December 16
A Look at Counterfeiting in Sports in 2014

This has been an exciting year for sports fans. In addition to all the other annual international sporting events, this year Germany won the World Cup and Russia took home a total of 33 medals to win the Winter Olympics. Among the authentic jerseys, hats, scaves, t-shirts, etc. are thousands of illegal counterfeit products. Law enforcement and customs officials around the world have been hard at work cracking down on merchants who sell counterfeit merchandise. Below are a few of the anticounterfeiting highlights from this year in sports:

US_blogpost_120314.jpgThe United States – This September in Philadelphia, a father and son team were charged with illegally importing counterfeit sports jerseys from China and selling them in the United States.  Over the past several years, they allegedly ordered more than 8,500 counterfeit baseball, football and hockey jerseys from unauthorized manufacturers in China. They even provided their manufacturers with photographs of licensed, authentic jerseys to ensure that the Chinese copies looked as genuine as possible. Both father and son were charged with conspiracy to intentionally and illegally traffic in counterfeit goods, specifically sports jerseys, and with knowingly using a counterfeit mark in connection with those goods. The father, who was also charged with additional counts of smuggling, faces up to 175 years in prison and a fine of up to $15.5 million, while his son could get as many as 15 years in prison and up to a $2.25 million fine.

In the United States, the Lanham Act broadly regulates the registration and infringement of trademarks, but the Trademark Counterfeiting Act imposes severe criminal penalties on the most egregious infringements, including the illegal trafficking of counterfeit drugs. Under 18 U.S.C. § 2320, an individual who intentionally traffics goods or services and knowingly uses a counterfeit mark in connection with such goods or services could potentially face fines up to $5 million and/or 20 years of prison. Criminal counterfeiting charges also support aggravated penalties and can constitute a violation of the Racketeer Influenced and Corrupt Organizations (RICO) Act. RICO Act violations allow law enforcement to seize non-monetary assets associated with the criminal counterfeiting activities, including property and equipment. Criminal counterfeiting also qualifies as an aggravated felony under U.S. immigration law and can result in the deportation of a foreign citizen engaging in criminal counterfeiting.

China_blogpost_120314.jpgChina – While soccer fans from all around the world were gearing up for the 2014 World Cup in Brazil, counterfeiters across the globe were focused on exploiting this much-anticipated event. In April, Xiamen customs officials seized more than 21,000 fake Brazil World Cup jerseys found to be almost identical to the Nike originals. Days later, more than 2,000 fake replica World Cup trophies were seized by Chinese customs officials. The trophies, which were not authorized replicas, were expected to be exported to Libya.

Although reports are not clear as to whether these offenders were criminally prosecuted, in theory, they could have been. In China, Article 61 of the Chinese Trademark Law makes it possible for individuals suspected of having committed criminal trademark infringement to be investigated and also transferred to China’s criminal courts (Article 61 of the Chinese Trademark Law). Along the same lines, Section 7 of the Chinese Criminal Law imposes criminal penalties on those who use or sell products displaying a mark identical to a registered trademark, without first obtaining the permission of the trademark owner. Depending on how serious the facts of the case are, individuals can face up to seven years of imprisonment and/or possible fines. The specific monetary amount of the fines will often depend on the volume of sales and the gravity of the situation (Section 7 of the Chinese Criminal Law, Articles 213, 214, 215, and 220).

UK_blogpost_120314.jpgThe United Kingdom – This October a British man was sentenced to 12 months in prison for setting up a factory based out of his farmhouse where he produced counterfeit souvenirs of Premier League soccer clubs. Prosecutors say that he had specialized printing and manufacturing equipment on-site that allowed him to produce counterfeit posters, pictures and clocks containing the teams’ official emblems. His makeshift factory was raided last year when more than 300 suspected counterfeit items were found and seized, and he was again raided a few months later, which led to the seizure of another 2,300+ counterfeit products. The counterfeiter was charged with six counts of using a trademark illegally and five counts of offering the items for sale. He admitted all eleven charges.

In the United Kingdom, most cases of trademark infringement are pursued through civil remedies such as injunctions and monetary damages. However, criminal penalties are also available. Section 92 of the Trade Marks Act of 1994 is the main body of law that sets out criminal sanctions for trademark infringement. Depending on the nature of the offense, an individual found guilty after a bench trial can face up to six months in prison or a fine of £5,000. If the case is tried and heard by a jury, a defendant could face up to ten years in prison or an unlimited fine (Section 92 of the Trade Marks Act 1994).

In addition to this legislative remedy, the UK Intellectual Property Office (IPO) puts out an annual IP Crime Report, detailing the relevant statistics, trends, and cases that occurred in the prior year. The most recent report, published on October 10, 2014, focuses on all types of intellectual property infringement, particularly issues related to the Internet and social media. 

With technology constantly advancing and criminals persistently finding new ways to counterfeit, whether in the world of sports or elsewhere, criminal trademark infringement is not going away any time soon.

Suleiman_Sara_blog_120314.jpgSara Suleiman is an associate attorney in the Intellectual Property Practice Group of McDonald Hopkins LLC, based in Chicago, Illinois. Sara has a Juris Doctor degree from the DePaul University College of Law, and a Bachelor of Science degree from Northwestern University and is admitted to the Illinois state bar.



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