Per the Los Angeles Police Department, a blog entry detailing a recent capture of 43,000 counterfeit sunglasses, a bust worth a cool $8.5 million.
This blog entry by the LAPD is worth noting for reasons beyond the seized sunglasses. For one, Los Angeles is a world capital of creative intellectual property, and the blog specifically states that the Anti-Piracy unit within the LAPD is one of the few operating anywhere. Also, the entry claims that the Anti-Piracy unit has a close working relationship with the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA) - both headquartered in Los Angeles. This fact is not tangential - the LAPD is responding to the specific needs of its constituents in enforcing intellectual property laws. Those constituents suffer enormous harm from counterfeiting every day, while the city endures organized crime and other side effects of counterfeiting. And while the Los Angeles market is relatively small compared to the worldwide audience for counterfeits, the LAPD nevertheless devotes five detectives and one officer in its Anti-Piracy unit full time to combat intellectual property crimes such as counterfeiting.
Good for the LAPD. Now, with intellectual property a key component in the service industry that forms the backbone to the U.S. economy, perhaps other police departments across the country and even globally can emulate what the LAPD has done and start their own dedicated enforcement efforts against counterfeiting.
Tuesday, July 29, 2008
Tuesday, July 22, 2008
A Tisket, A Tasket, A Counterfeited Casket
The counterfeiters thought that their products were dead ringers for the real thing. But their products ended up bringing a lawsuit to life instead.
News out of Houston took on a macabre tone as the York Group, a Pennsylvania-based manufacturer of caskets, sought a temporary restraining order against the Wuxi Taihu Tractor Co. for sales of imitation caskets. The caskets for sale by the Chinese company mimicked the York caskets in "hardware, design lines and paintjobs." This is not the first time the York Group has tangled with this Chinese company. In 2006, the York Group brought a similar and successful suit against Wuxi Taihu Tractor Co. in which the Chinese company was ordered to stop distributing counterfeit caskets and to start putting a "Made in China" label as required by federal law for items made in China.
The article heavily quotes defendants and competitors of York in the Houston area, who disparage York's claims. Patrick Mancini, a wholesale seller of the Chinese coffins, says that he has received no complaints about the knockoff caskets from customers.
Of course, it would be difficult for many of the customers to complain.
News out of Houston took on a macabre tone as the York Group, a Pennsylvania-based manufacturer of caskets, sought a temporary restraining order against the Wuxi Taihu Tractor Co. for sales of imitation caskets. The caskets for sale by the Chinese company mimicked the York caskets in "hardware, design lines and paintjobs." This is not the first time the York Group has tangled with this Chinese company. In 2006, the York Group brought a similar and successful suit against Wuxi Taihu Tractor Co. in which the Chinese company was ordered to stop distributing counterfeit caskets and to start putting a "Made in China" label as required by federal law for items made in China.
The article heavily quotes defendants and competitors of York in the Houston area, who disparage York's claims. Patrick Mancini, a wholesale seller of the Chinese coffins, says that he has received no complaints about the knockoff caskets from customers.
Of course, it would be difficult for many of the customers to complain.
Monday, July 21, 2008
eBay to Meet with Walpole
eBay will be sitting down with British luxury goods association the Walpole Group on July 28 to hash out possible "middle ground" solutions to the problem of counterfeiting.
Friday, July 18, 2008
Pride of Ownership
A piece in today's Financial Times of London from our own Frederick Mostert, Chairman and Co-Founder of the Authentics Foundation.
Tuesday, July 15, 2008
eBay vs. Tiffany Roundup
We will continue to monitor the press for impressions and interpretations of this landmark decision, but articles can be found here, here, and here.
Declan McCullagh notes that given Amazon's success in working with large sellers, eBay's strategy would have likely been different had Tiffany filed suit today.
Mark Hamblett of New York Law Journal has a particularly comprehensive analysis here.
Martin Schwimmer at The Trademark Blog posts his first impressions here.
My first impressions – It is clear that Judge Sullivan hewed closely to current trademark law.
While Tiffany attempted to argue that eBay’s direct infringement was analogous to the liability a store would incur should a store employee sell infringing items on its premises, Judge Sullivan disagreed. Judge Sullivan noted that eBay never took possession of the items sold on its website, and never directly sold counterfeit items to Tiffany buyers.
On the issue of contributory rather than direct infringement, Sullivan rejected measures proposed by Tiffany that presume trademark infringement, including a “five or more” rule that would prescribe listings of five or more Tiffany items on eBay as presumptively infringing. He instead maintained that eBay needed specific knowledge of infringement before being required to act, not a more generalized knowledge that infringement might be occurring on any class of listings. And Judge Sullivan noted that eBay took efforts to prevent repeat infringement offenders from setting up shop on eBay’s website.
Judge Sullivan seemed uncomfortable in delving into the policy arena, even if warranted. He does, in fact, imply that Congress could make policy in this arena, noting that the current law does not allow him to weigh the relative burden or efficiencies between Tiffany or eBay for policing counterfeits in eBay’s marketplace.
On the facts, Judge Sullivan noted that while eBay earned over $4 million from fees generated from the listing of Tiffany items on its website between 2000 and 2004,
eBay’s efforts to combat counterfeiting were extensive. These efforts included eBay’s Trust and Safety Department, its Fraud Engine that uses complex models to automatically searches its website for auctions violating eBay’s Terms of Service, and eBay’s Verified Rights Owner (VeRO) program that provides a mechanism for trademark owners to flag potential infringement in auctions not yet closed.
Sullivan also noted Tiffany’s relative lack of effort in policing its trademarks on eBay. Beginning in 2003, Tiffany has used a non-dedicated motley of security personnel, paralegals and temps that amounted to less than two full-time employees per month dedicated to policing Tiffany trademarks on eBay. Judge Sullivan also cited the budget outlays made by Tiffany for enforcement of its trademarks were consumed in large part by the litigation between Tiffany and eBay.
The Bottom line: Judge Sullivan maintained current American trademark precedent by ruling that trademark owners are the parties primarily responsible for policing their own trademarks.
Declan McCullagh notes that given Amazon's success in working with large sellers, eBay's strategy would have likely been different had Tiffany filed suit today.
Mark Hamblett of New York Law Journal has a particularly comprehensive analysis here.
Martin Schwimmer at The Trademark Blog posts his first impressions here.
My first impressions – It is clear that Judge Sullivan hewed closely to current trademark law.
While Tiffany attempted to argue that eBay’s direct infringement was analogous to the liability a store would incur should a store employee sell infringing items on its premises, Judge Sullivan disagreed. Judge Sullivan noted that eBay never took possession of the items sold on its website, and never directly sold counterfeit items to Tiffany buyers.
On the issue of contributory rather than direct infringement, Sullivan rejected measures proposed by Tiffany that presume trademark infringement, including a “five or more” rule that would prescribe listings of five or more Tiffany items on eBay as presumptively infringing. He instead maintained that eBay needed specific knowledge of infringement before being required to act, not a more generalized knowledge that infringement might be occurring on any class of listings. And Judge Sullivan noted that eBay took efforts to prevent repeat infringement offenders from setting up shop on eBay’s website.
Judge Sullivan seemed uncomfortable in delving into the policy arena, even if warranted. He does, in fact, imply that Congress could make policy in this arena, noting that the current law does not allow him to weigh the relative burden or efficiencies between Tiffany or eBay for policing counterfeits in eBay’s marketplace.
On the facts, Judge Sullivan noted that while eBay earned over $4 million from fees generated from the listing of Tiffany items on its website between 2000 and 2004,
eBay’s efforts to combat counterfeiting were extensive. These efforts included eBay’s Trust and Safety Department, its Fraud Engine that uses complex models to automatically searches its website for auctions violating eBay’s Terms of Service, and eBay’s Verified Rights Owner (VeRO) program that provides a mechanism for trademark owners to flag potential infringement in auctions not yet closed.
Sullivan also noted Tiffany’s relative lack of effort in policing its trademarks on eBay. Beginning in 2003, Tiffany has used a non-dedicated motley of security personnel, paralegals and temps that amounted to less than two full-time employees per month dedicated to policing Tiffany trademarks on eBay. Judge Sullivan also cited the budget outlays made by Tiffany for enforcement of its trademarks were consumed in large part by the litigation between Tiffany and eBay.
The Bottom line: Judge Sullivan maintained current American trademark precedent by ruling that trademark owners are the parties primarily responsible for policing their own trademarks.
Monday, July 14, 2008
Thursday, July 10, 2008
Another Wrist Slap
Some more news of enforcement against dealers of counterfeit drugs. Here, British authorities got convictions against Mr. Shabbir Hussain and Mr Mohammed Yasser Zaidi and seized just under half a million British pounds worth of counterfeit drugs.
Again, that the authorities are devoting resources to enforcement of anti-counterfeit drug laws is good news. The publicity brings attention to the problem. Unfortunately, the attention also allows the public to weigh costs and benefits of the criminal activity, and such weighing is obviously not good. Mr. Hussain did receive a four year sentence, while his co-conspirator Mr Mohammed Yasser Zaidi received a suspended sentence plus community service.
Let's take a look at drug laws in the United Kingdom.
Contrast these laws in the UK for dealing narcotics with the penalties imposed against Mr. Hussain, who operated his business dealing counterfeit drugs. Four years can be a long time, particularly for someone of his age, 55. However, the penalties for counterfeit drug distribution pale in comparison with penalties for Class A and Class B drug distribution.
These laws need to be updated.
Considering that consumers who take counterfeit drugs are most often doing so without knowledge that the drugs taken could be counterfeit or dangerous, one could make a case that the pusher of counterfeit drugs needs to be punished as much as the pusher of narcotics, whose victims are at least informed about the risks they take (albeit, often influenced by addiction).
Quoting Mick Deats, Group Manager of Enforcement at the MHRA, MedicalNewsToday said,
Again, that the authorities are devoting resources to enforcement of anti-counterfeit drug laws is good news. The publicity brings attention to the problem. Unfortunately, the attention also allows the public to weigh costs and benefits of the criminal activity, and such weighing is obviously not good. Mr. Hussain did receive a four year sentence, while his co-conspirator Mr Mohammed Yasser Zaidi received a suspended sentence plus community service.
Let's take a look at drug laws in the United Kingdom.
Penalties for possession and dealing
| | Possession: | Dealing: | |
|---|---|---|---|
| Class A | Ecstasy, LSD, heroin, cocaine, crack, magic mushrooms, amphetamines (if prepared for injection). | Up to seven years in prison or an unlimited fine or both. | Up to life in prison or an unlimited fine or both. |
| Class B | Amphetamines, Methylphenidate (Ritalin), Pholcodine. | Up to five years in prison or an unlimited fine or both. | Up to 14 years in prison or an unlimited fine or both. |
| Class C | Cannabis, tranquilisers, some painkillers, Gamma hydroxybutyrate (GHB), Ketamine. | Up to two years in prison or an unlimited fine or both. | Up to 14 years in prison or an unlimited fine or both. |
Contrast these laws in the UK for dealing narcotics with the penalties imposed against Mr. Hussain, who operated his business dealing counterfeit drugs. Four years can be a long time, particularly for someone of his age, 55. However, the penalties for counterfeit drug distribution pale in comparison with penalties for Class A and Class B drug distribution.
These laws need to be updated.
Considering that consumers who take counterfeit drugs are most often doing so without knowledge that the drugs taken could be counterfeit or dangerous, one could make a case that the pusher of counterfeit drugs needs to be punished as much as the pusher of narcotics, whose victims are at least informed about the risks they take (albeit, often influenced by addiction).
Quoting Mick Deats, Group Manager of Enforcement at the MHRA, MedicalNewsToday said,
"Counterfeit medicines are dangerous, these medicines would have found their way into high street pharmacies and onto the internet. Counterfeit medicines contain impurities, wrong ingredients and are not manufactured to the exacting standards required to safeguard public health. This is the latest in a series of successful prosecutions which should serve as a clear message to those contemplating involvement in this serious criminal activity that the MHRA is determined to take the strongest possible action against any person involved in the sale and supply of counterfeit medicines."Mr. Deats is correct. The problem is, publicizing light punishment for lucrative enterprises could well do more harm than good.
Wednesday, July 9, 2008
Fake Discounts in Brooklyn
From Gawker, a story close to my Brooklyn-born heart, literally. The Brooklyn Museum has been hosting the © MURAKAMI exhibit in which Louis Vuitton handbags designed by Japanese artist Takashi Murakami appear.
The exhibit also contains a fully functional Louis Vuitton store. Now, agent provacateur Filip Noterdaeme has decided to print flyers suggesting patrons ask for special discounts on all Murakiami-designed Louis Vuitton products. The flyers are fake - there is no discount.
What does this have to do with counterfeiting? Well... the Murakami exhibit opened this spring with actors pretending to hawk counterfeit Murakami Vittuons on a mock Canal Street set. The only different was that the bags "hawked" were real.
And what does all this prove? Maybe that conceptual art is over my head.
Check out the comments for some funny snark.
(Hat Tip: Counterfeit Chic)
The exhibit also contains a fully functional Louis Vuitton store. Now, agent provacateur Filip Noterdaeme has decided to print flyers suggesting patrons ask for special discounts on all Murakiami-designed Louis Vuitton products. The flyers are fake - there is no discount.
What does this have to do with counterfeiting? Well... the Murakami exhibit opened this spring with actors pretending to hawk counterfeit Murakami Vittuons on a mock Canal Street set. The only different was that the bags "hawked" were real.
And what does all this prove? Maybe that conceptual art is over my head.
Check out the comments for some funny snark.
(Hat Tip: Counterfeit Chic)
Tuesday, July 8, 2008
Enforcement Roundup
Some news from around the world in the last few days concerning police busts of counterfeit rings:
- Clothing in Australia
- Counterfeit CDs and DVDs in Ireland
- A grab bag of fake goodies in my hometown of Brooklyn, NY
- Canal Street counterfeit scammers going mobile (hat tip: Racked)
Thursday, July 3, 2008
Wrist Slap
Here is a disheartening story that just came over the wire - Viraj Shah was caught with 1.8 million pounds/ over $2 million worth of counterfeit drugs in London, and received a 51 week suspended prison sentence.
Any person possessing that much counterfeit medication is likely to have considerable assets, if only to purchase and sell at his point on the supply chain. He would also likely possess at least some information relating to his supply chain, such as who bought counterfeit drugs from him and who may have sold counterfeit drugs to him. And yet, there is no talk of a fine or even any certainty of Mr. Shah serving one day in prison. And, it does not appear from the article that Mr. Shah relayed any useful information concerning his cohorts to prosecutors.
Now maybe there is information on this case that the public is not aware of yet. Perhaps this man did inform on his partners in crime sotto voce, or maybe the state's case had a fatal flaw. But there is no evidence that any deal was made - the man was prosecuted, tried, convicted and sentenced.
The dangers of counterfeit medication are manifest and well-documented. Aside from possibly being ineffective and causing indirect harm, counterfeit medicines may well contain incorrect dosages or be made out of substances like cement powder - or worse.
The goals of criminal law enforcement are to mete out justice, rehabilitate the criminal and provide disincentives for the criminal and the public to engage in similar future behavior. Given the reckless dangers involved in dealing fake meds, it is clear that the crime well exceeded the very light punishment. There is also no evidence that Mr. Shah has been rehabilitated or even feels remorse for his actions. And as far as providing disincentives, the public has now been made aware of a lucrative career with extremely limited downside. So until the state gets serious about getting tough on people like Mr. Shaw, this problem will not get better.
With this publicity, it will likely get worse.
UPDATE: The press release from the U.K. Medicines and Healthcare products Regulatory Agency (MHRA) describes how Mr. Shah got caught (inspection of consignments at Heathrow Airport) and the sentencing process (Mr. Shah plead guilty, and will perform community service in addition to his suspended sentence).
Any person possessing that much counterfeit medication is likely to have considerable assets, if only to purchase and sell at his point on the supply chain. He would also likely possess at least some information relating to his supply chain, such as who bought counterfeit drugs from him and who may have sold counterfeit drugs to him. And yet, there is no talk of a fine or even any certainty of Mr. Shah serving one day in prison. And, it does not appear from the article that Mr. Shah relayed any useful information concerning his cohorts to prosecutors.
Now maybe there is information on this case that the public is not aware of yet. Perhaps this man did inform on his partners in crime sotto voce, or maybe the state's case had a fatal flaw. But there is no evidence that any deal was made - the man was prosecuted, tried, convicted and sentenced.
The dangers of counterfeit medication are manifest and well-documented. Aside from possibly being ineffective and causing indirect harm, counterfeit medicines may well contain incorrect dosages or be made out of substances like cement powder - or worse.
The goals of criminal law enforcement are to mete out justice, rehabilitate the criminal and provide disincentives for the criminal and the public to engage in similar future behavior. Given the reckless dangers involved in dealing fake meds, it is clear that the crime well exceeded the very light punishment. There is also no evidence that Mr. Shah has been rehabilitated or even feels remorse for his actions. And as far as providing disincentives, the public has now been made aware of a lucrative career with extremely limited downside. So until the state gets serious about getting tough on people like Mr. Shaw, this problem will not get better.
With this publicity, it will likely get worse.
UPDATE: The press release from the U.K. Medicines and Healthcare products Regulatory Agency (MHRA) describes how Mr. Shah got caught (inspection of consignments at Heathrow Airport) and the sentencing process (Mr. Shah plead guilty, and will perform community service in addition to his suspended sentence).
Negative Feedback
The Financial Times weighs in today with a nuanced look at the recent French court ruling against eBay. Taking the middle road, the Financial Times argues that while eBay cannot strictly be held accountable for the actions of its users, eBay must try to do more to combat the counterfeiting threat. Such measures, the Financial Times adds, would benefit eBay as well, lest it becomes seen as merely a gallery of rogues, counterfeiters, and cheats.
Commenting specifically on one aspect of the court ruling, the Financial Times takes issue with the finding of eBay's liability for legitimate goods sold on eBay that violate exclusive distribution agreements. Leaks in the supply chain, says the Financial Times, should be the sole responsibility of the manufacturer.
Commenting specifically on one aspect of the court ruling, the Financial Times takes issue with the finding of eBay's liability for legitimate goods sold on eBay that violate exclusive distribution agreements. Leaks in the supply chain, says the Financial Times, should be the sole responsibility of the manufacturer.
eBay's European PR Offensive
PR Week reports on eBay's public relations counteroffensive in the wake of this week's legal setback in France. The article notes eBay's involvement with the Knock Off Nigel initiative, as well as its teaming with various organizations to fight online fraud (including The Authentics Foundation, which sponsors this blog and the myauthentics.com website).
Wednesday, July 2, 2008
Cleaning Up for the Big Show
From Industry Week, an article about Beijing's efforts to clean up counterfeiting before hosting this year's Summer Olympics. Essentially, the article implies that the Chinese Government's desire not to be embarrassed on the world stage by dodgy counterfeit operations exceeds the power of local muckety-mucks to bribe their way into lax enforcement on the local level. The implication, of course, is that the Chinese government can do more in normal times to stop counterfeiting.
Tuesday, July 1, 2008
eBay Verdict Roundup
Pundits and prognosticators are weighing in on the Paris' Tribunal de Commerce's verdict in which it ordered eBay to pay LVMH Möet Hennessy Louis Vuitton and sister company Christian Dior SA $63.1 million of damages relating to eBay's sales of counterfeit and unauthorized LVMH goods.
Law.com
New York Times
Time (with a focus on French internet provincialism in the wake of the LVMH decision and an earlier French court judgment against eBay in favor of Hermes).
Citing the unusually large damages, the Wall Street Journal Law Blog wonders whether the victory and staggering damages were a product of "home cooking," with a French court ruling for a French company (and against an American company).
Women's Wear Daily notes a less noticed aspect of the decision - a separate award of $4.7 million to LVMH for eBay's selling of brands Parfums Christian Dior, Kenzo Parfums, Guerlain and Parfums Givenchy through unauthorized distribution channels. The French court also ordered eBay to stop selling these brands or face a fine of $79,000 per day.
On the other hand, Richard Waters, writing in the Financial Times, says that focusing on the distribution channel aspect of the decision is an attempt by eBay to distract from the meat of the anti-counterfeiting holding. Waters also draws parallels between eBay's legal challenges in the trademark sphere and copyright challenges facing YouTube.
Meanwhile, BusinessWeek looks at the totality of the eBay ruling and speculates on whether it might be a precedent for the Tiffany v. eBay case currently being decided in New York. BusinessWeek also speculates on the effects of these cases on eBay's bottom line and business model.
Law.com
New York Times
Time (with a focus on French internet provincialism in the wake of the LVMH decision and an earlier French court judgment against eBay in favor of Hermes).
Citing the unusually large damages, the Wall Street Journal Law Blog wonders whether the victory and staggering damages were a product of "home cooking," with a French court ruling for a French company (and against an American company).
Women's Wear Daily notes a less noticed aspect of the decision - a separate award of $4.7 million to LVMH for eBay's selling of brands Parfums Christian Dior, Kenzo Parfums, Guerlain and Parfums Givenchy through unauthorized distribution channels. The French court also ordered eBay to stop selling these brands or face a fine of $79,000 per day.
On the other hand, Richard Waters, writing in the Financial Times, says that focusing on the distribution channel aspect of the decision is an attempt by eBay to distract from the meat of the anti-counterfeiting holding. Waters also draws parallels between eBay's legal challenges in the trademark sphere and copyright challenges facing YouTube.
Meanwhile, BusinessWeek looks at the totality of the eBay ruling and speculates on whether it might be a precedent for the Tiffany v. eBay case currently being decided in New York. BusinessWeek also speculates on the effects of these cases on eBay's bottom line and business model.
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