Transcript NIPLI Presentation 2002

The National Intellectual
Property Law Institute
Counterfeiting Challenges and the Law
Product Counterfeiting:
Enforcement of Civil Remedies Against Producers and
Purveyors of Counterfeit Products
William C. Conkle
Conkle & Olesten, PLC
Santa Monica, California
310 998-9100
[email protected]
www.conklelaw.com
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Benefits of Advanced Planning for Counterfeit
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Speed is essential to responding to reports of counterfeits
The organization should have a prepared plan for responding to
counterfeit
Response items include:
• Investigation of sources, locations, and quantities
• Notice to trade
• Prevent dissemination of counterfeit
• Rebut claims of innocent behavior
• Seek government assistance from Customs and Department of
Justice
• Determine whether to file civil action
• If you can not rely on government to stop the counterfeit,
civil litigation will be necessary
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• Damages are available through civil action
What is the Goal for the Civil Action?
• Stop the manufacturing?
• Domestic, whether open or secret, or Foreign.
• Stop distribution?
• Stop retailing?
• Obtain evidence from some party to learn the identity of others
involved?
• Obtain seizure of products, advertising and materials to make them?
• Obtain money?
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What is A Counterfeit ?
• Your trademark or your copyrighted material on a product that is not
yours; duplicated books; films; recordings.
• A "counterfeit" is a spurious mark which is identical with, or
substantially indistinguishable from a registered mark. (18 U.S.C.
§1727; 15 U.S.C. § 1127) Includes words, pictures, shapes, colors.
• Counterfeits can include:
• Fake pharmaceuticals with your trade mark, trade dress or
packaging
• Duplication of your software by unlicensed person
• Duplication of coupons, and other printed material
• Copies of recordings and videos
• Your trademark or labels on a garment made by another
• Duplication of copyrighted fabric
• Duplication of access cards and unauthorized telephone access
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Grounds for Civil Relief
• Federal Remedies
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Trademark Infringement under Trademark Act, Title 15
Copyright Infringement under Copyright Act, Title 17
Tariff Act, 19 U.S.C. §1526
Racketeering, 18 U.S.C. § 1964
Trademark Infringement (15 U.S.C. § 1114)
Use in commerce, without consent, of any reproduction, counterfeit,
copy, or colorable imitation of a registered mark for advertising, sale,
offering for sale or distribution of any goods or services.
Use must be likely to cause confusion, or to cause mistake, or to
deceive.
Copyright Infringement (17 U.S.C. § 501)
Violation of exclusive rights of copyright owner or author.
Importation into United States of unauthorized copies or phonorecords
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that were acquired outside United States.
Additional Grounds for Civil Relief:
State Remedies
• Vary by state, but often similar to federal laws
• May provide additional types of protection, such as landlord liability
• California Bus. & Prof. § 14320, for state-registered marks:
• Prohibits “knowingly facilitating, enabling, or otherwise
assisting” anyone to “manufacture, use, distribute, display, or
sell” any counterfeit goods or services
• Conduct after notice is presumed “knowing”
• Liability can be imposed on “a landlord or property owner who
provides, rents, leases, or licenses the use of real property
where any such infringing goods or services are sold, offered
for sale, or advertised.”
• Commercial leases provide that anything other than “lawful
use” is a default.
• Even if not illegal, may be an “unfair business practice” under
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California Unfair Competition Law (B&PC § 17200)
Potential Defendants
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Manufacturers
Distributors
Retailers
Importers
Transporters
Individuals acting for business entities who are directly involved in
making, selling or distributing the goods or services
• Financiers and planners
• Landlords
• Others under applicable state law
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Types of Relief Available
Seizures under Trademark Act of
• Counterfeit products
• Means of counterfeits
• Seizure of documents
Impounding under Copyright Act of
• All copies
• All materials used to make copies
Seizure under Tariff Act of illegally imported materials
Injunctions under Trademark Act U.S.C. § 1116, Copyright Act § 502,
and Tariff Act § 1526(c)
• Temporary Restraining Orders
• Preliminary Injunctions
• Permanent Injunctions
Award of Plaintiff’s Damages and Defendants’ Profits
Attorneys Fees
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Counterfeit Seizures
• Seizure Order may include seizure of: (1) goods; (2) means of making
such marks; (3) and records documenting the manufacture, sale, or
receipt.
• Plaintiff’s Application and Affidavits must show:
• Counterfeit marks are being used for goods and services
• Where the materials to be seized are located
• Copyright Impounding
• At any time, Court may order impounding of counterfeit copies
and materials used to make them
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Ex Parte Trademark Seizures
(15 U.S.C. § 1116)
• Applications and Orders can be without notice to the Defendants
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• Applicant must inform the U.S. Attorney
Existence of “immediate and irreparable injury” unless seizure is
ordered
Harm of not granting seizure outweighs the harm to the legitimate
interests of the person(s) subject to the seizure
If Defendants knew of the Order, they would destroy, move, hide, or
otherwise make material inaccessible.
The Order must:
• Describe the material to be seized
• Describe each place at which such matter is to be seized
• State the time period during which seizure is to made (7 days
maximum)
• State the amount of the bond required to protect the Defendant
• Set a date for post-seizure hearing.
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Additional Procedures of Ex Parte Trademark Seizures
• The Order is served by law enforcement officers and upon service, the
seizure described in the Order is made
• The seized materials may be moved and stored by commercial
movers
• The seized records may be copied
• Seized materials are taken into the custody of the Court
• Post-seizure hearing
• Applicant must be able to prove the facts it submitted to support
the order for seizure
• If facts are not proved, the Order is dissolved or modified
• Anyone damaged by a wrongful seizure can seek damages for lost
profits, cost of materials, loss of good will, and punitive damages if
the seizure was sought in bad faith
• Plaintiff’s application for seizure is usually combined with application
for TRO and Order to Show Cause why a Preliminary Injunction
should not issue.
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Facility Venue Seizure Orders
• Used at special events, where counterfeiting is likely to occur
• Plaintiff files lawsuit and seizure papers prior to an event
• Plaintiff’s presentation: infringers likely to be at venue selling
infringing goods
• Obtain Order allowing seizure of goods described
• Peace officers serve the Order on persons at the venue and seize
counterfeits
• Risk of liability for damages from wrongful seizure
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Injunctions
• Temporary Restraining Order (“TRO”)
• Sought with little or no notice to defendants
• Requires showing of immediate and irreparable injury
• Short duration
• Often replaced by Preliminary Injunction
• Preliminary Injunction
• Defendant receives notice of the request and can oppose with facts
and legal argument
• Lasts until case is resolved or injunction modified
• Under Trademark Act the court may order defendant(s) to make a
written report under oath describing in detail how defendant(s)
complied with injunction
• Permanent Injunction
• Essentially perpetual
• Based on outcome of case, whether settlement, or ordered after
Plaintiff wins at trial
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• Defendant’s Profits
Awards of Money
• Money Defendant improperly gained
• Usually easy to calculate the revenue the infringer received, less
the allowable deductions
• Plaintiff’s Actual Damages
• Plaintiff must show how it was injured
• Lost sales from substitution by counterfeit
• Lost future sales from poor quality
• Copyright Statutory Damages $750 - $30,000 for any one work, up
to $150,000 for willful infringement
• Lanham Act Enhanced Damages: Court may increase award up to
three times damage
• RICO Treble Damages
• Attorneys’ Fees
• To prevailing party in copyright case
• In exceptional trademark case
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• To Plaintiff in RICO case
Racketeer Influenced Corrupt Organizations Act
(“RICO”) (18 U.S.C. § 1961)
• “Racketeering activity" means any act indictable as (among others):
• Commercial bribery criminalized by state law
• § 1029 - Fraud and related activity in connection with access
devices, including counterfeit access devices
• § 1341 - Mail fraud
• § 1343 - Wire fraud
• § 2318 - Trafficking in counterfeit labels for phonorecords, or
computer programs, documentation or packaging, or copies of
motion pictures or other audiovisual works
• § 2319 - Criminal infringement of a copyright
• § 2319A - Unauthorized fixation of and trafficking in sound
recordings and music videos of live musical performances
• § 2320 - Trafficking in goods or services bearing counterfeit marks
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Fraud in Connection with Access Devices
(18 U.S.C. § 1029)
• Violations include, among other acts:
• Knowingly and with intent to defraud producing, using or
trafficking in any counterfeit access device;
• Possessing any access device-making equipment;
• Possessing any telecommunications instrument that has been
modified to obtain unauthorized use of telecommunications
services; or
• Possessing a scanning receiver
• Without the authorization of the issuer of the access device,
knowingly and with intent to defraud soliciting sale of an access
device, or information or an application to obtain an access device
• Knowingly using, producing, trafficking in, or possessing
hardware or software, knowing it has been configured to insert or
modify telecommunication identifying information
• Without authority of a credit card system member, knowingly and
with intent to defraud causing presentation of records of
transactions made by an access device
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Fraud in Connection with Access Devices - Definitions
• Definitions include:
• (1) “Access device” includes any card, code, account number,
electronic serial number, mobile identification number, personal
identification number, or other telecommunications service,
equipment, or instrument identifier, or other means of account
access that can be used to obtain money, goods, services, or any
other thing of value, or that can be used for a transfer of funds
• (2) “Counterfeit access device” means any access device that is
counterfeit, fictitious, altered, or forged
• (3) “Unauthorized access device” means any access device that is
lost, stolen, expired, revoked, canceled, or obtained with intent to
defraud
• (7) “Credit card system member” means a financial institution or
other entity that is a member of a credit card system
• (8) “Scanning receiver” means a device that can be used to
intercept a wire or electronic communication, an electronic serial
number, mobile identification number, or other identifier of any
telecommunications service or instrument
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Fraud in Connection with Access Devices - Liability
Forfeitures, including seizure and disposition of the property
Liability for attempt to commit any violation
Liability for conspiracy to commit any violation
Conduct outside the United States is punishable as would be conduct
in the United States if
• (1) the offense involves an access device issued, owned, managed,
or controlled by a financial institution, account issuer, credit card
system member, or other entity within the jurisdiction of the
United States; and
• (2) the person transports, delivers, conveys, transfers to or through,
or otherwise stores, secrets, or holds, within the jurisdiction of the
United States, any article used to assist in the commission of the
offense or the proceeds of such offense or property derived
therefrom.
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Trafficking in Counterfeits
(18 U.S.C. § 2318)
• Knowingly traffics in a counterfeit label affixed or designed to be
affixed to a phonorecord, or a copy of computer program or
documentation or packaging for a computer program, or a copy of a
motion picture or other audiovisual work
• “Counterfeit label” means an identifying label or container that
appears to be genuine, but is not.
• “Traffic” means to transport, transfer or otherwise dispose of, to
another, as consideration for anything of value or to make or obtain
control of with intent to so transport, transfer or dispose of.
• “Copy,” “phonorecord,” “motion picture,” “computer program,”
and “audiovisual work” are defined in 17 U.S.C. § 101.
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Trafficking in Counterfeit Documentation or Packaging
for a Computer Program (18 U.S.C. § 2318)
• Knowingly trafficking in counterfeit documentation or packaging for
a computer program
• The offense is committed within the United States
• The mail or a facility of interstate or foreign commerce is used or
intended to be used
• The counterfeit label is affixed to or encloses, or is designed to be
affixed to or enclosed, a copy of a copyrighted computer program
or copyrighted documentation or packaging for a computer
program, a copyrighted motion picture or other audiovisual work,
or a phonorecord of a copyrighted sound recording
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Criminal Infringement of Copyright
(18 U.S.C. § 2319)
• Results from violation of 17 U.S.C. § 506(a) which is a willful
infringement of copyright, either:
• For purposes of commercial advantage or private financial gain; or
• Involves $1,000 worth of products within 180 days
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Unauthorized Fixation of and Trafficking in Sound
Recording and Music Videos (18 U.S.C. §2319A)
• Without the consent of the performers, knowingly and for purposes of
commercial advantage or private financial gain
• Fixing or reproducing sounds or images of a live musical
performance in a copy or phonorecord
• Transmits or otherwise communicates to the public the sounds or
images of a live musical performance; or
• Distributes, sells, rents, offers or traffics in any such copy or
phonorecord
• Court may order forfeiture and destruction of any copies or
phonorecords, and any plates, molds, matrices, masters, tapes, and
film negatives. Court may order forfeiture and destruction of any
equipment used to make such copies.
• If such unauthorized copies are fixed outside of the United States,
they are subject to seizure and forfeiture in the United States in the
same manner as property imported in violation of the customs laws.
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Trafficking in counterfeit goods or services
(18 U.S.C. § 2320)
• Intentionally traffics or attempts to traffic in goods or services and
knowingly uses a counterfeit mark on or in connection with such
goods or services
• Counterfeit mark means a spurious mark
• that is used in connection with trafficking in goods or services;
• that is identical with, or substantially indistinguishable from a
federally registered trademark; and
• the use of which is likely to cause confusion, to cause mistake, or
to deceive.
• A spurious designation that is identical with, or substantially
indistinguishable from, a designation as to which the remedies of
the Lanham Act are made available. (Lanham Act prohibits false
description of origin)
• Traffic means transport, transfer, or otherwise dispose of, to another,
as consideration for anything of value, or make or obtain control of
with intent so to transport, transfer, or dispose of
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RICO Requirements
(18 U.S.C. § 1962)
• “Enterprise” - An organized group of businesses or people, whether
the organization is informal or formal
• Enterprise is not usually the Defendant
• The enterprise may be your own company, such as when an
employee is corrupted by commercial bribery
• “Pattern of racketeering activity” – At least two of the so called
“predicate acts” that are identified in the statute, within a ten year period.
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Prohibited Racketeering Activities
(18 U.S.C. § 1962)
(a) Using income from a pattern of racketeering activity to invest in,
or acquire or establish all or part of an enterprise or to operate an
enterprise.
(b) Using a pattern of racketeering activity to acquire or maintain,
directly or indirectly, any interest in or control of any enterprise.
(c) Conduct or participate in, directly or indirectly, the conduct of
such enterprise's affairs through a pattern of racketeering activity.
(d) Conspiring to violate any of the provisions of subsection (a), (b),
or (c) of this section.
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The National Intellectual
Property Law Institute
William C. Conkle
(310) 998-9100
Conkle & Olesten, PLC
[email protected]
Santa Monica, California
www.conklelaw.com
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