What’s in a name? Plenty if its a branded product which is bypassing the regular channels. Reg Rumney reports.
AS a rule you can’t count on what’s available at flea markets — except for cheap brand-name audio cassette tapes, the essential element of the home-taping the record industry abominates.
Not only at flea markets, but on the street-side hawkers’ tables, such blank cassettes are a common sight, specifically boxes of popular TDK brand cassette tapes.
Typically they sell for much less than in supermarkets and stores. For example, hawkers are apt to sell TDK D60 tapes for R4,50 or less. An ad for a big discount store offers a special on the same tapes for the equivalent of R6,50 a tape, if you buy a pack of four. The regular price in a shop is around R10. Why the difference?
Part of the answer lies with the aptly named “grey” imports. The law has been that anyone can import brand- name goods, even if the manufacturer has an agreement granting a local company the sole agency. Importers do not have the costs of a sole agency and are accused of piggy-backing on the brand’s goodwill. That goodwill is bought, goes the argument, at some cost through advertising, promotions and back-up.
Sole agent for the popular TDK brand of cassette tapes, Frank & Hirsch, obtained an important ruling from the supreme court one-and-a-half years ago that effectively bans the importation of TDK tapes. The company could not act in terms of patent law and instead had recourse to copyright to prevent grey imports.
According to Llewelyn Parker of patent attorneys John & Kernick, the Appellate Division ruling in the matter of Frank & Hirsch versus A Roopanand Brothers was that the wrapper and printed inserts of TDK tapes constituted artistic work. Such artistic work is protected in South African copyright law.
The copyright in the artistic work was assigned by foreign manufacturer TDK Electronics in Japan to Frank & Hirsch, the local distributor. Frank & Hirsch then obtained an interdict against the parallel import of TDK tapes.
This is confirmed by Frank & Hirsch’s intellectual property attorneys, Spoor & Fisher. Another importer can bring in TDK tapes — but not in the same packaging as TDK uses. This would be pointless, since consumers would not trust the tapes to be TDK.
Recently, Frank & Hirsch sent a letter to importers and clearing agents, among others, advising of its copyright in TDK tapes. But CE Andre Coetsee admits there is nothing much the company can do against the clearing agents.
Frank & Hirsch does have private investigators tracking down parallel imports. Yet parallel imports continue, despite Frank & Hirsch having taken action against grey importers of cassette tapes.
Continuing sales of the TDK “J” range of cassette tapes are an example. Frank & Hirsch has stopped importing these, says Coetsee. Yet they are numerous, and Frank & Hirsch TDK product manager Ockert van Niekerk says they are genuine, and are imported in a way that minimises duty. This is done by mixing the cassettes in a container with other cassettes, often with counterfeit tapes, that attract a lower duty. Sometimes duty is avoided altogether.
Duty can add 60 to 70 percent to the landed cost of tapes, says Coetsee. Many of the cheaper tapes, he adds, are outright counterfeit. Van Niekerk concurs. “We can’t even land a D60 tape at the retail going price of some of these supposed D60s. We have seen documentation at customs. They are paying US27c a tape, and sometimes they still don’t pay duties on that.”
Apart from the poorer quality of theses tapes harming the TDK brand itself, the pirate tapes cut into Frank & Hirsch’s share of the blank cassette market, says Van Niekerk. TDK’s market share of the “legal” market could be around 30 percent of the 7,9-million cassettes which Van Niekerk estimates will be sold this year.
Of the total market, the pirate tapes could make up 25 percent, but it’s anybody’s guess. Even getting 10 percent of unknown, unquantifiable grey and pirate sales would be a plus for Frank & Hirsch.