Resource Toolkit - Part 1
AIPLA
AMERICAN INTELLECTUAL
PROPERTY LAW ASSOCIATION
Civil & Criminal Trademark Enforcement
P R E S E N T E D B Y T H E A N T I - C O U N T E R F E I T I N G
A N T I - P I R A C Y C O M M I T T E E
O C T O B E R
COMMITTEE
LEADERSHIP:

Kieran Doyle, Chair

Sherri L. Schornstein,
Vice-Chair

Brian B. Darville,
Liaison to the Board of
Directors
QUICK
INDEX:
Statistics
2
Examples
3
Criminal
Statutes
4
Criminal
Penalties
5
Civil Statutes
6
Civil
Remedies
7
Civil
Remedies &
8-9
Enforcement
Trademark
Registration
10
Additional
Resources
11
End Notes
12
&
2 0 1 0
Combating Counterfeit Trademarks and Goods:
A Key to Trademark Enforcement
In today’s informationbased economy, a company’s intellectual property (“IP”) may be its
most valuable asset. In
fact, IP is an increasingly
influential component of
the U.S. economy. IP
developed in the U.S. has
been valued at over $500
trillion, and from 2000 to
2007, IP-focused industries accounted for about
60% of total U.S. exports.1
Today, however, U.S.
companies are losing
more than $200 billion in
revenue annually due to
rampant IP counterfeiting
and piracy.2
Companies must take
care to protect their IP.
In fact, the importance of
monitoring and enforcing
IP rights cannot be overstated. Many counterfeit
and pirated goods arrive
in the U.S. from overseas
and are easily obtained
with purchases made over
the Internet.3
Many goods on the market today must meet precise quality standards
that help to ensure the
safety of the products. All
too often, however, these
standards are ignored by
counterfeiters, which
creates risks for the consumer and can harm the
goodwill vested in a
company’s trademarks.
To combat counterfeiting,
companies need to be
diligent and proactive in
monitoring the use—and
detecting the misuse—of
their IP, and be willing to
take the steps necessary to
enforce their IP rights.
Not only will such vigilance help preserve the
value of a company’s IP
assets, but it can help to
protect the public from
hazards posed by counterfeit goods such as pharmaceuticals, children’s toys,
and electronics.
This Resource Toolkit
provides an overview of
select civil and criminal
statutes and is designed
to help legal practitioners
locate pertinent resources
and advise registered
trademark owners in the
detection, civil enforcement, and referral for
criminal prosecution of
counterfeit goods. 4
Because a comprehensive trademark protection
program can be a valuable component of a
company’s overall IP
strategy, this Resource
Toolkit also discusses the
basic steps a company
can take to register its
trademark rights in the
U.S. and worldwide.
A company that implements a trademark protection program will be
better equipped to
promptly enforce its
trademark rights against
counterfeit trademarks
and goods. The company
will have greater confidence in knowing when to
contact a trademark
attorney and assessing
whether the circumstances are appropriate to
initiate a civil action, a
criminal case, or both.
©2010 American Intellectual Property Law Association. All Rights Reserved.
PAGE
2
About
5%-7% of
the world
trade is in
counterfeit
goods.
www.IACC.org
(About Counterfeiting)
Photo Courtesy of
U.S. Customs and Enforcement
IP COUNTERFEITTING/PIRACY STATISTICS
Global Trade:
Aviation:
 Since 1982, the global
 The Federal Aviation
trade in counterfeit
goods has increased
from $5.5 billion to
approximately $600
billion annually.5
Administration estimates that 2% of the
26 million airline
parts installed each
year are counterfeit,
which equals about
520,000 parts.9
 Among the 27
tradable industries,
only six industries
reported trade
surpluses—five of
which were IPintensive industries,
generating an average
$14.6 billion in trade
surplus each year.6
 America is a net
exporter of intellectual
property, contributing
$37 billion to the U.S.
trade balance in
2006.7
Pharmaceuticals:
 The Food and Drug
Administration
(“FDA”) estimates
that counterfeit drugs
account for 10% of all
drugs sold in the
United States.10
 Worldwide pharma-
ceutical counterfeiting
is a $32 billion business.11
 Worldwide drug
counterfeiting is
expected to grow to a
$75 billion industry in
2010.12
 In 2009, there were
14,841 intellectual
property rights
seizures with a
domestic value of
$260.7 million.8
 Counterfeit sales are
RESOURCE TOOLKIT - PART 1
CIVIL & CRIMINAL TRADEMARK
increasing at nearly
twice the pace of
legitimate pharmaceutical sales – estimated
at 13% annually.13
ENFORCEMENT
 The composition of
fraudulent drugs
ranges from crude
mixtures of glue,
chalk, and sugar to
nearly exact chemical
replicas of complex
pharmaceuticals.14
Consumer Goods:
 Counterfeit footwear
was the top commodity seized in 2009,
with a domestic value
of $99.7 million,
which accounted for
38% of the entire
value of infringing
goods. 15
Software:
 Reducing the piracy
rate for PC software
by 10% in four years
could create $142 billion in new economic
activity — more than
80 percent accruing to
local industries —
while adding nearly
500,000 new hightech jobs and
generating roughly
$32 billion in new tax
revenues.16
PAGE
EXAMPLE: COUNTERFEIT PHARMACEUTICALS
Counterfeit pharmaceuticals are estimated to account for 10% of the
drugs sold in the U.S.10
However, counterfeit
products can be difficult
to recognize. The labeling and appearance
of counterfeits are often very sophisticated. In the photos at right, the appearance of the counterfeit pill is very similar to
the authentic Viagra®. The difficulty of
detecting counterfeit pharmaceuticals,
combined with the possibility that they can
NOTICE: All registered trademarks appearing in these photos are
the sole property of their respective owners and no sponsorship,
endorsement or affiliation is implied by their use in this
Resource Toolkit.
contain contaminants, the wrong ingredients,
or no active ingredients at all, can present
risks to the people who use these pharmaceuticals.
In one case, Ortho Biotech Products issued a warning to health care professionals
upon learning about counterfeit vials of
Procrit® (a treatment for anemia). The concentration of the active ingredient in the
counterfeit vials was 20 times lower than
stated on the label.
The FDA issues warnings on its website
about known counterfeit pharmaceuticals
and provides additional resources for reporting counterfeit pharmaceutical products:
www.fda.gov.17
COUNTERFEIT AUTHENTIC
Photos and data courtesy of U.S. Immigration
Customs and Enforcement, except where indicated.
ADDITIONAL EXAMPLES OF COUNTERFEIT GOODS
Apple iPhone®
AUTHENTIC
COUNTERFEIT
COUNTERFEIT
AUTHENTIC
AUTHENTIC
COUNTERFEIT
To see more examples
of counterfeit products,
and to test your ability
to recognize
counterfeit goods, go to
www.iacc.org
and click on the
Counterfeit Gallery.
Photos courtesy of U.S.
Immigration Customs and Enforcement
3
PAGE
4
PROVING A
CRIMINAL OFFENSE
To establish an
offense under the
statute, a prosecutor
must prove the
following elements
beyond a reasonable
doubt:
1. The defendant
trafficked or
attempted to
traffic in goods or
services;
2. Such trafficking, or
attempt to traffic,
was intentional;
3. The defendant
used a “counterfeit
mark” on or in
connection with
such goods or
services; and
4. The defendant
knew that the
mark so used was
counterfeit.
A person accused of
a counterfeiting
offense under the
statute may present
all defenses,
affirmative defenses,
and limitations on
remedies that would
be applicable in an
action under the
Lanham Act. The
defendant has the
burden of proving, by
a preponderance of
the evidence, any
such defense.
Relevant Criminal Laws & Statutes:
Trademark Counterfeiting Act, 18 U.S.C. §2320
Criminal penalties for the trafficking of counterfeit goods or services are available under
the Trademark Counterfeiting Act, 18 U.S.C. §2320. A criminal action for a counterfeit
trademark offense generally will be prosecuted by the United States Attorney’s office on
behalf of the United States of America in the jurisdiction where some portion of the offense
occurred.
Section 2320 mandates criminal penalties ranging from fines of up to $2 million to
$5 million (for an individual) or $5 million to $15 million (if other than an individual), and
imprisonment of up to 20 years (if an individual), upon a finding that the accused:
… intentionally traffics or attempts to traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services,
or intentionally traffics or attempts to traffic in labels18 … documentation, or
packaging of any type or nature, knowing that a counterfeit mark has been
applied thereto, the use of which is likely to cause confusion, to cause mistake,
or to deceive….
(18 U.S.C. §2320(a)(1).) In this context, a “counterfeit mark” is defined, in part, as:
(A) a spurious mark—
(i) that is used in connection with trafficking in any goods, services …
documentation, or packaging of any type or nature;
(ii) that is identical with, or substantially indistinguishable from, a mark
registered on the principal register in the United Sates Patent and Trademark Office [“USPTO”] and in use, whether or not the defendant knew such mark was so
registered;
(iii) that is applied to or used in connection with the goods or services for
which the mark is registered with the [USPTO] …; and
(iv) the use of which is likely to cause confusion, to cause mistake, or to
deceive; or
(B) a spurious designation that is identical with, or substantially indistinguishable from, a designation as to which the remedies of the Lanham Act are made
available by reason of section 220506 of title 36….
(18 U.S.C. §2320(e)(1).)19
Statute of
Limitations:
The statute of
limitations under
federal criminal
law is 5 years
where no statutory
term is otherwise
specified.
PRACTICE POINT
Every federal criminal statue carries
a maximum penalty, including a fine
and a period of incarceration.
However, federal district court
judges are guided by the advisory U.S.
Sentencing Guidelines. Section 2B5.3
of the Guidelines provides a formula
and other useful information relevant
to a sentencing calculation under the
Guidelines. (U.S.S.G. §2B5.3.)
RESOURCE TOOLKIT - PART 1
CIVIL & CRIMINAL TRADEMARK
ENFORCEMENT
Reporting
Counterfeits:
ICE
Nat’l Intellectual
Property Rights
Coordination Ctr.
1-866-IPR-2060
[email protected]
VOLUME
1,
ISSUE
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PAGE
5
Criminal Penalties
The following is a quick-reference chart of the criminal penalties and their associated statutory
bases for counterfeit trademark offenses. Additional or alternative penalties may be available,
depending on the circumstances:
Forms of Relief
Applicable Statutes
1
Fines
18 U.S.C. §2320(a)
2
Imprisonment
18 U.S.C. §2320(a)
3
18 U.S.C. §2320(b)(1), §2323
4
Forfeiture of Proceeds, Counterfeit Goods, and
Facilitating Property
Restitution
18 U.S.C. §2320(b), §2323, 3663A
5
Destruction of Counterfeit Goods
18 U.S.C. §2320(b), §2323(b)(2)(B)
Penalties under
the criminal
statutes are
available in
addition to the
remedies available
under the civil
statutes.
1. Fines. If an individual, a defendant shall be fined not more than $2 million or imprisoned, or both. If the counterfeiter is a
person other than an individual, the counterfeiter shall be fined not more than $5 million In the case of an offense that occurs
after a person is convicted of another offense under the statute, the person convicted, if an individual, shall be fined not more
than $5 million or imprisoned, or both, and if other than an individual, shall be fined not more than $15 million.
2. Imprisonment. If an individual, a defendant shall be fined or imprisoned not more than 10 years, or both. In the case of an
offense that occurs after a defendant is convicted of another offense under this section (a repeat offender), the defendant shall
be fined or imprisoned not more than 20 years, or both.
3. Forfeiture and Confiscation of Property. Any article bearing or consisting of a counterfeit mark used in committing a
violation of the statute, any property used in any manner to commit or to facilitate the commission of a violation of the statute,
any article that bears or consists of a counterfeit mark used in committing the offense, shall be subject to forfeiture to the U.S.
In addition, a court may order forfeiture of property constituting or derived from any proceeds the defendant obtained, directly
or indirectly, as a result of the offense, any of the defendant’s property used, or intended to be used, in any manner, to commit,
facilitate, aid, or abet the commission of the offense, and any article that bears or consists of a counterfeit mark used in
committing the offense.
4. Restitution. When a defendant is convicted of an offense under this section, the court shall order the defendant to pay
restitution to the owner of the mark and any other victim of the offense.
5. Destruction of Counterfeit Goods. At the conclusion of forfeiture proceedings, unless requested otherwise by the
government, the court shall order destruction of forfeited counterfeit marks and infringing items.
Checklist for Initiating a Criminal Action
When a trademark owner encounters a counterfeit trademark, one of the first things an owner should do is consult an experienced
attorney. The following checklist provides a starting point for initiating a criminal action for a counterfeit trademark offense:
Prepare Description of the Registered Trademark. This description should include owner name, registration information,
and include samples of the mark in use, as well as samples of the products to which the mark is attached. Also, provide a copy of
the live trademark registration on the principal register of the U.S.P.T.O for the trademark at issue.
Prepare a Description of the Counterfeit Trademark. This description should include all information available to the
trademark owner regarding the counterfeit goods, including, for example, samples of the counterfeit good, the manner of distribution, the price, the states and/or countries of distribution, if the good is distributed over the Internet, the website URL, the
identity of the counterfeiter (if known), and a description of how the trademark owner became aware of the counterfeit good.
Preserve the Evidence. Ensure that the evidence and information collected is not destroyed (i.e., suspend automatic data purges
or document destruction policies), and maintain the evidence and other information, including samples of the counterfeit goods,
in a secure location.
Contact Law Enforcement. Prosecution of criminal violations against a counterfeiter can be facilitated if a trademark owner contacts law enforcement promptly. Conversely, if a trademark owner delays in communicating with law enforcement, criminal
prosecution of counterfeit mark claims may be adversely affected.
Document All Investigative Steps. In gathering the above information, a trademark owner should carefully document all investigative steps, including dates the steps were performed, the names and contact information of people consulted, and descriptions
of all documents, samples, and other evidence collected.
Additional information is available on the Department of Justice website: www.cybercrime.gov, and in the pamphlet Reporting Intellectual Property Crime: A Guide for Victims of Counterfeiting, Copyright Infringement, and Theft of Trade Secrets available at the
same site.
PAGE
6
Relevant Civil Laws & Statutes:
PROVING A CIVIL
OFFENSE
15 U.S.C. §1116
To establish an offense under the civil
statute, a trademark
owner must prove:
A trademark owner may bring a civil action for a counterfeit trademark offense under 15 U.S.C.
§1114 and/or 15 U.S.C. §1116, which permits ex parte application for seizure of the counterfeit goods:
In the case of a civil action arising under section 1114(1)(a) … with respect to a violation that consists of using a counterfeit mark in connection with the sale, offering for sale, or distribution of
goods or services, the court may, upon ex parte application, grant an order … providing for the
seizure of goods and counterfeit marks involved in such violation and the means of making such
marks, and records documenting the manufacture, sale, or receipt of things involved in such violation.
1. Use of a counterfeit
of a mark that is
registered on the
Principal Register
with the USPTO;
2. In connection with
the sale, offering for
sale, or distribution
of goods or services
for which the authentic mark is
registered;
(15 U.S.C. §1116(d)(1)(A).) A “counterfeit mark” is defined, in part, as:
… a counterfeit of a mark that is registered on the principal register of the [USPTO] for such
goods or services, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered[.]
(15 U.S.C. §1116(d)(1)(B)(i).) Before applying for civil remedies under 15 U.S.C. §1116, a trademark
owner must first give notice to the U.S. attorney for the judicial district in which the seizure order is
sought. (15 U.S.C. §1116(d)(2).)20
3. That the use of such
counterfeit mark was
intentional.
Checklist for Initiating a Civil Action
The owner need not
show that the defendant had knowledge of
the trademark registration.
If a company suspects counterfeit goods that are damaging or threatening the company’s trademark
or product sales, this checklist provides a starting point for initiating a civil action :
Consult an Experienced Trademark Attorney. An attorney experienced in trademark
litigation, especially in connection with counterfeit goods, can help a company assess the available
enforcement options and guide the company through an enforcement strategy.
Assess the Owner’s Trademark Portfolio. A company must review its trademark portfolio and
identify the registered marks that will form the basis for a counterfeit trademark claim under the
civil statutes. Section 1116 requires not only that the mark is registered with the USPTO on the
Principal Register, but that the registered mark is in use and that the registration is for the same
goods or services that are the subject of the action.
Ensure All Necessary Parties Are Named as Plaintiff(s). The owner of the registered mark
generally must be a named as a plaintiff in the complaint.
Identify the Suspected Counterfeiter(s). Identification of the counterfeiter(s) can be one of the
most difficult aspects of initiating a claim for a counterfeit trademark offense. Care must be taken
in ensuring that the proper parties are identified.
Conduct an Appropriate Investigation. One of the most important aspects of any action against
a suspected counterfeiter is to conduct an investigation to determine the size and scope of the
counterfeiting operation. A private investigative firm experienced with counterfeiting can help
ensure that samples of the counterfeit goods are obtained for comparison with the genuine goods
and determine where the counterfeit goods are being manufactured and stored. This information is
particularly important if an ex parte seizure order will be sought.
Determine the Appropriate Jurisdiction. Identification of the appropriate jurisdiction in
which a civil action can be brought can be difficult. Care must be taken in ensuring that suspected
counterfeiters are indeed subject to the jurisdiction of the court that will hear the case.
Provide Notice to the U.S. Attorney. If a company intends to seek an ex parte seizure order, the
company must first provide notice to the U.S. Attorney of the district in which the order is sought.
Contact the Appropriate Law Enforcement Personnel. If an ex parte seizure order is to be
sought, a company should confirm that the appropriate law enforcement—generally, the U.S.
Marshall’s Office—is available to assist in carrying out the seizure order. This may impact the
timing of the filing of the application for the seizure order.
Initiate a Civil Action in a Federal District Court. Generally with the assistance of counsel, a
company will file its complaint with a federal district court, alleging one or more claims relating to
the counterfeit trademark offense(s).
Where the identity of
the defendant is
unknown or cannot be
identified or when
jurisdiction over the
defendant may be
unavailable, a trademark owner may bring
claims against persons
or entities that contributed to the
distribution of the
counterfeit goods.
However, liability for
contributory infringement is an issue that
has not been conclusively decided by U.S.
courts. Before filing a
claim for contributory
infringement in
connection with counterfeit marks, an
owner should seek
counsel to investigate
the status of the law.
RESOURCE
CIVIL
&
TOOLKIT
CRIMINAL
-
PART
1
TRADEMARK
ENFORCEMENT
VOLUME
1,
ISSUE
1
PAGE
Civil Remedies
The following is a quick-reference chart of the civil remedies for distribution of counterfeit goods available under the civil counterfeit
trademark statutes. (See 15 U.S.C. §1114, §1116, §1117, and §1118)
Forms of Relief
Applicable Statutes
Notes
But see 15 U.S.C. §1114(2)(A).
1
Preliminary Injunction/TRO
15 U.S.C. §1116(a)
2
Permanent Injunction
15 U.S.C. §1116(a)
3
Seizure of Counterfeit Goods
15 U.S.C. §1116(d)
Notice to U.S. Attorney required.
4
Declaratory Relief
28 U.S.C. §2201s
See also Fed.R.Civ.P. 57.
5
Destruction of Counterfeit Goods
15 U.S.C. §1118
10-day notice to U.S. Attorney required.
6
Actual Monetary Damages
15 U.S.C. 1114(1) and 1117(a)
7
Statutory Monetary Damages
15 U.S.C. 1117(c)(1)
Election of statutory damages must be made before
final judgment.
8
Treble Damages
15 U.S.C. 1117(b), (c)(2) and (e)
Commonly awarded upon a finding of willfulness.
9
Prejudgment Interest
15 U.S.C. 1117(b)
May be awarded upon a finding of willfulness.
10
Attorney Fees
15 U.S.C. 1117(a)(3)
In exceptional cases. Counterfeit cases are usually
deemed exceptional and attorneys fees are common.
1. Preliminary Injunction/Temporary Restraining Order. Upon motion and a sufficient showing by the plaintiff, a court may
grant a preliminary injunction against a defendant counterfeiter, restraining the defendant from engaging in any counterfeiting
activity until a full trial on the merits. In some circumstances, a court may issue a temporary restraining order (“TRO”) against a
defendant, sometimes ex parte or without notice to the defendant, when necessary to preserve the status quo. In instances where the
defendant is a printer of the infringing mark or is acting on behalf of others and is deemed an “innocent infringer,” a plaintiff may be
entitled only to an injunction against future printing, except in some circumstances involving newspapers and similar periodicals.
2. Permanent Injunction. A court may grant a permanent injunction at the conclusion of the case, generally after a summary
judgment ruling that is dispositive of the claim or after trial. In rare circumstances, a court may grant a permanent injunction
following a default judgment, generally after the deadline for appeal has passed without communication from the defendant.
3. Seizure of Counterfeit Goods. In cases involving counterfeit goods, one of the most powerful weapons available to a plaintiff is an
ex parte seizure order, which enables the plaintiff to seize—without first giving notice to the defendant—the counterfeit goods located
at the defendant’s place of business or warehouse, along with the facilitating property used for making the counterfeit goods. An ex
parte seizure order can be desirable in cases involving a counterfeit products, particularly when there is reason to believe that the
defendant may flee the jurisdiction of the court or destroy or conceal evidence of the counterfeiting activity.
Section 1116(d) sets out precise guidelines for an application for an ex parte seizure order. To obtain an ex parte “seizure order” a
court must issue findings of fact and conclusions of law regarding the following elements:
(i) An order other than an ex parte seizure order is not adequate to achieve the purposes of;
(ii) The applicant has not publicized the request for a seizure order;
(iii) The applicant is likely to succeed in showing that the defendant used a counterfeit mark in connection with the sale,
offering for sale, or distribution of goods or services;
(iv) Immediate and irreparable injury will occur if seizure is not ordered;
(v) The matter to be seized will be located at the place identified in the application;
(vi) The balance of harms favors the applicant; and
(vii) The person against whom seizure would be ordered, or persons acting in concert with such person, would destroy, move,
hide, or otherwise make such matter inaccessible to the court if the applicant were to proceed on notice to such person.
Before applying for civil remedies under 15 U.S.C. §1116, a trademark owner must first give notice to the U.S. Attorney for the judicial
district in which the seizure order is sought. Also, a seizure order under 15 U.S.C. §1116(d) must be sealed until the defendant has an
opportunity to contest the order. A motion for an ex part seizure order is typically filed with the initial complaint and the entire file is
sealed until the seizure order takes place, usually within a day or two after the order is signed by the court.
A plaintiff should note that a defendant accused of counterfeiting who is wrongfully subjected to a seizure order has a course of
action under 15 U.S.C. §1116(d)(11), which provides recovery of damages, including lost profits, costs, and harm to goodwill and
reputation. In instances where the seizure order was obtained in bad faith, punitive damages, prejudgment interest, and attorneys’
fees also may be available.
7
PAGE
8
Civil Remedies (continued)
Statute of
Limitations,
Estoppel,
and Laches
There is no statute of
limitations under the
civil counterfeit
trademark statute or
the Lanham Act.
However, under some
circumstances, a court
could apply the statute
of limitations under
state law. State laws
relating to trademark
infringement and
counterfeiting may
differ among jurisdictions and the issue of
preemption by federal
statute is not yet settled
in each state.21
4. Declaratory Relief. As part of its complaint, a plaintiff may seek a declaratory relief from the
court under, where the court may rule that the owner’s mark is valid and infringed. A request for
declaratory relief must also meet the requirements of 28 U.S.C. §2201 and Rule 57 of the Federal
Rules of Civil Procedure.
5. Destruction of Counterfeit Goods. If a plaintiff prevails in an action for a counterfeit trademark offense, the plaintiff may seek an order for destruction of the counterfeit goods. (15 U.S.C.
§1118.) Under this statute, a plaintiff must give a 10-day notice to the U.S. Attorney for the judicial district in which the order is sought.
6. Actual Monetary Damages. A trademark owner may recover defendant’s profits, any damages
sustained by the owner, and the costs of the action. However, a trademark owner is not entitled to
recover profits or damages unless the alleged acts were committed with knowledge that the counterfeit good “is intended to be used to cause confusion, or to cause mistake, or to deceive.” (15
U.S.C. §1114(1).) Most cases involving counterfeit goods will result in a finding that the defendant
acted intentionally or willfully, which will allow the trademark owner to recover the infringer’s
profits and treble damages. Often, however, many counterfeiters will have inadequate records or
their profits may not be significant. In which case, the trademark owner may elect statutory damages, as described below.
7. Statutory Monetary Damages. A trademark owner may elect statutory damages in lieu of recovering actual damages, provided the plaintiff makes the election prior to final judgment. A court
may award statutory damages of not less than $1,000 or more than $200,000 per counterfeit mark
per type of goods or services distributed. Upon a finding of willfulness, statutory damages may be
increased to $2,000,000 per counterfeit mark per type of goods or services. (See 15 U.S.C. 1117(b)
and (c)(2).) This provision is helpful in circumstances where it would be difficult to establish the
actual amount of sales made by a defendant.
A trademark owner
should seek counsel
to evaluate the laws of
the state in which the
counterfeit claim is
brought to determine
whether any such laws
may preclude, or perhaps supplement, the
owner’s federal claim.
Estoppel and laches
can also preclude a
counterfeit trademark
claim. Certain forms of
improper delay or other
conduct by the owner
may serve as a viable
affirmative defense to a
counterfeit trademark
claim and prevent a
plaintiff from recovering some or all requested remedies.
RESOURCE
CIVIL
&
Counterfeit v. Infringement
Broadly speaking, a counterfeit trademark is the unauthorized use of another’s
registered mark, resulting in a “replica” of the good to which the mark is attached.
This is different from an “infringing product,” which refers to the use of a trademark that is likely to cause consumer confusion between the infringing mark and
another’s trademark, whether or not the other mark is registered. Confusingly
similar marks have little or no distinction in sight, sound, and meaning to the average consumer for the same or similar goods in the marketplace. As such, a counterfeit product can be an infringing product, but not all infringing products can be
counterfeit products.
In addition to the statutory distinctions, another way to differentiate an infringing mark from a counterfeit mark is to assess the level of confusion resulting
from the unauthorized use of a mark. For infringement, the standard is “likelihood
of consumer confusion,” which focuses on the relative confusion of a potential
buyer. A counterfeit mark, however, must be found to be “identical with, or substantially indistinguishable from” the registered mark, and the counterfeit goods
must be the same goods that the registered mark covers. (18 U.S.C. §2320.) In
some cases, a counterfeit good has been found to not only cause the confusion of a
purchaser, but also confusion of a third party, i.e., someone who sees a counterfeit
handbag or ball cap and believes it to be authentic.
Another, compelling difference involves concerns of public safety. In the counterfeit context, a counterfeit product can pose a very real threat to public safety.
Examples of dangerous counterfeit goods include counterfeit pharmaceuticals,
airline parts, and electronics that have caused serious harm to consumers. The
criminal statutes provide for enhanced penalties in circumstances involving bodily
harm or death that result from a counterfeit good where an defendant knowingly
or recklessly causes or attempts to cause serious bodily injury. (See 18 U.S.C.
§2320.)
TOOLKIT
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Civil Enforcement: First Steps - Cease and Desist Letters
In some circumstances, and prior to initiating a civil action, a trademark owner may wish to send a cease and desist
letter to a suspected counterfeiter, by which letter the owner outlines the suspected counterfeiting activities and demands
immediate cessation of the activities. A sample cease and desist letter follows. It is the obligation of the trademark owner
to actively protect and enforce its marks from infringements. Cease and Desist letters are evidence of such active protection of one’s marks.
Be aware, however, that there are inherent risks in sending a cease and desist letter. For example, a cease and desist
letter may give rise to a declaratory judgment action. Also, if a trademark owner intends to seek a seizure order, a cease
and desist letter may be counterproductive, as it may provide the accused counterfeiter with notice and incentive to destroy or conceal evidence of the counterfeiting activities. Generally, if a trademark owner plans to seek an ex parte seizure
order, there should be no advance notice to the counterfeiter. A trademark owner should seek the advice of counsel to
discuss the circumstances surrounding the suspected counterfeiting activity, whether delivery of a cease and desist letter
is appropriate, and if so, how the cease and desist letter should be framed.
Sample Cease & Desist Letter
Mr. Look A. Like
KNOCK-OFF CORP.
123 The Easy Way
Replica, ST 98765
Re: Suspected Counterfeit Goods
Dear Mr. Look A. Like:
It has come to our attention that Knock-Off Corporation (“Knock-Off”) is distributing counterfeit versions of The Real Product in violation of one or more registered trademarks owned by The Real Product, Inc.
(“TRP”). For example, TRP is aware of distribution by you in the United States of Knock-Off Products, which
appear to be identical with, or substantially indistinguishable from, from The Real Product and the following
associated trademarks (“Marks”):
USPTO Trademark Reg. No. 123,456 for “The Real Product” (word mark)
USPTO Trademark Reg. No. 456,789 for “The Real Product” (design mark)
By this letter, TRP places Knock-Off on notice that the Knock-Off Products constitute trademark counterfeits. The unauthorized sale, distribution, or other use of the Marks referenced herein, violates U.S> federal
and state civil and criminal laws.
Distribution of Knock-Off Products has and will continue to cause TRP irreparable harm to its business
and reputation. Thus, TRP hereby demands that Knock-Off immediately cease and desist all sale, distribution, and other use of the Knock-Off Products, as well as any and all other Knock-Off Products that bear TRP’s
Marks. Please confirm by no later than seven (7) days after the date of this letter that Knock-Off will comply with
this letter. If TRP does not hear from you within the designated time, TRP will pursue all available remedies
against Knock-Off. These remedies include, without limitation, initiation of civil and criminal actions, injunctive
relief, and full recovery for the damages caused to TRP by the Knock-Off Products.
Very truly yours,
Authentic Owner
Authentic Owner
THE REAL PRODUCT, INC.
DISCLAIMER:
This sample is provided only to demonstrate one of many ways
a cease and desist (“C&D”) letter can be framed. There are inherent risks in sending a C&D letter, including the risk of a declaratory judgment action or destruction of evidence by the
suspected counterfeiter upon receipt of the letter. Before sending a C&D letter, a company should consult with an experienced
attorney to discuss the individual circumstances of the case.
9
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10
Registering and Protecting Trademarks
A trademark
watching
service can
monitor the
market and
the USPTO
for the
introduction
of potentially
counterfeit
marks.
In order to bring a claim
under either the criminal or
civil counterfeit trademark
statutes, a plaintiff must first
register its mark on the
Principal Register of the
USPTO. A mark that is either
pending registration or registered on the Supplemental
Register will not qualify under
the counterfeit statutes. A
trademark protection program
can aid a trademark owner in
combating counterfeit goods.
A trademark protection
program includes procedures
for the selection and clearance
of proposed trademarks,
procedures for trademark
registration and maintenance,
procedures for educating
employees and overseeing
proper trademark use by
employees, and procedures for
consistent policing of registered marks.
Clearing and Registering
Marks with the USPTO
Once a trademark owner
selects trademarks for use in
connection with goods or
services, the marks should be
evaluated prior to use and
registration. A preliminary
clearance report and search
should be prepared, generally
by outside counsel or by a professional search agency, which
can weed out the marks that
are clearly unavailable, but
without incurring the cost of a
full trademark search. If proposed marks survive a prelimi-
RESOURCE
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PART
nary search, a full search
should be ordered. A full
search should cover both the
Principal and Supplemental
Registers of the USPTO, state
trademark registries, and
common law uses, including
the Internet. Searches of foreign registries are often advisable.
Once a trademark search
has been completed, an
application for a federal
trademark registration should
be filed, generally with the aid
of an attorney. This application includes a list of the
goods or services upon which
the mark is or will be used in
commerce, the dates of first
use of the mark, and, if the
mark is already in use, an
acceptable specimen of use.
Although an intent-to-use
application may be filed, the
application will not proceed
to registration until the
applicant can show evidence
of actual use.
International Protection
A company also may seek
international trademark
protection with individual
countries at the national level
or through various treaties,
such as the Madrid Protocol.
The Madrid system allows a
trademark owner to seek
trademark protection in
multiple countries with a single application. Trademark
protection in European
countries also is available
1
TRADEMARK
ENFORCEMENT
through the Community
Trademark system, which
offers trademark protection in
all member states of the European Union. An attorney experienced with international
trademark law can advise an
owner about its available registration options.
Policing Company Marks
A complete trademark
protection program should
include established procedures for policing each of the
registered marks. This vigilance includes monitoring to
ensure that similar marks are
not used by competitors or in
related fields, and that similar
marks are not registered with
the USPTO. An owner may
also engage the assistance of a
watching service, which will
monitor the market and the
USPTO for introduction of
any similar and potentially
counterfeit marks. This is in
addition to the company’s
own internal policies regarding their branding /quality
standards and allowable licensed uses of the company’s
marks.
The U.S. Customs and Border Protection (“CPB”) provides a registration service
that allows companies to
register their marks and other
IP rights with the CBP. The
CPB can then monitor
imports and seize counterfeit
goods, as well as enforce exclusion orders.
VOLUME
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Additional Resources
Websites:
U.S. Department of Justice, Computer Crime & Intellectual Property Section:
www.cybercrime.gov
U.S. Immigration and Customs Enforcement, National Intellectual Property Rights
Coordination Center:
www.ice.gov/IPRcenter
U.S. Customs an Border Protection, Intellectual Property Rights Enforcement:
www.cbp.gov/xp/cgov/trade/priority_trade/ipr/
U.S. Patent and Trademark Office:
www.uspto.gov
International Anticounterfeiting Coalition:
www.iacc.org
International Chamber of Commerce, BASCAP:
www.iccwbo.org/bascap/id1127/index.html
International Chamber of Commerce, Counterfeiting Intelligence Bureau:
www.icc-ccs.org
European Commission, Customs Controls, Counterfeit and Piracy:
ec.europa.eu/taxation_customs/customs/customs_controls/counterfeit_piracy/
index_en.htm
World Intellectual Property Organization, IP Enforcement:
www.wipo.int/enforcement/en/
Interpol, Intellectual Property Rights Programme:
www.interpol.int/public/financialcrime/intellectualproperty/default.asp
WTO, IP Protection and Enforcement:
www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm
Publications:
Reporting Intellectual Property Crime: A Guide for Victims of Counterfeiting, Copyright Infringement, and Theft of Trade Secrets, Department of Justice, www.cybercrime.gov.
What Every Member of the Trade Community Should Know About: CPB Enforcement of Intellectual Property Rights, Customs and Border Protection, www.cbp.gov/xp/cgov/trade/
“It is
estimated that
counterfeiting
is a $600
billion a year
problem.”
www.IACC.org,
The Truth About
Counterfeiting
PAGE
12
*End Notes
1.
http://www.theglobalipcenter.com/facts, visited October 2010.
2.
http://www.iacc.org/about-counterfeiting/the-truth-about-counterfeiting.php, visited October 2010.
3.
2010 Special 301 Report, Office of the U.S. Trade Representative, April 30, 2010.
4.
Counterfeits, piracy, and other forms of infringement can occur in connection with patents, copyrights, and other types
of intellectual property rights. These offenses may give rise to a variety of criminal and civil claims, such as unfair competition claims under the Lanham Act. However, claims other than those under 18 U.S.C. §2320 and 15 U.S.C. §1114
and §1116 are beyond the scope of this Resource Toolkit, but may be addressed in future Resource Toolkit distributions.
5.
http://www.iacc.org/about-counterfeiting/the-truth-about-counterfeiting.php, visited October 2010.
6.
http://www.theglobalipcenter.com/facts, citing Customs and Border Protection, Intellectual Property Rights - Seizure Statistics: Fiscal Year 2009, visited October 2010.
7.
Id., citing “BSA and IDC Global Piracy Software Study,” Business Software Alliance & IDC, May 2010.
8.
Id., citing “The Impact of Innovation and the Role of Intellectual Property Rights on U.S. Productivity, Competitiveness, Jobs,
Wages and Exports,” NDP Consulting, 2010.
9.
http://www.iacc.org/about-counterfeiting/the-truth-about-counterfeiting.php, visited October 2010.
10. Id.
11. http://www.nabp.net/programs/consumer-protection/buying-medicine-online/counterfeit-drugs/
12. Id.
13. Id.
14. Id.
15. http://www.theglobalipcenter.com/facts, citing Shayerah Ilias and Ian F. Ferguson, "Intellectual Property Rights and International Trade," Congressional Research Service, Dec. 2007.
16. Id., citing Customs and Border Protection, Intellectual Property Rights - Seizure Statistics: FY 2009.
17. http://www.fda.gov/Drugs/ResourcesForYou/Consumers/BuyingUsingMedicineSafely/CounterfeitMedicine/
default.htm
18. Though not the focus of this Resource Toolkit, it is worth noting that trafficking in counterfeit labels is prohibited under 18 U.S.C. §2318, which covers counterfeit labels that are, or are intended to be, affixed to phonorecords, computer
programs, motion pictures, or audiovisual works. The counterfeit labels prohibition also covers counterfeit documentation and packaging for computer programs. Violations under 18 U.S.C. §2318 are punishable by up to five (5) years
imprisonment and a $250,000 fine.
19. The full text of 18 U.S.C. §2320 may be found at http://www.law.cornell.edu/uscode/18/2320.html
20. The full text of 15 U.S.C. §1116 may be found at http://www.law.cornell.edu/uscode/15/1116.shtml
21. But see, e.g., Illinois v. Ebelechukwu, Ill. App. Ct., No. 07 CR 8843, July 28, 2010 (Illinois anti-counterfeiting statute is
not preempted by the federal Trademark Counterfeiting Act).
PRACTICAL GUIDE PART 1:
CIVIL & CRIMINAL TRADEMARK
ENFORCEMENT
VOLUME
1,
ISSUE
1
PAGE
ANTI-COUNTERFEITTING AND ANTI-PIRACY
COMMITTEE MISSION STATEMENT:
TO CONTACT AIPLA:
241 18th Street South
Suite 700
Arlington,VA 22202
Phone: (703) 415-0780
Fax: (703) 415-0786
E-mail: [email protected]
Sec. 1. This committee shall:
(a) Consider laws, rules, regulations and judicial decisions,
both domestic and foreign, specific to counterfeiting,
piracy, goods hijacking, and the like, to the extent they
affect the issues within the United States.
(b) Work with the other committees concerned with the
foregoing issues.
(c) Study problems and issues in domestic and international practice of formal and substantive law that impacts upon the foregoing.
Sec. 2 This committee shall give attention to the foregoing
and make recommendations to the Board in regard
thereto.
Acknowledgements
The Anti-Counterfeiting and Anti-Piracy Committee thanks the
following individuals for their contributions to this Resource Toolkit:
 Sherri L. Schornstein, U.S. Attorney’s Office for the District of Columbia
 Janna J. Lewis, Holland & Hart LLP
 Jill M. Goldman, American Bankers Association
 Molly B. Richard, Richard Law Group
Disclaimer:
The information contained in this Resource Toolkit provides only a general guideline for
detecting, reporting, and enforcing counterfeit trademarks under certain U.S. civil and
criminal statutes. This Resource Toolkit does not confer, and should not be perceived as
conferring, any legal advice. No attorney-client relationship is established by communication
of the information contained in this Resource Toolkit. If a reader suspects a counterfeit good
is being sold, distributed, or otherwise used in violation of any trademark rights, the reader
should seek the advice of an experienced trademark lawyer.
13