I.P. Counterfeiting: Protection from Counterfeiting in an Increasingly Online World

Written by: Reid Morelli, Esq. and Andrew Bayudan

Counterfeiting continues to remain one of most dangerous threats to I.P. owners –
cutting into owners’ profits and injuring reputations. Counterfeit products bear the insignia of a trademark owner’s brand without permission and are often of an inferior quality. A business’ success relies on providing high quality products and trustworthy branding and counterfeiting can undermine not just revenue, but also a brand’s favorable image. This problem has been exacerbated by digital and online marketplaces where counterfeit sellers can target unsuspecting customers behind the anonymity and safety of the internet.

In the wake of Tiffany Inc. v. eBay Inc., mark owners should be diligent and thorough in placing measures to protect their mark and to prevent damage to their brand.[1] The Tiffany decision emphasized the burden placed on trademark owners when policing their marks, particularly for online channels. In Tiffany, the Court found that using the Tiffany marks to advertise counterfeit products on the eBay channel was not infringement when portions of the website explained that the products were indeed counterfeit. Additionally, because some of the products on eBay’s website were not counterfeit, it was not found to be false advertising.

Online trading of counterfeits is especially difficult to combat due to the trans-border nature of the internet combined with the challenge of locating where the counterfeits are made and sold. Therefore, mark owners should take a comprehensive approach that addresses multiple aspects of online trading. The strategy should focus on three main areas: registering marks with customs agencies, utilizing detection and reporting technology, and informing the public on how to identify counterfeits.

Here in the United States, the Customs and Border Protection Agency can have a huge impact on enforcing an owner’s mark. Companies seeking to deter the import/export of counterfeit products should make sure to foster a strong relationship with the CBP. This begins with registering marks with the agency to help officials identify, track and prevent counterfeit goods from crossing the border. CBP employs an active counterfeiting team that seizes counterfeit goods at borders. CBP’s resources are extremely valuable in enforcing the prevention of counterfeits entering the market. Maintaining constant lines of communication with the CBP will also allow businesses to effectively monitor counterfeits.

I.P. owners should also be sure to adopt and use online detection technologies to monitor any possible infringements that occur over the internet. Counterfeiters have spread their sales and influence across a multitude of online channels, including online marketplaces, e-commerce sites, social networking sites and message boards. The utilization of detection technology remains one of the strongest tools that businesses can use to combat counterfeit sales through these channels. By monitoring these distribution venues, owners are placed in a better position to challenge the counterfeiters. Once the counterfeiting threats are recognized, owners should pursue aggressive and proactive strategies against them. This should include prioritizing and attacking the largest counterfeiting offenders first using available mechanisms and solutions that online channels already have in place to report infringers, sending cease and desist letters, and lastly, initiating administrative or criminal actions against counterfeiters where appropriate. Often, adopting aggressive strategies against first time counterfeiters can deter future counterfeiting operations against marks.

Owners should realize that the public can also be a key weapon in minimizing counterfeit sales. Educating consumers on how to identify fakes alongside highlighting the benefits of purchasing original, high-quality products can further sway the fight in favor of mark owners. It is also important to increase awareness among the public of the potential dangers associated with buying counterfeit products.

Anti-counterfeiting efforts should be continuous and persistent. Mark owners must be willing to challenge counterfeiters with a long-term strategy to help owners maintain their public image while effectively forcing counterfeiters away from the market. The best strategy is both offensive and defensive. Individuals with protectable IP should register their marks in an offensive position while defending their marks against counterfeiters.

[1] Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010).