Counterfeiting: Not a Victimless Crime

Have you ever walked down the street and done a double-take because you’ve seen your product being sold under someone else’s name? This problem is not limited to street carts or the underground network lining Canal Street in New York City. We have assisted clients stunned by “reputable” companies copying their design and distributing knock-offs to name-brand retail stores where the consumer buys it thinking they have gotten a real deal on the “real deal.”

The counterfeiting problem just keeps getting worse. According to the U.S. Customs and Border Protection Office of International Trade, the number of seizures (counterfeit and pirated) has skyrocketed from approximately 6,000 in 2003 to over 22,000 last year. The MSRP of the goods seized in 2012 exceeded $1.26 billion. Thirty percent of the items seized were consumer products (including electronics), personal-care items and digital media. Seventy-two percent of the seized items came from China.

Counterfeiting can take a huge toll on your business. So what do you do? Be vigilant. A written (and enforced) counterfeiting policy helps—a must if you host a site where others sell product—but what it really boils down to is keeping an eye out for and reporting anything suspicious. Here are some things to watch for:

• Items are being advertised or sold by an unauthorized distributor or retailer;
• The description includes “OEM” (original-equipment manufacturer) for a product type that is not produced this way;
• The item is pictured or displayed without its standard packaging;
• Links on the selling website do not work properly; or
• The product is being offered for sale at an odd price.
There are a number of other preventative and protective steps you can take, including:
• Registering your trademarks in all possible locations;
• Developing packaging and/or product characteristics that are not easily duplicated and can be checked for authenticity;
• Understanding search engine techniques and policies for identifying counterfeiting and work collaboratively with them;
• Regularly running online searches for counterfeit products;
• Spot-checking any online distributors and retailers to make sure that they are not displaying genuine product and then shipping a counterfeit to consumers;
• Perusing advertisements, flyers and the like for products that may be counterfeit (or confusingly similar);
• Establishing internal policies and routine procedures to be followed if counterfeiting is suspected, such as photographing the display, noting the name and address of the seller, buying a sample of the product, establishing a chain of custody, etc.;
• Designating certain people to whom suspected counterfeiting should be reported;
• Working with customs to record your trademarks and to search for and seize counterfeit or pirated goods;
• Educating your legitimate distributors and retailers about counterfeiting and engaging their assistance in watching for suspicious behavior; and
• Educating your consumers about the dangers of counterfeit products and how counterfeiting increases consumer costs.

Finally, if counterfeiting has become a problem for you, work with legal counsel to pursue the offender civilly and to cooperate with local and federal criminal authorities.

Kristi Davidson is a shareholder in the New York City office of Buchanan Ingersoll & Rooney. She can be reached at kristi.davidson@bipc.com.

Editor’s Note: The comments are those of the author and are not necessarily views shared by HFN or Macfadden Communications.