Trademark Counterfeiting
By Doreen J. Gridley and Bradley M. Stohry, Attorneys at Ice Miller
A well-known trademark is a valuable asset for a company. When consumers see the COCA-COLA, NIKE, or DISNEY trademark on a product, they should be able to easily formulate an opinion about the product based upon the reputation of the company that owns the trademark.
However, there is a problem when an unscrupulous individual places a trademark on an inferior product and attempts to palm it off as a product of the trademark owner. This practice of counterfeiting trademarks harms the public's faith in trademarks as distinguishing source of products and also results in inferior products that threaten the safety of those who use them.
A bill recently passed by the Senate, entitled the "Stop Counterfeiting in Manufactured Goods Act," has been described as an attempt to strengthen and clarify anti-counterfeiting laws. This legislation is intended to counter a threat to America that "wreaks real harm on our economy, our workers, and our consumers." The legislation requires the seizure and destruction of counterfeit labels as well as the equipment used to make and package counterfeit goods. According to statistics relied upon by the Senate, counterfeiting costs the U.S. between $200 billion and $250 billion annually.
This legislation is a response by Congress to an issue that is a genuine problem in our ever-expanding global economy. Aside from this legislation, there are real world defenses that an organization can adopt to assist it in preventing and eliminating counterfeiting of its trademarks.
Be Informed about Your Trademark Rights: Becoming informed about the issue is the first step. Before a company can do anything about the counterfeiting of its trademarks, it needs to become knowledgeable about protecting its trademarks and other intellectual property assets. Trademarks need to be protected like any other asset that a company owns. Companies should insure that they are using their trademarks properly and that their trademarks are adequately protected from infringement and counterfeiting.
Make Your Product Difficult to Duplicate: An effective way of preventing or reducing trademark counterfeiting is to include a feature on the product that is difficult to copy, such as a hologram or digital water marking. This makes it easier for the consumer to determine whether the product is genuine and also, from an enforcement perspective, makes it easier for the authorities to spot counterfeit products.
Register Your Marks: Registration of a trademark with the U.S. Patent and Trademark Office (USPTO) is often an important preliminary step in obtaining adequate protection. While registration is not mandatory in the U.S., there are many advantages of registration that make it a necessity. For example, in order to obtain civil and criminal penalties against counterfeiters and prevent importation of goods bearing an infringing or counterfeit mark, federal law requires that a trademark owner obtain registration.
Register Your Marks in Foreign Countries: A U.S. trademark registration is not valid outside of this country. There are systems which facilitate the registration of trademark rights on a regional basis and some countries allow a U.S. applicant to use the filing date for the application filed in the U.S. However, it is currently not possible to file and obtain a single trademark registration which will grant universal ownership. Therefore, registration is necessary in all parts of the world in which a trademark is being used. Unlike the U.S., most countries require registration as a mandatory prerequisite to obtain rights in a trademark. In addition, be aware that other trademark laws may vary from country-to-country.
Register with Customs: International treaties highlight customs administrations as an invaluable resource in combating against trademark counterfeiting. Trademarks should be registered with the customs agency in each country where a mark is used. It is important to note that a trademark owner must first register the trademark with the USPTO before a trademark may be registered with Customs. After a trademark is registered with U.S. Customs, officials do a spot check of imported goods for counterfeit or infringing goods which, if found, can be detained before entry into the U.S.
Protect Yourself Outside of This Country: While counterfeiting is a problem in the U.S., it is even more of an issue in the developing world. It probably comes as no surprise that China is the biggest source of counterfeit products in the world. A company that does business in China, or any other country, needs to have a trademark strategy in that individual part of the world. This includes working with foreign law firms to prevent counterfeiting and private investigation firms to track down counterfeiters.
Legal Actions Against Counterfeiters: The basic legal option in most jurisdictions is a civil action for trademark infringement or a related cause of action. Most countries have counterfeiting laws similar to those in the U.S. to combat counterfeiters, though some countries' laws are more effective than others. The Trademark Counterfeiting Act of 1984 is federal legislation that provides causes of action and remedies for trademark owners whose marks are subject to counterfeiting activities in the U.S. This law generally requires that the trademark owner register the trademark with the USPTO. Under the Trademark Counterfeiting Act, the federal courts may 1) issue orders requiring the seizure of counterfeit goods; 2) award treble damages or profits, as well as attorneys' fees to the trademark owner; and 3) levy criminal sanctions of up to $5 million and imprisonment against the counterfeiter.
Support Aggressive Intellectual Property Legislation: In addition to the "Stop Counterfeiting in Manufactured Goods Act," other legislation has recently been introduced. Senator Evan Bayh recently introduced legislation aimed at enhancing enforcement of intellectual property rights domestically and internationally. Senator Bayh's proposed legislation is intended to elevate the treatment of intellectual property theft to the same level as money laundering and other black market crimes. In addition, the U.S. Attorney General recently announced that the Bush administration would pursue legislation to strengthen protection of intellectual property rights. This bill will be called the "Intellectual Property Protection Act of 2005," and will increase the government's power to seize property used in intellectual property related crimes as well as proceeds from sales of counterfeit goods. In addition, the proposed bill gives increased powers to the government to award restitution to intellectual property owners whose rights are violated. Therefore, it is readily apparent that that lawmakers are recognizing the importance of protecting intellectual property rights. Trademark owners should support legislation of this nature that would assist them in defending their valuable rights.
For more information, contact Doreen J. Gridley at doreen.gridley@icemiller.com or Bradley M. Stohry at bradley.stohry@icemiller.com.
