Posts Tagged: "Counterfeited Goods"

While many holiday shoppers may think that they’re getting a bargain by purchasing goods displaying a particular brand without having to pay brand prices, these shoppers are unwittingly gifting low-quality items or worse, products that pose health hazards, to their friends or loved ones. Thanks in large part to the Internet, counterfeiting operations have reached epidemic levels in recent years. Nearly half of all brand owners are losing revenues because of the sale of counterfeits and, in 2017, U.S. customs agencies seized a total of 34,143 shipments carrying counterfeited goods being imported into the U.S. But counterfeiting is a victimless crime, the common refrain goes. Nothing could be further from the truth. Terrorist organizations and organized crime families are turning to counterfeiting as a meaningful source of income given the exceptionally low penalties even if they are caught and extraordinarily high profit margins — profit margins that are even higher than selling drugs on the street. 

Black Friday is one of the most important retail events of the year for brands and consumers alike. This sales event is particularly tempting for price-centric Millennials whose diverse buying habits put them at increased risk of falling for fakes. Representing one of the biggest Black Friday consumer segments, they are particularly vulnerable to counterfeiters. Last year alone, our data show that an estimated $482 million were lost on Black Friday from Millennials who unwittingly bought fakes online.

How should new parents avoid putting their young children in unnecessary harm and avoid counterfeit baby products? Caregivers should purchase directly from the brand, either through its website or its authorized retailers.  Most brands – including UPPABaby and ErgoBaby – provide customers with online tools to identify authorized retailers… Second, if shopping on an online marketplace, pay close attention to the listed price.  It’s tempting to seek out a bargain while faced with the mountain of costs associated with parenthood, but prices that are significantly outside of the manufacturer’s suggested retail price should be viewed with suspicion.

The rate of digital transformation within the business world is unstoppable. Of course, transformation of this kind can deliver numerous benefits, but it is also leading to an increase in illicit counterfeit activity. Almost half (47%) of all brands are losing revenue due to counterfeiting while four out often organizations have experienced an increase in the occurrence of counterfeiting and brand infringement. This has, more often than not, originated from a variety of components related to digital transformation on a global scale, including but not being limited to: advances in social media (61%); chat/messaging (52%); artificial intelligence (51%); the dark web (48%), and augmented reality (47%).

Counterfeiting can sometimes be seen as a victimless crime where the only ones losing out are the super-rich corporations whose products are being copied. This is simply not true… A big reason for the increase in fake goods is that quite simply, that they are getting harder and harder to spot, both by consumers and also by the authorities.

It’s not just counterfeits of gadgets or luxury fashion items available for sale on Amazon, lining the already deep pockets of Bezos. As we’ve noted in other reports, there are plenty of counterfeit items that mimic badges and official documents from law enforcement agencies like the Federal Bureau of Investigations and the Secret Service. But a recent letter sent by the Federal Communications Commission in late May of this year indicates that Amazon is also allowing the sale of set-top boxes which falsely use FCC logos in the branding, indicating that the device is permitted by FCC regulation when in fact it is not.

Although Amazon is typically quick to reference its anti-counterfeit policy as proof of its commitment to weeding out inauthentic products from its retail platform, watchdog groups continue to point at major concerns regarding Amazon’s true intentions regarding the sale of counterfeits. Most recent among these is a press release issued on June 5th by The Counterfeit Report which strongly suggests that Amazon and Jeff Bezos have every intention of skirting the rules to continue the financial benefits they receive from the sale of counterfeits. The Counterfeit Report received multiple e-mail responses to counterfeit product issues it presented to Amazon. Those official Amazon e-mails indicate that Bezos received e-mails from The Counterfeit Report and that the e-mail sender was answering on Bezos’ behalf. Amazon’s official stance, as outlined by these e-mails, counterfeit products will continue to be listed on Amazon’s website in countries where the trademark covering the brand isn’t registered.

Counterfeit products are an enormous problem for businesses all over the world. Counterfeiters rip off name brand products, making cheap knock-offs, easily (and conservatively) costing many hundreds of billions of dollars each year… For example, according to RedPoints, an online piracy and brand abuse monitoring company, during 2015 Facebook accounted for only 2.2% of counterfeits sales of football jerseys for the clubs they were monitoring. That number grew to 46.3% by 2017. With the infringements on Facebook typically being smaller in scale, RedPoints comes to the conclusion that counterfeiters have not merely left one channel for another, but instead are using multiple sales channels and diversifying their efforts.

Among the many bureaucratic changes that resulted from the amendments to the Chinese Constitution included the integration of trademark responsibilities with the other intellectual property activities of the State Intellectual Property Office (SIPO). Such responsibilities, including the management of trademark applications, grants and administrative adjudications, were formerly the province of China’s State Administration for Industry and Commerce (SAIC), which has been disbanded. The newly reorganized SIPO will also handle applications and grants for geographical indications of product origin.

According to the Office of the United States Trade Representative, imports of counterfeit and pirated physical products are valued at about half a trillion dollars, or about 2.5 percent of all imports around the globe… The recent review of notorious markets by the USTR identifies 43 such markets offering counterfeit or pirated goods either through physical stores or online channels. A total of 25 notorious markets identified in the report operate in the online space as websites either facilitating infringing conduct or lacking consumer privacy safeguards, some of which even enable the installation of malware on consumer computers. This malware can include remote access Trojans (RATs) which can steal sensitive personal information, like bank account information, or gain control of computer hardware.

Without a comprehensive trademark policing regime in place, which continually checks quality, authorized users, and is keeping a close eye on counterfeits, the trademark can become significantly damaged.

At issue in the trademark infringement suit is Amazon’s sale of counterfeit wheel center caps bearing distinctive Mercedes-Benz trademarks… Daimler argues that Amazon “facilitates the sale of an exorbitant number of counterfeit and infringing goods” through its platform, counterfeit activity which has increased since 2015 when the company began inducing Chinese manufacturers to list on its U.S. and European e-commerce platforms. Daimler notes that lawsuits over counterfeit products have been filed against Amazon by well-known consumer brands including a February 2017 suit filed by French luxury goods brand Chanel against the American e-commerce giant.

Branded apparel companies face many challenges in protecting their IP assets, including the unavailability of copyright protection for fashion designs, the length of time necessary to secure a design patent, the challenge of securing secondary meaning required for a trade dress claim before the market is flooded with knock-offs, and the geographic and practical impediments to pursuing counterfeiters, who are often foreign-based and/or judgment proof.  Perhaps mindful of the limited statutory protections for IP assets and the significant damages being incurred at the hands of infringers, various courts, particularly in the Second and Ninth Circuits, have in recent years taken steps to enhance the alternatives available to apparel companies confronted by the scourge of knockoffs.  Specifically, such court decisions have (1) expanded the scope of potential contributorily liable actors, and (2) broadened the means of freezing and attaching assets of foreign counterfeiters.

Many states have statutes that make counterfeiting a state crime, but often only if the trademark is registered in that state. According to Lo Cicero, state registrations give local prosecutors and law enforcement officers jurisdiction – and they may be more able and willing to tackle local counterfeiters than are busy federal prosecutors. Thus, where budgets will allow and brand owners have significant counterfeit concerns obtaining state trademark registrations in at least several states, including California and New York, could be a worthwhile investment.