Based on a recent restitution submission prepared by Faegre Drinker, a federal judge in Harrisburg, Pa. awarded Eli Lilly and Company $1.9 million in restitution from an individual convicted of trafficking in drugs bearing counterfeit trademarks of Lilly and other pharmaceutical companies. The defendant in this matter was sentenced to 70 months in prison and ordered to pay $3.6 million in restitution, the remainder split between the other companies based on the defendant’s conduct involving their trademarks. In this instance, crime clearly didn’t pay for the defendant and success was achieved by partnering with our client to fight counterfeiting and illegal importing. So how does this work?
Intellectual property rights holders are constantly seeking creative ways to protect their brands, including preventing counterfeit products from entering the marketplace. There are the traditional methods – such as federal trademark registration with the United States Patent and Trademark Office – that are well-known to most companies. However, many companies are less familiar with the high-value, low-cost enforcement tools available through a Customs Recordation filing with United States Customs and Border Protection.
United States Customs and Border Protection (CBP) can be a vital partner in your company’s efforts to enforce its trademarks and copyrights, and to stop counterfeit imports. Intellectual property enforcement is currently a “Priority Trade Issue” for CBP, and the increased focus on such enforcement is highly beneficial to companies who can then leverage CBP’s database and workforce to identify and stop counterfeit product imports. CBP uses the information contained in its database of recorded trademarks and copyrights in order to target and seize imports of counterfeit and pirated goods at various U.S. ports of entry. In FY 2019, CBP seized more than 27,000 shipments containing counterfeit goods, enforcing over 18,500 active recordations1. Notably, CBP rarely takes action to detain or seize goods displaying trademarks or copyrights that are not recorded; therefore, it is critical to include CBP recordation as part of your enforcement strategy.
If trademark infringement and dilution are frequent headaches for brand owners, counterfeiting – which the U.S. Trademark Act defines as use of “a spurious mark identical with, or substantially indistinguishable from, a registered mark” – is a migraine. As a practical matter, counterfeiting in most cases renders perfunctory the task of analyzing the “likelihood of confusion factors” required in traditional infringement cases. In counterfeit cases, the marks and goods are identical, and the counterfeit mark was applied with the intent to deceive consumers into believing that fake goods are genuine, so it’s reasonable to assume it will do exactly that.