Knockoffs, Infringing Products and Counterfeits in New York City

Knockoffs, Infringing Products and Counterfeits

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Knockoffs, Infringing Products and Counterfeits

Walking down the streets of New York City (pre-pandemic) you were bound to encounter vendors selling fake designer bags or products.  Since the pandemic, the online marketplace for these goods has surged.  It is now easy to find third-party vendors selling fake, defective or counterfeit goods.  Now, more than ever, it is important for designers to understand the differences between legal knockoffs, infringing products and counterfeits, so they can protect their brand from fashion thieves.

How do Fashion Designers Protect Their Designs from Fashion Thieves?

When starting a fashion brand, it is important to safeguard your designs.  Intellectual Property (IP) law can provide you with this much-needed protection.  Within IP law, you can utilize trademark, copyright, and patent law.

It is common practice for designers to trademark their brand’s name, logo, symbol or unique phrase to use as a source and quality identifier to establish brand recognition.  Under Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017), certain elements of clothing design can also be eligible for copyright protection.  To obtain copyright protection for design elements, the elements must: (i) be identified separately from the functional use or purpose of the clothing, and (ii) have an independent existence from the functional design of the clothing.  Decorative, non-functional features on a useful product, such as a complex bow or sweat-wicking fiber, may also be eligible for patent protection.

If a company’s or designer’s products contain unique designs, symbols or patentable products, then they should protect their IP rights by applying for federal protection.  A company or designer may also want to register their trademarks with various states; an experienced attorney can provide guidance on when dual registration is advisable.

Please note that you are not required to register a trademark with the US Patent and Trademark Office or with any state to receive common law protection.  However, common law protection is limited and does not confer all the benefits of federal and state registration.

Identifying Knockoffs, Infringing Products or Counterfeits

If you encounter a design or product in the marketplace that is similar to your own, it can be frustrating.  Sometimes these copies or knockoffs are legal.  In these instances, it is not advisable to take legal action.  When, however, someone infringes on your IP rights, there are various actions that you should consider, both civilly and through criminal courts.

Knockoffs

It is a common misconception that knockoffs are illegal replications of another brand’s work.  Oftentimes, a knockoff is a legal copy.  A knockoff is legal if: (i) the copy does not incorporate any of the original IP, (ii) the quality of the knockoff is different than the product it is copying, and (iii) the copier does not intend on misleading consumers into believing its product is the original product.

Knockoffs are common in “fast fashion”—a sub-industry in which retailers sell less expensive versions of the latest designer fashion trends.  For example, if a fast fashion retailer sells a very similar dress to the dress worn by an A-list superstar on the red carpet, there is likely no legal recourse available to the original designer if the retailer is not using the designer’s brand name, changed the print slightly and used less expensive fabric.  When these retailers produce legal knockoffs, their goal is usually for consumers to achieve a similar style to the original without paying full cost.

A copycat version of a product is also legal when the original product is ineligible for IP protection.  For example, black underwear is a basic, common and useful product that is not entitled to protection.

Infringing Products

It is unlawful for a someone to incorporate your IP into their goods without prior authorization.  When an unauthorized user sells a good or service using your IP, it is important to protect your IP through policing, sending a cease and desist letter and, when necessary, filing a lawsuit.

Copyright Infringement

A copyright infringement claim, in fashion, occurs when an infringer wrongfully replicates an original print, certain fabric design (like lace and embroidery), jewelry and accessories.  A copyright owner has the exclusive right to decide when and under what circumstances their original work can be reproduced and distributed.

To prove copyright infringement, you must possess a valid copyright.  You must also show that the infringer copied your work.  Typically, this is proven by demonstrating that the infringer had access to your work and that the material copied is substantially similar to your work.  The remedies available to you will depend on willfulness of the infringer and whether the infringement occurred before (or very shortly after) you registered your work with the US Copyright Office.

Trademark Infringement

To establish a trademark infringement claim, you must own a valid and protectable trademark.  You must also demonstrate that there is a likelihood of consumer confusion from the unauthorized use of your mark in commerce.

An example of a potential trademark infringement claim is the unauthorized use of the Chanel “C” in conjunction with something else on a t-shirt.  Although this may not be a product that Chanel sells, it still may cause consumer confusion.

A trademark owner may recover monetary damages at the discretion of the court.  Trademark owners may also obtain an injunction to, among other things, stop the further sale of infringing products.

Counterfeits

To counterfeit is to distribute or manufacture a good that utilizes a mark that is identical to, or substantially indistinguishable from, a federally registered trademark.  The counterfeiter (i) must have intentionally used the trademark knowing its use was counterfeit, or (ii) was willfully blind and deliberately disregarded the trademark owner’s use.

In fashion, counterfeiters produce or sell an item that displays a reproduction of a registered trademark to deceive buyers into believing they are purchasing genuine merchandise.  An example of a counterfeit item would be a handbag that looks identical to a Louis Vuitton handbag because its print, label, logo and design are a near exact replication of the original bag.  Of course, it is more obvious to the average consumer that a product is counterfeit when it is sold outside of its normal venue, such as on the street rather than in a store.  When, however, a counterfeit item is sold online, potential buyers are more easily deceived, especially if the price point is similar and a vendor’s website appears to be that of a well-established business.

Counterfeits have the potential to cause physical harm to consumers as well as reputational damage to businesses.  Take, for example, the damage that could occur when a consumer believes she is purchasing a high-end makeup brand but ends up, unknowingly, buying a counterfeit version.  The counterfeit product’s marketing, packaging and design is identical the high-end brand.  However, the counterfeit product is manufactured with cheaper and harsher chemicals.  Imagine if the consumer has an allergic reaction to the counterfeit product.  She is going to believe that the product of the high-end brand caused this reaction.  The consumer’s experience, in this scenario, damages the reputation of brand.  Therefore, it important to be vigilant and take all possible steps to prevent counterfeit versions of your product from being sold in the marketplace.

How to Determine if a Trademark Infringement Claim is a Counterfeiting Claim?

All counterfeits are infringements, but not all infringements are counterfeits.   A counterfeit claim is very similar to a trademark infringement claim.  A counterfeit infringement claim, however, is narrower in scope.  The penalties for counterfeiting are harsher and more severe.  Both criminal penalties and punitive civil remedies, such as increased damages, become available in instances of counterfeiting.  IP owners often opt to pursue civil, instead of criminal, action because they have more control over the outcome and the burden of proof is lower.

Civil Action

A civil action involving counterfeiting is often part of a broader trademark infringement claim.  It does, however, involve additional analysis.   Treble (triple) profits or damages, reasonable attorneys’ fees and statutory damages are available to victims of counterfeiting.  Some of the factors courts consider when determining whether counterfeiting occurred include:

  • Replication.  A counterfeit mark is usually associated with or used on goods or services that are essentially identical to the goods or services the original trademark was registered under.  For example, the Adidas trademark on a wine bottle is not considered counterfeit since Adidas does not have a federally registered trademark for wine.
  • Similarity.  Courts usually examine the products as a whole rather than just the similarity of the marks.  A counterfeit good is often identical to or substantially indistinguishable from the registered trademark.
  • Intent.  Courts generally look to see if the counterfeiter intentionally, or with willful blindness, deceived consumers into believing the counterfeit product was an original.
  • Consumer Confusion.  Courts have the discretion to analyze whether there is a likelihood of consumer confusion that the product was real or fake in either pre-sale or post-sale context or both.  Post-sale review allows courts to dig deeper and assess if viewers believed the counterfeit product was an original.

Criminal Action

Criminal action can be pursued by reporting the counterfeiting to the appropriate law enforcement authorities.  Factors that authorities often examine before deciding whether to bring criminal charges include: (i) the involvement of organized crime, (ii) public health and safety concerns, and (iii) the amount of loss and harm.

Conclusion

Protecting your brand is not only critical to your business’s success, it is also crucial for consumer protection.  Understanding the difference between knockoffs, infringing products and counterfeits prepares you in the event your designs or products are sold in the marketplace without your consent.

Notice

This Blog is made available by Romano Law PLLC for general informational and educational purposes only, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and Romano Law PLLC or any individual contributor. You should consult a licensed professional attorney for individual advice regarding your own situation.

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