WASHINGTON — Trademark owners are developing deeper partnerships and resorting to new tools to combat the proliferation of counterfeit products on the Internet.
Anticounterfeiting strategies and success stories were a key area of focus for fashion and consumer product companies who joined government officials, academics, lawyers and professionals from around the globe at the International Trademark Associations’ annual meeting here May 5 to 9 at the Walter E. Washington Convention Center.
Gregg Marrazzo, president of INTA and senior vice president and general deputy counsel at the Estée Lauder Cos. Inc., said, “With the growth of the Internet and explosion of social media, the challenges to IP rights have increased. Our quest to protect trademarks faces hurdles beyond the sorts of legal issues we used to deal with.”
He noted that anti-IP sentiment in Europe, fueled by discussions of overkill of enforcement and litigation, is threatening a ground-breaking anticounterfeiting agreement aimed at bolstering the global fight against counterfeit consumer products. The global pact has already been signed by the U.S., Australia, Canada, Japan, South Korea, Morocco, New Zealand and Singapore. A vote in the European Parliament is scheduled for July.
RELATED STORY: DOJ in Counterfeit Sports Apparel Seizure >>
Another looming concern is centered around a major change to Internet domain names by the Internet Corporation for Assigned Names & Numbers, or ICANN, which voted last year to open the number of Internet name endings, called generic top-level domains, or gTLDs. The move will broaden the generic names that can be used from the current 22 to an infinite number, but it is raising concerns among INTA members that it will increase “cybersquatting” and counterfeiting.
“In the midst of all of the uncertainty, one of the things we are certain of is that cybersquatters, counterfeiters and pirates will all take maximum advantage of the new gTLD program,” Marrazzo said. “This is unacceptable to legitimate trademark owners that work hard to develop strong brands to protect consumers and to grow their business.”
Leonard Lauder, chairman emeritus of Estée Lauder, said in an interview before giving the keynote address at the INTA meeting that online counterfeiting continues to evolve, presenting challenges for brand owners.
“The problem with counterfeiting at one time used to be the sales at flea markets…and it was an annoyance but not crucial,” Lauder said. “Today with the Internet, it has gone from being an annoyance to being a very serious problem because what it does is take away money, which is one thing, but it also takes away the credibility and trust in the brand.”
Estée Lauder has more than 21,500 filings of product names, covering 11,000 trademarks, Lauder said.
“We have to be alert around the world when counterfeits [are sold],” he added. “The minute you shut down one site, they pop up the next day.”
The U.S. government is utilizing new strategies, such as seizing assets in U.S. bank accounts, as well as from service provider accounts, such as PayPal, linked to counterfeiters’ operations. To date, federal authorities have seized 761 domain names used in the sale and distribution of counterfeit goods and illegal copyrighted works, as part of an initiative dubbed “Operation in Our Sites.” The initiative focuses on online commercial intellectual property crime.
“Most recently, we were very successful in seizing $896,000 from bank accounts based in the U.S. that were Chinese accounts,” said Rana Saoud, national IPR program manager at The National Intellectual Property Rights Coordination Center. “We also identified $69,000 from PayPal accounts that individuals were using to obtain money from the sale of counterfeit [sports apparel] goods through the Web site. We’re hoping to do a lot more than that.”
Valerie Sonnier, global intellectual property director for Louis Vuitton and LVMH Fashion Group, said, “The counterfeit market has changed in the past year, so we had to adapt and find new ways for fighting against counterfeiting, including online.”
One of the newest strategies employed by the luxury brand was an unfair trade case it brought and won before the U.S. International Trade Commission that could lead to a permanent exclusion order of importation and sale of infringing counterfeits from the several companies involved in several states and in China. Sonnier told the audience it was one of the most important infringement cases for Louis Vuitton and is a “powerful” tool for trademark holders.
“Such a procedure was very helpful because it allows a plaintiff to include all infringers in one proceeding and it is fast,” Sonnier said.
Sonnier also pointed to a separate, key online counterfeiting case that Louis Vuitton won at the Ninth Circuit Court of Appeals last September that successfully applied the Internet theory of “contributory liability.” The case also marked the first time statutory damages were awarded against those found “contributorily liable for trademark infringement.”
LACOSTE SA has also been stepping up its involvement with law enforcement authorities around the world to crack down on counterfeits. Nathalie Moulle-Berteaux, the company’s executive vice president of public and legal affairs, said Lacoste helped authorities seize a record number of counterfeits — 8 million, including components and finished products — last year. The top 10 countries for seizures for Lacoste in 2011 were India, Brazil, Israel, Czech Republic, China, Turkey, Greece, the U.S., Saudi Arabia and Peru, she said.
One of the company’s top priorities is to work with other brands and China’s Customs authorities to urge China’s Taobao online marketplace to take more preventive measures against counterfeiters. Last year, two vendors of counterfeit Lacoste goods on the Taobao site were sentenced to up to three years in prison and fined 300,000 yuan, or $47,393 at current exchange.