Counterfeiting is a form of trademark infringement, and includes intentionally manufacturing or selling goods or services bearing fake trademarks; for example, deliberately duplicating the Adidas trademark on shoes not manufactured by the company. Although the counterfeiter’s primary purpose is to confuse consumers,
it’s still counterfeiting even if both buyers and sellers are aware that the product is not genuine.
The term “knockoff” is often used as a substitute for counterfeit, however while some knockoffs may imitate an established product they may not necessarily infringe; if the design of the underlying work -a dress, for example- is not protected under the law, the knockoff may not violate any legal rules unless it includes a counterfeit trademark or other copyrighted design. In addition, the counterfeiter must have duplicated the trademark on the goods or services for which the trademark was federally registered; for example, it is not counterfeiting to put the Gucci mark on automobile seat covers as these are not goods for which Gucci has a registered trademark.
Although the sales of counterfeit goods is aggressively prosecuted it is difficult to hold a person liable for purchasing them, especially if the item is for personal use and/or they bought it without knowing that it was fake.
According to the International Chamber of Commerce (ICC), counterfeit goods account for from 5 percent to 7 percent of world trade. As a result, prosecuting distributors of counterfeit goods has become a priority for law enforcement.
Not only do the designers and manufacturers of legitimate products lose money, but their brands’ reputation is compromised by inferior fakes. Counterfeit Drugs seldom meet FDA standards, putting the health of those who use them at risk and opening the door to additional civil and criminal charges.The counterfeiting industry is complex and highly organized: it often involves the transport of illegal goods across state and international borders. Persons who are arrested for selling counterfeit goods may be charged with multiple crimes in connection with the sales, including conspiracy and smuggling goods into the U.S.
Most illegal distributors are caught as a result of online sales (for example, eBay has explicit anti-counterfeiting rules and will banish violators), or because a disgruntled customer or competitor reports them. The trademark owners will generally seek to make an example of counterfeiting businesses in order to prevent others from doing the same.
Statutes outlawing the production and distribution of counterfeit goods include the Stop Counterfeiting in Manufactured Goods Act, the Trademark Counterfeiting Act of 1984 and the Anti-counterfeiting Consumer Protection Act.
Penalties for counterfeit trafficking increase with the value of the items manufactured, sold or distributed; if the value exceeds one thousand dollars the maximum term is 3 to 7 years' imprisonment, and if the value exceeds one hundred thousand dollars you could go to prison for a term of 5 to 15 years. Fines may exceed $500,000. In addition, a judge has discretion to order that all your goods will be destroyed and authorities may seize the proceeds of any sales along with property such as vehicles used to transport counterfeit products or machinery and tools used in their manufacture.
A simple offer to sell counterfeit products can also trigger liability as a counterfeiter; i.e., offering to sell counterfeit jeans and providing a sample to an undercover police officer. Proof of actual production or sale may not be necessary to prove counterfeiting. Similarly, an Internet Service Provider (ISP) that knowingly hosts websites selling fake merchandise could be liable for contributory infringement.
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