Before even considering the various civil and criminal counterfeit enforcement options, it is critical for IP owners to have all their rights properly defined and protected. This typically requires the assistance of a skilled intellectual property attorney, who assesses a client’s business by reviewing its portfolio of goods and services. Once reviewed, care should be taken to register the relevant IP rights; namely, trademarks, copyrights and patents. Specifically, in order to pursue counterfeit enforcement civilly, criminally, through U.S. Customs or by using e-commerce platforms and domain name host/registrar intellectual property enforcement tools, it is a prerequisite to own a trademark registration on the USPTO’s Principal Register covering the trademark and the goods/services being counterfeited. As it could take a year or more to obtain registrations, it is best to pursue the rights as soon as practicable. Once obtained, the registrations can, and should, be recorded with Customs, and, to the extent possible, with e-commerce platforms such as Amazon’s Brand Registry. 

The Trademark Counterfeiting Act, 18 U.S.C. § 2320 (TCA) is the primary federal criminal law involving counterfeiting. It was enacted in 1984 to amend the federal criminal code to make it a federal offense to violate the Lanham Act by the unauthorized or intentional use of a counterfeit trademark.

Criminal proceedings typically involve violations of the TCA, which relates to trademark counterfeiting only, and are most often brought in federal courts. Counterfeiting rises to the level of a criminal offense when it involves an intent to defraud in passing off the counterfeit item. Prosecutors often combine other charges when prosecuting the TCA, including criminal conspiracy under 18 U.S.C. § 371, mail fraud under 18 U.S.C. § 1341, wire fraud under 18 U.S.C. § 1343, money laundering under 18 U.S.C. §§ 1956-1957, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) under 18 U.S.C. §1961, among other federal and sometimes state charges. In addition to the TCA, there are also corresponding state statutes, which have similar burdens of proof and thresholds for liability.

To assert a criminal offense under the TCA, the government must prove the following elements: 

• that the defendant intentionally trafficked, attempted or conspired to traffic in goods, services, labels, patches, stickers, wrappers, badges, emblems, medallions, charms, boxes, containers, cans, cases, hangtags, documentation, or packaging of any type or nature; 

• that the defendant knowingly used or applied a counterfeit mark likely to cause mistake, confusion or deception; and 

• that the mark is counterfeit pursuant to 18 U.S.C. § 2320(f). 

The cooperation of the trademark owner is necessary to prove both the validity of the owner’s trademark rights and that the goods being sold are not genuine.

The penalties provided under the TCA are: 

• for an individual’s first offense, a fine of up to USD 2,000,000 or imprisonment for up to 10 years, or both, and for an entity, the fine increases to not more than USD 5,000,000; or

• for an individual’s second or subsequent offense, a fine of up to USD 5,000,000 or imprisonment for up to 20 years, or both, or for an entity, a fine of not more than USD 15,000,000. 

Under section 2320(c) convicted counterfeiters are typically ordered to reimburse victims of their crimes (including the trademark owners). Law enforcement authorities will also seize the counterfeit goods during the investigations, and will destroy or otherwise dispose of the counterfeit goods after convictions. 

In the U.S., civil enforcement remedies for counterfeiting are provided by the Lanham Act, and such cases are litigated in U.S. federal courts since the Lanham Act is a federal statute. Counterfeiting cases, distinct from trademark infringement cases, both of which arise under the Lanham Act, involve “counterfeit marks” (i.e., spurious marks that are identical with, or substantially indistinguishable from, registered marks). In order to be eligible to bring a counterfeiting claim, the trademark must be registered with the USPTO. Owners of registered marks may also bring an action for trademark infringement under 15 U.S.C. § 1114, or absent a registration, infringement of unregistered marks and/or federal unfair competition under 15 U.S.C. §1125(a). In order to prevail with regard to a trademark infringement or counterfeiting claim, the plaintiff has the burden of proving that it owns a valid and legally protected mark, and the defendant’s use of the mark causes a likelihood of confusion. 

While for trademark infringement and unfair competition a plaintiff is eligible to seek its actual damages as well as the infringer’s profits and costs (including enhanced discretionary damages) under 15 U.S.C. § 1117(a), counterfeiting provides certain heightened damages remedies. Specifically, in the case of willful counterfeiting, treble damages or in lieu of actual damages and profits, a rights holder is able to seek statutory damages of up to USD 2,000,000 per counterfeit mark per type of goods or services sold, offered for sale or distributed (or up to USD 200,000 if willfulness cannot be shown). Attorneys’ fees can also be sought, and will be awarded if there is a finding that a case is “exceptional”. In addition to monetary compensation, rights holders can also seek injunctive relief, including ex parte relief on an expedited basis. Recently, the TMA codified the presumption of irreparable harm for trademark owners, and thus, made it easier to obtain injunctive relief in trademark infringement and counterfeiting actions. In addition, rights holders can seek (and obtain) seizure, asset freeze and destruction orders. (See 15 U.S.C §§ 1116, 1118.)

U.S. case law involving the distribution and/or sale of counterfeit goods is robust, and always evolving. For example, in 2021, the Second Circuit, in Omega SA v. 375 Canal, LLC, 984 F.3d 244 (2d Cir. 2021), revisited the issue of contributory liability for landlords, and affirmed a jury verdict finding that the defendant landlord was contributorily liable. The Second Circuit shed further light on its Tiffany decision (Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 106 (2d Cir. 2010)), and confirmed that actual knowledge “of a specific infringer” is not required in all cases, but instead, willful blindness is sufficient, including the landlord’s “history of turning a blind eye toward counterfeiting at 375 Canal Street” and “insufficient steps to root out the counterfeiting it knew or should have known was occurring” (Omega v. 375 Canal at 254–255). Also in 2021, the Sixth Circuit, in Ohio State Univ. v. Redbubble, Inc., 989 F.3d 435 (6th Cir. 2021), overturned summary judgment in favor of the print-on-demand online marketplace, Redbubble, and analyzed the spectrum of marketplace liability (i.e., brick-and-mortar locations on one side, and certain passive online marketplaces on the other). Ultimately, it found summary judgment improper because Redbubble was more than a mere facilitator of sales, given — among other things — the products were delivered in Redbubble packaging and with Redbubble tags. More recently, in the Southern District of New York, Alibaba and AliExpress moved to dismiss complaints (alleging that they were both direct and contributory trademark infringers) and the motions were denied: Kelly Toys Holdings, LLC v. 19885566 Store, et al., Case No. 1:22-cv-9384 (S.D.N.Y.); King Spider LLC v. 884886 CH Store, et al., Case No. 23-cv-3472 (S.D.N.Y.).

One area of the law that is constantly expanding is the issue of grey market goods (i.e., “a foreign-manufactured good, bearing a valid United States trademark, which is imported without the consent of the United States trademark holder”: K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 285 (1988)). Under U.S. law, grey market goods are permissible so long as they are not “materially different” from the goods sold in the U.S. Thus, much of the case law surrounding this issue focuses on what constitutes a material difference. See, for example, Dan-Foam A/S & Tempur-Pedic, Inc. v. Brand Named Beds, LLC, 500 F. Supp. 2d 296 (S.D.N.Y. 2007) (collecting cases exemplifying what constitutes a material difference, including differences in packaging, warranty protection and quality control procedures). To the extent a material difference is found, a rights holder may seek the remedies provided under the Lanham Act for trademark infringement; however, criminal penalties generally cannot be imposed. See United States v. Cone, 714 F.3d 197 (4th Cir. 2013); and 18 U.S.C. § 2320(e)(1)(B) (“authorized use” exception). Additionally, U.S. Customs and Border Protection has the authority to prevent the entry of goods that are found to constitute grey market goods, and the U.S. International Trade Commission is able to grant exclusion orders blocking the importation of such goods.

Aside from the Lanham Act and criminal counterfeiting, there are a litany of regulations in the United States, which are intended to protect consumers from the hazards of counterfeit goods. For example, the U.S. Consumer Product Safety Commission administers and enforces laws relating to products that pose safety concerns; the Food and Drug Administration issues and enforces regulations relating to food, drugs, cosmetics, etc.; and the Federal Trade Commission enforces laws pertaining to the prevention of fraud, deception and unfair competition, including, but not limited to, marketing and product labelling. 

Decisions on how best to pursue a counterfeiter are quite complex, and most often require a multi-prong approach, including several of the measures explained here. Before making a decision to pursue a matter civilly, a rights holder will typically first conduct its own private investigation of the counterfeiter (internally or using a private investigator or third-party online enforcement service) by conducting background research, surveillance, and/or purchases. Enforcement efforts, especially those involving the internet, can be complicated by an infringer’s ability to hide behind fake aliases or domain register privacy settings, which not only make the pursuit of infringers difficult, but also the collection of any monetary judgment that may be rendered. 

Criminal prosecution has benefits (including serious penalties for counterfeiting), and it is less expensive for a rights holder than bringing a civil litigation since it is initiated by the government. However, some of the challenges associated with criminal enforcement include higher burdens of proof (including proving that the counterfeiting was intentional) and relying on law enforcement officials (which can severely delay the action, as counterfeiting is typically given a low priority as compared to other criminal offenses). 

Over the past few years, there has been an increased prevalence of social media influencers creating content on YouTube, TikTok, Instagram, Reddit and other social media platforms to promote the sale of counterfeit goods on traditional platforms such as DHGate and AliExpress. More recently, social media influencers have been found promoting counterfeit products via online shopping platforms that aid consumers wishing to purchase goods on popular Chinese ecommerce platforms such as Taobao and 1688, which are known for selling counterfeit products, and are directed towards businesses and consumers based in China and do not ship products directly to the U.S. Some of the more popular platforms that conduct this type of business are Pandabuy, CSSBuy, Sugargoo and Superbuy. These platforms specifically target U.S. consumers by translating the information posted on merchant storefronts on Taobao and 1688 from Chinese to English to enable U.S. consumers to shop on these platforms. Consumers, without access to merchant storefronts on Taobao and 1688, search for and identify items they wish to purchase via the translated listings and instruct the platform agents to purchase the products, who direct shipment to their warehouses in China. Once the shipments are received in the warehouse in China, they are unpackaged and photographed and the photographs are sent to the end consumer for review and approval. Upon approval and receipt of shipping instructions from the consumer, these platforms repackage the product(s) and ship the same to the consumers located in the U.S.

Social media influencers are compensated by the platforms for conducting video “un-boxings” or reviews of purchases they have made through the platforms and for providing their viewers/followers access to the same counterfeit products by including customized links to the counterfeit products on their own social media platform pages. The influencers also, in what has become common practice, create and disseminate Excel spreadsheets that contain hundreds or thousands of photos and links to counterfeit products on the platforms to provide consumers with easy access to 1688 and Taobao listings. 

Since the China-based platforms target U.S. consumers, they can be pursued in U.S. courts. Recently, U.S. courts have issued temporary restraining orders and asset freezes to prevent further counterfeiting misconduct occurring via such platforms. 

Given the advancements in social media promotion discussed in the previous subsection, there has seemingly been a shift among the younger Gen Z and millennial generations, who purchase through social media, rather than via traditional Shopify designed-websites and retail platforms such as Alibaba, DHGate and Amazon. The same young consumers are flocking to retail platforms such as Shein.com and Temu.com. There has also been a post-COVID return to brick-and-mortar retail and wholesale counterfeiting. 

Since counterfeiting has become more widespread among a wider net of brands, there are many more companies providing services to target counterfeits, particularly on the internet. In addition to traditional takedown services, there are website and platform-crawling services using AI to seek out counterfeits by scanning brand names and brand images. Given the wider net of brands facing these challenges and the less expensive nature of the technology used to combat counterfeiting, there is a greater opportunity for more brands to carry out additional enforcement with more readily available technology than was available just a few years ago. 

Also, brand owners continue to pursue counterfeiters located in China through the U.S. court system, seeking injunctions and asset freezes at a never-before-seen level. While the number of lawsuits has increased, there is much less successful recovery of frozen assets as counterfeiters have become more sophisticated in running their online operations, often cleaning out the relevant financial accounts on a daily basis. 

The following is a list of the most popular targeted platforms for takedowns and lawsuit restraining orders and asset freeze actions: Alibaba, AliExpress, DHGate, Amazon, Wish, Temu, Shein, Wal-Mart, Shopify, Fruugo, Pandabuy, Superbuy, CSSBuy and Sugargoo. 

With the prevalence and rapid expansion of online marketplaces and e-commerce websites, online counterfeiting has become rampant; however, much to the dismay of brand owners, the enactment of legislation specifically addressed to combat the same has been a long, arduous process that has not yet fully come to fruition. As it currently stands, brands are able to seek largely the same remedies against both offline and online infringers. The Lanham Act does not specifically address online trademark infringement or counterfeiting, the circumvention of technological measures (like the Copyright Act does; see 17 U.S. Code § 1201), or the manufacture, importation and sale of technologies, devices and services designed primarily for the purpose of breaking digital locks. In addition to pursuing online infringers civilly, an IP rights owner should proactively monitor and remove infringements using IP enforcement tools provided by many online service providers. While these activities are time consuming, potentially costly (especially if required to retain third-party takedown services if the scope of the infringement warrants as such), and frustrating due to the temporary nature of such a solution in many cases, it is important to include the takedown work as part of an overall brand protection strategy.  

Third-party e-commerce service providers that facilitate the sale of counterfeit goods may be held liable under the theory of secondary liability. See Tiffany v. eBay (holding that an online service provider can be held liable if it intentionally induces another to infringe and continues to supply its services to a third party it has reason to know is partaking in trademark infringement, but declining to hold eBay liable). As indicated above in Section 1.3, recently, in the Southern District of New York, Alibaba and AliExpress moved to dismiss complaints alleging that they were both direct and contributory trademark infringers and the motions were denied: Kelly Toys v. 19885566 Store; King Spider v. 884886 CH Store.

While case law has evolved since Tiffany, and varies by circuit in the United States, such that some third-party service providers may be held accountable for trademark infringement in certain cases, as addressed in the Introduction, if the SSA is enacted by Congress — which explicitly establishes contributory liability for third-party platforms through which counterfeit products posing health and safety concerns are sold — online marketplaces could be held liable for any injuries or damages suffered from such products. 

In light of the complexities posed by infringement occurring online, including but not limited to the ability of infringers to use fake aliases or hide behind cloaks of anonymity, the best approach for combatting infringements will often be dictated by the scope of the infringement. For online infringers that also have physical storefronts and/or warehouses, on the ground efforts may be wise, such as dispatching investigators to the physical locations to assess the extent of the infringement. If there are large quantities of counterfeit goods involved, the potential for on the ground raids and seizures of infringing goods may be possible. In a similar vein, in the online context, the seizure of assets and the suspension of online storefronts is possible by seeking temporary restraining and preliminary injunctions. 

When a dispute over a domain name occurs, a trademark owner has options, including commencing a lawsuit under the Anti-cybersquatting Consumer Protection Act 15 U.S.C. § 1125(D) (ACPA) in federal court or filing a complaint pursuant to the Uniform Domain Name Dispute Resolution Policy (UDRP). 

Under the ACPA, a trademark owner may bring an action against a domain name registrant, who has a bad faith intent to profit from the owner’s trademark, and registers, traffics in, or uses a domain name that is identical or confusingly similar to a distinctive or famous mark. If successful in bringing a claim under the ACPA, a court can order the forfeiture, cancellation or transfer of the infringing domain name: 15 U.S.C. § 1117(D)(1)(c). A mark owner may also obtain injunctive relief, and can elect to recover either their actual damages or statutory damages between USD 1,000 and USD 100,000 per infringing domain (15 U.S.C. § 1117).

The UDRP was designed to provide a relatively quick, low cost and streamlined alternative to initiating a lawsuit; however, the only remedies available under the UDRP are cancellation of the infringing domain name or transfer of the infringing domain name to the trademark owner. In a UDRP proceeding, a trademark owner must prove:

• the domain name is identical or confusingly similar to the owner’s trademark; 

• the domain registrant does not have any rights or legitimate interest in the domain name; and 

• the domain name has been registered and is being used in “bad faith”. 

Since the start of the COVID-19 outbreak, the number of COVID-19 related domain names registered has skyrocketed. From January through October 2020, the World Intellectual Property Organization Center (WIPO) handled 3,406 cases, or an 11% increase over the same period during 2019 (see www.wipo.int/pressroom/en/articles/2020/article_0026.html). Some of these domain names host websites dedicated to spreading false information regarding COVID-19 or websites selling counterfeit products and/or false services relating to the pandemic. For example, Gilead Sciences, Inc. filed a UDRP complaint against Main Contact for registering the domain name coronagileadsciences.com, which contained the well-known and famous GILEAD mark. The WIPO Administrative Panel Decision ultimately ordered the domain name to be transferred to Gilead. (See Gilead Sciences, Inc. v. Main Contact, WIPO Case No. D2020-0776.)

With the popularity of Shopify and similar proprietary e-commerce platforms for online stores and retail point-of-sale systems, we have seen a significant increase in counterfeit platforms. These e-commerce platforms offer online retailers a suite of services including payments, marketing, shipping and customer engagement tools. As of 2023, Shopify hosted 4.6 million stores across 175 countries. Specifically in the toy and luxury fashion spaces, there has been an uptick in fraudulent websites, popping up daily, which are made to mimic brands’ authentic websites, and are entirely dedicated to the sale of counterfeit products. It is often the case that the bad actors behind such fraudulent websites own and operate companies that register tens, if not hundreds, of domains that include variations of a brand’s name or most famous trademarks. Such websites are constantly activated and deactivated to avoid detection.

Social media platforms such as Facebook, Instagram and TikTok have become a hotbed for promoting and distributing counterfeit goods. Each platform has a tool to report counterfeit goods and other IP violations. Like e-commerce platforms, though, these platforms have largely skirted liability for direct or contributory infringement; however, given the extent to which they engage in e-commerce (which they all do to a degree), they may be liable in the future if the SAS is enacted. 

With the increased hype around NFTs, there has been a surge in the creation of platforms where only NFTs are available, such as Opensea. NFTs are also being marketed via traditional social media platforms. With this excitement comes an increase in the unauthorized use of IP rights in connection with NFTs. More reputable platforms have established notice and takedown mechanisms; however, enforcement may not be immediate for trademark infringement where the goods/services registered under the mark are not at issue. In the same vein, we are seeing more and more brands participating in other digital goods and trying to find their footing in the augmented and virtual reality space. This has caused other parties to try to beat rights owners at offering their products/services in these digital realms. At this juncture, rights owners are relying primarily on pre-existing trademark registrations for enforcement where applicable, but at the same time, rushing to file for trademarks to cover products/services in the digital space. 

AI technology has developed at a rapid pace, and U.S. legislators, regulators, and court systems have been grappling with the novel issues that have arisen, and the question of how it is best to regulate AI (if at all). Currently, there is no broad-sweeping centralized legislation that addresses AI head-on in the United States; however, a number of bills touching upon AI have been introduced in Congress. See Brennan Center for Justice, “Artificial Intelligence Legislation Tracker”, www.brennancenter.org/our-work/research-reports/artificial-intelligence-legislation-tracker (last updated April 1, 2024) (tracking bills introduced in Congress relating to AI). Additionally, in 2023, over 25 also introduced bills pertaining to AI. See National Conference of State Legislatures, “Artificial Intelligence 2023 Legislation”, www.ncsl.org/technology-and-communication/artificial-intelligence-2023-legislation (last updated January 12, 2024) (tracking state legislation relating to AI). Working groups and initiatives have also been launched at all different levels of government. For example, in the intellectual property space specifically, the U.S. Copyright Office is undertaking a study of generative AI and copyright law, and if legislation and/or regulations are necessary. See U.S. Copyright Office, “Copyright and Artificial Intelligence”, www.copyright.gov/ai.

For lawyers, AI has the potential to be a useful tool, but its use should also be exercised with caution. The foregoing proposition is embodied in Mata v. Avianca, Inc., 2023 U.S. Dist. LEXIS 108263 (S.D.N.Y. June 22, 2023), which is a widely publicized decision wherein attorneys were sanctioned due to their citation of non-existent cases, which the attorneys had found via using OpenAI’s ChatGPT.

In the United States, there is no singular centralized body that governs lawyers, but instead, the rules governing lawyers vary by state. This being said, the American Bar Association publishes Model Rules of Professional Conduct (the “Model Rules”), which are followed, in whole or in part, by many states and have become a part of (in one form or another) each state’s own ethical rules. Many of the Model Rules are implicated by the use of AI; however, there are not currently any rules that are specific to AI, although the American Bar Association has developed a number of policy initiatives and resolutions relating to the same. See Jayne R. Reardon and Tom Martin, “The Ethics and Regulation of AI”, American Bar Association (January 1, 2024), available at www.americanbar.org/groups/law_practice/resources/law-practice-magazine/2024/2024-january-february/the-ethics-and-regulation-of-ai (analyzing a number of the Model Rules applicable to the use of AI).

Deepfake technology adds a layer of “faux” credibility to counterfeit products by creating video replications of an individual’s image and likeness, which can be manipulated by the creator to act, speak and appear as they wish. Counterfeiters can now utilize the technology to advertise their products via videos of popular public figures expressing their endorsement of the goods. Deepfake technology — aided by the AI revolution — has become increasingly sophisticated, making deepfakes nearly undetectable to consumers. In January 2024, popular singer/songwriter Taylor Swift fell victim to a deepfake scam. A counterfeit seller of Le Creuset kitchenware developed a deepfake video of the singer endorsing a giveaway. The brand was forced to reckon with angry consumers, who were duped by the video, thereby causing the brand to issue a public apology. 

Deepfake technology poses a significant threat to brands utilizing influencer marketing techniques. Where the image and likeness of the brands’ key figures are readily available online, counterfeiters have all the tools to formulate faux videos in connection with their fraudulent activities. Although our clients have yet to be affected by deepfake technology, the firm is highly aware of the dangers it poses and has implemented steps to root out such scams. Specifically, we regularly monitor online platforms, submit takedown requests, send cease and desist letters, and keep in constant communication with clients about what advertising and marketing efforts they authorize. Like any other counterfeiting technique, constant vigilance is key.

There have been significant efforts at both the state federal level to pass laws and regulations touching upon crypto technology and digital assets, and particularly, cryptocurrency. See, for example, National Conference of State Legislatures, “Cryptocurrency, Digital or Virtual Currency and Digital Assets 2024 Legislation”, www.ncsl.org/financial-services/cryptocurrency-digital-or-virtual-currency-and-digital-assets-2024-legislation (last updated February 21, 2024) (tracking state legislation relating to cryptocurrency and digital assets). As with AI, there is no singular broad-sweeping centralized legislation addressing crypto technology, but instead, a plethora of laws and regulations have been proposed that touch upon crypto technology, some of which have passed.

As with AI and crypto technology, there is no singular governing body responsible for all regulation of piracy via content streaming in the United States, and there are a number of laws and regulations that touch upon the topic, either directly or indirectly. One notable more recent federal law that was passed is the Protecting Lawful Streaming Act of 2020, part of the Consolidated Appropriations Act of 2021 (Public Law No: 116-260) (PLSA), which was signed into law on December 27, 2020, and aimed at remedying a loophole in the penalties available for the illegal streaming of copyrighted works. The PLSA made illegal streaming a felony when done “willfully” and “for purposes of commercial advantage or private financial gain”, but only when offering or providing to the public a “digital transmission service” that meets one or more qualifications. 18 U.S.C. § 2319C(b). In other words, the PLSA only applies to the most severe offenders: those operating commercial streaming services intended for illegal streaming. Prior to the passage of the PLSA, such an offense was only a misdemeanor. The heightened penalties provided by the PLSA are intended to act as a deterrent to curb such illegal conduct.

Despite lobbying efforts by the Motion Picture Association of America, among other industry groups, to date, the United States has refrained from joining other jurisdictions, and has not passed any federal site blocking legislation. That being said, under the Copyright Act, a rights holder is able to seek a temporary, preliminary, or permanent injunction on “such terms as it may deem reasonable to prevent or restrain infringement of a copyright”, among other remedies, including damages and attorneys’ fees, against a copyright infringer (or anyone acting in concert or participation with such an infringer), including those engaged in the streaming of pirated content online. 17 U.S. Code § 502; 17 U.S. Code § 504. The Digital Millennium Act, in addition to establishing a notice and takedown system, also provides U.S. courts with the authority to issue injunctions against service providers, such as those that provide streaming services. 17 U.S. Code § 512(j)(1). 

QR codes have become a daily feature of our lives — from QR-coded menus at restaurants to methods of payment, their efficacy is undeniable. However, the risks associated with QR codes have exponentially increased in direct proportion to their popularity. Scammers can now utilize QR codes to employ phishing scams, re-directing consumers to malicious websites or counterfeit product listings. Recently, our clients have seen an increase in all-out counterfeit websites. Although QR codes have not yet been employed, they could play a part in the promotion and trafficking of these fake websites in the future.

United States Customs and Border Protection (CBP) is the main federal agency responsible for handling counterfeit goods at U.S. borders. CBP has the statutory authority, pursuant to 19 CFR § 162.6, to search “all persons, baggage and merchandise” that arrive in the United States and may rely on various other authorities to stop and prevent the trafficking of counterfeit goods. CBP has the authority to “detain, seize, forfeit, and ultimately destroy merchandise seeking entry into the United States if it bears an infringing trademark … that has been registered with the United States Patent and Trademark Office (USPTO) …,” and has thereafter been recorded with CBP via its e-Recordation Program. An intellectual property right owner has the ability to record its registered trademarks with CBP at iprr.cbp.gov, which CBP will rely on in providing border enforcement and identifying counterfeit goods.

Pursuant to 19 CFR § 133.21, when CBP suspects that goods are counterfeit, the goods are detained for up to 30 days, during which time CBP will determine whether to formally seize the goods. Within five business days from the date of decision to detain suspected infringing merchandise, CBP will notify the importer of the detention. During the detention period, rights holders are advised of limited importation information (i.e., the country of origin, the date of importation, the port of entry, a description of the merchandise and the quantity of merchandise detained) so assistance may be given to CBP in determining whether the imported goods bear a counterfeit mark. If a formal seizure occurs, rights holders are additionally given the names and addresses of the manufacturer, exporter and importer. 

Customs recordation is an excellent and cost-effective tool that brand owners can use to prevent counterfeit goods from entering the U.S. CBP expends substantial resources on minimizing counterfeit goods, including by monitoring targets, intercepting shipments and bearing the costs of destroying counterfeit goods. The initial fees for brand owners are minimal, especially in comparison to the costs associated with destroying counterfeit goods that brand owners are responsible for in many other countries. One downside is that CBP officers cannot inspect each and every package that arrives and therefore some unauthorized and counterfeit goods still make it into the country. 

In 2020, the U.S. Government Accountability Office (GAO) was tasked with reviewing IPR enforcement practices in advanced economies, and the extent to which CBP could implement those practices. The primary issue that GAO found, spanning across jurisdictions, is that smaller packages are often overlooked. GAO recommended that CBP take steps to develop a streamlined enforcement approach against counterfeit goods in small packages and CBP concurred. Implementing these steps will allow CBP to stop parties that were taking advantage of the misconception that CBP does not routinely inspect small parcels. In 2021, CBP announced a partnership with the US Chamber of Commerce, which seeks to enhance the exchange of information concerning known or suspected intellectual property rights violations, and will involve joint training and outreach events to improve public awareness of efforts to disrupt the trade in counterfeit and pirated goods. 

In accordance with 19 CFR § 133.61, CBP routinely provides brand owners or their authorized agents with seizure notices that include information such as: the description of the property that was seized, the trademark at issue, the name and address of the importer, exporter and manufacturer if available. This information can be used to further investigate the counterfeiters and determine if a factory abroad is producing counterfeits, the nature of the importing party’s business in the U.S., if they frequently ship goods here, etc. Such information often leads brand owners to send cease and desist letters or further pursue the parties in court. 

Once counterfeit goods have been determined as such, and are seized, forfeited, destroyed, or otherwise disposed of in accordance with 19 U.S.C. § 1526(e), civil monetary fines may also be imposed. Under 19 CFR § 133.27, CBP has the authority to impose civil fines on any person who directs, assists or aids and abets the importation of counterfeit merchandise that is seized. For a first-time seizure of merchandise, the fine will not be more than the value the merchandise would have had if it were genuine. For the second, and each subsequent seizure thereafter, the fine will not be more than twice the value the merchandise would have had if it were genuine. Counterfeiters are also subject to both civil enforcements, if rights owners choose to file such lawsuits, and criminal prosecution as discussed above in Section 1. 

Beyond recordation, intellectual property right owners may provide CBP with supplemental information and resources to aid in its identification of counterfeit goods, such as product identification guides, in-person product identification training, live online training introducing the brand and describing the intellectual property rights and partnerships with the Centers of Excellence and Expertise (see www.cbp.gov/trade/priority-issues/ipr/protection). These methods allow brands to educate CBP officials, which helps to increase CBP’s success rate of identifying counterfeit products. 

Every year, CBP seizes millions of counterfeit goods, including fake versions of popular products, such as smartphones and related accessories, electronics, apparel, shoes, cosmetics and high-end luxury goods. During the fiscal year 2022, according to CBP records, the following was seized: 31,030 handbags and wallets, 28,910 apparel and accessory items, 14,098 watches and jewelry items, 11,964 footwear, 3,875 consumer electronics, 3,671 pharmaceuticals and personal care items, as well as thousands of automotive and consumer products and hundreds of toys.

Founded in 2000, the National Intellectual Property Rights Coordination Center (IPRC) is the central prosecutorial authority in the U.S., comprised of over 19 U.S. government investigative and regulatory agency partners, including U.S. Customs and Border Protection and the Federal Bureau of Investigation. The IPRC uses the unique expertise of each of the member agencies to share information, manage and coordinate investigations, and it provides assistance to federal, state, local and international law enforcement agencies. It is unclear how effective the IPRC is, given that most of the actual work is conducted by the government agency partners and it is not often made public how the information made it to the appropriate agency. However, from our experience, we know that CBP often works alongside trade policy and law enforcement agencies, such as Immigration and Customs Enforcement (ICE), to respond to intellectual property right violations and enforce trade laws. Internationally, CBP works with foreign organizations and governments to strengthen its border enforcement by gathering intelligence to inform its operations. CBP routinely refers cases to other agencies to ensure that criminal activities lead to investigations, arrests and convictions. 

6.1 How do we stop the flow of counterfeits of our branded products in the United States?

The only true and time-tested means of curtailing the flow of counterfeits in the United States — since it is impossible to completely stop it — is by instituting a comprehensive anti-counterfeiting program that incorporates many, if not all, of the following components: 

• actively registering new and relevant intellectual property rights associated with your brand; 
• recording your intellectual property rights with U.S. Customs; 
• recording your intellectual property rights with online market place brand registries; 
• using the services of third party takedown companies; and/or 
• retaining legal counsel to send cease and desist letters and file lawsuits. 

6.2 Is it worth spending money to attack the counterfeiting problem? 

Absolutely. If counterfeiters see you are serious about protecting your brand, they may just move on to knockoff the next brand that is not doing so. Also, at the end of the day, if the anti-counterfeiting program that is put in place is comprehensive, you should see a direct correlation between the money you spend and an increase in sales. Sometimes you need to spend money to make money.   

There are no other relevant updates to report in the U.S.

United States Patent and Trademark Office (USPTO)

www.uspto.gov 

United States Copyright Office

www.copyright.gov 

International Trademark Association (INTA)

www.inta.org

International AntiCounterfeiting Coalition (IACC) 

www.iacc.org

American Intellectual Property Law Association (AIPLA)

www.aipla.org