How to Defend Against Trademark Counterfeit

Matt: Hi, and welcome back to Trademark Law Radio.  I’m Matt Plessner. Today we’re going to be discussing trademark counterfeiting, and how to defend yourself against claims of counterfeiting. To help us, we’re speaking again with Brian Hall of the Traverse Legal office of Traverse City, Michigan…Brian, nice to have you back.

Brian: Thanks Matt, it’s good to be here again.

Matt: Now Brian, fist of all, what is trademark counterfeiting?

Brian: That’s a great question, Matt. A lot of people are aware of trademark infringement and related claims, but trademark counterfeiting is something that people think about when they’re buying or selling a product that isn’t the actual or genuine product, but instead has been produced by someone else to look like that product and it bares the mark of the actual product. So, under law, the Lanham Act, which is the act that specifically deals with trademarks (and it is a federal act), it prohibits the use and commerce of counterfeit trademark in a matter that’s likely to cause consumer confusion, and it’s further provides that anyone using the counterfeit trademark in that way, meaning as a counterfeit, will be liable in civil action to the registrant of the trademark. So, put simply, what it means is, under law, if someone uses the trademark of another product that’s not the actual product or a genuine product then they can be liable for trademark counterfeiting.

Matt: And Brian, what kind of liability does trademark counterfeit face?

Brian: It’s huge. There’s civil liability and there’s criminal liability. We’re talking about civil liability, again, we’re looking at the Lanham Act and what trademark counterfeiting damages could be, and it’s up to 2 million dollars per counterfeit. So each use of the mark on a product can amount to 2 million dollars in statutory damages, so long as it’s well-formed and other things that go along with it. so typically when we are talking about counterfeiting it’s a strict liability defense. There’s no way around it-you either did or you didn’t. Now, facts might go towards what the damages amount might be, so if you didn’t sell a lot of product, or if you were committing counterfeiting innocently, meaning maybe you purchased products overseas and sold them here thinking they were genuine products when in fact they weren’t. That could go to damages, but ultimately, it can be up to 2 million dollars on the civil side. So you could be a named defendant. the trademark owner would sue you, and the ligation would commence with hopes, at least from a trademark owners standpoint, of getting that high damages amount. But civil liability isn’t the only thing. There’s also criminal liability. And obviously criminal liability would require that some kind of municipality brought the action against you, be it the US government, be it particular state, or otherwise. But if a prosecutor decides to move forward, criminal liability can carry with it jail time, money awards, [and] those kinds of things as well.

Matt: So if I receive a notice to cease and desist trademark counterfeiting in that regard, what should I do, Brian?

Brian: The first thing you should do is speak with a trademark attorney, and I don’t say that because I’m a trademark attorney, but because it’s critically important, that the response the would are going to put together isn’t to incriminate you further if, in fact, you are most likely going to be held liable for trademark counterfeiting. But also, if there are defenses available and you potentially might not even be liable for trademark counterfeiting, under law, a trademark attorney is going to be in a position to advise you that that’s the case. What happens often is that somebody gets a letter to cease and desist as trademark counterfeiting, and they might stop doing it but they don’t take any further action. They ignore it and hope that it goes away. Well, more often then not, the trademark owner is going to take further action, and that could mean a lawsuit. It can them notifying the authorities and potential criminal prosecution happening. So there’s all kinds of additional things that can happen if you aren’t strategic and smart in responding to a cease desist letter. And really the way to be strategic and smart responding to a cease and desist letter for trademark counterfeiting is to speak with a trademark lawyer.

Matt: And how can a seller protect against being accused of trademark counterfeiting, Brian?

Brian: It really comes down to good decision making. So, if it’s too good to be true, it probably is. And what I mean by that is, if you are a reseller, and everywhere you look you can find…let’s just go with handbags and bags as that’s typically the one that people think of when they think of trademark counterfeiting. If a handbag costs 200 dollars at a retail store online from it’s actual seller, and you’re finding it for 10 dollars online, especially on sites that might sell from China or other overseas locations, it’s probably a counterfeit item. So, if you have a belief that it’s a counterfeit item and you want to insulate yourself from liability, the smart thing to do is to look into that reseller vender from which you’re purchasing it. And the reality is, if you’re really concerned about it, a lot of trademark owners have particular units within their company or even employ outside firms that will review particular items to make sure that it’s not counterfeit. So that could be an option as well if you’re really looking to prevent being accused of trademark counterfeiting.

Matt: Well thank you very much, Brian, and one final question for you: are owners active in their anti-counterfeiting actions online?

Brian: Absolutely, and now more then ever. If you think about it, back in the day, the only way that trademark owners, before the internet, could police their goods was to have people on the ground. So they’d send people overseas; they’d send people to commonly known areas where counterfeit items are sold, be it Central Park in New York, or various streets in other major cities. And they would simply look for the product. They might go get court intervention to cease the product and get an injunction and all those things that go with it. But that obviously took a lot of resources. So now, with the proliferation of the internet and the ability for people to use online market places such as eBay and other various sites to sell some items they can constantly be monitoring what is being offered for sale and sold. So, there’s software programs out there that help identify where marks are being used, and they can look and se: is it being used appropriately. And one of the appropriate ways it could be used is if someone purchases a genuine product, they have the right to re-sell that under the first sale doctrine. So they wouldn’t be liable for trademark infringement, trademark counterfeiting, ect.  But where they see they’re selling a  product that is not a genuine product, and that they didn’t but it knowing it wasn’t a genuine product, that’s trademark counterfeiting. And they’re going to take actions, and those actions might be some of the things we talked about, like a cease and desist letter, a lawsuit, [or] it might be using tools that carious online markets have these days such as eBay’s Vero program (or V-E-R-O program), but they’re going to take action because it costs them to much money in the long run not to. And as you and I have discussed in the past, [with] a lot of these companies, their strongest asset is their brand, meaning their mark.  So if they don’t police it, if they don’t enforce it, they could ultimately lose rights in it.

Matt: Alright, well Brian, again, thank you again for talking with us today.

Brian: Yeah I appreciate it. Have a good day.

Matt: You too. And this is Matt Plessner, wrapping it up for Trademark Law Radio.

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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney Enrico Schaefer, who has more than 20 years of legal experience as a practicing Business, IP, and Technology Law litigation attorney.