This article discusses the global problem of counterfeiting and piracy and the ensuing negative impact on the global economy. The main thesis proposes that companies are not faced with the issue of "if' their goods will be counterfeited or pirated, but rather it is a matter of "when." Strategies are presented that every corporation and practitioner in the legal field can use to combat the growing counterfeiting and piracy problem. Recommendations include identifying and registering intellectual property. This discussion is followed by practical guidance as to how to utilize the federal and international agencies that already have programs in place to combat the international flow of counterfeit and pirated goods. Various federal civil and criminal statutes are discussed in depth, presenting both their strengths and practical shortcomings. Pending U.S. federal legislation is discussed to provide an overview of powerful statutory tools still in the developmental stage. Pending legislation may be further modified by trade associations and private lobbying interests to strengthen the impact needed to help reduce the ever-increasing international counterfeiting and piracy problem.
Counterfeiting and Piracy Pose a Substantial Threat to Intellectual Property and International Trade
Global intellectual property theft and commerce in pirated and counterfeit goods continue to grow to alarming proportions, creating a threat to economies worldwide. (1) Counterfeiting has evolved from a localized cottage industry concentrating on the copying of high-end designer goods into a sophisticated black-market industry involving the manufacturing and sale of counterfeit versions of an unimaginable number of products. (2) Counterfeiting on such a global scale has a broad negative effect on companies that produce legitimate goods. (3) Consumers are also harmed when they unwittingly purchasing counterfeit goods. (4) Governments are harmed by the decrease in tax revenues and future investment. (5) One example of the serious nature of counterfeiting is the significant increase in the manufacturing and distribution of counterfeit pharmaceuticals. (6) This presents special concerns because of the safety risks to the public. (7) The Office of the U. S. Trade Representative states in their 2006 annual report that the proliferation of counterfeit pharmaceutical manufacturing in China and Russia is steadily on the rise, and similar increases are occurring in many more countries. (8)
Likewise, the U.S. Chamber of Commerce estimates that intellectual property theft costs domestic companies between $200-$250 billion a year in lost revenues and has resulted in a loss of 750,000 jobs in the United States. (9) Counterfeit goods make up an estimated five to seven percent of the total world trade, resulting in lost economic opportunities domestically and abroad. (10) The problems of counterfeiting and piracy go beyond the mere manufacturing, distribution, and sale of unauthorized goods. (11) Nearly all industries are affected, from apparel and footwear, high-tech industrial goods, medicines, automotive, food and beverages, and cosmetics to copyrighted works, including entertainment and business software, movies, music, and books. (12)
The U.S. Commerce Department also estimates that the U.S. automotive industry has been particularly hard hit by counterfeiting, as that industry could conceivably hire an estimated 200,000 additional workers if the sale of counterfeit auto parts were curtailed. (13) Counterfeiting and piracy have eliminated jobs in heavy manufacturing industries such as farm and industrial equipment, consumer goods industries such as clothing and footwear, and pharmaceuticals. (14)
Few industries have been harder hit by piracy than the software sector. The Business Software Alliance (BSA) estimates that worldwide, 36% of the software installed on computers in 2003 was counterfeit. (15) BSA estimates that a mere 10% reduction in worldwide computer piracy rates could add $400 billion to the lawful, taxable, global economy. (16) That would lead to the generation of over 1.5 million jobs, as well as $64 billion in additional taxes. (17)
Identify and Protect Your Trademarks and Copyrights
As set forth in greater detail below, the U.S. Customs and Border Protection agency (CBP) has the authority to exclude from entry and seize counterfeits of goods protected by copyright and trademark registrations. (18) A brief overview of basic U.S. copyright and trademark law is provided to help the reader appreciate how to obtain registration and seek anti-counterfeiting protection under the aegis of the CBP if the situation warrants. In order to utilize the CBP, intellectual property owners must first register their trademarks and copyrights with the appropriate U.S. government agency. (19) These agencies include the U.S. Patent and Trademark Office (USPTO) for trademarks and service marks and the U.S. Copyright Office for copyrightable subject matter. (20) Once registered, an intellectual property owner can then seek to obtain the importation protection provided by the CBP pursuant to the relevant enabling federal statutes. (21)
Basics of Copyright Protection
A copyright is a form of intellectual property that is secured automatically when an original work entitled to copyright protection is created. (22) Under basic copyright law, a work is "created" when it is fixed in a tangible medium of expression for the first time. (23)
Registration in the U.S. Copyright Office is a legal formality intended to make a public record of a given copyright. (24) Importantly, with respect to anti-counterfeiting issues, prior registration is a threshold step that permits the owner of a copyright to record the registration with the CBP for protection against the importation of counterfeit copies. (25)
The display of a copyright notice on goods is no longer required under U.S. law to obtain copyright protection, but it is still quite beneficial to display the proper notice on the packaging of the goods themselves. (26) Prior copyright statutes in the United States did in fact require the display of copyright notice to secure copyright protection, but the use of the copyright notice still remains important to maintaining copyright protection for older works. (27) Displaying copyright notice today remains tactically important for several reasons. It puts the public on notice that the work is protected by a copyright, identifies the copyright owner, and shows the year of first publication. (28) Importantly, a defendant in a copyright infringement suit shown to have access to works published with the proper notice of copyright may be prevented from claiming the status of an "innocent infringer" in an attempt to mitigate actual or statutory damages. (29)
Basics of Trademark Protection
Trademarks generally consist of a word, phrase, symbol, or design, or a combination thereof, that identify the source of the goods of one party from the goods of another. (30) A service mark is accorded the same legal status as a trademark under U.S. law, except that a service mark identifies and distinguishes the source of a service rather than a product. (31)
In the United States, one can establish rights in a trademark based on the legitimate use of the mark in commerce. (32) Owning a trademark registered on the Principal Register in the USPTO provides several advantages, as it provides: (1) constructive notice to the public of the registrant's claim of ownership of the mark; (2) a legal presumption of the registrant's ownership of the mark and exclusive right to use the mark nationwide on or in connection with the goods and/or services listed in the registration; (3) the ability to bring an action concerning the mark in federal court; (4) the use of the U.S. registration as a basis to obtain registration in foreign countries; and (5) the ability to file the U.S. registration with the CBP to prevent importation of infringing foreign goods. (33)
Record Your Copyrights and Trademarks with Customs Agencies and Communicate with Agents for Border Protection
The first line of protection against the unlawful importation and exportation of counterfeit goods is invariably the customs services of any given country. Most countries, as well as the European Union, have procedures for recording registered trademarks, copyrights, and even corporate names, with customs agencies, which have the authority to seize and prevent the importation or exportation of goods bearing trademarks or copyrighted materials without the owners' written permission.
For example, trademark owners who duly register their rights with the USPTO and copyright holders who register their works in the U.S. Copyright Office may request that the U.S. Customs and Border Protection (CBP) agency collect and retain information specific to those recorded rights for a specified time, during which the CBP will actively monitor imports in order to prevent the importation of counterfeit goods. (34)
As indicated above, in order to invoke the power of the CBP to protect a trademark or copyright, one must first record the U.S. copyright or trademark registration number. (35) Similar recordation schemes exist globally and intellectual property owners should utilize those forms of recordation when counterfeiting is likely to occur. (36)
Establish Internal and External Monitoring and Enforcement Programs
For companies engaged in international trade or manufacturing, monitoring for counterfeit goods and enforcement of intellectual property rights against infringers and counterfeiters is a vital step in the prevention and efforts to stop counterfeiting. Without a reliable program for monitoring and reporting counterfeit products, infringement can adversely affect the trademark and the company's business without the brand owner's knowledge of the damage until after it has occurred. Such programs should include both...