Counterfeit goods can cause significant injury to brands and consumers who believe they are buying the genuine article. Fortunately, businesses usually have some recourse against counterfeiters under trademark law but it can be difficult and expensive to litigate such cases. An experienced trademark lawyer can help owners protect and enforce their rights to minimize the damages and deter other counterfeiters.
Do You Have a Valid Trademark?
Typically, brands will trademark their name, logo, and other identifiers to ensure brand recognition and protect against infringement and counterfeiting. A trademark is a word, phrase, symbol, or design (or a combination of those things) that identifies and distinguishes the source of certain goods or services. It allows a business to clearly differentiate its goods or services from another company’s so consumers know on sight what they are buying.
Not every mark is trademarkable. However, those that are valid should be federally registered to get the maximum protection under the law. In some cases, registration with the state is advisable as well. While registration is not required, it offers many benefits including enabling owners to sue in federal courts and obtain certain types of monetary damages.
What Is a Counterfeit Mark?
Under federal trademark law, a counterfeit mark is “a spurious mark which is identical to or substantially indistinguishable from a registered mark.” Further, the counterfeit mark must be used on, or in connection with, goods or services that are identical or substantially indistinguishable from those for which the genuine mark is registered. This high degree of similarity is the key to demonstrating a counterfeit. Typically, the counterfeiter imitates the entire product, not just the trademark, so consumers believe they are buying the authentic article.
Counterfeiting also requires that the counterfeiter must have intentionally used the trademark knowing its use was counterfeit or was willfully blind and deliberately disregarded the trademark owner’s use.
How Does Counterfeiting Cause Harm?
Counterfeiting can cost brands significant lost sales. Revenue goes to a counterfeiter, instead of to the trademark owner. Confusion about whether a product is real or counterfeit may also lead to fewer sales as consumers don’t trust what they are buying. Further, brands may suffer reputational damage because consumers may purchase inferior counterfeits believing them to be the actual products. If the quality is very poor, it may even lead to physical harm to a consumer.
Finally, brands must pay substantial sums to enforce and litigate trademark rights against counterfeiters.
What U.S. Laws Protect Trademarks Against Counterfeiting?
The Lanham Act is the federal law that governs trademarks. It provides statutory protection and civil remedies for trademark owners against infringers who unlawfully use their trademarks resulting in consumer confusion. The law applies to infringement and counterfeiting, which is a form of infringement as discussed further below.
The Trademark Counterfeiting Act makes certain counterfeiting violations of the Lanham Act federal crimes. 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.
How Is a Counterfeiting Claim Different from Infringement?
Trademark infringement requires proof of a valid and protectable trademark and that there is a likelihood of consumer confusion from the unauthorized use of the mark in commerce. A counterfeiting claim is similar but narrower in scope. The counterfeit marks and their use must be identical or substantially indistinguishable to the trademark as noted previously. This is not a requirement for infringement. All counterfeits are infringements, but not all infringements are counterfeits.
The penalties for counterfeiting are also harsher and more severe as compared to infringement. Both criminal penalties and punitive civil remedies, such as increased damages are also available in counterfeiting claims.
What Relief Is Available Against Counterfeiters?
Trademark owners can sue in court for monetary damages for their losses as well as receive the alleged infringer’s profits in connection with the infringement. Treble (triple) profits or damages are available for intentional counterfeiting. Owners may also elect statutory damages of not less than $500 or more than $100,000 per counterfeit mark (as determined by the court) per type of goods or services sold, offered for sale, or distributed. In cases of willful infringement, the court has the discretion to award up to $1,000,000 per counterfeit mark as statutory damages. Reasonable attorneys’ fees may also be awarded.
Importantly, owners can obtain injunctive relief to stop the further sale of infringing products and seize and/or destroy the counterfeit goods.
Owners can also report counterfeiters to the appropriate law enforcement authorities. Counterfeiters may be subject to fines and prison terms for intentional trafficking in counterfeit goods. They may also have to pay restitution to victims. The counterfeit goods and any property used in the commission of the crime may also be seized by the government.
How Can Brands Protect their Trademarks Against Counterfeiters?
The first step in protecting trademarks is to register the mark with the U.S. Patent and Trademark Office. In addition, such registration should be recorded with the U.S. Customs and Border Protection (CBP) and information such as product identification guides should be provided to the agency. The CBP is the agency tasked with addressing counterfeit goods at the U.S. border. In some cases, state registration of trademarks could provide protection in addition to federal registration. In addition, businesses should work with law enforcement agencies, rights holder organizations, suppliers, distributors, and consumer groups to support anti-counterfeiting measures in all forms.
Businesses may also want to hire someone to monitor third-party websites and suspected brick-and-mortar locations to identify potential sales or distribution of counterfeit goods.
Trademark owners are responsible for protecting and enforcing their marks. Therefore, aggressive policing is important to minimize damages and deter illegal counterfeiting. This includes working with experienced trademark counsel to ensure that they are taking advantage of all legal options to stop counterfeiting.
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