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Anticounterfeiting Measures Seen as Boost to Battle Bogus Goods

Federal help welcomed despite concerns over bureaucracy.

WASHINGTON — The hard-fought war waged by U.S. apparel and footwear brands against counterfeiting is about to get a little help via reinforcements from the White House and the Federal Bureau of Investigation.

This story first appeared in the October 20, 2008 issue of WWD.  Subscribe Today.

U.S. industry groups expect relief from a newly enacted bill that provides funding for new FBI officers and establishes a cabinet-level position within the White House to coordinate the federal agencies’ anticounterfeiting initiatives.

Despite the efforts of companies trying to stymie the proliferation of bogus apparel, footwear, handbags and accessories, U.S. Customs’ seizures of counterfeit goods have hit record highs this year on the West Coast.

China is the largest producer of fashion counterfeits that infiltrate the U.S. market. U.S. Customs seized $40.3 million in bogus footwear, of which China accounts for 96 percent, in the first half of the year and $15.7 million in counterfeit apparel, which accounted for 14 percent of the seizures in the first half of the year.

The bill signed by President Bush last Monday provides increased resources for Department of Justice programs to combat intellectual property theft, stiffen criminal and civil penalties, create a new enforcement officer and provide more funding to hire additional FBI officers.

The timing was right for the passage of a more comprehensive, high-level intellectual property effort, said Susan Scafidi, a law professor at Fordham University and author of “Counterfeit Chic,” a legal and intellectual property blog.

The possibility of increased financial resources from the federal government for enforcement efforts is important to rights owners, who look to make their own enforcement efforts more efficient in down times, she noted.

“In tough times people think harder about enforcement. When times are flush you have more dollars to throw at enforcement,” Scafidi said.

She said the legislation indicates a level of commitment to intellectual property enforcement that has not really been seen to date. Establishing the position of a so-called “copyright czar” as a cabinet-level position is as much a symbolic gesture as a practical one designed to help eliminate redundancies and centralize discussions about intellectual property rights, Scafidi said.

However, there is still a lack of consensus on the new White House post.

Brian Brokate, a partner with Gibney, Anthony & Flaherty, who specializes in intellectual property and represents a host of fashion and accessories companies, said, “If there is one potential downside or criticism of [the legislation] it would be that it seems to create these unnecessary levels of federal bureaucracy, which may slow things down.”

But he noted the bill overall will provide new enforcement tools for businesses.

“I think the best thing the bill does for trademark owners, whether in the apparel or footwear industries, is in the area of statutory damages,” Brokate said.

The bill increases the statutory damages in a fundamental trademark case to a maximum of $200,000 from $100,000. In cases of “willful trademark counterfeiting,” the maximum damages would be increased to $2 million from $1 million.

“To the extent the amount of statutory damages are higher, they have a more chilling effect on those who counterfeit and think twice in terms of either going into counterfeiting or, once sued, continuing it,” said Brokate.

Kurt Courtney, manager of government relations at the American Apparel & Footwear Association, said, “Overall, it improves the current laws on the books and it will definitely help our members in the trademark area. There is certainly going to be a lot more enforcement because the bill provides 10 additional FBI agents, for example, to do just intellectual property investigations,” he said.

Courtney also said the new intellectual property rights coordinator post will be “beneficial” because it will channel the coordination of several agencies “under one roof.”