Counterfeit consumer products were once limited mostly to luxury fashion and jewelry brands, but now companies are finding the threat reaching broadly across all product categories and levels of commerce -- from upscale merchants to the local 99¢ store, and even the pharmacy shelves.
Current estimates are that 7-10% of global trade is derived from counterfeit products, with an annual cost of almost $492 billion to the global economy. Within the U.S., government agencies made almost 15,000 seizures of counterfeit and pirated goods in 2009, with a domestic value of $260 million.
In this exclusive LegalMindsTV interview, Greg Gulia, a partner in the New York office of Duane Morris LLP, discusses the factors contributing to the sudden increase in counterfeit and gray market goods, what companies can do to protect their brands from trademark infringement and why it’s essential to take action.
According to Guilia, the risks are more than just financial. "If you allow third parties to use your brand," says Gulia, "it loses it’s ability to indicate a single source of goods or services and therefore the brands can be weakened or destroyed." Gulia also points to the health and safety risks involved, as "many of these counterfeit products are not FDA approved and they haven’t gone through the rigorous testing such as what a legitimate consumer products company would do."
Guilia believes that in addition to actions taken by the brand owners to protect their trademarks, some factors that will help turn the trend around are stricter enforcement as well as an increase in penalties, such as those assessed under the recently passed PRO-IP Act, which can help serve as a deterrent by increasing the maximum statutory damages for counterfeit goods to up to $2 million.
But as these enforcement methods are put in place to stem the growth of counterfeit goods, Gulia points to other trademark issues that are emerging as a result of the growth of the internet and social media. For example, celebrities are becoming brands on Twitter, competitors are buying and bidding up the costs of brand name keywords on Google, cybersquatters are grabbing domain names that include the marks of established brands and parodies are challenging the issues of fair use and the years invested in building brand equity.