A Game of Clones

Z Peter Sawicki

By Z. Peter Sawicki, James L. Young

We all know someone who has purchased an expensive product at a bargain price on the Internet. It seems as if great deals are everywhere online. But was it a bargain or was it a counterfeit? The word “counterfeit” gets bandied about a lot. What is a counterfeit? We all probably have an idea of what counterfeit money is. In fact, it’s mentioned in the Constitution, Article 1, Section 8 Clause 6: “The Congress shall have Power To … provide for the Punishment of counterfeiting the Securities and current Coin of the United States.” What about things other than funny money? What about the “bargains” we see on the Internet? When is a product a counterfeit?

“A counterfeit is something that it is not,” may be a clever phrase to use at a dinner party but try telling it to a judge. In the IP world, Congress has provided a definition (15 U.S.C. § 1116(d)(1)(B)(i)) which states, in relevant part: “[A] counterfeit of a mark that is registered on the principal register in the United States Patent and Trademark Office for such goods or services sold, offered for sale, or distributed and that is in use, whether or not the person against whom relief is sought knew such mark was so registered ….”

Under 15 U.S.C. § 1116(d) one can obtain ex parte injunctive relief, including the seizure of goods in certain circumstances. In addition, there are the normal damages that an aggrieved party can get under the Lanham Act (15 USC et seq). However, litigation is expensive and takes time. What can you do in the situation when one of your clients comes into the office (actually an email is more likely) and says, “How do I stop those jerks on Amazon that are selling knockoff s of our products for less? My sales have dropped by 50%.”

Most products sold via the Internet are sold from the seller’s own website or through a third-party sales platform such as Amazon, Ebay or Alibaba. It is these third-party sales platforms that connect sellers with buyers where counterfeit goods abound. These third-party sales platforms are sensitive (so they say) to counterfeit goods even though they profit through the sale of counterfeits. Being sensitive, each provides methods for countering the counterfeiters. For the most part these alternative methods are not complicated and have quick, if not immediate, effects on the counterfeiters.

You can think of these third-party sales platforms as having their own “kingdom” (aka their website) and, therefore, they have their own rules on how sellers can sell goods/services, how they pay the kingdom for the selling privilege and how aggrieved parties may settle their diff erences. Remember these are rules (actually, more like guidelines) within each kingdom and not the law.

Since space is limited, we will discuss the procedures of only one third-party sales platform, Amazon.com. Each third-party sales platform has comparable procedures. You should note that using these procedures does not guarantee a satisfactory outcome and sometimes you will feel like you’re playing Whack A Mole. Patience and persistence are key.

As an initial guideline, having a federally registered trademark is important. Theoretically speaking it is not necessary, but it makes the journey easier, less costly and the outcome more assured. An incontestable registration is even better, as it shuts down blow-back that your client’s mark is descriptive.

Since almost all counterfeits are imported, the goods must be cleared by U.S. Customs and Border Protection (CBP). If the client has a registered mark, the supply of counterfeits may be disrupted by registering that mark with CBP, who will then stop entry into the United States of goods bearing the mark and identified in the registration.

If the client is also a seller on Amazon, the client may register its trademark with Amazon through the Amazon Brand Registry Program. The value of this program is limited. However, in certain situations it may help the trademark owner/seller where the counterfeiter has a higher volume of sales on Amazon and, therefore, is a more “important” seller on Amazon.

Another Amazon program is called Brand Gating, which was originally developed for well known brands (think NIKE or APPLE) to help those brand owners deal with counterfeit goods on Amazon. This program is now available to the ordinary, smaller seller on Amazon (like our clients).

Another available option is to simply report trademark infringement to Amazon (again, federal registration of the brand really helps). Using this option along with a registered mark with CBP can be rather effective.

We have touched on only the bare minimum in this game against counterfeiters. There’s more, so stay tuned.

Mr. Sawicki and Mr. Young are shareholders at Westman, Champlin & Koehler. Pete and Jim both have over 30 years of experience obtaining, licensing, evaluating and enforcing patents. Each has also developed an extensive practice regarding the clearance, registration, licensing and enforcement of trademarks. They work closely with clients to understand their values and business plans, and provide customized and effective strategies for intellectual property asset procurement, growth, management and protection. To contact Z. Peter Sawicki, call (612) 330-0581 or call James L. Young at (612) 330-0495. Please email them directly at psawicki@wck.com or jyoung@wck.com.