How can companies cost-effectively combat counterfeiting?
At the federal level, the Trademark Act of 1946, also known as the Lanham Act, is a useful litigation tool for combating counterfeiters. It provides for statutory damages of up to $2 million per counterfeited trademark as well as subpoena power for collecting valuable information about the counterfeiters.
Companies can also record their trademarks with the U.S. Bureau of Customs and Border Protection and share with Customs what they know about the counterfeiting of their goods and where they are coming from.
Recording a trademark with Customs authorizes the seizure of counterfeit goods at the border. Seizures often lead to the identification of other counterfeit shipments that got through and the people who imported them. Once companies identify suspects, they can hold them accountable through civil litigation and, potentially, criminal prosecution.
Counterfeiters are businesspeople, and they invest hundreds of thousands of dollars or more in their businesses. If a brand owner makes its trademarks even just a little too hot to handle, counterfeiters will make the rational business decision to invest in someone else’s trademark. All companies need to do is ramp up the pressure just enough to push counterfeiters into someone else’s space.
Also, publicizing the problem can be an effective strategy. Some companies don’t want to do that, believing publicity will steer customers away from their brands and erode their value. But others believe if they alert the public to the existence of counterfeits and warn potential victims about what to look for, people will choose to avoid counterfeits and seek out the genuine item.
What advice would you give companies that say they don’t have the resources to worry about counterfeits?
It’s tempting for a growing company to use its limited resources on needs other than brand protection. But two considerations counsel otherwise. First, that company will likely fail to grow as it effectively surrenders market share to the counterfeiters. Second, counterfeit products typically are inferior to genuine goods. Fake goods often injure consumers, prompting costly investigations of genuine goods by the Consumer Product Safety Commission. In some cases, product liability lawsuits may be filed against the genuine brand owner.
Even if a company can prove at trial that the product was counterfeit, the plaintiff could badly damage the company’s reputation by claiming that the company knew that counterfeits were out in the market, knew of the dangers to the consuming public, but took no action to warn or protect the public from fake and dangerous products. Companies can and should avoid these risks by having and implementing a brand protection strategy.
Sam Watkins is a senior attorney at Theodora Oringher Miller & Richman PC. Reach him at [email protected] or (310) 557-2009.
