Trademark Counterfeiting Act of 1984

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The Trademark Counterfeiting Act of 1984 is a United States federal law that amended the federal criminal code to make it a federal offense to violate the Lanham Act by the intentional use of a counterfeit trademark or the unauthorized use of a counterfeit trademark. The act established penalties of up to five years imprisonment and/or a $250,000 fine ($1,000,000 fine for a corporation or other legal entity) for selling or attempting to sell counterfeit goods or services. It increased such penalties for a second or subsequent conviction under the Act.

Contents

Trademark infringement

Trademark infringement involves the determination of the probability of confusion by consumers between two marks. Similarity of appearance, phonetics, and meaning as well as channels of trade, direct competitiveness, strength of the famous mark, and evidence of actual confusion can determine trademark infringement. [1]

Remedies of trademark infringement include, but are not limited to; attorneys' fees, destruction of infringing products and any other materials bearing the infringing mark, profits obtained by the counterfeiter from the infringing products, and injunction relief. [2]

History

Trademark Act of 1870

Trademark law dates back to the age of President Ulysses S. Grant starting in the late 19th century with the Trademark Act of 1870. The Trademark Act of 1870 was the first trademark act passed in the nation and grounded trademark protection into Article 1 of the U.S. Constitution. The act covered many different aspects of trademark law but failed to cover trademark counterfeiting. After much protest from merchants and manufactures around the country, Congress amended the act to make counterfeiting a crime. This however was short lived, as the case U.S. v. Steffens in 1879 ruled that Article One of the Constitution could not serve as a basis of authority and thus making the Trademark Act of 1870 unconstitutional. All trademark acts after the 1870 one, including the 1881 Trademark Act and the 1946 Trademark Act (The Lanham Act), make no mention of the trademark counterfeiting provision of the 1870 act. [3]

By the 1970s, counterfeiting was costing U.S. companies billions of dollars, upwards of $100 billion in the years leading up to the Trademark Counterfeiting Act of 1984. Unless the counterfeiting manufacturer was large enough, little could be done to prosecute illegal counterfeiters. Most counterfeit manufactures were small companies that once a civil suit was filed against them, would virtually disappear. Lack of penalties for counterfeiters also meant that products could be sold that were not safe and up to regulatory standards including medications, cosmetics, and machinery parts. [3]

In October 1984, after much lobbying by industry groups, mainly the International AntiCounterfeiting Coalition (IACC), President Ronald Reagan signed into law the Trademark Counterfeiting Act of 1984 (S.875). Senator Charles Mathias Jr., the Chairman of the subcommittee on Patents, Copyrights, and Trademarks of the Senate Judiciary Committee sponsored the act. [4] In enacting the Trademark Counterfeiting Act of 1984, Congress sought to provide trademark owners with more powerful weapons against persons involved in trademark counterfeiting, including protection of not only intentional copying of trademarks, but also entire products as well. Those who were in favor of the act were pleased with it while those against it claimed it was "manifestly unfair", "heavy-handed", and "overreaching". [3]

Penalties under the act

The Senate and House bills both aimed at accomplishing three primary changes in the law: First, creation of criminal penalties for intentionally dealing in materials that one knows to be counterfeit; second, authorization for mandatory or virtually mandatory awards of treble (sic) damages and attorneys fees in civil counterfeiting cases; and third, authorization for ex parte court orders for the seizure of counterfeit materials when it can be shown that the defendant would be likely to attempt to conceal or transfer the materials. [4]

The Trademark Counterfeiting Act of 1984 made it illegal for anyone to intentionally traffic or attempt to traffic goods or services knowingly using a counterfeit mark, which is defined as

a spurious mark and spurious designations (1) used in connection with trafficking in goods or services (2) identical with, or substantially indistinguishable from, a mark registered for those goods and services on the United States Patent and Trademark Office's Principal Register (whether or not the defendant knew the mark was registered) and in use and (3) the use of which is likely to deceive, confuse, or cause mistake on the part of the consuming public.

These counterfeit goods include numerous things such as labels, stickers, wrappers, charms, cases, tags, and patches. Originally under the act, the penalty for being convicted for trademark counterfeiting was a fine up to $100,000 and a prison sentence of up to five years plus paying attorney fees to the trademark owners. These penalties were later amended and called for a fine of up to $2 million and/or imprisonment for up to 10 years, with large companies being fined up to $5 million. If charged more than once for trademark infringement, individuals can be fined up to $5 million and/or be imprisoned for up to 20 years while corporations may be fined up to $15 million. [3] Counterfeiters of safety-sensitive products, such as pharmaceuticals, would get the maximum penalty set forward in the act. [5]

Provision 1: ex parte seizure

One of the most powerful provisions under the Trademark Act of 1984 is that of ex parte seizure. Under this part of the act, an aggrieved party may seize the counterfeit goods, business documents, and machines used that the counterfeiter has without notice to the counterfeiter. The section on ex parte seizure amends the Lanham Act, creating stronger remedies in civil cases involving the intentional use of counterfeit trademarks. [3]

Trademark registrants may apply for an ex parte seizure through the courts without notifying the counterfeiting party. The courts, however, will not grant the ex parte seizure unless

  1. the applicant knows where the goods to be seized are located
  2. the ex parte seizure will show that there was in fact trademark infringement
  3. an ex parte seizure is the only order that is adequate
  4. the applicant specifies the time period the seizure will occur within a limited time frame
  5. the seizure is not publicized
  6. the harm to the trademark holder is greater than the harm to the counterfeiter
  7. immediate harm will occur without the seizure to the trademark holder and
  8. the person obtaining the order provides security to cover the damages the adverse party may suffer due to the ex parte seizure. [3]

Provision 2

The second provision of the Trademark Counterfeiting Act of 1984 deals with damages that may be recovered against users of counterfeit trademarks; treble profits or damages (damages awarded in an amount that is three times the amount for which the wrongdoer is found liable for), whichever is greater, and reasonable attorney fees. [3]

Counterfeiting today

Counterfeiting remains a growing problem in the modern world economy. The garment industry is one of the largest areas of counterfeit goods. Louis Vuitton estimates two to three million counterfeit Louis Vuitton pieces are produced each year—about twice the number of genuine products it manufactures. Because of this, Louis Vuitton spends upwards of 5% of its revenue fighting off counterfeiters; about 1,500 actions/civil proceedings. According to the International Trademark Association, between 1991–1995, apparel and footwear companies lost 22 percent of their sales, around $2.1 billion, due to trademark counterfeiting. [3]

In addition to the garment industry, automotive parts is also a large area of counterfeit goods. The U.S auto industry alone said it would employ another 200,000-plus employees if it could manage to put counterfeit supplies out of business. [6]

Related Research Articles

Counterfeit Making a copy or imitation which is represented as the original

To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value than the real thing. Counterfeit products are fakes or unauthorized replicas of the real product. Counterfeit products are often produced with the intent to take advantage of the superior value of the imitated product. The word counterfeit frequently describes both the forgeries of currency and documents, as well as the imitations of items such as clothing, handbags, shoes, pharmaceuticals, automobile parts, unapproved aircraft parts, watches, electronics, software, works of art, toys, and movies.

A trademark is a word, phrase, or logo that identifies the source of goods or services. Trademark law protects a business' commercial identity or brand by discouraging other businesses from adopting a name or logo that is "confusingly similar" to an existing trademark. The goal is to allow consumers to easily identify the producers of goods and services and avoid confusion.

Lanham Act United States trademark law

The Lanham (Trademark) Act (Pub.L. 79–489, 60 Stat. 427, enacted July 5, 1946, codified at 15 U.S.C. § 1051 et seq. is the primary federal trademark statute of law in the United States. The Act prohibits a number of activities, including trademark infringement, trademark dilution, and false advertising.

Patent pending As yet ungranted patent application

"Patent pending" or "patent applied for" are legal designations or expressions that can be used in relation to a product or process once a patent application for the product or process has been filed, but prior to the patent being issued or the application abandoned. The marking serves to notify the public, business, or potential infringers who would copy the invention that they may be liable for damages, seizure, and injunction once a patent is issued.

Intellectual property rights (IPRs) have been acknowledged and protected in China since the 1980s. China has acceded to the major international conventions on protection of rights to intellectual property. Domestically, protection of intellectual property law has also been established by government legislation, administrative regulations, and decrees in the areas of trademark, copyright, and patent. This has led to the creation of a comprehensive legal framework to protect both local and foreign intellectual property. Despite this, copyright violations are common in the PRC. The American Chamber of Commerce in China surveyed over 500 of its members doing business in China regarding IPR for its 2016 China Business Climate Survey Report, and found that IPR enforcement is improving, but significant challenges still remain. The results show that the laws in place exceed their actual enforcement, with patent protection receiving the highest approval rate, while protection of trade secrets lags far behind. Many US companies have claimed that the Chinese government has stolen their intellectual property sometime in 2009–2019.

Enforcement Directive

Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights is a European Union directive in the field of intellectual property law, made under the Single Market provisions of the Treaty of Rome. The directive covers civil remedies only—not criminal ones.

Statutory damages are a damage award in civil law, in which the amount awarded is stipulated within the statute rather than being calculated based on the degree of harm to the plaintiff. Lawmakers will provide for statutory damages for acts in which it is difficult to determine a precise value of the loss suffered by the victim. This could be because calculation of a value is impractical, such as in intellectual property cases where the volume of the infringement cannot be ascertained. It could also be because the nature of the injury is subjective, such as in cases of a violation of a person's rights. The award might serve not only as compensation but also for deterrence, and it is more likely to succeed in serving a deterrence function when the potential defendants are relatively sophisticated parties. Other functions that can be served by statutory damages include reducing administrative costs and clarifying the consequences of violating the law.

Counterfeit watch

A counterfeit watch is an unauthorised copy of an authentic watch. High-end luxury watches such as Rolex, Patek Philippe and Richard Mille are frequently counterfeited and sold on city streets and online. With technological advancements, many non-luxury and inexpensive quartz watches are also commonly counterfeited.

In United States trademark law, the Principal Register is the primary register of trademarks maintained by the United States Patent and Trademark Office. It is governed by Subchapter I of the Lanham Act.

The Prioritizing Resources and Organization for Intellectual Property Act of 2008 is a United States law that increases both civil and criminal penalties for trademark, patent and copyright infringement. The law also establishes a new executive branch office, the Office of the United States Intellectual Property Enforcement Representative (USIPER).

Trademark Trade identifier of products or services

A trademark is a type of intellectual property consisting of a recognizable sign, design, or expression which identifies products or services of a particular source from those of others, although trademarks used to identify services are usually called service marks. The trademark owner can be an individual, business organization, or any legal entity. A trademark may be located on a package, a label, a voucher, or on the product itself. For the sake of corporate identity, trademarks are often displayed on company buildings. It is legally recognized as a type of intellectual property.

Counterfeit consumer goods are goods, often of inferior quality, made or sold under another's brand name without the brand owner's authorization. Sellers of such goods may infringe on either the trademark, patent or copyright of the brand owner by passing off its goods as made by the brand owner. Counterfeit products made up 5 to 7% of world trade in 2013, and in 2014 cost an estimated 2.5 million jobs worldwide, with up to 750,000 jobs lost in the U.S. About 5% of goods imported into the European Union in 2013 were fakes, according to the OECD.

National Intellectual Property Rights Coordination Center

The National Intellectual Property Rights Coordination Center (NIPRCC) is a U.S. government center overseen by U.S. Immigration and Customs Enforcement, a component of the U.S. Department of Homeland Security. The NIPRCC coordinates the U.S. government's enforcement of intellectual property laws.

Trademark infringement is a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees. Infringement may occur when one party, the "infringer", uses a trademark which is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services which the registration covers. An owner of a trademark may commence civil legal proceedings against a party which infringes its registered trademark. In the United States, the Trademark Counterfeiting Act of 1984 criminalized the intentional trade in counterfeit goods and services.

Tiffany (NJ) Inc. v. eBay Inc. 600 F.3d 93, is a United States Court of Appeals for the Second Circuit case in which plaintiff Tiffany & Co. filed the complaint, first in 2004, alleging that eBay constituted direct and contributory trademark infringement, trademark dilution, and false advertising since it facilitated and advertised counterfeit Tiffany jewelries on its online market. On July 14, 2008, the District Court for S. D. N. Y. decided in favor of eBay on all claims. Tiffany appealed these decisions to the Second Circuit. The court affirmed the judgment of the district court with respect to the claims of trademark infringement and dilution. The false advertising claim was returned to the district court for further processing, which was then ruled in favor of eBay.

An unregistered trademark or common law trademark is an enforceable mark created by a business or individual to signify or distinguish a product or service. It is legally different from a registered trademark granted by statute.

Operation In Our Sites

Operation In Our Sites is an ongoing effort by the National Intellectual Property Rights Coordination Center in the U.S. government, to detect and hinder intellectual property violations on the Internet. Pursuant to this operation, governmental agencies arrest suspects affiliated with the targeted websites and seize their assets including websites' domain names. Web users intending to access targeted websites are directed to the server operated by the U.S. government, and greeted with a graphic bearing the seals of the United States Department of Justice (DOJ), the National Intellectual Property Rights Coordination Center (NIPRCC), and U.S. Immigration and Customs Enforcement (ICE).

Rosetta Stone v. Google, 676 F.3d 144, was a decision of the United States Court of Appeals for the Fourth Circuit that challenged the legality of Google's AdWords program. The Court overturned a grant of summary judgment for Google that had held Google AdWords was not a violation of trademark law.

Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992), was a United States Supreme Court case where the Court held that Two Pesos, Inc. infringed upon the trademark of Taco Cabana, Inc. by copying the design of their restaurants. Writing for a majority of the court, Justice Byron White concluded that trade dress is inherently distinctive under the Lanham Act and that plaintiffs are not required to prove secondary meaning in suits to protect their trademark. The Court upheld an award of $3.7 million in damages, and Taco Cabana ultimately acquired all of Two Pesos' assets in 1993 for $22 million.

Copyright Act of 1870 Former United States law

The Copyright Act of 1870, also called the Patent Act of 1870 and the Trade Mark Act of 1870, was a revision to United States intellectual property law, covering copyrights and patents. Eight sections of the bill, sometimes called the Trade Mark Act of 1870, introduced trademarks to United States federal law, although that portion was later deemed unconstitutional after the Trade-Mark Cases.

References

  1. ↑ Dorr, Robert (1995). Protecting Trade Secrets, Patents, Copyrights, and Trademarks (2nd ed.). New York: Wiley Law Publications. pp. 148–149. ISBN   0-471-06150-6.
  2. ↑ Andorka, Frank (1989). A Practical Guide to Copyrights & Trademarks (2nd ed.). New York: Pharos Books. pp. 70–73. ISBN   0-88687-572-2.
  3. 1 2 3 4 5 6 7 8 Paradise, Paul (1999). Trademark Counterfeiting, Product Piracy, and the Billion Dollar Threat to the US Economy. Westport, CT: Quotum Books. pp. 17–19, 83–86. ISBN   1-56720-250-0.
  4. 1 2 "Criminal Resource Manual 1706 Joint Statement on Trademark Counterfeiting Legislation, 130 Cong. Rec. H12076, H12078 - Introduction". United States Department of Justice. Retrieved January 2, 2014.
  5. ↑ Papa, Joe (1984). "Congress Passes an Anti-Aounterfeiting Bill". Chemical Week. p. 54.
  6. ↑ "The International Trademark Association Summary Statement". United States House Committee on the Judiciary. Retrieved January 2, 2014.

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