Five counterfeit hotspots that you should know in Paraguay

In an update from our series on marketplaces around the world that should be on counterfeit enforcement radars, we head to Paraguay. 

The problem of illicit goods in Paraguay has been a long-running issue. Back in 2003, Marketing Week described the country as “a counterfeiter’s paradise”, while in 2005 the FT described Paraguay as fighting a “war on counterfeit goods”. In more recent times, the problem continues to be significant – according to World Finance, it is reported that 40% of Paraguay’s GDP is made up of illegal transactions, with an estimated 90% of all cigarettes in Paraguay unlawfully exported into the country. Furthermore, Paraguay has appeared on the USTR’s Special 301 Report for a number of years.

For that reason, then, we reached out to Diego Pérez from Cervieri Monsuárez & Asociados to gain insights into how rights holders can protect their brands from counterfeiting in Paraguay, and identify some physical marketplaces that rights holders should know about.

In a nutshell, what should a rights holder know about enforcing against counterfeit goods in Paraguay?

Paraguayan legislation provides both civil and criminal actions for the enforcement of intellectual property rights. Although no administrative procedures are established, counterfeiting in Paraguay is considered a public offense, and there are available Prosecution Offices specialised in intellectual property, which operate efficiently. For offences against intellectual property, the punishment may be up to 8 years of imprisonment in severe cases.

There are other state offices specialised in intellectual property that are able to conduct autonomous researches and file complaints to the Prosecution’s Office, such as DINAPI’s (intellectual property office, for registrations) Enforcement Directorate, the Specialized Department against the Violation of Intellectual Property Rights, and the Administrative Coordination of Customs Investigation (customs).

Moreover, the judiciary has specialised judges in criminal matters, as well as an Intellectual Property Directorate that depends on the Supreme Court. The Prosecution’s Office has its own warehouse and its own destruction machines and vehicles, which facilitate the work (and expenses) of the procedures. There is also the possibility of filing a civil lawsuit requesting the cease of the use of illicit goods, and a compensation for the caused damages; as well as unlawful competition claim, but the disadvantage is that the action is filed before unspecialised civil judges, therefore the processes are extended and more expensive.

In the extrajudicial field, cease-and-desist letters can be sent in order to make the infringer agree to hand over the infringing items, not commercialising them in the future, inform suppliers and reimburse the expenses involved. Crucially, though, Paraguay could improve the actions provided for the IP rights holders, for example, by encouraging parties to adopt mechanisms of alternative dispute resolution (ADR) such as mediation and conciliation which, although they are currently available in the judiciary, are not frequently used.

Does landlord liability exist in Paraguay?

This is not provided in the legislation, and neither there are successful precedents. In the criminal field it would be very complicated, considering that liabilities have a personal nature and on contracts the landlords include disclaimer statements about the activities performed by the tenant. However, in the civil field a more successful chance may exist if an effective knowledge of repetitive infringing conducts by the tenant could be demonstrated, and that there were properly informed to the landlord, which has not taken the appropriate measures after being made aware of the situation (alleging possible complicity, collusion, indifferent or careless conduct).

Are there any local dedicated anti-counterfeiting associations or organisations in Paraguay?

In Paraguay, there are no associations nor organisations involved exclusively on fighting against piracy and counterfeiting. However, there are business chambers that normally file smuggling and counterfeiting complaints (eg, Shoes Importers Chambers, Parfums and Cosmetics Chambers, Industrial and Supermarket Chambers). Also, an Anti-Piracy and Smuggling Chamber is in the process of development, similar to CALPYC in Uruguay, which is a role model in the region.

Counterfeit hotspots you should know in Paraguay:

Mercado N° 4

Location: This is a large marketplace that spans the neighborhoods of Pettirossi, San Roque, Ciudad Nueva and Pinozá in the capital city of Asunción (map link).

Counterfeit risk factor: Very high

False products known to be sold there: Clothing, footwear, phones and accessories, electronics.

Challenges of enforcement at this marketplace: Organised and violent merchants, narrow streets, with complicated access and way out.

Recommendations to brand owners: Carry out criminal actions, conducting raids at night and coordinating street blocks, with enough backup from riot police and the Economic Crimes Department. Low chances of success regarding to extrajudicial actions.

Silvio Pettirossi International Airport

Location: Paraguay's main national and international gateway, located at Luque, near Asunción (map link).

Counterfeit risk factor: High

False products known to be sold there: As the country’s main airport, this is where goods accessed through air waybills are found, including footwear, clothing, electronics, accessories, bags, glasses, and watches.

Challenges of enforcement at this marketplace: Authorities need to improve merchandise controls performed at all times (24/7).

Recommendations to brand owners: Cooperation with specialised authorities legally enabled for the verification of air waybills and luggage, such as DINAPI (TMO), CAIA/Customs and Economic Crimes Department of the National Police. 

Private ports

Location: Located in Asunción and surrounding cities such as Mariano Roque Alonso, San Antonio and Villeta (map link).

Counterfeit risk factor: Very high

False products known to be sold there: Private ports of entry of goods from abroad include footwear, clothing, electronics, spare parts, toys, bags, glasses, and fragrances.

Challenges of enforcement at this marketplace: Gathering of legitimate information from customs and other sources.

Recommendations to brand owners: Cooperation with specialised authorities legally enabled to verify the containers, such as DINAPI (TMO) and CAIA/Customs.

San Lorenzo Market

Location: Found in the centre of the city San Lorenzo (map link).

Counterfeit risk factor: High

False products known to be sold there: Clothing, footwear, backpacks, and toys.

Challenges of enforcement at this marketplace: A lot of commercial flow in the zone, so procedures must be performed quickly to ensure success.

Recommendations to brand owners: Carry out criminal actions and raids with an escort of specialised police from the Economic Crimes Department. Establish strategies that allow quick access and escape from the place. Low chances of success regarding extrajudicial actions.

Ciudad del Este

Location: A city on the Paraná River and located 327km from Asunción (map link).

Counterfeit risk factor: Very high, the biggest counterfeit hotspot in the country.

False products known to be sold there: Electronics, phones, bags, glasses, watches, clothing, footwear, backpacks, accessories, and toys.

Challenges of enforcement at this marketplace: Weakness of local institutions due to budget constraints and corruption.

Recommendations to brand owners: Attempting extra-judicial actions before a criminal or civil claim can lead to better results and gathering proof.

Read previous articles from our counterfeit hotspots series using the interactive map below: