were premium goods that were sold in many countries.

In addition, the site operators had run their illegal businesses for at least one year. But the worst damage was to the legitimate companies' reputations, she said.

The suspects were clever enough to not register their domain names in Thailand or use '.co.th' web addresses, in order to stay under the radar of Thai law enforcement agencies

Instead, they registered their domain names as '.com' or '.net' in other countries, forcing the law firm to seek co-operation from web hosts overseas in closing the Thailand-based web sites.

The suspects are well-educated and technology-savvy, the lawyer said. For instance, in the Ukrainian suspect's residence, police found a wireless local area network, iPSTAR satellite Internet access, brand-new digital cameras and studio-quality photography lamps.

The attorney said she did not know what facilitated the Westerners' breaches of Thai laws related to intellectual property rights. Perhaps they saw a loophole. For instance, Thailand does not require people to register at state agencies when they want to run a business.

As for the money factor, she said: "They [the web site owners] can buy fake cheap sports gear here for 100-200 baht apiece and sell them for 1,000 to 1,500 baht each. That's easy money."

The official from the Intellectual Property Department said that if the case results in convictions, the department would pass on a list of the violators to their embassies in Thailand.

Such a move would serve as a reminder to developed countries that while they are demanding that developing countries protect intellectual property, their own citizens may be in cahoots with those involved in breaking the law.

If the accused are found guilty, the maximum penalty is four years in jail and/or a 400,000-baht fine.

The attorney said, however, that in many cases defendants plead guilty and the punishment is then reduced.

--Bangkok Post 2004-03-16