Posts Tagged: "counterfeiting"

On October 5, 2016, a jury in Tiffany and Co. v. Costco Wholesale Corp. – litigated before Judge Swain of the Southern District Court of New York – awarded Tiffany & Co. (Tiffany) $8.25 million in punitive damages for willful and bad faith infringement of their trademark by defendant Costco Wholesale Corp. (Costco). This award, in combination with an earlier award of $5.5 million in profits and statutory damages, brings the total damages owed by Costco to $13.75 million. The case is particularly notable for several reasons, but specifically because punitive damages were awarded.

Misspellings, $20 for a $200 jersey, encouraging use of Western Union wire transfers, and no visible mention of being officially licensed NFL merchandise should raise at least some suspicions… Chinese production of counterfeit NFL jerseys and other sports apparel has also attracted the attention of domestic crime rings looking to make money from unsuspecting consumers, many of whom are purchasing a low-quality product compared to the officially licensed version.

Joseph and Adriana Shayota were recently found guilty of manufacturing and selling millions of counterfeit bottles 5-hour ENERGY. They were kingpins in a criminal ring of 11 people charged with the counterfeiting. Eight of the conspirators have already plead guilty and one is a fugitive. Their clandestine factory was located in San Diego, and employed more than 50 workers working two shifts per day. They manufactured about 4.3 million counterfeits, all of which were either consumed or seized by 2012.

Given the devastating impact of counterfeit medicines on patients and the importance of intellectual property protection in combating pharmaceutical counterfeiting, it is troubling that the UN High Level Panel seems poised to prevent a series of recommendations that will undermine public health under the guise of enhancing access. Without the assurance of quality medicines, access is meaningless. Moreover, while falsely presenting intellectual property rights as the primary obstacle to global health care, the High Level Panel downplays a host of other factors that prevent developing country patients from getting the drugs they need: inadequate medical infrastructure, insufficient political will, a shortage of clinical trials in nations where neglected diseases are endemic, poverty, and insufficient market incentives.

Protecting intellectual property today is more challenging than ever, and the stakes are high. An open and rapid-fire exchange of information has become the norm in our digital age. Add the global nature of the market and persistent technological advancements, and it should come as no surprise that imitators stand ready to capitalize on the latest breakthroughs. As their low-cost, low-quality products flood a market, not only do they claim valuable market share, but they have potential to erode the credibility of an entire category and its leaders. Any company that produces a product must consider the prospect of knockoffs, and the potential impact imitations will have on market share and brand perceptions. Obtaining IP protection directed at mitigating knockoffs can be highly beneficial, particularly for start-ups that may have limited resources and brand awareness.

With leading-edge, tech-savvy companies in the internet, social networking, and e-retailing space often dominating headlines nationwide, it is easy to overlook the myriad businesses competing in the Fast Moving Consumer Goods (“FMCG”) industry, and to dismiss them as somewhat out-of-touch with the modern consumer. However, FMCG companies have combined revenues nearly on par with those in the more highly-publicized technology-based sectors, and have been thriving in the retail space for decades. IP Rights are critically important in the FMCG industry because businesses operating in this sector rely heavily on brand awareness and brandy loyalty for their success. It makes sense then that IP Rights are pivotal in any FMCG company’s long-term strategy for success.

What follows is our wide ranging discussion, which start out with what Cohn is doing with INTA and then moves into an in depth discussion of issues surrounding counterfeiting, the newly formed Trademark Caucus in Congress, and the recent Federal Circuit decision on disparaging trademark registrations in the so-called Slants case. We ended with the familiar fun questions that give us an opportunity to get to know Cohn.

Counterfeiting has exploded in the last decade or so, paralleling the growth of the Internet and online sales. It’s harder for counterfeiters to get their products into the supply chain headed for brick and mortar stores, but the Internet makes it possible for counterfeiters to bypass physical stores and flourish, as they’re hiding behind the anonymity of a website or an online marketplace. Counterfeit goods are much more likely to be available on ecommerce marketplaces—either on independent sites specifically set up to market fakes, or on platforms such as Taobao or AliExpress. Identifying and taking down these sites requires constant watchfulness and diligence.

The ownership of ideas and creations are among the most valuable assets to any company. Businesses invest in these ideas and rights and use the value they create to help promote and grow business for years to come. Printer manufacturers, for example, invest heavily in new ink and toner technologies and realize a return over the life of the device through the sale of supplies and consumables. When third-party supplies manufacturers, particularly manufacturers of new build ‘cloned products’, violate IP rights and take products to market, they are effectively stealing from the original equipment manufacturer (OEM) – reducing the ability of the OEM to realize the full potential of their investment and, through their sale, securing financial benefit from the OEM who receives no compensation for this lost revenue. These organizations effectively take a ‘free ride’.