Counterfeit Goods and The Law

A trademark is a word, name, slogan, or symbol used by businesses in order to distinguish their goods or services from those of others. Trademark registration allows businesses to prevent other individuals from using their name, image, or slogans to sell products.

Counterfeiters steal the designs or trademarks of others in order to deceive customers into buying replica products. There are two avenues for recourse under trademark law. Firstly, the true owner of the trademark can sue the person who is using their trademark for any lost profits. Secondly, the counterfeiter can be sued under the Trademark Counterfeiting Act of 1984.

Under the Trademark Counterfeiting Act of 1984, it is illegal for any individual to knowingly use a counterfeit trademark to sell goods of services. The penalty for violating the act for a company is a max penalty of $15 million dollars and for an individual the max penalty is $2 million dollars and 10 years in prison.

In less than two months, U.S. customs agents in Texas have busted two multimillion-dollar shipments of counterfeit goods from China. The seized goods included knockoffs of popular apparel brands such as Adidas, Calvin Klein, Nike, Under Armor, and Diesel; luxury designer brands like Chanel, Coach, Fendi, Gucci, Hugo Boss, Louis Vuitton, and Yves St. Laurent; popular electronics and watch brands like Apple, Casio, Rolex, Samsung, Sony, and LG; and fake DC and Marvel Comics. On July 3, the customs agents tallied up what was inside the boxes—181,615 pieces of trademark-infringed merchandise, with an estimated street value of more than $42.9 million – had the goods been authentic.

Brands regularly devote significant resources to brand enforcement efforts and litigation to crack down on the counterfeit profession. Some companies like Louis Vuitton even utilize an “anti-counterfeiting” measure that shows a holographic logo under a tag to prove authenticity. Counterfeit goods have become sophisticated and so identical to the point where it is almost impossible to decipher the real from the fake.

The volume of fakes sold is at a high due to the ease of access consumers have to purchase counterfeit goods. Individuals can log onto websites like “Reddit” and “Taobao” and purchase AAA replica goods with the click of a button and have them shipped fairly quickly. Some individuals make a living off of buying counterfeit goods at low price points and scam consumers into buying the goods at a little below the authentic price point.

According to a 2017 report commissioned by the International Trademark Association (“INTA”) and the International Chamber of Commerce (“ICC”), the global economic value of counterfeiting and piracy could reach $2.3 trillion by 2022, up from $1.7 trillion in 2015. Research & Markets' 2018 Global Brand Counterfeiting Report echoed this prediction, describing the counterfeit market as "booming rapidly," and asserting that "globalization of trade and communication has offered unparalleled opportunities for organized crimes to engage in illicit trade and counterfeiting so as to increase their economic influence".

Although China is the source of most of the world’s counterfeit goods, the Chinese officials have begun to crack down on the production of counterfeit goods within their borders. According to a 2017 report on intellectual property rights (IPR) seizure by the U.S. Department of Homeland Security, there were 34,143 IPR seizures in the United States in 2017, an increase of 8 percent from 2016, of which 46 percent originated from China and 32 percent originated from Hong Kong, followed by Vietnam in third place with 19 percent.