INTA Board of Directors Adopts Two Critical Anticounterfeiting Resolutions

Published: March 24, 2021

INTA’s Board of Directors has adopted two resolutions on anticounterfeiting enforcement, allowing the Association to further bolster its anticounterfeiting advocacy globally.

The resolutions, approved by the Board on March 18, expand INTA’s anticounterfeiting policies to cover two additional advocacy points: (1) Proceeds of Counterfeiting and (2) Remarking as Criminal Counterfeiting.

The adoption of these two resolutions will now allow the Association and the Anticounterfeiting Committee to advocate for these guidelines when meeting with critical stakeholders, such as legislators and policymakers. The team leaders for each project, Mark Mordi (Aluko & Oyebode, Nigeria) and Jeffrey Hallam (Sideman and Bancroft, USA), respectively, presented the resolutions to the Board. They were supported by global policy team lead Leslie Skinner (Intel Corporation, USA) and project team members.

The Resolution on the Proceeds of Counterfeiting advocates for national governments to implement a framework that would allow enforcement officials to seize assets of counterfeiters and to grant judicial bodies the power to freeze these assets prior to a criminal conviction.

The Resolution on Remarking as Criminal Counterfeiting takes the position that the practice of “remarking” should constitute a crime even where the original trademark as affixed by the trademark owner has not been altered and therefore subject to criminal sanctions against the offense of trademark counterfeiting.

Below is a summary of the rationale behind each resolution.

Proceeds of Counterfeiting

Strong anticounterfeiting enforcement mechanisms are needed in order to effectively combat the menace of counterfeiting and to protect consumers from being misled or deceived by such products. These mechanisms would be beneficial to brand owners as well in order to protect their trademarks from potential counterfeiting. Such measures also would deprive counterfeiters of the necessary financial resources to continue their illegal and harmful conduct.

Therefore, the Anticounterfeiting Committee drafted a resolution advocating for national governments to implement measures and create an innovative and new legal framework to empower enforcement officials to seize assets from counterfeiting activities. The aim is to dismantle any means for counterfeiters to continue illegal activities.

Specifically, the resolution seeks to empower national courts with the legal basis to confiscate and seize assets on a temporary basis, subject to appropriate evidentiary requirements, prior to securing a conviction when proceeds appear to be the result of counterfeiting.

The provisions also seek to compel defendants to prove that the source of a particular asset, transfer, or expenditure is legitimate, or risk forfeiting the assets in question.

The Resolution also seeks to enact a new “third-party confiscation” provision that empowers national courts to order the confiscation of apparent assets or proceeds of counterfeiting when counterfeiters transfer assets to third parties for the purpose of evading confiscation orders on an interim or perpetual basis.

Additionally, the Resolution recommends that national governments enact comprehensive procedures for the efficient management and protection of frozen or seized goods, and the adequate disposal and transfer of confiscated goods to the appropriate entity. This would be done upon a finding that the defendant is guilty of counterfeiting, in order to strengthen the effectiveness of confiscation.

Finally, the Resolution seeks to encourage greater international collaboration in anticounterfeiting matters by providing reciprocal freezing and seizure orders, to preserve assets or proceeds of counterfeiting subject to confiscation located in another country.

It adopts the “follow the money” model in dealing with counterfeiters, and if adopted internationally, will provide best practices in anticounterfeiting matters. This will herald in a new era of international cooperation to deny the counterfeiters and their collaborators the necessary capital that gives their operations oxygen.

The Resolution hands courts and law enforcement new tools to disrupt counterfeiting across the globe. It will assist in helping dismantle criminal organizations from large criminal rings, and prevent the trickling down to local counterfeiters, which harms consumers.

Remarking as Criminal Counterfeiting

Imagine the following: A networking switch marked with the trademark of the manufacturer is sold to a reseller in Russia. Then, with the trademark intact on the product, it is otherwise modified by (1) changing the model number and serial number on the unit itself and in the internal memory to match that of a higher functioning and more expensive switch sold by the manufacturer under the mark; (2) adding additional ports to the switch which have not been authorized under the brand; (3) altering the switch to bypass its authentication technology; and (4) uploading different software, also not authorized under the brand.

Even though the product has been transformed with new components, software, and labels, the trademark affixed to the switch by the brand owner at the time of manufacture is never removed or replaced or altered in any way. That switch is then sold as a new, genuine, higher functioning switch under the manufacturer’s trademark in a form clearly not authorized under the brand to the U.S. Department of Defense, for installation in its computer network.

Under a 2013 decision by the Fourth Circuit Court of Appeals in United States v. Cone, knowingly trafficking in this unauthorized, modified, and fraudulent switch under the trademark affixed by the manufacturer for the original genuine product would not give rise to criminal sanctions under the criminal counterfeiting laws because the original trademark had not been altered.

Now, INTA has taken the important step of adopting a Remarking as Criminal Counterfeiting Resolution that calls for products that are “remarked” and modified to qualify as a “counterfeit” under criminal counterfeiting laws, irrespective of whether the original trademark remains affixed to the remarked product or is removed and then reaffixed without authorization. The Resolution does not cover aftermarket or refurbished goods.

This Resolution will send a strong signal to countries around the world that, to the extent such misconduct is not presently proscribed by criminal counterfeiting laws, steps should be taken to adopt or modify legislation to provide for criminal sanctions in this context.

The Remarking Resolution, and subsequent legislation that is implemented consistent with it, will make it clear that brand owners are victims of this version of counterfeit trafficking in the same way that they are victims of the more traditional means of counterfeit trafficking. That is because a remarked product that fails or causes harm to a customer creates the same damage to a brand owner’s goodwill and reputation.

Simply put, the remarked product is not the same product that the brand owner manufactured. Moreover, to the extent that legislation is adopted consistent with the Resolution, counterfeiters that knowingly traffic in remarked products in a way that deceives their customers will no longer be able to take advantage of the loophole created by the Cone decision or any other similar law or court decision. Instead, they may be prosecuted and sent to jail for this nefarious conduct.

The adoption of this Resolution now allows INTA to advocate on this critical issue to protect brand owners and consumers globally, starting in the United States, and then throughout the world.

Although every effort has been made to verify the accuracy of this article, readers are urged to check independently on matters of specific concern or interest. 

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