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Counterfeiting


1. What is counterfeiting?

Counterfeiting is the practice of manufacturing goods, often of inferior quality, and selling them under a brand name without the brand owner’s authorization. Generally, counterfeit goods are sold under a trademark that is identical to or substantially indistinguishable from the brand owner's trademark for the same goods, without the approval or oversight of the trademark owner. Many well-known brands, spanning various industries, are victims of counterfeiting. Counterfeiting can be distinguished from traditional trademark infringement or passing off, which involves the use of confusingly similar trademarks or service marks on or in association with similaras opposed to fakeproducts or services. The manufacturing of counterfeits is most prevalent in developing countries with a strong, inexpensive manufacturing capability, including many nations throughout Asia (such as China and Taiwan), although counterfeit goods are sold around the globe. Counterfeits are manufactured to a lesser degree in developed countries.


2. Is counterfeiting illegal?

Yes. Counterfeiting is illegal. In most countries, counterfeiting is punishable by criminal laws as well as civil laws, with penalties ranging from injunctions to damages to imprisonment. Put simply, counterfeiting is theft.


3. Where are counterfeits sold?

Counterfeits can be found in street vendor stalls as well as legitimate-looking stores. In recent years, many stores selling counterfeits have become increasingly well organized and established so as to imitate a store selling legitimate products. Furthermore, counterfeits are now increasingly sold online creating more opportunities to dupe consumers into thinking they are buying genuine goods at discounted prices. While some websites openly market fake goods, others pass off their goods as genuine by displaying pictures of the genuine item. It is only after the consumer has received their purchase that they realize they have been tricked into buying a counterfeit.


4. What types of products are counterfeited?

Anything that can be made can be counterfeited. Counterfeit goods include not only clothing, jewelry, purses, CDs, and DVDs, but also baby formula, medications, cigarettes, electronic equipment and parts, airplane and automobile parts, and toys.


5. Does counterfeiting cause any damage?

Yes. Although some believe counterfeiting is a victimless crime, it has many far-reaching consequences. To begin with, depending upon the nature of the product being counterfeited, there can be serious health and safety concerns for consumers, such as in the examples of counterfeit baby formula, toys for children, medications, car parts, or electronic goods. In nearly every instance, counterfeited goods are not made with the same quality materials or to the same high standards as the original.

In addition, counterfeiting damages brand owners’ reputations and lowers consumer confidence in the affected brands. Counterfeiting also damages brand owners and retailers selling legitimate products by causing missed sales opportunities and actual job losses by manufacturers and retailers. Consumer confidence and the value of branding may suffer when purchasers discover that the product they bought, believing that it was being sold under a recognized brand, is in fact not authentic. Damages do not stop with brand owners and consumers because counterfeiting also deprives national economies of customs duties and tax revenues.

Counterfeiting may also be linked to organized crime or criminal activity, which may pose serious threats to the health and safety of consumers, economies and national security.


6. How do I avoid counterfeit products?

The best way to avoid purchasing counterfeit products is to deal only with reputable retailers that are officially authorized by the brand owner. Also keep in mind that if a price seems too good to be true, it probably is.


7. As a business owner, how do I keep my products from being counterfeited?

Brand owners can take various legal, technological, and business steps to prevent or at least minimize counterfeiting. This includes not only registering your trademarks in jurisdictions where you sell product, but also in jurisdictions where your products are manufactured; recording your trademarks with customs offices; maintaining watching services; creating anti-counterfeiting positions within your company; and monitoring online websites closely in light of the significant and growing number of websites engaged in the “business” of counterfeiting. Brand owners should also work closely with legitimate online and brick-and-mortar retailers to prevent inadvertent sales of counterfeit products. Once counterfeiting has become a problem for your company, consult with counsel regarding strategies to confront the issue. Depending upon the territory involved, you may be able to conduct raids in collaboration with local authorities, seize fake products or domain names (that direct consumers to offending websites), work with customs agents to prevent import or export of the counterfeit goods, or file civil and/or criminal actions against the perpetrator.


Additional INTA Resources

Topic Portal: Anticounterfeiting


Best Practices for Addressing the Sale of Counterfeits on the Internet
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