Free trade agreements (FTA) function to offer benefits and incentives for trade with certain countries. The US belongs to many, most notably is NAFTA, where it shares free trade with Canada and Mexico. Various smaller Caribbean countries (CARIFTA) and South America (MERCOSUR) exercise bilateral and multilateral trade initiatives to encourage international trade and business within their regions. An importer or exporter of textiles, luxury goods, and fashion related items must keep abreast of these agreements to take advantage of cost efficient sourcing and protect the brand against unintended misapplication of duty free status.
According to WWD, United States Customs and Border Protection officials have seized a shipment of counterfeit perfume bearing labels under the Estée Lauder Cos. Inc. trademark. Authorities claim that the counterfeit perfume shipment included approximately 5,000 bottles valued at more than $344,000. According to officials, the counterfeit shipment was intercepted on January 24th at the Port of Houston and included thousands of perfume bottles bearing the Flirt and Sensuous labels owned by Estée Lauder.
Federal authorities busted two overlapping counterfeit schemes worth over $325 million dollars in clothing, footwear, cigarettes and drugs. wwd reports that “the chineese goods [were] imported into the United States through Port Newark and Port Elizabeth over the last two or three years by two different criminal conspiracies with overlapping members.” The Department of Justice claims that this is one of the largest counterfeit goods cases ever prosecuted.
“Sex and the City” fans are likely to be thrilled at the news of a prequel show. The rumors of a new Carrie have been in headlines all over, allowing addicts to once again have their needs satisfied. But, the prequel is not the only newsworthy development in the “Sex and the City” world. A recent report claims the most frequently intercepted fake perfume in 2011 by U.S. Customs and Border Patrol (CBP) bore the “Sex and the City” name.
For the second year in a row, just in time for the holiday online shopping rush, “Operation In Our Sites” stormed the Internet, executing federal seizure orders against 150 domain names of websites selling and distributing alleged counterfeit goods and copyrighted works illegally.
The initiative, spearheaded by U.S. Immigration and Customs Enforcement (ICE), was launched in June 2010 to combat intellectual property piracy problems cropping up in online stores.
The time for a reactive approach to combating counterfeits is long gone. All brands, whether luxury or mass market, domestic or international, emerging or established, need to take proactive measures to ensure brand protection.
Fashion houses and branded organizations pour money into investigating and litigating to prevent counterfeiting as businesses suffer global estimated losses of $600 billion, according to the International Anti-Counterfeiting Coalition. However, relying solely on in-house investigations or local law enforcement is just not enough. Federal agencies (ICE and IPRC) and Major League Baseball teamed up, and won, in a recent counterfeit bust.
US Immigration and Customs Enforcement officials (ICE HSI) in conjunction with the Washington Metropolitan Police Department seized 18,640 counterfeit items worth $3 million. These items were seized from four vehicles at 16 different locations within the D.C. Farmers Market last Friday. The Huffington post reports that among the items seized were hats, purses, shoes, purfume, watches, shirts, jackets, sweatshirts, pants, music and movies.
Eleven people were arrested and seven search warrants were served. WWD reports that among the counterfeit brands were trademarks such as
Approximately three years ago, Coach launched an aggressive national civil litigation program called Operation Turnlock in an attempt to redouble their efforts against counterfeiting. According to WWD, this zero-tolerance program targets companies and individuals who are involved in the sale or distribution of counterfeit products in both state and federal courts. Statistics from the U.S. Customs and Border Protection and U.S. Immigration and Customs Enforcement show that in 2010 alone these agencies made approximately 20,000 counterfeit seizures valued at $188.1 million. Approximately $15 million of the seizures were fake handbags, wallets and backpacks.
According to Todd Kahn, Coach senior vice president and general counsel, “Coach has always taken counterfeiting very seriously, but the missing piece was shoring up the civil lawsuits.” He alleges that counterfeiters are more afraid of paying a penalty as opposed to spending time in jail. And Kahn may be right- under federal law, counterfeiters can be ordered to pay as much as $2 million per counterfeit item.
Since beginning the program in May of 2009, Coach has initiated over 500 lawsuits with about 250 of them judged in favor of Coach. According to Kahn, in addition to these judgments there have also been many out-of-court cash settlements, leaving the company with a sum of money “in the eight figures.” The company says its largest settlement was for more than $2 million and its largest seizure at one time was more than 500,000 units.
On March 8, the Vancouver Sun reported that Louis Vuitton Canada, Inc. and Burberry Canada are seeking more than $2 million in fees and damages (which would be the largest award in Canadian history) against Singga Enterprises, Altec Productions, and a Vancouver store owner for selling knock-off goods in Canada. The lawsuit was filed after two years of private investigation by the fashion houses revealed that that Singga and Altec were running a large-scale counterfeiting operation which involved manufacturing large quantities of counterfeit products in China and importing them for sale throughout Canada and online.
Holy Hockey Sticks… This is actually nothing new, Canada has traditionally been a safe-haven for importing counterfeits due to lax IP laws and weak border protections – they just aren’t tending goal. Customs officers in Canada have very little authority to “stop the puck.” Officials are only permitted to proactively seize goods being imported if one of two situations exists: either if the intellectual property rights owner obtains a prior court order or if the seizure is requested by the RCMP (Royal Canadian Mounted Police) in connection with an ongoing criminal investigation. Officers are only allowed to look for hidden or undeclared goods; so if counterfeit imports are declared, they cannot be prevented from entering Canada.
Canada has made some recent attempts to improve their own IP laws to combat counterfeiting crimes… AND it is “aboot” time! In December 2010, Canadian Parliament passed C-36, the Consumer Products Safety Act, with the purpose of public protection. Provisions include a prohibition against labeling creating an erroneous impression as to the safety of the product and a prohibition against misused certification marks. The Act also imposes criminal liability for violations. C-32, An Act to Amend the Copyright Act, was also introduced in 2010 and, among others, included provisions that would potentially impose liability on Internet Service Providers (ISPs) and prohibit circumvention of “technical protection measures.” Unfortunately, with last week’s announcement of a dissolution of parliament pending a Canadian general election on May 2, 2011, the bill is as dead as a moose during hunting season.
In addition to the national efforts to “freeze-out” counterfeiters, Canada is also a party to the Anti-Counterfeiting Trade Agreement (ACTA), which is a controversial plurilateral agreement aiming to increase and harmonize international IP laws among the signatories (including the U.S. – See the USTR fact sheet HERE & request for public comments HERE) and the EU. The text of the final proposed ACTA is available on the United States Trade Representatives website. Critics of the agreement claim that the act favors rights-holders with provisions calling for increased enforcement of all intellectual property rights, urging the usage of government resources to enforce rights held by private companies instead of allowing private companies to protect those rights through civil litigation (See a criticism of ACTA published by American University HERE).
Eh, Canada, you might have try a little harder to keep the peace… we may need a Zamboni to smooth this one over!
Take a look at this article published by the Daily Finance about the The 10 Most Counterfeited Products Sold in America. Footwear rounded out the top of the list for the 4th year in a row, representing 38% of products and over $100 million seized. Have a read for some of the other astounding numbers…