Thursday, November 04, 2010

Pop Quiz: Counterfeit?

Customs plays an important role in preventing the importation of merchandise that infringes U.S.-held intellectual property rights. That is an important job for the economy as well as for the health and safety of the public. You can usually be pretty certain that a company that is willing to rip off a brand name trademark is not too scrupulous about health and safety requirements. There are lots of dangerous counterfeit products out there, and we should all thank CBP for helping keep them out of the marketplace.

But there are also non-counterfeit products that nevertheless infringe someone's trademark, trade dress, or other intellectual property right. Those products may or may not present health and safety concerns as well. But, they are legally different.

Specifically, a "counterfeit" product is one bearing a mark that is "identical to or substantially indistinguishable from a registered trademark." 19 CFR sec. 133.21(a). These are the fake Coach and Prada bags, HP ink cartridges, and Nike shoes for example.

Recently, CBP used this picture as an example of counterfeit batteries:


I totally understand that these batteries are ripping off Duracell and that CBP should seize them as being infringing. But, is this a counterfeit products issue? "Young Emperor" is not identical or indistinguishable from "Duracell." So what is going on here?

Actually, CBP is on the right track about this and the folks at Duracell have been on the ball too. You need to understand that the label design can also be a trademarked device. In this case, beyond the Duracell name, the company all holds a trademark on the copper and black packaging as well. If you want to check, it is registration number 1039589. While the brand name  has not been copied, the packaging has.

We could quibble about whether the Duracell registration requires both the color scheme and the brand name, but the illustrative point is clear. Infringer who think they will avoid legal problems with minor changes to spelling or by avoiding the use of the brand name are often wrong.

Advice for the U.S.-based rights holder is to record your trademarks, copyrights, and other intellectual property with Customs and Border Protection. Then work with CBP to let the agency know what aspects of your product or packaging are protected. CBP will then be in a position to help protect your rights. And, they are all the more happy to do so if you can point to a health or safety issue related to the infringing goods.

4 comments:

Lowell DeFrance said...

Good explanation Larry.

On the importer side you should also make sure what you are buying does not look like something that has a trademark. I could see some poor dupe buying batteries not seeing what they looked like and getting the "Young Emperor" brand.

Also if you have a licensing agreement, you should have a copy of it sent to your logistics department, broker, etc., so it is ready to show customs on arrival.

Anonymous said...

The other big issue that isn't discussed is importation of grey market goods. These are genuine goods bearing the authentic mark at issue, but manufactured or acquired outside the US. The ports need more training in not just assuming that all goods are infringing because the trademark holder says so, but that sometimes the trademark holder's own sister company is selling genuine products destined for the US market. If that is the case, then the problem is intra-company, not with the import(er).

Larry said...

Anonymous is right. Grey market goods are often legally imported (assuming no material differences from the domestic product). Customs has a very hard distinguishing between grey market products and counterfeits. The problem is that importers have the same problem and are often duped into buying counterfeits after being told they are legitimate but non-US goods. This can leave the importer in the tough position of trying to prove the negative the the goods are not counterfeit. People lose merchandise in these scenarios. I have seen Customs state in public that it needs to work more closely with all legitimate importers including parallel or grey market imports. What they do on that front remains to be seen.

Richard said...

Hi I have a question that maybe you can answer. A few months ago I received a letter from customs saying that a shipment of 10 counterfeit hair irons had been seized. I never claimed anything because I had never ordered such items.

Now I get a law suit from the company talking about infringement and a whole bunch of mumbo jumbo. My company sells educational products which are copyrighted by us. I have never sold any beauty products etc...so my company has no record of selling such items and they don't have proof of me selling anything either.

Sometimes I have bought things from China but for personal use but never for resale. In this particular case I never ordered any such products.

Can this idiot company still get away with what they are doing?

By the way although I have been in business for 11 years I am closing it in the next 2 months to open another one because I am moving into the health related industry for a line of products we developed. Dont know if that helps any.

THANKS