Strategies for Fighting Counterfeiting
William D. Coston
&
Christopher S. Crook
Venable LLP
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What is Counterfeiting?

Counterfeit goods are phony products offered for sale as authentic.
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“Counterfeiting has evolved in recent years from a localized industry
concentrated on copying high-end designer goods to a sophisticated global
business involving the mass production and sale of a vast array of fake
goods.”

“Counterfeiting and piracy diminish the profits of legitimate producers and
risk harm to consumers who may purchase fraudulent, potentially
dangerous products.”
Source - Ambassador Ronald Kirk, 2011 Special 301 Report, Office of
the United States Trade Representative (April, 2011)
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Counterfeiting Poses a Two-Fold Threat
To Your Business

By distributing inferior imitations, counterfeiters damage the goodwill and
reputation of upstanding companies.
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By inundating the market with low-cost (and low-quality) products,
counterfeiters free-ride on the research, development, and marketing of
others.
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Years spent building your brand are quickly rendered futile when imitators tarnish
the quality of your reputation.
Indeed, counterfeiters reap profits that rightfully belong to your business.
Counterfeiting Statistics

In fiscal year 2010 U.S. Customs performed 19,959 seizures, a 34%
increase compared with 2009.

Seizures of products that could have harmed consumers, vital
infrastructure and national security soared 97% over the previous year,
and accounted for 23% of all Intellectual Property Rights ("IPR")
seizures.

The total domestic value of the fake goods seized in fiscal year 2010
totaled $188.1 million.
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The estimated manufacturer's suggested retail price value of the goods
had they been genuine totaled $1.4 billion.
China continues to be the number one source country for counterfeit and
pirated goods seized, accounting for 66% or $124.6 million of the total
domestic value of seizures.

The top 10 categories of IPR-infringing products seized were footwear,
consumer electronics, wearing apparel, handbags/wallets, optical media,
computers/hardware, cigarettes, watches/parts, jewelry, and
pharmaceuticals.
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Source – U.S. Customs 2010 Annual Report
A New Cost of Doing Business

Counterfeiting is an ongoing problem.

For every counterfeiter that is shut down, many more begin
operations.

A dynamic anti-counterfeiting strategy is required to enable
companies to respond quickly to new counterfeiting threats
and minimize the number of counterfeit products in the
marketplace.
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Anti-Counterfeiter Tools
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In-depth Investigations
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Locating counterfeit product
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Tracing counterfeits back to their source
Government Agencies
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Customs Border Protection
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Immigration and Customs Enforcement
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Office of the United States Trade
Representative
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United States Chamber of Commerce
Administrative proceedings
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ITC
Federal Court
Monitoring and Investigating
Goal: Try to establish whether all
of the counterfeits are from a single
supply source, or if there are different
variants in the market.
This could involve:

one supplier of product and one
packaging operation

one supplier of product and multiple
packaging operations

several independent sources of
product and packaging
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Monitoring and Investigating
There are multiple ways to locate counterfeit goods.
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Search the Internet for evidence of infringing activity.
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Monitor trade shows and swap meets to determine if
counterfeit products are being sold.
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Monitor major retailers (both online and brick-andmortar locations).
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Oversee the auditing and investigation of
manufacturing facilities.
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Purchase products from seemingly legitimate sites –
including those with which you may have relationships
– to determine whether customer orders are being
fulfilled with authentic product.

Monitor products that are returned to you to determine
if they are authentic and trace their source(s) if they
are fakes.
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Technological methods allowing Customs to quickly
and accurately differentiate fake products from real
products (bar codes, RFID chips, holograms, etc.)
Monitoring and Investigating
Once counterfeits are discovered:
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Work with investigators and professionals to review
the legitimate products to confirm rights, rights
ownership, appropriate registration (copyrights and
trademarks), and recordation with customs.

Collect information regarding: the location of
replication, printing and product completion; identity
and location of the business operator arranging
manufacture, packaging, export/distribution; the exit
points from the source country; and routes to the
U.S. (and other relevant markets).

Conduct online research into the availability of
counterfeit product on a "wholesale" basis in source
country.

Examine the range of counterfeit products
themselves for forensic clues as to source.
Monitoring and Investigation
Hiring an expert to investigate
counterfeit products can save your
company money in the long run.

There are a number of companies that specialize in
counterfeit product investigations.

These companies have people on-the-ground in
various countries known for counterfeiting products
around the world.

Professional investigators have developed a network
of people with knowledge of the counterfeiting
industry and can provide results faster than an
investigation independent of these contacts.

Professional investigators are able to keep "chain of
custody records" to preserve evidence for use at trial.
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Government Agencies
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Customs Border Protection

United States Customs and Border Patrol
("CBP"), as the primary U.S. border
enforcement agency within the U.S. Department
of Homeland Security, is a key player in the
government's federal interagency initiative
called the Strategy Targeting Organized Piracy
("STOP!")
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http://www.stopfakes.gov/
CBP has the authority to enforce U.S.
trademark and copyright laws by detaining,
seizing, causing forfeiture of, and destroying
counterfeit and pirated goods imported into the
United States.
Government Agencies
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Customs Border Protection
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Record with CBP your intellectual property that previously
has been properly registered with the U.S. Patent and
Trademark Office and Copyright Office.
Owners of recorded IPR can work with CBP to develop
anti-counterfeiting strategies so that officers at Ports of
Entry will be able properly to identify IPR infringing goods.

Provide detailed images of the subject registered
merchandise

Product specifications (length, width, height, weight,
etc.)
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Physical samples, if available, of all registered,
authorized goods
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Physical samples, if available, of
infringing/counterfeit products previously imported
into the US
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Names, addresses and contact information, if
available, of any suspected foreign exporters or US
importers of the counterfeit or pirated goods to
prevent future infringing imports by these companies
After assembling the product identification information,
CBP suggests that the importer set up meetings with the
relevant Ports of Entry.
In order for these meetings to have the maximum
beneficial impact, it is essential that you present as
comprehensive a training package as possible to each
Port.
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Government Agencies
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Immigrations and Customs Enforcement
(“ICE”)
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The National Intellectual Property Rights Coordination
Center (IPR Center) is one of the U.S. government's key
weapons in the fight against criminal counterfeiting and
piracy.
The IPR Center is led by ICE's Homeland Security
Investigations (HSI) and includes partners from
 Customs Border Patrol;
 The Federal Bureau of Investigations;
 The Department of State;
 The Food and Drug Administration;
 The Postal Inspection Service;
 The Department of Commerce;
 The U.S. Patent and Trademark Office;
 The Naval Criminal Investigative Service;
 The Defense Logistics Agency;
 The Defense Criminal Investigative Service;
 The Army Criminal Investigative Command;
 The General Services Administration;
 The Consumer Product Safety Commission;
 INTERPOL;
 The Royal Canadian Mounted Police; and
 The Government of Mexico Tax Administrative
Service.
Government Agencies
Office of the United States Trade
Representative

USTR's Office of Intellectual Property and Innovation
(IPN) uses a wide range of bilateral and multilateral trade
tools to promote strong intellectual property laws and
effective enforcement worldwide, reflecting the importance
of intellectual property and innovation to the future growth
of the U.S. economy.
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Key areas of work include:
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the negotiation, implementation, and monitoring of
intellectual property provisions of trade agreements;
bilateral and regional engagement through such
vehicles as the annual "Special 301" review and
numerous IP dialogues with trading partners;
multilateral engagement on IP issues through the
World Trade Organization (WTO), and other
organizations;
implementation of trade policy in support of U.S.
innovations, including those in the pharmaceutical
and medical technology industries; and
providing interagency trade policy leadership.
Other Agencies
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United States Chamber of Commerce
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The U.S. Chamber's Global Intellectual
Property Center (GIPC) is committed to
creating jobs, spurring economic growth,
and advancing American competitiveness
by promoting and defending robust IP
rules globally, while strengthening
enforcement efforts in the United States
and abroad.
The U.S. Chamber of Commerce works
with Congress, the administration, and the
private sector to cut off rogue websites—
those dedicated to theft of IP—from the
U.S. market.
Administrative Proceedings
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International Trade Commission (ITC)
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The ITC is an independent non-partisan, quasijudicial federal agency.

Adjudicates cases involving alleged infringement
by imports of IPR.
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Administers U.S. Trade remedy laws
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Provides the U.S. Trade Representative and
Congress with independent advice and
information on international trade and
competitiveness
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Administers import injury investigations.
Federal Court
To the extent counterfeiters can be traced
back to the United States, companies can
seek redress using litigation in Federal
Court.
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Send cease and desist letters.
Negotiate settlement agreements enforceable by
U.S. Courts.
Go into court immediately and secure preliminary
injunctive relief.
Seek orders seizing the counterfeit product.
Seek discovery of counterfeiting and financial data.
Recover monetary settlements or judgments.
Destroy counterfeit goods
Take down infringing web sites.
Federal Court
The Trademark Counterfeiting Act (“TCA”)
15 U.S.C.§§1116-18 et seq.
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The TCA provides a federal vehicle for anti-counterfeiting
enforcement.
The TCA defines a counterfeit as “a spurious mark which is
identical with, or substantially indistinguishable from a
registered mark.”
The TCA strengthens Lanham Act remedies available to
plaintiffs bringing actions against counterfeiters including:
 ex parte seizures; and
 enhanced damages.
Seizures are carried out by U.S. Marshalls.
 Plaintiff must describe the place to be searched and
the goods to be seized with particularity.
 The government retains possession of the seized
goods.
 Plaintiff is required to post a bond.
TCA allows for damages
 In cases of intentional and knowing counterfeiting, the
TCA provides for a mandatory award of attorney’s
fees.
 The TCA allows Plaintiff to elect statutory damages
instead of actual damages.
 $1000 – 200,000 per mark
 Up to 2,000,000 for willful violations.
Federal Court
The difference between Trademark Infringement and Counterfeiting
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Trademark Infringement
 Plaintiff must show use in
commerce.
 Plaintiff must show a likelihood of
confusion.
 Similarity of the marks
 Strength of the owner’s
mark
 Price of the goods
 Actual confusion
 Intent
 Length of co-existence
 Channels of trade
 Target customers
 Relationship of the goods
in the minds of consumers
 Other factors that suggest
the consuming public would
think the junior user makes
the senior user’s product
 Plaintiff can recover actual
damages and/or defendants
profits.
 Plaintiff can be awarded injunctive
relief.
 Extends liability to the infringer
and to third parties via contributory
and vicarious liability theories.
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Counterfeiting
 Plaintiff does not have to show use
in commerce.
 Plaintiff must show use on
goods and services to obtain
ex parte seizure and/or
certain enhanced damages.
 Likelihood of confusion is
presumed.
 Plaintiff can recover actual
damages or elect to recover
statutory damages (must show
use).
 Plaintiff can recover enhanced
damages.
 Plaintiff can be awarded injunctive
relief.
 Extends liability to those, who with
specific intent provides goods or
services necessary to the
counterfeiting.
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