In a number of busts this year, federal agents of the Customs and Border Protection (CBP) seized over 950 shipments of counterfeit goods, worth approximately $700 million if the goods were authentic.
These bogus goods included copies of well-known brands of clothing, watches and accessories that are much in demand among U.S. consumers. The Department of Homeland Security estimates that counterfeit goods are costing the U.S. economy nearly $200 billion a year. Many counterfeit cases also involve high-value packaged goods, such as pharmaceuticals, cosmetics, liquors and tobacco. Clever criminals often are able to reproduce packaging to make it virtually indistinguishable from the real product. The results can heavily damage the product’s brand equity and be downright dangerous.
Attorney Rick van Amam of Barnes, Richardson & Colburn, an international law firm specializing in global trade issues, said: “What I find disturbing about this plot is the number of different links along the supply chain that were compromised, as the individuals indicted include not just the importers of the bogus goods but freight forwarders, customs brokers, owners of a customs-bonded warehouse and a manager of a customs exam site.
“And counterfeiting will continue to be a global problem as long as consumers place a greater value on owning a brand name acquired at a bargain price regardless of that product’s authenticity” according to van Amam. While the uptick in global counterfeiting is being fueled in large part through the involvement of organized crime, “at the end of the day the market does not exist without a purchaser” says van Amam.
Because the huge impact counterfeiting has on a number of companies throughout the supply chain, van Amam suggests that businesses take steps to safeguard their intellectual property. First, he said, companies should register all trademarks and patents in all the countries in which they do business or could conceivably do business – either selling or sourcing. He explained that trademark laws are territorial, so merely filing in the U.S. or the European Union does not safeguard a brand in other countries.
He also suggested that companies register their trademarks and trade names with CBP. “I continue to see many companies fail to take this easy and inexpensive step that can lead to government interdiction at the border,” he said. “If counterfeit merchandise is seized, CBP will advise you of the names and addresses of the exporter and importer, allowing you the possibility of taking additional steps directly against the offending party.”
Many counterfeit or diverted items can come from the vendors and manufacturers on whom brand owners rely. Van Amam urges consumer products companies to know their vendors and manufacturers. “They are making your product, and you need to be sure that they are not making additional units of your merchandise on the side.”
The attorney said companies also should be aggressive with the law. Many remedies exist, both in civil and criminal law, and at both the federal and state court levels. “No violation is too small to warrant, at a minimum, a cease-and-desist letter, he added.
He also urges business to identify websites, especially auction sites that sell counterfeit merchandise. Become familiar with the auction house policies allowing legitimate rights holders to identify themselves and to have the auction house remove offending auctions. For example, on EBay® this is called the Verified Rights Owner Program.
Finally, van Amam suggests, companies must educate their employees and vendors on these issues so they understand the importance of protecting the valuable rights of the business.
