Counterfeiting occurs when someone copies or imitates another’s trademark without having been authorized to do so and passes trademark-bearing goods off as the genuine or original items. Under the Lanham Act, the term “counterfeit trademark” refers to a “spurious mark which is identical with, or substantially indistinguishable from, a registered trademark.“ This is a higher bar than trademark infringement, which does not require that the underlying mark be registered and relies on a likelihood of confusion test (which occurs when the respective marks are so similar and the goods and/or services for which they are used are so related that consumers would mistakenly believe they come from the same source). It does not require that the marks be “identical with, or substantially indistinguishable from” one another.
The elements of a counterfeit (as set forth in 18 U.S.C. § 2320(d)) are as follows …
(1) In order for a product to be considered a counterfeit, it must include another party’s federally registered trademark or one that is “substantially indistinguishable” from the other party’s trademark.
(2) A counterfeiter must be knowingly and deliberately using another party’s trademark without the authorization to do so. This use is almost always paired with the counterfeiter’s intent to deceive the consumer by presenting itself as the trademark holder by way of the fake logo, fake tag, etc.
(3) In accordance with U.S. law, the trademark that is being counterfeited must be federally registered with the U.S. Patent and Trademark Office and must be in use (in commerce) by the trademark holder.
(4) The goods that the counterfeiter is making/selling must be of the type that are covered by the trademark holder’s registrations; trademarks are registered by “class of goods or services,” remember. Clothing and footwear, for instance, is included in Class 25.
(5) The use of the counterfeit trademark must be “likely to cause confusion, to cause the mistake, or to deceive” the average consumer in terms of the source of the product.
The Market: The market for counterfeit goods is difficult to measure accurately due to its illicit nature. Estimates on the size of the counterfeit market vary, and it is challenging to obtain precise data. However, it is widely recognized that the market for counterfeit goods is substantial and continues to grow. According to the Organization for Economic Co-operation and Development (OECD), the global trade in counterfeit and pirated goods amounted to approximately $509 billion in 2016, which was nearly 3.3% of global trade at that time. However, it’s important to note that these figures are estimates and subject to various limitations.
The market for counterfeit goods spans a wide range of industries, including fashion, electronics, pharmaceuticals, automotive parts, luxury goods, and more. Counterfeiters take advantage of consumer demand for popular brands and products, often selling their counterfeit goods at significantly lower prices than the genuine items. The rise of e-commerce and online marketplaces has also contributed to the growth of the counterfeit goods market, making it easier for counterfeiters to reach a global audience.
To combat trademark counterfeiting, companies often employ various strategies such as implementing authentication technologies, conducting regular market surveillance, and collaborating with law enforcement agencies. Legal measures and enforcement actions, including civil lawsuits and criminal prosecutions, are regularly taken against individuals or organizations involved in the production, distribution, or sale of counterfeit goods.