Protecting Clients’ Brands from Counterfeiters

Vol. 28 No. 2

By

James R. Davis, II, is a partner in the Intellectual Property Group of Arent Fox’s Washington, D.C., office.

 

Following are ten general strategies for combating counterfeiters. The vast majority of companies do not have the need, resources, or commitment to adopt and carry out all ten. But don’t let perfection be the enemy of progress; adopting just one or two strategies is far better than taking no action.

Register your trademarks.

Registration of trademarks is the cornerstone upon which an intellectual property (IP) strategy should be built. In many countries, ownership of a trademark registration is an absolute prerequisite to enforcing rights against infringers and counterfeiters. Even in countries where common law rights are recognized, there are significant benefits to owning a trademark registration, including the availability of enhanced legal remedies and a presumption of validity and ownership of the trademark.

Record with customs.

Customs operations in the United States and abroad serve as the frontline defense to ensure that at least some of the counterfeit goods never arrive at their destination. Given how inexpensive and easy it is to record trademarks with customs, there is no excuse for not taking advantage of this valuable resource.

Monitor and investigate.

A serious anti-counterfeiting program should incorporate routine investigations of businesses and regions where counterfeit activity is suspected. Monitoring activity in trademark offices around the world is a critical component of an IP enforcement strategy. The goal is to identify potentially infringing trademark applications before they mature into registrations, and take appropriate legal action to challenge the applicant. Brand owners should monitor and investigate territories, countries, and markets where counterfeit activity is suspected. The goal should be to move as far up the distribution chain as possible, from the street vendors all the way to the primary distributors and manufacturer.

To manage costs, companies sometimes pool their resources and launch a joint investigation of a particular company or region. Most brand owners also have an underutilized armada of prospective investigators. Employees, distributors, and affiliates can be educated and trained to identify and report suspicious activity and instances of consumer confusion. Consumers can also be an important facet of an IP enforcement strategy. By creating a dedicated telephone number or e-mail address where consumers can report suspicious activity, brand owners can obtain critical and timely information at minimal cost.

Counterfeiters are no longer relegated to manufacturing in abandoned warehouses and peddling their goods in seedy markets. Many counterfeit products move through legitimate trade channels, often with the knowledge and assistance of the IP owner’s own manufacturers, distributors, retailers, and licensees. It is a risky proposition to put blind trust in your business affiliates.

The web is teeming with black-market activity, and every brand owner should dedicate some resources to surfing the Internet for counterfeit activity. Monitoring online auction sites such as eBay and Alibaba is an inexpensive way of finding counterfeit products and identifying their source.

Take legal action.

Setting snares with customs offices and investigators is a good start, but brand owners should be prepared to take legal action when counterfeiters are caught. Nothing will discourage a law enforcement or customs officer more than a brand owner who routinely disregards notices of infringement.

Brand owners should not necessarily be scared away by the potential cost of taking action. The appropriate legal response in many countries can be as simple as filing documents confirming that the seized products are counterfeit and authorizing prosecution against the defendant. Litigation also need not be limited to civil or criminal lawsuits against the counterfeiters. Brand owners in the United States and abroad have been successful in lawsuits against third parties that harbor and facilitate counterfeit activity, including landlords and website operators.

Seek formal recognition as a well-known mark.

Some trademarks qualify for a wider scope of protection. Several countries maintain official governmental lists of well-known or famous marks. Although obtaining such status can be expensive and time-consuming, the long-term benefits often outweigh the costs. For example, owners of recognized well-known trademarks are granted broader protection and are more likely to prevail in adversarial proceedings.

Work with local authorities.

Infringing and counterfeit activity around the world can be identified from investigations coordinated from a central location, but remedial and legal action occurs at the local level. Brand owners should enhance their anti-counterfeiting efforts by forging relationships with local officials, including customs officers, law enforcement, prosecutors, and, in China, the State Administration for Industry and Commerce (AIC), or its equivalent elsewhere.

Small gestures often are sufficient to generate positive results. Face-to-face meetings or, better yet, hosting a luncheon are easy ways to educate officials about your brands and show them that your company takes counterfeiting issues seriously. No matter the venue, periodically scheduling on-site meetings can create the goodwill that is necessary to open communications channels and get local officials to assist quickly when the next problem arises.

Utilize the press.

The press loves a good story, and reporters are usually happy to attend press conferences and publish articles about seizures of counterfeit products and the prosecution of the perpetrators, particularly if, as is often the case, the counterfeit products pose a threat to consumers.

Make it difficult to copy your products and packaging.

Brand owners should seek to stay one step ahead of counterfeiters by using technology and creativity to periodically modify their products and packaging. Brand owners have a plethora of technological innovations to mark their products in a way that is difficult to replicate, thereby simultaneously making it more expensive for counterfeiters to copy and also easier for customs officials, consumers, retailers, and others to identify counterfeits. For example, special markings, laser etchings, color-changing inks, and unique microfibers can be used on or in products and packaging. The applicability of these services is almost limitless.

Keep written policies.

Informal understandings and agreements are insufficient when it comes to something as important and complex as a global IP enforcement strategy. Brand owners should maintain written anti-counterfeiting policies and guidelines. These policies should be distributed to employees and affiliates, and you should encourage—if not require—all employees to be familiar with your international trademark and brand-protection policies and the zero-tolerance policy for violators.

In addition, all manufacturers, distributors, suppliers, and licensees and other affiliates should be required to enter into a written agreement regarding your intellectual property policies.

Be active.

Brand owners can benefit by networking with each other and sharing resources, information, and ideas regarding anti-counterfeiting efforts and strategies. This can be accomplished through informal relationships and global or national associations that offer unique opportunities for networking, information sharing, efforts coordination, and cost sharing, as well as in-person or online workshops and seminars.

Governments and legislators are scurrying to address the numerous problems created by counterfeiters. The Prioritizing Resources and Organization for Intellectual Property Act (Pro-IP Act) was passed in 2008. Among other things, the Pro-IP Act increases the civil and criminal penalties for trademark and copyright infringement. It also established a new executive branch office, the Office of the United States Intellectual Property Enforcement Representative.

In April 2010, the U.S. trade representative released a draft of the Anti-Counterfeiting Trade Agreement (ACTA) for public review. The summary comments provided with the draft describe ACTA as an initiative to bring together countries “that are interested in fighting counterfeiting and piracy, and to negotiate an agreement that enhances international cooperation and contains effective international standards for enforcing intellectual property rights.”

Summary.

Counterfeiters threaten everyone, and brand owners should proactively take steps to protect the goodwill associated with their IP. Taking precautions now to prevent counterfeiters from damaging your brand is a far superior business strategy than trying to repair your tarnished reputation after the damage is done. 

 

FOR MORE INFORMATION ABOUT THE SECTION OF INTELLECTUAL PROPERTY LAW

- This article

is an abridged and edited version of one that originally appeared on page 48 of Landslide, July/August 2010 (2:6).

- For more information or to obtain a copy of the periodical in which the full article appears, please call the ABA Service Center at 800/285-2221.

- Website: www.abanet.org/intelprop.

- Periodicals: Landslide, a four-color magazine, published six times annually; E-News, timely Section developments; The Legislative Newsletter, electronic updates on legislative news, published by our legislative consultant in Washington, D.C., Hayden Gregory.

- Books and Other Recent Publications: Marketing Your Invention, 3d ed.; The Tech Contracts Handbook; A Legal Strategist’s Guide to Trademark Trial and Appeal Board Practice; Patent Obviousness in the Wake of KSR International v. Teleflex Inc.; Annual Review of Intellectual Property Law Developments 2009; Patent Infringement Litigation Handbook: Avoidance and Management; IP Attorney’s Handbook for Insurance Coverage in Intellectual Property Disputes; A Lawyer’s Guide to Section 337 Investigations Before the U.S. International Trade Commission; Computer Games and Virtual Worlds: A New Frontier in Intellectual Property Law; What Is a Patent?, 3d ed.; What Is a Trademark?, 3d ed.; What Is a Copyright?; Distance Learning and Copyright: A Guide to Legal Issues; Drafting Patents for Litigation and Licensing; Patent Litigation Strategies, 2d ed.; Trademark Infringement Remedies. Downloadable PDF titles include Navigating Recent Developments in Online Security and E-Privacy.

- CLE Materials: Audio CD packages and online courses produced from previous live teleconferences.

 

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