Last week U.S. Senators Chris Coons (D – Del.) and Chuck Grassley (R – Iowa) introduced a bipartisan resolution recognizing August as National Anti-Counterfeiting and Consumer Education Awareness Month, highlighting “the importance of trademarks in the American economy and in protecting consumer safety.”(1) The resolution notes that, according to the United States Patent and Trademark Office (USPTO), the U.S. economy suffers a $29 billion loss every year from the displacement of U.S. sales of legitimate products by counterfeit and pirated goods sold abroad. Within just the first eight months of 2022, U.S. Customs and Border Protection (CBP) made almost 17,000 seizures of counterfeit goods worth an estimated $2.4 billion. (2)
As such, counterfeit goods no longer effect only luxury brands and pro sports teams. For example, counterfeit dietary supplements have become increasingly problematic for nutraceutical brands. (3)
What is Counterfeiting?
Counterfeiting is the act of manufacturing, importing, selling, or distributing a non-genuine consumer good that is designed and branded to look identical to the authentic product, so that consumers are deceived into believing it is authentic. (4) Specifically, counterfeiting involves the affixing of the trademark or logo of the copied brand, without the authorization or approval of that brand.
The Lanham Act defines a counterfeit mark as “a spurious mark which is identical with, or substantially indistinguishable from, a registered mark.” (5) “The essence of counterfeiting is that the use of the infringing mark seeks to trick the consumer into believing he or she is getting the genuine article, rather than a colorable imitation.” (6) The Lanham Act provides civil remedies for trademark infringement and counterfeiting, including injunctive relief and money damages or statutory penalties. The Trademark Counterfeiting Act of 1984 criminalizes certain trademark counterfeiting offenses. (7)
6 Steps to Fight Counterfeiting
Despite this rise of counterfeit goods in the food, clothing, dietary supplement, and cosmetics markets, CPG companies have many tools for implementing a robust anti-counterfeiting program. In recognition of National Anti-Counterfeiting Month, here are 6 steps (with some “baby steps” within each) that CPG brands can take to fight back against the scourge of counterfeit goods.
Step 1: Register your Trademark(s)
While brand owners enjoy some limited rights in an unregistered mark, a trademark must be registered with the USPTO to bring a trademark counterfeiting claim in federal court. A federal trademark registration can be obtained based on actual use in commerce or a bona fide intent to use. To the extent that their goods and services are sold, manufactured, or stored abroad, brands should seek trademark registration in those countries, too. (8)
Step 2: Record with CBP
Trademarks registered on the USPTO’s Principal Register can be recorded with CBP. 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 recorded with the agency. (9) Rights owners can create Product Identification Guides to assist CBP officials with spotting counterfeit versions of their goods.
Step 3: Enroll in Amazon Brand Registry
Amazon.com offers an array of anti-counterfeiting measures. Trademark owners can enroll registered trademarks and pending applications with Brand Registry and utilize its reporting tools to notify Amazon of counterfeit sellers and listings. A trademark owner does not have to be an Amazon seller to use Brand Registry.
Other next-level Amazon tools include Transparency (a product serialization service), Project Zero (which instantly removes counterfeit listings for brands whose reported violations have high acceptance scores), and the Counterfeit Crimes Unit (CCU), which files lawsuits against egregious counterfeit operations and works with law enforcement to disrupt counterfeiting networks.
Step 4: Protect the Supply Chain with Contracts, Licensing, and Technology
Contracts: Contractual protections ensure that everyone on the supply chain is incentivized to police against counterfeit goods. Contract terms prohibiting sales to third parties and outside the distribution chain will help keep goods and packaging out of the hands of counterfeiters (who, for example, may put counterfeit goods in otherwise legit packaging).
Licensing: Trademark owners should also implement licenses which specifically identify the trademarks being licensed, the manner of placement, and describes the exact goods on which the licensee can place the owner’s trademark.
Embrace Technology: Brand owners should develop an effective product track-and-tracing program with advanced serialization codes, holograms, RFID tags, and similar high-tech solutions that will make your product line less susceptible to counterfeiting.
Step 5: Monitor the Marketplace and Report Responsibly
Enforcement of trademark rights requires careful deliberation. Brand Registry rights owners should supplement Amazon’s reporting tools by carefully reviewing third party listings, and most importantly, by conducting test orders. A counterfeit product received from a test order provides the best evidence for responsibly reporting a problematic listing with Amazon and for pursuing legal action against the counterfeit seller. Without a test order or other concrete evidence of a counterfeit sale, rights owners run the risk of having their reports being rejected by Amazon, or worse, being sued by third party sellers for false reporting of infringement.
Monitoring the marketplace also involves fostering close relationships with suppliers, payment service providers, logistics providers, distributors, and retail stores, and alerting these partners of any counterfeit sellers or suspicious packaging.
Step 6: Pursue Legal Action
Quite often, threatening litigation and filing suit is necessary to meaningfully enforce trademark rights and stop rampant counterfeit sales. Under the Lanham Act, trademark owners can seek a temporary restraining order, a preliminary injunction, and upon notice to the U.S. Attorney in the district where sought, an ex parte seizure of the offending goods where appropriate. (10)
A successful plaintiff in a counterfeiting action may recover either actual damages or profits (trebled) or may elect statutory damages ranging from $1,000 to $200,000 per counterfeit mark per type of goods or services sold, and up to $2,000,000 per counterfeit mark per type of goods or services sold for willful infringement. (11)
Conclusion
CPG brands of all types and sizes must take seriously the possibility that someone is selling counterfeit versions of their goods. It is recommended that brands confer with trademark counsel to determine which steps are right for their business and how best to execute an effective anti-counterfeiting strategy.
Counterfeit goods risk consumer safety, cause poor customer reviews, and damage a brand’s goodwill. As we recognize National Anti-Counterfeiting Month, taking these six steps to combat counterfeit goods should put trademark owners on the right path to protecting their reputation and business.
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Chilivis Grubman helps businesses across various industries establish robust trademark enforcement and anti-counterfeiting programs.
- Res. 325 (2023).
- U.S. Customs and Border Protection, “Back to School: Business and Law Enforcement Team Up to Protect Students, Parents, and Teachers from Counterfeit Goods.” (Aug. 11, 2022).
- Natural Products Insider, “Don’t Let Your Supplement Brand Get Knocked Out by Knockoffs.” (June 24, 2021).
- International Trademark Association, “Counterfeiting (Intended for a Non-legal audience).” (last updated Aug. 31, 2020).
- 15 U.S.C. § 1127.
- Gucci America, Inc. v. Guess?, Inc., 868 F. Supp. 2d 207, 242 (S.D.N.Y. 2012).
- 18 U.S.C. § 2320.
- Selecting and registering a trademark requires careful consideration and many factors implicate the registerability of a mark, including, for example, the strength of the mark and whether a confusingly similar mark has already been registered in connection with similar goods and services. The author will discuss general principles of U.S. and foreign trademark registration in future articles.
- U.S. Customs and Border Protection, “Help CBP Protect Intellectual Property Rights.” (last modified Oct. 4, 2022)
- 15 U.S.C. § 1116.
- 15 U.S.C. §§ 1117(b), (c).