Track Leader Heather McDonald Offers Insight into the Latest Enforcement and Anticounterfeiting Issues

Heather McDonald (Baker & Hostetler LLP, USA)

As it has at past Annual Meetings, enforcement and anticounterfeiting will once again be featured as an educational track at the 2022 Annual Meeting Live+, April 30 to May 1.  And for good reason: it holds its rank as one of INTA’s top policy issues as well as being a high priority for brand professionals.

Heather McDonald (Baker & Hostetler LLP, USA) is a member of the 2022 Annual Meeting Project Team and the track leader of the Enforcement and Anticounterfeiting educational track. Sessions on this track will take place on May 3.

In an interview with the INTA Bulletin, Ms. McDonald, who currently serves on INTA’s Anticounterfeiting Committee, shares her insights on how the COVID-19 pandemic and new technology are impacting global enforcement and anticounterfeiting efforts, and notes her excitement about “seeing people” at the upcoming Meeting.

The latest Edelman Trust Barometer, released in January 2022, emphasizes, as it has in past surveys, that credibility and trust are closely linked to brand performance and growth. Given that, why does it become especially vital for brands to initiate or expand upon their anticounterfeiting efforts during periods of disruption—such as during the ongoing COVID-19 pandemic?
It’s always been important for brands to focus on protecting their name and their reputation and a lot of that happens by having a robust anticounterfeiting program. The COVID-19 pandemic has presented a lot of challenges on many different levels. Quite a few very well-known retail brands, many of which are INTA members themselves, suffered from some real financial issues during the pandemic. With nobody out there shopping, and people losing jobs and having less disposable income to spend, this also required a tightening of the budget belt in a lot of areas. So, the unfortunate corollary is that for completely understandable reasons, a lot of brands pulled back on their enforcement programs, especially during the early stages of the pandemic.

Now, as we’re starting to see the light at the end of the tunnel, and people are going back to work and traveling again, and some restrictions have been lifted, we have seen a bit of a rebound in the economy. The fiscally conservative approaches that some brands had to take at the beginning of the pandemic, in which they had to pull back on their enforcement budgets, have started to ease now that we all have a greater understanding of how the pandemic has affected businesses across the economy. It doesn’t mean they’re all back to pre-pandemic levels, but companies are now focusing more on protection and enforcement again.

On the other side, we’ve seen a tremendous uptick in counterfeiting in sectors where it wasn’t previously that prominent. Counterfeiters are opportunistic businesspeople, with little to no scruples, who will try to make money wherever they can. As a result, we’ve seen a tremendous spike in counterfeiting of products like masks and other personal protective equipment (PPE), medical supplies and equipment, and there have been reports of some counterfeit vaccines. Many of our members who are in the pharmaceutical, medical device, and the consumer products sectors are seeing a huge increase in counterfeiting activity and are having to focus on these issues more so than ever before.

Doesn’t it seem like an oxymoron that budgets have been cut while counterfeiting is on the rise?
It is an interesting paradox that you would cut a budget at a time when counterfeits increase. But I think that the budgets were cut in the beginning because businesses were extremely nervous. People just had to do what they had to do to protect their bottom line and try to figure out how they were going to survive economically. I think the companies that are making genuine PPE, medical devices, pharmaceuticals, cleaning and hygiene products, and related products realized very quickly that they couldn’t scale back on their anticounterfeiting efforts, and I don’t think they did.

What has been the impact of the pandemic in terms of raising awareness of counterfeit products among consumers and prompting greater anticounterfeiting actions on the part of brands?
When we’re talking about products that directly relate to protecting you against COVID, such as PPE, medical devices, pharmaceuticals, cleaning products, etc., we’re seeing a very big increase in consumer engagement and brands trying to make sure consumers know how to find genuine goods, how to tell those goods are genuine, and where to report counterfeits.

Likewise, how would you characterize the global response by policy makers, IP offices, the judicial system, and law enforcement to the rapid proliferation in counterfeiting that we have seen of late?
Concerning the government, there’s parallel criminal and civil jurisdiction in the United States and in many other countries as it relates to counterfeiting. There has always been enhanced enforcement when there is a health and safety issue to deal with. Government and enforcement agencies have always heavily focused on these issues, and it’s certainly easier to get their attention when counterfeit products pose health and safety concerns. As a result, with the proliferation of counterfeit products that are supposed to be protecting you against COVID, law enforcement has been very active, and we’ve seen a lot of criminal actions taking place globally against people who are selling counterfeit masks that are improperly marked and medical devices like ventilator tubes and other things like that.

We also can’t forget that, while we have all had to deal with COVID, we have also had all kinds of other horrible things happening in the world like the murder of  George Floyd and its effect on everyone, and vast political division in our countries among other things, all of which have strapped the resources of our police departments. So even trying to get local police to enforce criminal intellectual property (IP) laws has been incredibly difficult because their manpower has been understandably redeployed to cover other societal problems.

How is the rapid pace of technology reshaping enforcement and anticounterfeiting efforts worldwide—for the better/worse?
What we’ve always seen in the world of trademark counterfeiting is that whatever the popular product is, counterfeiters will knock it off in a heartbeat. Some of the reason why that can happen is because technology has gotten to the point where it’s easy to replicate things, mass produce them, and get them out into the marketplace. No counterfeiter was ever going to think about counterfeiting a N95 mask before COVID, but now that’s at the top of everybody’s list. I think technology allows the counterfeiters to be nimble and shift the types of products they produce.

A lot of people have talked about blockchain as a great anticounterfeiting tool. I still don’t think we really know how that’s going to work. Blockchain is terrific if people participate in the process correctly—so if a brand is logging through a blockchain every genuine item that they make which can then be traced back to a source, that’s great. And, theoretically, I’m sure there’s an application by which a consumer could trace back an item to its source and be confident they were buying a genuine item. However, you have to have a consumer who cares whether they’re buying a genuine or a counterfeit for this to be relevant, and over the years, we have learned that many consumers of fake goods know exactly what they are buying and do not care that the goods are not genuine.

The other issue I see is the question of who has access to that technology to trace it back. I believe that, to the extent that blockchain could be adapted to the mainstream retail market, that’s where you would see some good applicability. And I can see some applicability to the resale of genuine goods. Consumers of these goods are much more interested in making sure they are getting genuine goods.

The non-fungible tokens (NFT) market is exploding and is now becoming a real issue that brands must think about. A number of brands are already filing for protection in the classes that protect digital works, and some brands are already moving into the NFT marketplace.

Anticounterfeiting enforcement has had to change dramatically as the technology and the world have changed. Historically, there was the world of anticounterfeiting enforcement and a well-developed framework of laws that existed before the Internet existed. Then the Internet happened and everything changed. All kinds of new issues came up, and because the law is slow to change, we were often stuck in a “square peg, round hole” situation, where the laws didn’t exactly apply, but we had to try to make them apply to situations nobody had ever thought of before. It took some time, but new laws were enacted, and new enforcement techniques were developed, and we are back on steady ground.

I feel like we’re almost at that point again right now. Lots of laws have been enacted, lots of policies and procedures have been put into place, brands have adapted to how to enforce sales on and off the Internet, and now if the NFT market goes the way that a lot of pundits are saying it will, we will have to adapt again. To be clear, there are laws and enforcement techniques that can be used now, but like everything, we will likely see a new framework developing that more specifically applies to these new technologies and their uses.

Technology is going to continue to change over and over, and as we see new digital products out there, the law and enforcement programs are going to have to adapt to cover that new segment of the economy.

What are you most looking forward to at the 2022 Annual Meeting Live+?
Seeing people! Like so many INTA members, I have INTA friends—people who I have seen, up until recently, twice a year, at the Leadership Meeting and then at the Annual Meeting, who come from different parts of not just the country, but the world. It’s a great opportunity for us to get together and reconnect over coffee or a meal. I’m really, really, really looking forward to that! In addition, I have a global client base, and the Annual Meeting also has always been a great opportunity to see clients face to face.

Also, I have to say, while the virtual events I’ve participated in have all been good, it just can never be the same as it is in person. There’s nothing like being in the room, feeling the vibe, and hearing people laugh at the jokes or “ooh” at an interesting point. I just can’t wait for everything about the in-person aspect of the Meeting.

As track leader, what do you hope attendees of the Enforcement and Anticounterfeiting sessions ultimately walk away with?
One of the things that I’ve always loved about INTA is that the panels traditionally are cutting edge. We have among our members the most knowledgeable people and the greatest experts in trademarks and other IP issues. So, I’m hoping that what we’ll be able to highlight for those who attend in person or virtually is as much cutting-edge information as we can about the problems that companies are facing, new technologies and tools that are out there to address them, and how governments are responding. In sum: the most up-to-date information about the state of the problem and the state of enforcement and how those two things are working together.

The Enforcement and Anticounterfeiting track at the 2022 Annual Meeting Live+ is supported by Strategic Sponsor-Enforcement and Anticounterfeiting, WANHUIDA Intellectual Property. Learn more about the Meeting and register. 

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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