Tag: Intellectual Property

On October 13, 2020, President Trump signed a “Memorandum on Stopping Counterfeit Trafficking on E-commerce Platforms Through Fines and Civil Penalties” to combat trademark counterfeiting by taking aim at the e-commerce marketplaces that act as intermediaries between buyers and sellers.

This builds on the previous Executive Order issued on January 31, 2020 which aims to impose a greater threshold of responsibility on express consignment operators, carriers, hub facilities and licensed customs brokers in preventing the sale e-commerce counterfeit goods.

The new Memorandum instructs the Secretary of Homeland Security to:

• Seize counterfeit goods imported into the US in connection with a transaction on an e-commerce platform
• Impose the maximum fines and civil penalties permitted by law on any e-commerce platform that directs, assists with or is involved in the importation of counterfeit goods into the US
• Develop a legislative proposal to promote the policy objectives of the Memorandum in conjunction with the Attorney General within 120 days

What’s On the Horizon
The Memorandum is the latest effort in a series of new efforts to combat online counterfeiting. Bipartisan bills have been introduced in both the House and the Senate.

As we previously reported, the SHOP SAFE Act of 2020 incentivizes e-commerce platforms to adopt best practices to reduce the presence of counterfeit products on their sites. E-commerce sites that fail to adhere to the steps would be held liable.

The INFORM Consumers Act aims to require online marketplaces to disclose certain verified information regarding high-volume third party sellers of consumer products to inform consumers.

Over five months ago, we entered one of the darkest periods of recent memory.  The safety of family and friends became paramount as priorities changed and numerous activities simply stopped. Our online world became our reality as we were cut off from connections and activities.  Now may be a good time to take a quick peek at where enforcement against counterfeit products stands.

Looking at border actions, we continue to see a significant number of seizures and inquiries from U.S. Customs and Border Protection (CBP) as the work of protecting trademarks and the economy from the entry of counterfeits of all types and especially those that impact public health and safety continues. It is difficult to get a true sense of where we stand year to year due to the lag time between seizures and notices. The sense is that there has a been a dip but the scope will not be known for a few more months.

As to where the counterfeit goods are, we are seeing significant activity on the stand alone sites, mass merchandise platforms and close in/neighborhood sales sites. Amazingly enough, we have been kept busy with takedowns and buys throughout the last few months on the latter. While arrests depend on law enforcement availability, we are working with a dedicated group of local investigators who have the necessary contacts and resources.  Much more is taking place online than it was last year. Just as legitimate online retail commerce has increased, so too have the counterfeiters come to rely on web-based sales. When tourists and local buyers are missing, counterfeiters must find a way to sell or perish. This does not mean, however, that brick and mortar options have disappeared, rather they are evolving and still pose a threat to brands.  We have been able to take a few cases to arrest against retail vendors as well as those on Craigslist, OfferUp and LetGo.  While there are limitations, law enforcement’s interest in IP remains strong.

Speaking of law enforcement, we have been very fortunate that Homeland Security Investigations (HSI)  and CBP acted immediately to address the importation of counterfeit PPE and Covid related products. Under the code name Operation Stolen Promise, HSI is leading a coordinated effort to not only seize violative products and funds, but to make arrests and build cases for criminal prosecution. In that regard, anti-counterfeiting work has taken on new urgency and the federal law enforcement agencies have risen to meet the challenge.

One of the greatest impacts has been on the brand protection departments of trademark owners. Entire departments have been eliminated or culled as the severe economic ramifications from the closing of stores worldwide have impacted the brands’ ability to develop and fund anti-counterfeiting strategies. Those personnel and budget cuts are especially painful as we see friends and colleagues leave brands that they have dedicated years to protecting. With brands facing a multitude of counterfeiting issues, it is important to retain some form of enforcement strategy especially in the online space. The number of threats and sites seems to grow exponentially and has to be addressed to the extent possible. Success comes from dedicated specialists interacting with peers, collaborating to stretch resources and working with law enforcement contacts on meaningful actions.

How are we doing five months later? We are still sorting through this as Covid-19 convulses society and the economy. With resources stretched thin and counterfeiters persisting in their efforts, enforcement in the age of the pandemic requires doing more with less and maintaining brand value and integrity for a post-pandemic world of enforcement where the altered landscape will present unique challenges.

The United States Patent and Trademark Office (USPTO) is providing extensions to file certain patent and trademark-related documents and pay required fees as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act.

Extension Guidelines

• For eligible documents or fees due between (and inclusive of) March 27, 2020 and April 30, 2020, the filing will be considered timely if made within 30 days of the original due date, provided that the filing is accompanied by a statement that the delay in filing or payment was due to the COVID-19 outbreak.
• A delay in filing or payment is due to the COVID-19 outbreak if the outbreak materially interfered with timely filing or payment.
• Qualifying circumstances include office closures, cash flow interruptions, lack of access to files or other materials, travel delays, personal or family illness, or similar circumstances.
• The person affected by the outbreak may be a practitioner, applicant, registrant, or other person associated with the filing or fee. For patents, this may also be a patent owner, petitioner, third-party requester or inventor.

Trademarks

Eligible trademark filings include responses to Office actions, notices of appeal, statements of use, notices of opposition, priority filings, transformation and renewal applications, affidavits of use or excusable nonuse and related requests for extension. For all other situations where COVID-19 has prevented or interfered with a proceeding before the Board, a request or motion for an extension can be made.

Patents

Eligible patent filings include responses to Office actions, notices of appeal, appeal and reply briefs, appeal forwarding fees, PTAB oral hearing and rehearing requests, Chief Judge petitions, patent owner preliminary response in a trial proceeding, or any related responsive filings. Additional relief limited to small and micro entities includes replies to the following notices: omitted items; file corrected application papers; incomplete applications; comply with nucleotide sequences requirements; file missing parts of application (including payment of filing). The extension does not apply to filing dates for new patent applications.

Additional Relief

For trademark and patent applications that were abandoned and registrations that were canceled/expired due to COVID-19, the USPTO waived the petition fee to revive the abandoned application or reinstate the canceled/expired registration. Petitions must include a statement explaining how the failure to respond to the Office communication was due to the COVID-19 outbreak and must be filed not later than two months after the issue date of the notice of abandonment or cancellation.

USPTO Office Remains Open

The USPTO is open for the filing of documents and fees. Waivers are only available for delays due to the COVID-19 emergency.

What’s Next

The USPTO will continue to evaluate the evolving situation around COVID-19 and the impact on the USPTO’s operations and stakeholders. If the USPTO extends the CARES Act relief, the USPTO will provide timely notice. Gibney will continue to monitor these updates. For more information, please see the USPTO FAQs.

Without waxing on too much with a certain amount of nostalgia, I remember the late 1990s when we first started enforcing against online sellers. Addressing the issue was simple and fairly straight forward. Little did we know what awaited us.

As number of platforms grew, technology advanced, mobile platforms mushroomed, counterfeiters developed the uncanny knack of exploiting nascent technology to best serve their illegal wants and desires. With no road map and strategies instituted on the fly, the enforcement battle lines were drawn and the battle joined.

What still amazes me is the willingness of counterfeiters to continue to sell in the darkest of times. Without even taking in the account the those who lack a moral compass and would sell counterfeit PPE and pharmaceuticals to desperate people around the world, let’s talk about the close in sellers providing goods through sites that encourage local connections and in person exchanges.

While conducting online enforcement on behalf of our clients, we have noticed that sellers now tend to post more during the weekend than in the past (real work takes precedence). Sellers are now more prevalent on these platforms in the western half of the country. In reviewing images, sellers appear to be enjoying the outdoors without significant social distance. However, they will not sell in person. Many have shifted to mailing product (even locally) with tracking numbers and securing payment through a variety of person to person payment options; again using technology to enhance their efforts.

As the discussion turns to the post-pandemic world, it will be interesting to see how the sale of counterfeit goods will change. In particular, what the future will be of in person, cash transactions. You can rest assured that the counterfeiters will lead the way in harnessing technology to their maximum benefit.

What do you think? What are your current enforcement challenges and what hazards in the road do you see ahead for stemming the sale of counterfeit goods.

Almost as if on cue, as the United States ramps up testing and containment measures, US Customs and Border Protection (CBP) announced its first seizure of counterfeit COVID-19 test kits at the Los Angeles Airport International Mail Facility. The seizure took place on March 12 and involved vials which had been manifested as innocuous purified water vials. However, upon closer examination, the vials bore labels which included language identifying them as corona virus test kits.

It is unfortunate that the most trying of times still bring out the worst in people willing to risk public health and safety to make money trading on fear.  There are no magic beans and currently no publicly available test kit for the virus. Whether these tests were going to be peddled online or enter into the public health system is unknown. However, it is clear that vigilance is necessary to prevent counterfeit test kits and pharmaceuticals from entering the stream of commerce and use. Consumers should not be shocked at a seizure like this one. Counterfeit pharmaceutical products are an unfortunate development that impact all levels of society. And, admittedly, sometimes we may chuckle at the stories of counterfeit erectile dysfunction products, but these fall into the same category as counterfeit cough syrup, anti-malarials, cancer treatments and blood thinners (and the list goes on).  Counterfeit pharmaceuticals have deadly consequences wherever they are unleashed.

The fact that the seizure took place at an international mail facility should not come as a surprise. Producers and shippers based overseas have, for years, exploited low shipping rates and sheer volume of small parcels to overwhelm the system. We are fortunate to have CBP Officers at the ports, courier hubs and mail facilities dedicating their efforts to stem the flow of dangerous counterfeits entering the country. However, with the constant increase in e-commerce orders and fulfillment, there is also a part all of us can play in protecting the health and safety of our communities.

Best Practices for Protecting Against Counterfeit Pharmaceutical Products

With only a relatively small percentage of imported goods actually targeted and inspected, we have to do our part as well.

• Be careful what you order. The FDA has a strong system in place to test and approve a variety of health related products. Do not fall for online panaceas and promises.
• Check where the seller is located. A large percentage of seized counterfeit goods originate in China.  The old adage “Location, location, location” is very relevant.
• Watch those prices. No one will be so altruistic as to offer goods for a miniscule percentage of cost or value.
• Shop smart. Before you place an order for pharmaceuticals that are normally only available with a prescription, ask why on earth would they be available online without a doctor’s approval.

We all have a role to play in maintaining the integrity of health tools needed to combat this pandemic. Make smart choices to prevent counterfeits from impacting the health and safety of your community.

If you have any questions about this alert, please contact your Gibney representative or email info@gibney.com.

As the COVID-19 pandemic spreads throughout the corners of the world, people rush to complete shopping and stock pantries and medicine cabinets by shopping online. In their haste and sometime desperation, individuals become easy targets for fraudsters and counterfeiters. Now more than ever offers stark examples of why counterfeiters always seek to profit from human misery and show no regard for the fragility of human life.

Online Best Practices for Protecting Against Counterfeit Products

Spend some time shopping for elusive hand sanitizer, gloves, disinfectant wipes and more and you will see quite clearly the manner in which counterfeiters seek to profit. Offering items that appear to be genuine while making spurious claims about curative properties is often a sign that the goods may not be what they appear to be.

Take a close look at the seller names. Do they appear to be an odd jumble of letter thrown together? Does the seller have a lack of selling history? Prices too low for a tight, shortage plagued market?  Product descriptions sound a little off or not quite in English? All signs you may be dealing with less than reputable merchants.

What about an unheard of site offering product at reasonable to slightly high prices? You attempt to order but after providing all you credit card and shipping information the site bombs out. Often a sign of a scam site that is more interested in obtaining data than providing product.

The golden rule of if it’s too good to be true, it likely isn’t still holds even in these difficult times. When personal health and safety are of the utmost concern, it pays to stick to the sites, brands and sellers you are familiar with and have a reputation of being responsible. Do not be fooled by counterfeiters who have no qualms about putting health and safety at risk. And remember, no matter how much a legitimate site claims to be policing third party sellers, the sheer volume can overwhelm those efforts.

It is important to be as vigilant about purchasing health related products as it is to prevent the spread of COVID-19.  Let’s be careful out there!

The House of Representatives recently introduced the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-commerce (SHOP Safe) Act of 2020. The bipartisan bill incentivizes e-commerce platforms to adopt best practices to reduce the presence of counterfeit products on their sites. E-commerce sites that fail to adhere to the steps would be held liable.

The SHOP SAFE Act would:

• Establish contributory trademark liability for e-commerce platforms when a third-party sells counterfeit products and the platform does not follow certain best practices
• Incentivize e-commerce platforms to establish best practices to vet sellers, remove counterfeit listings and monitor sellers
• Require e-commerce platforms to take steps to prevent the continued sale of counterfeits by third-party sellers or be subject to contributory liability

10 Reasonable Steps in the SHOP Safe Act:

Steps for e-commerce platforms would include:

1. Verify the third party seller’s identity, principal place of business and contact information
2. Require the third-party seller to verify and attest to the authenticity of its goods
3. Provide contractual requirements that the third-party sellers agrees not to sell, distribute or advertise counterfeit goods on the platform and consents to the jurisdiction of U.S. courts
4. Clearly display the third party seller’s verified principal place of business, contact information and identity, including the country of origin for both the manufacturing and shipping goods
5. Require the third party seller to use images that they own or have permission to use and that accurately depict the actual goods being sold
6. Implement technology to screen goods before posting to prevent counterfeit sales
7. Implement a timely takedown process for the removal of counterfeit listings
8. Terminate any third-party seller that has engaged in more than three instances of counterfeit sales, distribution or advertising
9. Screen and prevent third-party sellers from participating on the platform under a different seller identity or alias
10. Provide the infringing third-party seller’s information to relevant law enforcement and, upon request, the trademark owner

What this Means for Brand Owners

There has been an increase in efforts to help prevent the sale of counterfeit goods that pose a threat to consumer health and safety.

More brands are increasingly transitioning from traditional brick and mortar to online retail. With that transition, we have seen a significant increase in the sale of counterfeits goods online. Combating counterfeit sales can be extremely timely and costly for brand owners.

While e-commerce platforms have started to implement policies to manage counterfeit sales, contributory liability puts the burden of responsibility on the both the counterfeit seller and the platform. If implemented, these practices will create an incentive for online retailers to be more diligent and proactive.

Gibney will continue to monitor developments on this issue.

Author
John Macaluso
Partner, Intellectual Property
jmacaluso@gibney.com