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Fashion Law
Fashion Law
A Guide for Designers, Fashion Executives, and Attorneys
Edited by
Guillermo C. Jimenez
Fashion Institute of Technology
Barbara Kolsun
Stuart Weitzman LLC
Fairchild Books
New York
Executive Editor: Olga T. Kontzias Assistant Acquisitions Editor: Amanda Breccia Editorial Development Director: Jennifer N. Crane Development Editor: Sylvia L. Weber Associate Art Director: Erin Fitzsimmons Production Director: Ginger Hillman Associate Production Editor: Andrew Fargnoli Copy Editor: Christine DAntonio Cover Design: Erin Fitzsimmons Text Design: Andrew Katz Copyright 2010 Fairchild Books, A Division of Cond Nast Publications, Inc. All rights reserved. No part of this book covered by the copyright hereon may be reproduced or used in any form or by any means graphic, electronic, or mechanical, including photocopying, recording, taping, or information storage and retrieval systemswithout written permission of the publisher. Library of Congress Catalog Card Number: 2008940704 ISBN: 978-1-56367-778-6 GST R 133004424 Printed in the United States of America TP09
Contents
Extended Contents Preface Acknowledgments
vii xv xviii
I Introduction
1 Fashion Law: Overview of a New Legal Discipline 3
Guillermo C. Jimenez, Fashion Institute of Technology
II Intellectual Property Issues

2 An Introduction to Intellectual Property Protection in Fashion 35
George Gottlieb, Gottlieb, Rackman & Reisman, P.C. Marc Misthal, Gottlieb, Rackman & Reisman, P.C. Barbara Kolsun, Stuart Weitzman LLC
3 Fashion and Apparel Licensing 81
Barbara Kolsun, Stuart Weitzman LLC Kristin B. Kosinski, Cislo & Thomas LLP
4 Counterfeiting 105
Barbara Kolsun, Stuart Weitzman LLC Heather J. McDonald, Baker Hostetler
III Commercial Operations and Expansion

5 Starting the Business and Launching the Line: How to Choose the Right Business Structure 133 v
Thomas M. Pitegoff, Pitegoff Law Ofce PLLC
vi 6
Contents
Selling and Buying: Commercial Agreements in the Fashion Sector
160 175
Donald L. Kreindler, Phillips Nizer LLP

7 Employment Law Issues in Fashion
Elise M. Bloom, Proskauer Rose LLP Carole P. Sadler, Coach, Inc.

8 Marketing, Advertising, and Promotion 221
Ashima Dayal, Davis and Gilbert LLP Vejay Lalla, Davis and Gilbert LLP William Jelinek, The Este Lauder Companies
9 Retail Leasing for Fashion 263
Steven R. Gursky, Olshan Grundman Frome Rosenzweig & Wolosky LLP Mitchell B. Stern, Olshan Grundman Frome Rosenzweig & Wolosky LLP
IV International Aspects
10 International Development of the Fashion Business 287
Michael F. Colosi, Kenneth Cole Productions, Inc. Paul A. Friedman, Kenneth Cole Productions, Inc.
11 Import and Customs Issues in Fashion 319
Frances P. Hadeld, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP About the Contributors Index
347 348
Extended Contents
Preface Acknowledgments
xv xviii
I Introduction
1 Fashion Law: Overview of a New Legal Discipline 3 3 3 5 12 12 12 14 15 16 17 18 20 20 22 24 25 25 27 27 28 28 29 vii
Guillermo C. Jimenez
1.1. Introduction 1.1.1. Dening Fashion Law 1.1.2. The Need for Fashion Law 1.1.3. Analogies to Entertainment Law 1.2. Fashion 101 for Lawyers 1.2.1. The Structure of the Business 1.2.2. Production Processes 1.2.3. Fashion Seasons 1.2.4. The Realities of Knocking Off and Counterfeiting 1.2.5. The Role of Licensing 1.2.6. International Aspects of Fashion Law 1.3. Fashion Law and the Life Cycle of the Fashion Firm 1.3.1. Entrepreneurship Phase: Start-Up Issues 1.3.2. Expansion: Growth Issues 1.3.3. Large Corporation Issues 1.4. The Elements of Fashion Law 1.4.1. IP Protection in Fashion, Textiles, and Apparel 1.4.2. Anticounterfeiting 1.4.3. Fashion and Apparel Licensing 1.4.4. Legal Structure of the Company 1.4.5. Selling and Buying Fashion Products: Commercial Agreements 1.4.6. Labor and Employment Issues
viii
Extended Contents
1.4.7. Marketing, Advertising, and Promotion of Fashion: Legal Issues 1.4.8. Real Estate 1.4.9. International Business Issues 1.4.10. Customs 1.5. Conclusion 1.5.1. Fashion Education and Fashion Law Schools 1.5.2. Fashion Law Research
30 30 30 31 32 32 32
II Intellectual Property Issues

2 An Introduction to Intellectual Property Protection in Fashion 35 35 36 38 38 39 49 52 59 62 66 67 69 69 70 70 71 71 72 73 74 75 75 77 77 77 78 78 79
George Gottlieb, Marc Misthal, and Barbara Kolsun

2.1. Introduction 2.1.1. Scope of IP Law 2.1.2. Finding the Right IP Attorney 2.2. IP Protection of Fashion and Apparel in the United States 2.2.1. Trademarks 2.2.2. Trade Dress Protection 2.2.3. Copyright 2.2.4. Design Patent Protection 2.2.5. Utility Patent Protection 2.2.6. Trade Secrets 2.3. International Protection 2.3.1. International Protection of Trademarks 2.3.2. Protecting Copyrights 2.3.3. Protecting Registered or Industrial Designs 2.3.4. Protecting Patents 2.4. Resolving Disputes in IP 2.4.1. Strategies to Protect Your Companys Rights 2.4.2. The Value of a Legal Opinion: The Opinion Letter 2.4.3. What to Do If You Receive a Cease and Desist Letter or Are Sued 2.4.4. Strategies to Avoid Infringing on IP Rights 2.4.5. Understanding the Stakes in IP Litigation 2.4.6. IP Litigation in General 2.4.7. Copyright Disputes 2.4.8. Trademark and Trade Dress Disputes 2.4.9. Patent Disputes 2.4.10. Settlement 2.5. Conclusion Appendix: Researching IP Issues: Links and References
Extended Contents
3 Fashion and Apparel Licensing
ix 81 81 81 82 84 84 84 86 87 87 90 91 92 96 98 99 101 104 105 105 105 106 107 108 108 110 113 113 114 114 115 115 116 117 118 119 120 121 121 122
Barbara Kolsun and Kristin B. Kosinski

3.1. Introduction 3.2. What Is a License? 3.3. Why License? 3.4. Negotiating a License 3.4.1. Pre-Preparation 3.4.2. Preparation 3.4.3. Post-Preparation, Pre-Negotiation 3.5. Key Terms 3.5.1. Licensed Products/IP 3.5.2. Additional Trademark Considerations 3.5.3. Term and Termination 3.5.4. Compensation 3.5.5. Quality Control and Advertising and Promotion Minimums 3.5.6. Sales and Product Delivery Deadlines and Schedules 3.5.7. Representations and Warranties and Risk Controls 3.5.8. Miscellaneous Terms 3.6. Conclusion
Counterfeiting
Barbara Kolsun and Heather J. McDonald

4.1. Introduction 4.1.1. What Is Trademark Counterfeiting? 4.1.2. The History of Counterfeiting and Anticounterfeiting 4.1.3. The Crime of the Twenty-First Century 4.1.4. Identifying a Counterfeit: An Overview 4.1.5. A Growing Problem and the Governmental Response 4.1.6. Not a Victimless Crime 4.1.7. Anticounterfeiting Today 4.2. Nature of the Counterfeiting Problem 4.3. Agents in the Effort 4.3.1. Management 4.3.2. Preliminary Action Plan 4.3.3. In-House Counsel 4.3.4. Outside Counsel 4.3.5. Federal Law Enforcement 4.3.6. Border Enforcement 4.3.7. State Law Enforcement Ofcials 4.3.8. Private Investigators 4.3.9. Trade Organizations 4.4. Criminal Enforcement 4.4.1. Enforcement under Federal Criminal Statutes
Extended Contents
4.4.2. Enforcement by State Criminal Statutes 4.5. Civil Enforcement 4.5.1. Civil Seizure Actions 4.5.2. Third-Party Liability Actions 4.5.3. Cease and Desist Letters 4.5.4. Foreign Matters 4.6. Enforcement on the Internet 4.6.1. Websites 4.6.2. Auction and Listings Sites 4.7. Conclusion
123 124 124 124 126 126 126 128 128 130
III Commercial Operations and Expansion

5 Starting the Business and Launching the Line: How to Choose the Right Business Structure 133 133 134 134 135 136 136 138 139 144 146 147 148 148 149 149 150 151 153 154 156 157 159 160 160
Thomas M. Pitegoff
5.1. Introduction 5.2. The Business Entity 5.2.1. Sole Proprietorship 5.2.2. Partnership 5.3. Forming the Entity 5.3.1. Why Form an Entity? 5.3.2. Financing and Securities Laws 5.3.3. Which Entity? 5.3.4. Which State? 5.3.5. Transfer Restrictions 5.3.6. Comparing Forms of Ownership 5.4. Launching and Expanding the Business 5.4.1. The Brand 5.4.2. Manufacturing the Products 5.4.3. Licensing 5.4.4. Distribution 5.4.5. Franchising 5.4.6. Other Sales Arrangements 5.4.7. Buying a Business 5.4.8. Other Laws 5.4.9. International Expansion 5.5. Conclusion
Selling and Buying: Commercial Agreements in the Fashion Sector
Donald L. Kreindler
6.1. Introduction
Extended Contents
6.2. The Sales Contract between the Fashion Company and Its Retailer Customers 6.2.1. The Importance of Agreements to Sell and Buy 6.2.2. The UCC: What the Law Provides Absent a Written Contract with Inconsistent Provisions 6.2.3. What Constitutes the Contract between the Fashion Company and Its Retailer Customers 6.2.4. VCERPs Position on Six Key Items of VendorRetailer Relations 6.2.5 Putting the VCERP Provisions into Practice 6.3. The Purchase of Goods by the Fashion Company: Terms and Conditions That Should Apply, and What the Fashion Company Should Do to Implement Them 6.3.1. How the World Has Changed 6.3.2. Important Provisions in the Fashion Companys Purchase Order 6.4. The Sales Representation Agreement 6.4.1. Authority of the Sales Representative 6.4.2. Compensation 6.5. Conclusion
xi
161 161 162 165 167 168
170 170 171 173 173 173 174 175 175 176 177 189 189 191 193 194 195 195 197 199 199 201 201 202 204 205 205
Employment Law Issues in Fashion
Elise M. Bloom and Carole P. Sadler

7.1. Introduction 7.2. Discrimination Law: An Overview 7.2.1. Federal Laws 7.2.2. State and Local Laws 7.3. Wage and Hour Laws 7.3.1. Fair Labor Standards Act and Related State Laws 7.3.2. Overtime and Job Classications 7.3.3. Record-Keeping Requirements 7.3.4. Other Wage Laws of Concern 7.3.5. Employee Uniforms 7.3.6. Anti-Sweatshop Practices 7.4. Other Important Federal Laws 7.4.1. Family and Medical Leave Act 7.4.2. Fair Credit Reporting Act 7.4.3. Occupational Safety and Health Act 7.5. Contingent Work Force (Independent Contractors) 7.6. Weight Regulation of Fashion Models: Council of Fashion Designers of Americas Health Initiative 7.7. Employment Agreements in the Fashion Industry 7.7.1. Nature of the Employment Relationship
xii
Extended Contents
7.7.2. Covenant Not to Compete 7.7.3. Other Restrictive Covenants 7.7.4. Arbitration 7.7.5. Choice of Law 7.7.6. Return of Property 7.7.7. Assignments and Successors 7.7.8. Severability 7.7.9. Merger and Modication Clause 7.8. Immigration Issues in the Fashion Industry 7.8.1. Foreign Nationals Employed in the Fashion Industry: Admission to the United States 7.8.2. General Nonimmigrant Options 7.8.3. H-1B Visa 7.8.4. Fashion Models 7.8.5. O-1 Visa 7.9. Conclusion
205 207 210 210 211 211 212 212 213 213 214 216 218 219 220 221 221 223 224 225 233 235 236 239 239 245 251 253 254 255 257 258 263 263 263 266 266
Marketing, Advertising, and Promotion
Ashima Dayal,Vejay Lalla, and William Jelinek

8.1. Introduction 8.2. What Constitutes Advertising? 8.3. Engaging Creative Personnel to Create Advertising 8.3.1. Contract Basics 8.3.2. Talent/Model/Spokesperson Contracts 8.3.3. Union Issues 8.3.4. Hiring Minors 8.4. Creating and Clearing Advertising 8.4.1. To Own or License Content? 8.4.2. Clearance of Third-Party Materials in Advertising 8.5. Regulatory Issues in Fashion Advertising 8.5.1. What Is an Advertising Claim? Express and Implied Claims vs. Puffery 8.5.2. Performance Demonstrations 8.5.3. Endorsements and Testimonials 8.5.4. Other Advertising Claims 8.6. Conclusion
Retail Leasing for Fashion
Steven R. Gursky and Mitchell B. Stern

9.1. Introduction 9.2. Selecting the Right Location 9.3. Making the Offer 9.3.1. Purpose of the Letter of Intent
Extended Contents
9.3.2. Contents of a Letter of Intent 9.4. Negotiating Posture 9.5. Assembling the Team of Experts 9.5.1. Selecting the Right Attorney 9.5.2. Selecting a Retail Leasing Broker 9.5.3. Choosing Other Professionals 9.6. Percentage Rent 9.7. Exclusives and Radius Restrictions 9.8. Construction and Architectural Design Issues 9.9. Signage and Displays 9.10. Commercial Lease Checklist 9.11. Conclusion
xiii 270 272 272 274 274 276 277 277 278 280 280 283
IV International Aspects
10 International Development of the Fashion Business 287 287 288 289 293 294 294 294 297 298 298 299 300 302 303 303 304 304 308 309 312 313 314 315 317
Michael F. Colosi and Paul A. Friedman

10.1. Introduction 10.2. Choosing the Right Partner 10.2.1. Expertise and Track Record in the Foreign Market 10.2.2. Financial Strength 10.3. Preparation 10.3.1. Choosing a Trademark Wisely 10.3.2. Trademark Rights Are Territorial 10.3.3. Design Protection Law in Different Jurisdictions 10.3.4. Knowing the Appeal of Products to Local Tastes and Needs 10.4. Types of Relationships 10.4.1. License Agreement 10.4.2. Distribution Agreement 10.4.3. Franchise Agreement 10.4.4. Agency/Sales Representative Agreement 10.4.5. Joint Venture 10.5. Considerations in Negotiating and Drafting an International Deal 10.5.1. Rights Granted 10.5.2. Design Process 10.5.3. Retail Rights 10.5.4. Monetary Allowances for Visits to a Territory 10.5.5. Pricing Decisions 10.5.6. Advertising 10.5.7. Factory Compliance with Human Rights Standards 10.6. Conclusion
xiv 11
Extended Contents
Import and Customs Issues in Fashion 319 319 320 322 324 326 328 329 329 333 334 336 337 338 339 340 340 340 342 343 344 345 346 347 348
Frances P. Hadeld
11.1. Introduction 11.2. The Import Process 11.2.1. Entry Documentation 11.2.2. Classication 11.2.3. Valuation 11.2.4. Valueless or Damaged Goods 11.2.5. Country of Origin 11.2.6. Marking Requirements for Apparel 11.2.7. U.S. Fish and Wildlife Requirements for Apparel 11.2.8. Entry of Commercial Samples 11.3. Administrative Processes 11.4. Litigation 11.5. Penalties for Violating the Customs Laws 11.5.1. Seizure and Forfeiture under 19 U.S.C.A. 1595a 11.5.2. Liquidated Damages 11.5.3. Criminal Sanctions 11.6. Customs Audits 11.7. Record-Keeping Requirements 11.8. Customs-Trade Program against Terrorism 11.9. Foreign Manufacturing Issues for Importers 11.10. IP, Trademarks, and Importation 11.11. Conclusion
About the Contributors Index
Preface
In the twenty-rst century, fashion has achieved the status of a truly global industry. Consumers in virtually every country on the planet are now familiar with such mass-market brands as Levis, Nike, Adidas, H&M, Zara, and Lacoste. At the same time, the artistic creativity of top designers working for haute couture and luxury brands has made fashion a cultural force. The importance of a fashion-oriented design strategy has thus increasingly become apparent in industries as diverse as automobiles, hotels, and electronic appliances. Despite the economic and cultural importance of the fashion sector, the legal profession has been slow to develop specic tools and treatises to serve its fashion clientele. One of the reasons for this is doubtless to be found in the highly fragmented nature of the industry. Until recently, the fashion and apparel complex was characterized by a vast array of small- to medium-sized enterprises. However, decades of consolidation and growth have turned many fashion companies today into major international corporations. These companies typically face certain kinds of legal issues and problems on a regular basis. It is therefore the primary objective of Fashion Law to provide a concise but practical guide to the most common legal issues faced by a fashion company as it grows from infancy to international stature. The text is divided into four parts. First is Part I, the Introduction. Chapter 1 provides an overview of the book and the issues covered by fashion law. It describes fashion law as an emerging course of study for students of fashion and a specialized area for law students. The rst problem typically faced by a fashion company is how to protect its intellectual property (IP)especially its brand name, logo, and other trademarks. Part II, comprising Chapters 2, 3, and 4, addresses IP issues. Fashion consumers are more likely to purchase a brand they can easily recognize, hence the value of a unique and highly visible trademark. However, fashion is also an unusually imitative industry. Fashion leaders and innovators inevitably nd that their ideas are copied by rivals. IP law allows fashion companies to obtain xv
xvi
Preface
some measure of protection, but it is a highly limited protection. As is set forth in Chapter 2, fashion companies can protect logos, images, fabric prints, and jewelry designs, for example, but they generally cannot protect fashion designs. One of the structural characteristics of todays fashion industry is a strong reliance on licensing, which is discussed fully in Chapter 3. In licensing transactions, the owner of IP enters into an agreement under which another party manufactures branded fashion items pursuant to the licensors quality and design standards. Through licensing, a rm that has developed a famous brand name can exploit that value in a number of countries or industries where it might otherwise have lacked the capital to operate. The tremendous growth in the value of fashion trademarks has unfortunately led to a serious business problem, global trademark counterfeiting. Counterfeiting is no longer a small problem for many fashion companies. It now represents a serious drain on the corporate treasury with negative effects on consumer goodwill. Many large fashion companies have therefore adopted highly proactive, collaborative approaches to ghting counterfeiting. The elements of a successful anticounterfeiting plan are reviewed in Chapter 4. Part III, comprising Chapters 5 through 9, deals with the commercial operation and expansion of fashion businesses. Every company needs to be set up according to a particular legal structure as, for example, in a sole proprietorship, partnership, or corporation. The considerations involved in making this crucial choice are explored in Chapter 5. Later, when a fashion company is in operation, it will enter into a number of business deals with suppliers and customers. The most common of these transactions is the commercial sale of fashion items from a fashion company to a major retailer. The legal aspects of the commercial sale transactions are analyzed in depth in Chapter 6. Fashion companies are often obliged to employ a large number of personnel. These employees are covered by a complex web of legal protections. The various state and federal laws covering employee rights are reviewed in Chapter 7. As anyone who has ever perused a fashion magazine knows, print advertising is tremendously important for fashion rms. Today, however, new forms of advertising, particularly through electronic media, are also becoming important. A recurrent issue faced by fashion companies is the clearance of images used in their advertising. Images may be owned by photographers or other parties, and the people portrayed in those images may have additional rights. In addition, fashion advertisers may need to enter into agreements for the use of props or the right to shoot images at particular locations. The ways to obtain legal clearance for all aspects of the use of images in advertising is discussed in Chapter 8. Despite the growth of e-commerce, most apparel sold today is still sold through retail stores. The fashion company needs to carefully negotiate the
Preface
xvii
lease or purchase of space for its stores. The key aspects of commercial lease negotiations are set forth in Chapter 9. Part IV, which includes Chapters 10 and 11, covers international aspects of the fashion industry. When a fashion company has begun to achieve international recognition, it will inevitably be demanded be consumers in other countries. The best and safest ways to grow internationally are discussed in Chapter 10. Apparel manufacturing today is a complex, global process. A single garment may involve elements from a half-dozen different countries. It is absolutely vital for fashion companies to be able to move products across national borders in a timely, efcient, and cost-effective manner. Proper customs and dutymanagement procedures are therefore mandatory for the sophisticated apparel company and are discussed in Chapter 11. To introduce fashion students and industry professionals to these legal aspects of working in the fashion business, this text relies on the expertise of contributing authors who specialize in fashion law, either in law partnerships or as inside counsel to fashion business rms. Although designers and fashion executives are encouraged to turn to legal counsel to ensure that they are conducting their business in the most advantageous way that complies with the law, a basic understanding of fashion law can make their relationship with their legal advisors more productive. Several features of the text help to make legal concepts accessible to the lay reader. Boxes provide summaries of court cases and other real-life examples of the role of law in the fashion business. Templates for agreements illustrate the provisions that owners and managers of fashion businesses should include in these documents. Sample Clauses familiarize readers with the legal language that covers the rights and responsibilities of the parties to agreements. Practice Tips discuss legal issues that should be considered as fashion designers and executives establish procedures for conducting their business. Law students who are contemplating a specialty in fashion law will learn about applications of business law and IP protection to the particular, sometimes unique, conditions and practices that occur in this fascinating industry.
Acknowledgments
This book was written by a team of highly experienced attorneys and legal experts, and it is therefore tting for us to thank our contributing authors rst: Elise M. Bloom, Michael F. Colosi, Ashima Dayal, Paul A. Friedman, George Gottlieb, Steven R. Gursky, Frances P. Hadeld, William Jelinek, Kristin B. Kosinski, Donald L. Kreindler, Vejay Lalla, Heather J. McDonald, Marc Misthal, Thomas M. Pitegoff, Carole P. Sadler, and Mitchell B. Stern. We would also like to thank our tireless research and drafting assistants, Lauren Allen, Ashley Corwin, Cara Joy David, Stephen Fletcher, Shannon Hedvat, Megan Heeter, Jean Kim, Whitney Meers, and Tina Mepani. We are grateful to the following reviewers, selected by the publisher, for their helpful recommendations: Jean K. Dilworth, Eastern Illinois University; Elena Karpova, Iowa State University; Mary Littrell, Colorado State University; Erin Parrish, University of Alabama; and Jack Rose, Johnson & Wales University. Finally we would like to thank our highly supportive and professional publishing team at Fairchild Books, especially our editors, Olga Kontzias, executive editor; Jennifer Crane, director of editorial development; Sylvia Weber, development editor; and Andrew Fargnoli, production editor; and our art director, Erin Fitzsimmons. Guillermo C. Jimenez Professor, Fashion Institute of Technology Barbara Kolsun General Counsel, Stuart Weitzman LLC
xviii
Counterfeiting
Barbara Kolsun and Heather J. McDonald
4.1.
Introduction
Trademarks are the most valuable commodities in the fashion industry. Fashion companies rely on their trademarks so consumers can identify a particular brands products easily, which in turn has a bearing upon whether the consumer elects to purchase the product. Since copyright protection for fashion designs is limited, fashion companies must rely on their trademarks in order to help distinguish their products from those of their imitators. Trademarks have the ability to stimulate consumer demand for products globally.1 This is particularly true given the advent of the Internet. Marks indicate that a particular product is associated with a certain reputation, and that, by buying another product with the same mark, consumers are purchasing items of the trademark owners standard of quality. With the increased demand for certain trademarks, counterfeiters have realized the benet of copying such IP. Counterfeit products can be created at a relatively low price and can be sold for great prots (Figure 4.1).
4.1.1. What Is Trademark Counterfeiting?

Trademark counterfeiting is the act of manufacturing or distributing a product or service bearing a mark that is identical to or substantially indistinguishable
Whitney Meers, Cardozo Law School, Class of 2009, and Cara Joy David, Cardozo Law School, Class of 2010, provided additional research. 1 Curtis Krechevsky, INTA and the Battle against Counterfeiting, 93 Trademark Rep. 145 (1996).
105
106
Intellectual Property Issues
Fig. 4.1. These counterfeit handbags were seized from a New York City warehouse before they could be sold on the streets as designer merchandise. (Courtesy of Fairchild Publications, Inc.)
from a registered trademark.2 Simply put, trademark counterfeiting is theft of someones IP. People who copy legitimate products not only reproduce the trademark owners original patterns and designs, but they also decrease the value of the original products in the marketplace by making exclusive products seem as though they are available at mass-market prices. This practice harms the trademark owner, who seeks to maintain the exclusivity of the brand in the marketplace, while at the same time it allows counterfeiters to capitalize off the established goodwill and reputation of the trademark owner.
4.1.2. The History of Counterfeiting and Anticounterfeiting

People have attempted to associate brands with their products for hundreds of years.3 For as long as people have created objects of value, they have attempted to protect the marks that they have attached to those products.4
15 U.S.C. 1116(d)(1)(B)(I), 1127 (2008). Jed S. Rakoff & Ira B. Wolff, Commercial Counterfeiting: The Inadequacy of Existing Remedies, 73 Trademark Rep. 493 (1983).
3 4 2
Id.
Counterfeiting
107
In 1946, Congress enacted legislation to protect trademarks5 that enabled trademark owners to enforce and protect their trademarks through civil actions. However, these early laws did little to protect trademark owners against counterfeiting.6 In 1983, brand owners again lobbied Congress for criminal penalties against trademark counterfeiting.7 By then, the problem of counterfeiting had escalated far beyond the trademark owners control,8 and the issue was reaching crisis proportions.9 The legislature amended the 1946 statute in 1984 to criminalize trademark counterfeiting and included stiffer penalties for counterfeiters.10
4.1.3. The Crime of the Twenty-First Century

Theft of IP, particularly trademark counterfeiting, is often referred to as the crime of the twenty-rst century.11 As technology advances, so does the ability of criminals and infringers to copy the trademarks of others, with the hopes of easy prots. Much of todays counterfeiting problem is linked to China,12 although Russia represents a major problem, and smaller issues are present in such places as Argentina, Belize, Brazil, Egypt, Indonesia, Israel, Lebanon, Paraguay, Turkey, Ukraine, and Venezuela. In Latin American countries, the biggest problems come from domain name pirates and counterfeiters claiming to be distributors for U.S. companies. Chinas unprecedented economic growth has been accompanied, unfortunately, by rampant counterfeiting.13 Professor Peter Yu has written that
. . . the culprit behind the Chinese piracy problem is the Confucian beliefs ingrained in the Chinese culture, the countrys socialist economic system, the leaders skepticism toward Western institutions, the xenophobic and nationalist sentiments of the populace, the governments censorship and information control policy, and the signicantly different Chinese legal culture and judicial system.14
5 6
Lanham Act, 15 U.S.C. 1041 et seq. Krechevsky, supra note 1. 7 Rakoff & Wolff, supra note 3. 8 Krechevsky, supra note 1.
9
Id.
Trademark Counterfeiting Act of 1984, 18 U.S.C. 2320 (2008). Dubbed as such by James Moody, former Chief of the Federal Bureau of Investigations Organized Crime/Drug Operations Division. 12 Daniel C.K. Chow, Counterfeiting in the Peoples Republic of China, 78 Wash. U. L.Q. 1 (2000).
11 13 14
10
Id.
Peter K. Yu, From Pirates to Partners: Protecting Intellectual Property in China in the Twenty-First Century, 50 Am. U. L. Rev. 131, 206 (2000).
108
Professor Yu suggests that Chinas reluctance to embrace IP laws is due to the perception that these laws protect only foreigners and not citizens of China, and to the impression that such laws were adopted as the result of pressure to comport with Western IP laws, which creates further hostility and reluctance to abide by such laws.15 On June 20, 2006, European and U.S. ofcials joined forces in the form of a joint task force to ght counterfeiting. The EU-US Action Strategy for the Enforcement of Intellectual Property Rights provided a framework in which the E.U. and United States could identify and act on common projects with industry support. China and Russia were the main focus of the joint action plan. Additionally, in October 2007, the U.S. Trade Representative announced the launch of the Anticounterfeiting Trade Agreement to establish common standards for anticounterfeiting enforcement among numerous countries.
4.1.4. Identifying a Counterfeit: An Overview

Some counterfeits are easier to spot than others. For example, a counterfeit handbag purchased in a ea market will usually be of very poor quality, with loose seams and stitching. The difference in quality between the counterfeit and an original will be visible to the ordinary consumer. However, many counterfeiters today are capable of producing extremely precise imitations of famous branded products. Such counterfeiters can mimic everything from a particular stitching method to precise thread coloring. Because of the difculty in identifying such counterfeits, some companies have incorporated product-securing devices in packaging or into the product itself, such as thread in a label identifying the product as authentic. Brand owners must be prepared to train investigators and law enforcement ofcials, such as customs ofcers, in how to spot counterfeit products. Also, trademark owners should review their counterfeiting prevention measures from time to time in order to ensure that the measures are up-to-date, since counterfeiters are constantly becoming more sophisticated in their methods.
4.1.5. A Growing Problem and the Governmental Response

The International AntiCounterfeiting Coalition (IACC) estimates losses to U.S. companies due to trademark counterfeiting to be between $200 billion to $250
15
Id.
Counterfeiting
109
billion annually.16 Globally, counterfeiting is approximately a $600 billion a year problem.17 In 2005, Congress also noted that counterfeiting costs legitimate employers thousands of potential job opportunities, owing in part to lost prots and in part to the companies competition with illegal operations that do not comply with national employment standards.18 In a survey conducted by the IACC, Fortune 500 companies reported that they spend an average of between $2 and $4 million per year to combat counterfeiting. Some reported spending up to $10 million.19 According to the November 2004 report of New York City Comptroller William C. Thompson, Jr.,20 counterfeiting accounted for $380 million lost in New York City sales taxes, $290 million lost in New York City business income taxes, and $360 million lost in New York City personal income taxes.21 The Los Angeles County Development Corporation reported that counterfeiting had deprived state and local governments of at least $483 million in 2005.22 In recent years, Congress has taken a more proactive stance in the ght against counterfeiting. In passing anticounterfeiting laws, Congress now recognizes the importance of IP to the national economy. Laws now exist that allow trademark owners to enforce their rights and that allow both federal and state authorities to protect the consuming public (Box 4.1). Agencies such as the Federal Bureau of Investigation, Secret Service, and Customs Service (now part of the Department of Homeland Security) monitor and establish trade regulations, patrol the borders, and monitor the Internet in order to locate and prosecute counterfeiters. Under federal laws, counterfeiters may be ned up to $2 million and ten years in prison per infringement. Further, as many as two-thirds of the states in the United States have adopted laws criminalizing trademark counterfeiting. Many of these laws include felony penalties, prison terms and nes for those convicted of crimes associated with trademark counterfeiting.23
16 See International AntiCounterfeiting Coalition, http://www.iacc.org/counterfeiting/counterfeiting .php (last visited July 3, 2008). However, it is important to note that it is difcult to come up with a precise gure because so much of the counterfeiting industry is below the economic radar. 17 Id. 18 S. 1984, 109th Cong. 1 (2005). See also International AntiCounterfeiting Coalition, Facts on Fakes, available at http://www.iacc.org/resources/Facts_on_fakes.pdf (last visited Mar. 19, 2008). 19 See International AntiCounterfeiting Coalition website, http://www.iacc.org (last visited May 28, 2008). 20 William C. Thompson, Jr., Bootleg Billions: The Impact of the Counterfeit Goods Trade in New York City (Nov. 2004), available at http://www.iacc.org/resources/IACC_WhitePaper.pdf (last visited May 28, 2008). 21 22
Id.
Gregory Freeman, Nancy D. Sidhu & Michael Montoya, A False Bargain: The Los Angeles County Economic Consequences of Counterfeit Products (Feb. 2007), available at http://www.laedc.org/consulting/ projects/2007_piracy-study.pdf (last visited Dec. 14, 2008). 23 18 U.S.C. 2320.
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Intellectual Property Issues Box 4.1
Purse Parties: U.S. v. Ohri

In big cities, counterfeit vendors are part of everyday life. For instance, New York Citys Chinatown is a popular spot for tourists to purchase counterfeit products. However, in suburban areas, consumers might attend purse parties, parties that serve food and drinks and sell counterfeit goods. Purse parties are more difcult to discover and to police than retail outlets because such parties are held in private and by invitation only. But there are success stories. In U.S. v. Ohri, an anonymous tip from an attendee at a purse party led to the arrest of a man and his son, who were later tried for selling counterfeit handbags bearing the marks of nine different designers, including Prada and Louis Vuitton. Federal agents found 30,000 knockoff bags in a warehouse in Fairfax, Virginia. The arrest also connected the defendants to others involved in the counterfeiting ring.
Source: U.S. v. Ohri, WL 150799 (E.D. Va. 2007).
Trademark owners also have at their disposal various civil remedies to protect their trademarks. Under existing laws, companies have the ability to seize counterfeit products, permanently enjoin the manufacture and sale of such items, remove such items from sale on the Internet, and seek monetary damages.24
4.1.6. Not a Victimless Crime

A common misconception is that counterfeiting is a victimless crime. It is not. Beginning with the large corporations at the top, trickling down to the low-wage workers who slave in barely inhabitable sweatshops, and ending with the consumers of counterfeit products, counterfeiting has countless victims. People who purchase counterfeit products often do not realize the harms that are associated with purchasing such products. They generally just assume they are getting a good deal for something that looks substantially similar to a brand name product. But in reality, there are high costs, including harm to the economy, danger to consumers health, and substantial funding for organized crime.
24
Id. 1116.
Counterfeiting 4.1.6.1. Harm to Trademark Owners
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From the trademark owners point of view, the obvious harm done by counterfeiting is lost sales. People who would have elected to purchase an authentic product either are deceived into purchasing or willingly purchase a fake. If people who have innocently purchased counterfeits believe that the products are authentic but simply of poor quality, they may have reservations about purchasing the mark owners products in the future. Therefore, the mark owner is harmed not only by the fact that the person has purchased a non-genuine product, but also by the fact that the consumer may choose not to purchase genuine items from that trademark owner in the future. The money that companies lose when people purchase counterfeit products, coupled with the money that corporations spend to ght such counterfeiting efforts, signicantly increases operating costs.
4.1.6.2. Harm to Consumers

Consumers also lose when they purchase non-genuine products. Counterfeiting is successful because counterfeiters nd ways to take shortcuts in manufacturing. This poses a substantial threat to the health and safety of consumers because of a lack of quality control. Counterfeiting operations often work below the radar of international standards and therefore do not comply with minimum public safety requirements. For products such as clothing, this means that garments may be washed in substances that are toxic or that are proven skin or eye irritants. Counterfeit sunglasses may not be shatterproof or protect eyes from ultraviolet rays. It is essential to get the message out to consumers. One highly effective public relations strategy is for a group of fashion companies to launch a major public awareness campaign. For instance, the hair-care company Paul Mitchell had television commercials stating that its products are sold only in salons and that products purchased elsewhere are not guaranteed by the company and may be dangerous. For several years, Harpers Bazaar has devoted one issue a year to anticounterfeiting, and this has become a popular venue for fashion companies to place anticounterfeiting ads. There are also lower cost alternatives. For example, a company should designate a place on its website where consumers can report counterfeiters. If possible, labels should also clearly state only sold in. . . .
4.1.6.3. A Drain on Law Enforcement

Counterfeiters generally run all-cash businesses and avoid keeping records or paying taxes. This is problematic on many levels. Cash-only operations leave no
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paper trail, a situation that can make large-scale counterfeiting operations difcult to investigate. It also allows counterfeiters to easily hide their assets once they are tracked by law enforcement. Because they have no records, it is impossible to ascertain whether counterfeiters are complying with international human rights health and safety standards in their factories. The likelihood is that most of them are not in compliance, because it costs money to comply with such standards. Organized crime and terrorist organizations are increasingly involved in counterfeiting operations.25 Counterfeiting has become big business, with organized criminal enterprises establishing manufacturing and distribution networks in the United States, Europe, and Asia. Many of these criminal groups ship counterfeit products through the same sophisticated routes that they use for narcotics trade.26 Congress recognized the correlation between organized crime and counterfeiting when it enacted federal criminal copyright and trademark piracy laws under the Racketeer Inuenced Corrupt Organizations (RICO) Act.27 At the International Conference on IPR in Lyon, France in 2001, hosted by Interpol, the relationship between counterfeiting and funds for terrorist activities was discussed.28 Some of the groups that the government has encountered through its anticounterfeiting operations include al Qaeda, Hamas, Hezbollah, and the Irish Republican Army.29 In fact, Interpol states that counterfeiting is not merely a single source of funding for such organizations, but that it is becoming the preferred method of funding for these groups.30 The FBI compiled evidence of a direct link between the sale of counterfeit merchandise in the streets of New York and the terrorists who bombed the World Trade Center in 1993.31
See generally Maureen Walterbach, International Illicit Convergence: The Growing Problem of Transnational Organized Crime Groups Involvement in Intellectual Property Rights Violations, 34 Fla. St. U. L. Rev. 591
(2007). 26. Anna-Liisa Jacobson, The New Chinese Dynasty: How the United States and International Intellectual Property Laws Are Failing to Protect Consumers and Inventors from Counterfeiting, 7 Rich. J. Global L. & Bus. 45 (2008). 27 International AntiCounterfeiting Coalition, The Negative Consequences of International Intellectual
25
Property Theft: Economic Harm, Threats to the Public Health and Safety, and Links to Organized Crime and Terrorism Organizations (Jan. 2005), available at http://www.iacc.org/resources/IACC_WhitePaper.pdf (last
visited May 28, 2008). 28 Kathleen Millar, U.S. Customs Today, Financing Terror: Prots from Counterfeit Goods Fund Terrorist Attacks (Nov. 2002), available at http://cbp.gov/xp/CustomsToday/2002/November/interpol.xml (last visited Dec. 14, 2008).
29 30
Id.
Public Testimony of Ronald K. Noble, republished in The Links between Intellectual Property Crime and Terrorist Financing, 108th Cong. (July 16, 2003), available at http://www.interpol.int/Public/ICPO/ speeches/SG20030716.asp (last visited Mar. 20, 2008). 31 Willy Stern, Why Counterfeit Goods May Kill, 36 Bus. Wk., Sept. 2, 1996, at 6.
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4.1.7. Anticounterfeiting Today

18 U.S.C. 2320 prohibits trafcking in counterfeit labels, patches, and medallions bearing a copy of a registered trademark that are unattached to any goods. Mark owners are currently pushing legislation that, in the case of a famous mark, would remove the burdensome requirement that the spurious mark be used in connection with goods or services identical to those for which the genuine mark is already registered.
4.2.
Nature of the Counterfeiting Problem
The Unites States Code denes a counterfeit as a spurious mark that is identical with or substantially indistinguishable from the original registered mark in 15 U.S.C. 1127, 15 U.S.C. 1116(d)(1)(B)(i), and 18 U.S.C. 2320(e)(1). Under 19 C.F.R. 133.21(a), this standard is reached when the copying or simulating mark or name is either an actual counterfeit of the recorded mark or is one which so resembles it as to be likely to cause the public to associate the copying or simulating mark with the registered mark or name.32 All counterfeits are infringements, but not all infringements are counterfeits. Counterfeiting is narrower in scope than trademark infringement and applies only to marks made to look identical to the actual mark. (The confusingly similar standard for infringement is a lower threshold to reach.) If Company X, which makes shoes that look exactly like, or very close to, Company Ys shoes and also bear Company Ys trademark, then Company X is engaging in blatant counterfeiting. Company X is attempting to capitalize off Company Ys name and brand. However, if Company X creates a pair of shoes with a pattern and trademark similar to Company Ys, but not exactly the same, then there is less likelihood that this product will be considered counterfeit. It may, however, be found to infringe Company Ys trademark because consumers may nd the products confusingly similar when they look at the products in the marketplace. Ultimately, the differences between counterfeiting and infringement are important because they lead to different consequences. Infringement generally results in an injunction, a legal remedy that prohibits the defendant from manufacturing and selling the product, and sometimes in monetary damages. Counterfeiting, on the other hand, may not only result in an injunction and
32
Montres Rolex, S.A. v. Snyder, 718 F.2d 524 (2d Cir. 1983).
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monetary damages, but also can result in criminal penalties, such as nes and imprisonment. A further dening aspect of trademark counterfeiting is that in order to constitute a counterfeit, the mark must be used on the same type of goods or services as are covered by the mark owners registrations according to 15 U.S.C. 1116(d)(1)(B). Generally, companies that manufacture products must le trademark registrations specically dening which types of products their marks will be used on. For example, most countries use the International Classication of Goods and Services. Under this system, Class 25 covers clothing, which includes clothing, footwear, and headgear.33 If Company X has a valid trademark registration for Class 25 products, then it has the exclusive right to place its mark on such products. However, a person who wishes to put Company Xs mark on a toy, which is covered by Class 28,34 may not be guilty of trademark counterfeiting, although there may be a trademark infringement or copyright infringement issue in doing so under the doctrine of related use.35 Box 4.2 describes another situation in which the determination of the type of infringement of IP rights is at issue.
4.3. Agents
in the Effort
It is the responsibility of trademark owners to protect their trademarks and enforce against the unauthorized use of those marks. This includes taking initiative to protect their trademarks against counterfeit products.
4.3.1. Management
Trademark enforcement begins at the top. Management must be aware of the problem of counterfeiting and drive the companys enforcement efforts. Management must cooperate with in-house and outside counsel and law enforcement to designate contacts for various needs that may arise, including the production of afdavits of authenticity, the identication of counterfeit goods, providing testimony where necessary, and supporting civil litigation. Not only is executive management integral in the counterfeit ght, lowerlevel business and sales personnel must also be cognizant of the problem. Those in sales are usually closest to the marketplace and are often the best suited to
33 34
http://www.wipo.int/classications/fulltext/nice8/enmain.htm. http://www.uspto.gov/web/ofces/tac/tmfaq.htm#Application018. 35 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Comp. 17:15 (4th ed. 2008).
Counterfeiting Box 4.2
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The Gray Market: Zino Davidoff SA v. CVS Corp.

Products that are authentic but sold through illegal channels of distribution, commonly called gray market products, blur the line between counterfeits and authentic items. Because prices for products will often vary substantially from country to country, transporters will purchase products legally from authorized dealers in countries where the products are less expensive and will transport them without authorization to retailers in other countries where the products are more expensive. In legitimate trade, the difference in price is usually attributable to shipping prices, taxes, and quality-control standards. In the recent case of Davidoff SA v. CVS Corp., Davidoff, alleging various Lanham Act and state law trademark claims, moved to enjoin CVS from selling gray market Davidoff perfumes. CVS argued that it should not have to stop selling such products because it had purchased the perfumes from authorized dealers. Because an injunction will be granted only where there is a likelihood of success on the merits of the claim, the court addressed whether Davidoff had appropriate monitoring efforts in place to make its products protectable against gray market perfumes. The court found that Davidoffs UPC monitoring system was sufcient, and that, since UPC codes had been scraped off, such absence of UPC codes constituted a material difference from an authentic product, allowing an injunction under the Lanham Act. The case is now on appeal.
Source: Zino Davidoff SA v. CVS Corp., 06 Civ. 15332 (S.D.N.Y. 2007).
see or hear about counterfeit products. Other business personnel may be particularly well-placed to notice differences in importing patterns and can help the legal team determine where to direct its efforts.
4.3.2. Preliminary Action Plan

Trademarks and domain names should be registered in all countries where the trademark owner sells, manufacturers, or distributes products or components. In addition, it is often wise to register trademarks in advance in large markets like China and Russia, in order to avoid problems when the brand becomes known.
4.3.3. In-House Counsel

In-house counsel plays an important role in the battle against counterfeiting. Such counsel should determine an appropriate anticounterfeiting strategy,
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maintain close contact with outside counsel and investigators hired to conduct anticounterfeiting operations, and work directly with investigators and law enforcement to monitor anticounterfeiting progress. In large companies, in-house counsels duties may consist solely of combating counterfeiting operations.36 However, in most corporations, anticounterfeiting involves only part of such counsels responsibilities.37 Experienced in-house counsel can assist investigators in formulating appropriate procedures to conduct local sweeps in targeted geographic locations.38 A program administrator at the paralegal level will be instrumental in helping the corporation throughout the process.39 It is important for that person to be able and willing to work with law enforcement to determine the authenticity of products and to track the chain of custody of counterfeits.40 This person should also be trained to identify counterfeit product.41 One of the most important functions of in-house counsel and related staff is maintaining an evidentiary chain of custody. It is imperative to have les on each civil and criminal action related to maintenance of the brand mark. Included in these les should be a chain of custody form and the afdavit discussing the counterfeit product in question, with details about how it was discovered and how it differs from the authentic product. If all the necessary documents are in one place, they can be easily accessed by, or forwarded to, the party dealing with enforcement.42
4.3.4. Outside Counsel

In many cases, in-house counsel must turn to outside counsel for assistance in ghting counterfeiting. The role of outside counsel varies with the type of case involved and the amount of responsibility taken by in-house counsel. Generally, outside counsel becomes a key player when civil litigation is involved because, in many states, corporations cannot represent themselves in court.43 It is generally ideal for in-house counsel to retain control of the anticounterfeiting program because they can help set the parameters of such a program and
36 Barbara Kolsun & Nils Victor Montan, Building a Comprehensive Counterfeiting Program, in Trademark Counterfeiting in the United States, at 7 6 (Brian W. Brokate & Dawn Atlas, eds., International AntiCounterfeiting Coalition 2008). 37 38
Id. Id. 39 Id. 40 Id. 41 Id. at 7 7 42 Id.

43
N.Y. C.P.L.R. 321(a) (2008).
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help shape its overall strategy.44 In-house counsel should carefully consider the qualications of any outside counsel chosen to represent the company.45 For instance, many law rms involved with copyright and trademark registration and licensing know little about how to successfully combat counterfeiting. Further, pricing should be considered in selecting a law rm to work with, as mark enforcement can become extremely expensive. Some law rms will charge hourly rates, but it may be more cost effective to establish a at fee for cease and desist letters, afdavits, and other matters preliminary to litigation. Outside counsel must become familiar with the in-house counsels role in combating counterfeiting in order to establish a cohesive anticounterfeiting program. This will likely involve regular reports and updates, so that both in-house and outside counsel will be aware of the progress made in investigations and actions.
4.3.5. Federal Law Enforcement

Customs and Border Protection (CBP)46 and Immigration and Customs Enforcement (ICE)47 are two of the most signicant allies in enforcing laws against counterfeiting. CPB and ICE conduct investigations at the borders; at major international ports such as Los Angeles, CA, and Newark, NJ; and at various other ports throughout the country. The FBI also serves an essential role in investigating counterfeiters. Because of the established link between counterfeiting and organized crime, money laundering and terrorism have received increased interest from the FBIs Computer Crimes division. ICE (Figure 4.2) is the largest investigatory agency run by the U.S. government.48 ICE agents use a variety of tactics to combat counterfeiting, including the National Intellectual Property Rights Coordination Center, ICECyber Crimes Center, and ICE Attach Ofces overseas. In 2007, ICE and CBP conscated nearly $200 million in counterfeit or pirated merchandise nationwide.49
44 45 46 47
Kolsun & Montan, supra note 36, at 7 9
Id.
http://www.cbp.gov. http://www.ice.gov. 48 U.S. Immigration and Customs Enforcement, Fact Sheet: Border Enforcement Security Task Force, available at http://www.ice.gov/pi/news/factsheets/080226best_fact_sheet.htm (last visited May 18, 2008). 49 U.S. Immigration and Customs Enforcement, ICE Arrests 4 Illegal Aliens, Seizes $5 Million in Counterfeit Merchandise in Alabama, available at http://www.ice.gov/pi/news/newsreleases/articles/080502 montgomery.htm (last visited July 7, 2008).
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Fig. 4.2. Smuggling or dealing in counterfeit goods is a serious violation of the law. Criminal penalties may include large nes and prison sentences. (Photo courtesy of ICE.)
4.3.6. Border Enforcement

CBP is designed to combat terrorism and to encourage legal trade in the United States. However, CPB can only conscate products that it knows to be counterfeit. Trademark owners must record their registered trademarks with U.S. Customs and other relevant customs organizations throughout the world, depending on the scope of the counterfeiting problem. This recordation enables Customs to seize counterfeit goods at the border and stop their entry into commerce. Recordation in the United States is simple, can be done online (see Figure 4.3), and is relatively inexpensive. In order to maximize the benet of recordation with Customs, trademark owners must engage in training agents and inspectors at key ports of entry. The IACC Foundation (http://www.iaccfoundation.org/) has an active training program through which trademark owners can participate in meaningful and targeted training of Customs and other law enforcement entities. These programs are effective and are relatively inexpensive (even cheaper for members in the United States, costing about $250 per session plus travel). Training materials should be short (no more than a page or two), concise, and up-to-date. They
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should identify by name, address, phone number, and e-mail a contact that is current, reliable, and expert in identifying counterfeits of the brands merchandise. Pictures of registered marks, authentic labels, and hardware should be included in this material. Ofcials should be given instructions only about what the trademark holder knows the ofcials can seize. Recordations should be routinely updated. Countries where authentic goods are manufactured often change as do personnel and product styles.
4.3.7. State Law Enforcement Ofcials

Because of shifts in federal priorities, local law enforcement agencies nd themselves increasingly involved in enforcement of trademark laws. State law enforcement often deals with local manufacturers, distributors, street vendors,
Fig. 4.3. Trademark owners should record their marks (called recordation) through the U.S. Customs and Border
Protection website, as this enables Customs to conscate counterfeit items. (Photo courtesy of CBP.gov.)
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retailers, house parties, and others involved in the manufacture and sale of counterfeit merchandise. State law enforcement ofcials who are willing to tackle small-scale cases are among the most valuable resources for anticounterfeiting programs. Local law enforcement agents who begin with small seizures can eventually engage in widely visible deterrence efforts. Smaller busts often lead to much larger busts; as with illicit drugs or weapons operators, each counterfeit vendor has his or her suppliers. Such ofcials can also provide a network in which local law enforcement can cooperate with the larger federal agencies to help successfully enforce IP rights (Box 4.3).
4.3.8. Private Investigators

Private investigators can help an anticounterfeiting effort in many ways that go beyond routine investigations. Ideally, private investigators will be local because they will know the local law enforcement networks and counterfeiting patterns.
Box 4.3
The Local Level: Counterfeiting and the NYPD

Counterfeiting is a rampant problem in many of Americas metropolitan areas. For instance, a single, routine bust in New York City in 2005 led to the discovery of a warehouse lled with counterfeit shoes, handbags, and clothing worth up to $2 million. The New York City Police Department has initiated many investigations as the result of a larger plan by Mayor Michael Bloomberg to crack down on counterfeiters. For the program, the Mayors Ofce of Special Enforcement engages multiple city agencies including the New York City Building Department, Police Department, Fire Department, Department of Consumer Affairs, District Attorneys Ofce, and the local tax authorities in a multiagency program combating landlords who knowingly rent to counterfeiters. In 2007, raids throughout New York City led to the seizure of counterfeit goods reportedly worth $25 million. During ve weeks in early 2008, city ofcials targeted lower Manhattan and conscated over $1 million in counterfeit goods and closed down thirty-two shops that housed such goods. Multiagency programs such as the one in New York are a valuable asset to mark owners. Los Angeles now has a similar program in place, and the IACC is working with other cities to adopt this model.
Sources: Ross Tucker, New York Seizes $2M in Counterfeit Goods, Womens Wear Daily, Sept. 30, 2005; Christine Hauser, City Agents Shut Down 32 Vendors of Fake Items, N.Y. Times, Feb. 27, 2008.
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Private investigators can act as useful intermediaries between trademark owners and their lawyers and law enforcement. Many private investigators come from the world of federal and state law enforcement and are invaluable resources in building anticounterfeiting investigations. Private investigators can go undercover to purchase counterfeit goods at retail shops, as well as much more: They have resources that allow them to track counterfeiting operations in order to help get to the source of the larger operation. They can troll the Internet, searching for bargains that seem to be too good to be true. They can further pose as purchasers from retailers and websites, authenticate counterfeit products on behalf of the trademark owner, educate law enforcement in these techniques, and assist law enforcement in building their case. Competent investigators have strong law enforcement contacts in multiple jurisdictions. A well-chosen investigator relieves some of the burden of investigation from law enforcement ofcials, who are often overwhelmed with other cases. While hiring a private investigator can be expensive, the benets they offer can be immediate. Like outside counsel, investigators should be chosen based on their expertise in anticounterfeiting cases. The best sources of referrals are other brand owners and the IACC. It is prudent to use a relatively small number of good and cost-effective private investigators to effect criminal actions.
4.3.9. Trade Organizations

There are many trade organizations that unite trademark holders and support their ght against counterfeiting. These include the IACC,50 the International Trademark Association,51 the Recording Industry Association of America,52 the Motion Picture Association of America,53 and the American Apparel and Footwear Association.54 While this list is not exhaustive, each of these organizations can be of tremendous help to trademark holders who are developing and implementing anticounterfeiting strategies and programs.
4.4.
Criminal Enforcement
Laws that protect trademark owners from counterfeiting and other infringements may be enforced by federal or state criminal statutes.
50 51
http://www.iacc.org. http://www.inta.org. 52 http://www.riaa.com. 53 http://www.mpaa.org. 54 http://www.apparelandfootwear.org.
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4.4.1. Enforcement under Federal Criminal Statutes

Criminal penalties for counterfeiting can be severe. Because counterfeiters usually engage in large-scale operations, they may commit a number of federal crimes in the same enterprise. These federal crimes may include money laundering (the act of supplying money to an illegal cause), mail and wire fraud (crimes committed through the U.S. post ofce or over the wires), and conspiracy to commit such offenses. In addition, counterfeiters may also be charged with tax evasion and human rights violations. Besides the CBP, ICE, and FBI, other federal agencies, such as the U.S. Postal Service; the Secret Service; the Bureau of Alcohol, Tobacco, and Firearms; and the Internal Revenue Service, can assist with enforcement. It can sometimes be difcult to persuade federal prosecutors to become involved with a counterfeiting case. Since the federal dockets are full of other cases involving crimes that are perceived as a greater public threat than a few fake purses, federal agents may be unaware of the relatively serious harms of counterfeiting. Increasingly, federal prosecutors are becoming more aware of the gravity of the problem of counterfeiting. For example, in one recent case, what began as a small bust led to the arrest of four individuals as well as the seizure of more than 20,000 counterfeit products and materials to make up to 50,000 more. The estimated costs of the counterfeit products came to more than $1 million. While the case was initially led in state court, authorities decided to move it to federal court when they discovered evidence of the defendants funneling money to Texas. Having the case heard in federal court enabled pursuit of more serious (federal) criminal penalties than would have been allowed under state law, as well as allowed the use of federal resources to engage in a more thorough criminal investigation than state resources would have allocated.55 The following federal criminal statutes are helpful in combating counterfeiting:
The Stop Counterfeiting in Manufactured Goods Act (H.R. 32). This law was passed
on March 16, 2006 (Public Law No. 109-181) and establishes prison terms up to twenty years and nes up to $15 million. It now adds mandatory forfeiture, destruction, and restitution provisions. This law strengthens U.S. laws against trading counterfeit labels and packaging. While it was already illegal to manufacture, ship, or sell counterfeit
55 Shaun Tolson, Prison Time for Peddlers of Phony Purses, The Boston Herald, Apr. 10, 2007, at 4; Shelley Murphy, Cache of Knockoff Bags Triggers Federal Case, The Boston Globe, Nov. 4, 2005, at A1.
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products, this legislation closes a loophole allowing the shipment of falsied labels or packaging, which counterfeiters could then attach to fake products in order to cheat consumers by passing off poorly made items as brand-name goods. It also requires those convicted of counterfeiting to reimburse the legitimate business they harmed. 18 U.S.C. 2320 Trafcking in Counterfeit Goods or Services Anticounterfeiting Consumer Protection Act of 1996. The relevant text of the statute is included here:
Whoever intentionally trafcs or attempts to trafc in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services shall, if an individual, be ned not more than $2,000,000 or imprisoned not more than 10 years, or both, and, if a person other than an individual, be ned not more than $5,000,000. In the case of an offense by a person under this section that occurs after that person is convicted of another offense under this section, that person convicted, if an individual, shall be ned not more than $5,000,000 or imprisoned not more than 20 years, or both, and if other than an individual, shall be ned not more than $15,000,000.
Other Federal Statutes that can be used to prosecute counterfeiters include:

18 U.S.C. 2319Criminal Infringement of a Copyright 18 U.S.C. 1961 et seq.RICO 18 U.S.C. 371Criminal Conspiracy 18 U.S.C. 1956, 1957Money Laundering 18 U.S.C. 1341Mail Fraud 18 U.S.C. 1343Wire Fraud 18 U.S.C. 542Entry of Goods by Means of False Statements 18 U.S.C. 545Smuggling Goods into the United States
4.4.2. Enforcement by State Criminal Statutes

Approximately two-thirds of the states in the United States have criminal counterfeiting statutes. Other states that do not have anticounterfeiting laws can still prosecute the crime under other offenses, such as fraud. New York, California, and Florida, leaders in the movement against counterfeiters, have enacted severe criminal state law penalties for counterfeiting.56
56 N.Y. Penal Law 165.70 et. seq. (2008); Calif. Penal Law 350(a)-(g) (2008); Fla. Stat. 831.02 034 (2008).
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4.5.
Civil Enforcement
Civil enforcement of IP rights has advantages and disadvantages. For example, a civil suit can result in a settlement, as well as the seizure of the counterfeiters products. Unfortunately, counterfeiters have discovered advanced ways to hide their assets.
4.5.1. Civil Seizure Actions

In cases where counterfeit goods are being sold, trademark owners can seek recourse by ling a civil action and seeking an ex parte seizure order, allowing for the seizure of goods.57 An ex parte seizure proceeding is brought by one party in the absence of another (i.e., the trademark owner does not inform the alleged counterfeiter in advance that the trademark owner wishes the judge to order a seizure of the goods). The party seeking the ex parte relief argues that if the counterfeiter were given notice the counterfeiter would be likely to ee or destroy the illegal goods. In addition to permanent injunctive relief, plaintiffs can often recover prots, damages, costs, and attorneys fees. There are currently near mandatory treble damages in civil counterfeiting cases.58 Plaintiffs, in lieu of actual damages, which are often very difcult to prove, may request statutory damages.59 Damages are $500 $100,000 per infringing mark, and, if conduct is willful, up to $1,000,000 per mark. Plaintiffs cannot, however, request additional attorneys fees in addition to the statutory damages.60
4.5.2. Third-Party Liability Actions

Retailers and vendors are the easiest targets of a lawsuit. However, they often do not have as many nancial resources as others in the operation. Because vendors are often only the point of sale and are not engaged in any manufacturing operations, the money damages that can be recovered from them may be minimal. Despite this, lawsuits against vendors can offer effective deterrence. Further, lawsuits against vendors will sometimes result in admissions as to
57 58
15 U.S.C. 1116.
Id. 1117(b). 59 Id. 1117(c). 60 K & N Engineering, Inc. v. Bulat, 259 Fed. App. 994 (9th Cir. 2007) (holding that, in counterfeiting cases, Plaintiffs cannot recover attorneys fees in addition to statutory damages).
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sources and locations of counterfeit goods. Therefore, lawsuits against vendors can sometimes lead to effective results. Trademark owners can also le lawsuits against third parties, such as landlords and ea market owners, that rent space to counterfeiters. These targets are attractive candidates for lawsuits because of theories of contributory infringement 61 and vicarious liability.62 For example, a ea market owner can be liable for knowingly allowing a vendor to sell counterfeit products on its property. Usually, ea market owners and other property owners have greater nancial resources, which can effectively increase settlements or money gained from lawsuits. Further, this approach may deter property owners from allowing vendors of counterfeit products to sell on their property in the future.63 Even though counterfeiting is a billion-dollar industry worldwide, the people who make the most money are those at the top of the chain. Retailers make just a small portion of proceeds, while the behind-the-scenes distributors may take in millions of dollars. Because of this, mark owners must decide wisely when to pursue litigation against a person or entity that is suspected of selling counterfeit products. For example, a raid at a ea market might lead to several arrests, but judgments against the ea market vendors may result in uncollectible defaults. For this reason, third-party actions may be highly useful to mark owners. In a ea market case, the ea market owner may be held liable on theories of vicarious and/or contributory liability if the owner had knowledge of the illegal act and failed to take appropriate steps to stop it from occurring on its premises. Property owners are attractive candidates for third-party liability actions because they have at least one asset from which the mark owner may be able to collect damages: the property. Lawsuits against property owners can be very effective in helping to cure the counterfeiting problem. Vicarious liability applies when one party induces another to infringe a trademark. This theory is applicable, for example, when a person is supplying a product, knowing that it will be sold on the market as a counterfeit.64 In some cases, landlords may face liability from additional statutes. For instance, in New York, landlords can be held responsible for the illegal conduct
61 Contributory infringement occurs when the defendant does not control the direct infringer, but knowingly assists the direct infringer or somehow provides the means for the infringement. 62 Vicarious infringement is when the direct infringer is an agent or business partner of the defendant. It must be proven that such a relationship exists. 63 For more information on these cases, see Hard Rock Caf Licensing Corp. v. Concession Svcs., Inc., 955 F.2d 1143 (7th Cir. 1992); Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996); UMG Recordings, Inc. v. Sinnott, 300 F. Supp. 2d 1924 (E.D. Cal. 2004). 64 Heather J. McDonald, Counterfeit Goods on Premises: Third Party Liability Actions Target Owners of Property Where Business Is Conducted, 238 N.Y.L.J., Oct. 29, 2007, at S2, col. 2.
126
of their tenants when, after being put on notice, the landlords take no action.65 Internet Service Providers (ISPs) that knowingly host websites selling counterfeit goods can also be held contributorily liable.66
4.5.3. Cease and Desist Letters

In combating counterfeiters, the rst step may be to send a cease and desist letter. The letter generally will provide notice to the target that the trademark owner is aware of its counterfeiting activities. These letters may stop the problem, for example, when a person claims not to have known the product he or she is selling is counterfeit or when the target is a xed location like a retail store. At the very least, such letters will put the counterfeiter on notice, which is proof of willfulness if the conduct continues. A company should have a standard letter on le that can be customized for the individual situation (see, e.g., Figure 4.4). Responses from counterfeiters should be replied to immediately in writing, and the company should follow up by visiting the counterfeiters to conrm compliance.
4.5.4. Foreign Matters

Effective anticounterfeiting outside the United States requires the assistance of foreign investigators and counsel. Local experts understand the language, laws, and legal system of the country. Further, in countries where enforcement is difcult, foreign investigators and counsel will be in the best position to advice on the most expedient and practical way to proceed.
4.6.
Enforcement on the Internet
Over the last few years, counterfeiters have taken advantage of the Internet to sell goods on websites, including auction and classied ad sites. Because information is transmitted so quickly to a large number of people, and it is difcult to verify the authenticity of the products until consumers receive them, counterfeiting websites on the Internet have proven to be a problem of unprecedented proportions for trademark owners.
65 66
N.Y. Real Prop. 231 (2008)
Gucci Am., Inc. v. Hall & Assocs., 135 F. Supp. 2d 409 (S.D.N.Y. 2001).
Counterfeiting
127
via federal express Manager Fashion Jewelry 4321 86th Ave. Brooklyn, NY 10000 Re: [Trademark/Copyright] Our File: NY/97-004 Dear Sir/Madam: We are writing on behalf of John Doe Jeanswear Company (JDJC), owner of the john doe trademarks (the Trademarks), regarding your sale of garments bearing counterfeits of the trademarks described below. You are hereby advised that under federal law, only John Doe has the right to use the john doe name and trademarks on a wide variety of products, including jeans and T-shirts. These rights are evidenced in the trademark registrations owned by JDJC and granted by the U.S. Patent and Trademark Ofce, including Registration Number for the trademark john doe. Use of the Trademarks on merchandise, labels, or tags without the express written consent of JDJC is a violation of both federal and state law. Both making such merchandise and selling it is illegal. Violators of these laws not only face criminal prosecution, but may have their illegal goods, as well as the means of making or selling the goods, and their business records seized. Infringers may also be required to pay damages up to three times their prots or three times JDJCs damages, as well as having to pay our legal fees if we must go to court to stop the illegal use. You should know that JDJC does everything possible to protect its interests in its name and marks, and seeks all the penalties listed above if we do not receive cooperation from an unauthorized user. You should also know that no one is authorized to manufacture, advertise, offer for sale or sell any products utilizing the Trademarks without the express written permission from JDJC. Any merchandise you may obtain from, or which is offered to you by anyone other than JDJC is most likely to be counterfeit or stolen property. Our investigator recently purchased from your store merchandise that bears counterfeits of the Trademarks. We hereby demand that you: 1. Immediately cease and desist from further distributing, and/or selling this infringing merchandise bearing the Trademarks; and 2. Remove from sale all infringing items in your possession or under your control which bear the Trademarks including jeans, T-shirts, silk screens, promotional items or merchandise of any kind or nature bearing, or items used to manufacture or reproduce the Trademarks. Any sales to the public taking place after your receipt of this letter will constitute intentional and willful violations of our companys rights. Moreover, each unit of counterfeit or infringing merchandise in your possession or control constitutes evidence of our companys claims, and serious legal consequences would result from any failure by you to preserve all such evidence. You may not contact your vendors in writing or orally to return this evidence to your vendors or otherwise dispose of it or inject it back into the stream of commerce. We also demand: 1. That within 24 hours of our delivery of this letter to you, you provide your written commitment that you have ceased all sales of counterfeit garments bearing the Trademarks or infringing versions thereof, your store and every other wholesale or retail location owned or controlled by you; 2. That within ve (5) days of our delivery of this letter to you, you provide us with copies of all documents, correspondence, purchase orders, pro forma invoices, correspondence and all other records of every kind relating to your manufacture, purchase, distribution, sale and marketing activity with respect to all merchandise bearing counterfeits or infringements of the Trademarks. Such records should include, without limitation, documents reecting the purchase price or factory price of all counterfeit products sold by you; 3. That within ve (5) days of our delivery of this letter to you, you provide us with a list of every other wholesale or retail location owned or controlled by you in which the counterfeit garments are or have been sold, and list of sources from which the counterfeit goods were obtained; and 4. That within ve (5) days of our delivery of this letter to you, you provide to us all information and documentation relating to the number of units of counterfeit merchandise within your possession and control, including any outstanding orders of the counterfeit merchandise, the number of units of such merchandise heretofore sold by you, whether sold at your store or any other wholesale or retail location owned or controlled by you, or to any other person or entity, and the sales price for each unit sold. If you do not agree to these demands, JDJC will take the strongest possible legal action. Having received this letter, you now have actual notice of JDJCs exclusive rights to the use of the Trademarks. Any continued sale of such items would constitute a willful infringement of JDJCs rights. Nothing in this letter shall be construed as a waiver or relinquishment of any rights or remedies of JDJC. Very truly yours,
Fig. 4.4. Model cease and desist letter. (Source: Barbara Kolsun & Nils Victor Montan, Building a Comprehensive Counterfeiting Program, in Trademark Counterfeiting in the . United States, at 7-62 [Brian W Brokate & Dawn Atlas eds., 2008].)
128
4.6.1. Websites
One of the biggest challenges in the ght against counterfeiting lies in the websites that sell products that are clearly counterfeit. These sites, which often look authentic, in reality are not licensed to sell authentic product and are selling counterfeit products. Similar sites purport to sell replica merchandise with disclaimers indicating that they are for novelty purposes or otherwise disclosing the fact that the merchandise being sold is not genuine. These types of websites are currently common on the Internet. It is important to know that such sites are illegal, as there is no replica or disclaimer defense to counterfeiting. High visibility combined with difculty in identifying volume sellers makes target selection and determination of priorities difcult. Tactics to ght these types of sites include sending cease and desist letters to the site as well as to the ISP hosting the site. Such letters should point out the penalties of contributory infringement and request removal of the site. Advanced tactics allow Web hosts to hide counterfeiters, which Web hosts often list under fake names and addresses and in countries that do not comply with U.S. IP rights standards. If these websites and hosts are found, the most effective remedies are initiated by ling civil lawsuits. If a lawsuit uncovers a larger operation, trademark owners may wish to involve law enforcement in their efforts.
4.6.2. Auction and Listings Sites

Online auctions and listings websites are notorious for their popularity with counterfeiters. Companies such as eBay and Yahoo! are two of the largest, but there are dozens of others. These sites have become a digital ea market for the sale of counterfeit merchandise. Under current law, the burden is on mark owners to monitor their rights. In order to ght auction and listing sites effectively, trademark owners must monitor sites and contact them to terminate counterfeit auctions (Notice and Take Down). Trademark owners can make use of special utilities provided by the sites to authorized mark owners, such as eBays Veried Rights Owner (VeRO) Program, which allows IP owners to quickly report listings that they believe infringe their property rights.67 Mark owners may need to designate an in-house employee, investigator, or outside counsel to manage this piece of an anticounterfeiting program. Unfortunately, anonymity through decient Internet governance and third-party services (proxy service, broker sites) makes investigation
67
See How eBay Protects Intellectual Property (VeRO), available at http://pages.ebay.com/help/tp/programs
-vero-ov.html (last visited May 28, 2008).
Counterfeiting
129
very difcult and time-consuming. Additionally, international exposure makes establishing jurisdiction problematic and may make enforcement of remedies difcult, even once jurisdiction is established (see Box 4.4). Trademark owners should pressure sites to monitor auctions and listings for phrases that blatantly indicate merchandise is counterfeit (e.g., replica, faux, cannot guarantee authenticity) and cancel them. However, very few products sold are actually advertised as counterfeit. Trademark owners should encourage online auctions to have notication policies for mark owners when Internet purchasers wish to return products that they believe are counterfeit.
Box 4.4
eBay: Limited Gains against a Tremendous Counterfeiting Problem

While eBays Veried Rights Owner (VeRO) Program allows mark owners to easily report products that they believe infringe on their IP rights, the sheer number of listings and items for sale via the Internets premiere auction site has made removing counterfeit goods seem like a virtually insurmountable and expensive problem. In the United States, courts have frequently taken the position that it is the mark owner who must police the online auction and sales sites. On July 14, 2008, the U.S. District Court for the Southern District of New York ruled against Tiffany & Co, which had led a suit against eBay Inc. in 2004, claiming the online site had not taken adequate measures to remove imitation Tiffany jewelry from its site. The judge stated plainly that, under current law, the mark owner has the responsibility of protecting its own trademark. As long as eBay did not allow listings from sellers who it knew, or should reasonably have known, were selling counterfeits, the auction site could not be held liable to Tiffany on the grounds of infringement. While this decision dealt a signicant blow to the anticounterfeiting ght in America, eBay was the one hit abroad. Just two weeks before this U.S. decision, a French court ordered eBay Inc. to pay LVMH Met Hennessy Louis Vuitton and sister company Christian Dior SA $63.2 million for allowing both fake and unauthorized goods to be listed for sale on the site. While it is not the rst ruling of its kind against eBay Inc. (earlier that same month Frances Tribunal de Grande Instance in Troyes ordered eBay to pay approximately $31,058 to Herms for that same reason), it is the most signicant and may encourage other major brands to go after the company. eBay, which claims it spends more than $20 million a year trying to remove illegal goods from its site, has said it will appeal the ruling.
Sources: Christina Passariello & Mylene Mangalindan, EBay Fined over Selling Counterfeits, Wall St. J., July 1, 2008; Alexandria Sage, From Handbags to Diamonds, eBay a Target, but Safe, Reuters, July 1, 2008; Katya Foreman, Court Rules for Herms in EBay Counterfeit Suit, Womens Wear Daily, June 5, 2008; Tiffany (NJ) Inc. and Tiffany and Company v. eBay Inc., 04 Civ.
4607 (S.D.N.Y. 2008).
130
4.7.
Conclusion
Counterfeiting is a serious problem that many trademark owners must combat with signicant resources. As the value of a brand grows, so too does the likelihood of counterfeiting. Because counterfeiting is a crime, law enforcement ofcials are a trademark owners best allies in the battle against counterfeiters. Routine busts can provide inroads into larger counterfeit organizations. Working together with corporations, in-house counsel, outside counsel, and lawmakers, trademark owners can successfully combat the counterfeiting problem evident today. Through lobbying, trade organizations (like the IACC and INTA), and the U.S. Chamber of Commerce, brand owners must continue to reach out to educate consumers about the dangers of counterfeit products. Consumers also must be aware that when they purchase counterfeit products, they are supporting deplorable factory conditions and nancing organized crime operations. Very high costs come with getting a good deal on a counterfeit article of clothing or accessory.

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Fashion Law

Extended Contents Preface Acknowledgments

Guillermo C. Jimenez, Fashion Institute of Technology

II Intellectual Property Issues

Barbara Kolsun, Stuart Weitzman LLC Heather J. McDonald, Baker Hostetler

III Commercial Operations and Expansion

Thomas M. Pitegoff, Pitegoff Law Ofce PLLC

Donald L. Kreindler, Phillips Nizer LLP

Elise M. Bloom, Proskauer Rose LLP Carole P. Sadler, Coach, Inc.

II Intellectual Property Issues

George Gottlieb, Marc Misthal, and Barbara Kolsun

Barbara Kolsun and Kristin B. Kosinski

Barbara Kolsun and Heather J. McDonald

III Commercial Operations and Expansion

Selling and Buying: Commercial Agreements in the Fashion Sector

161 161 162 165 167 168

Employment Law Issues in Fashion

Elise M. Bloom and Carole P. Sadler

Marketing, Advertising, and Promotion

Ashima Dayal,Vejay Lalla, and William Jelinek

Retail Leasing for Fashion

Steven R. Gursky and Mitchell B. Stern

Michael F. Colosi and Paul A. Friedman

About the Contributors Index

4.1.1. What Is Trademark Counterfeiting?

Intellectual Property Issues

4.1.2. The History of Counterfeiting and Anticounterfeiting

4.1.3. The Crime of the Twenty-First Century

Intellectual Property Issues

4.1.4. Identifying a Counterfeit: An Overview

4.1.5. A Growing Problem and the Governmental Response

Intellectual Property Issues Box 4.1

Purse Parties: U.S. v. Ohri

Source: U.S. v. Ohri, WL 150799 (E.D. Va. 2007).

4.1.6. Not a Victimless Crime

Counterfeiting 4.1.6.1. Harm to Trademark Owners

4.1.6.2. Harm to Consumers

4.1.6.3. A Drain on Law Enforcement

Intellectual Property Issues

4.1.7. Anticounterfeiting Today

Nature of the Counterfeiting Problem

Intellectual Property Issues

Counterfeiting Box 4.2

The Gray Market: Zino Davidoff SA v. CVS Corp.

Source: Zino Davidoff SA v. CVS Corp., 06 Civ. 15332 (S.D.N.Y. 2007).

4.3.2. Preliminary Action Plan

4.3.3. In-House Counsel

Intellectual Property Issues

4.3.4. Outside Counsel

Id. Id. 39 Id. 40 Id. 41 Id. at 7 7 42 Id.

N.Y. C.P.L.R. 321(a) (2008).

4.3.5. Federal Law Enforcement

Kolsun & Montan, supra note 36, at 7 9

Intellectual Property Issues

4.3.6. Border Enforcement

4.3.7. State Law Enforcement Ofcials

Intellectual Property Issues

4.3.8. Private Investigators

The Local Level: Counterfeiting and the NYPD

4.3.9. Trade Organizations

http://www.iacc.org. http://www.inta.org. 52 http://www.riaa.com. 53 http://www.mpaa.org. 54 http://www.apparelandfootwear.org.

Intellectual Property Issues

4.4.1. Enforcement under Federal Criminal Statutes