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Online Guy Rob Holmes kicks off IACC Meeting

IACC (International AntiCounterfeiting Coalition) Annual Meeting is getting kicked off with a bang this morning at the Hyatt Hotel in Downtown Boston, MA. Rob Holmes of IP Cybercrime and my partner in busting crime with the Online Guys is giving out some amazing secret information about techniques to do online investigations.

I could tell you some of these tips here, but Rob would have to kill me.

IACC Starts Next Week – May 18-20, Boston MA

The 2010 Annual Meeting of the International Anticounterfeiting Coaltion (the “IACC:) is next week in Boston, MA and yours truly will be attending along with Online Guy, Rob Holmes. We will be tweeting and reporting on the conference from the site and hope to see some of you peeps there.

Check out http://www.iacc.org

If you don't know where Holmes and Montan are - you aren't trying very hard.

The Online Guys

The AntiCounterfeiting Agreement – by Tom Walsh

The first issue I will pass upon regarding the recently released ACTA text is the definition of “willful trademark counterfeiting or related rights piracy on a commercial scale.” This concept is defined in Section 3, Article 2.14 of Chapter 2. The definition is quite broad in scope and encapsulates “(a) significant willful copyright or related rights infringements that have no direct or indirect motivation of financial gain; and (b) willful copyright or related rights infringements for purposes of commercial advantage or financial gain.”

Even though Subsection (b) generally conforms to traditional views of counterfeiting, Subsection (a) has been the subject of much controversy and merits further examination. At first glance, there appears to be a conflict between the concept’s requirement that the infringement or piracy be on a “commercial scale” and the definition’s clear statement that the infringement or piracy need not have any financial motivation. However, it is clear that Subsection (a) targets large-scale, anti-copyright file sharing networks such as The Pirate Bay.

The drafters are correct to permit rights holders to press claims against anti-copyright groups who distribute protected content. When a tangible product is counterfeited, supply of the actual product is increased. An increase in the supply of the aggregate market for the product should create undesired downward pressure on the price of the actual product. Conversely, in cases of file-sharing, the counterfeit product is digital in nature and supply is virtually unlimited. Each time a file is shared, demand decreases while the supply of that file remains unchanged. Rights holders therefore require tools to control supply of their digital assets in order to preserve equity.

However, while I commend the drafters of ACTA for providing rights holders with addressing piracy by anti-copyright persons and organizations, Subsection (a) is ripe for abuse, or at the least heavy-handedness, on two fronts as a result of its present vagueness. First, the released ACTA text does not define the term “significant”. The lack of precision in drafting this term may lead to the unintended prosecution of smaller-scale infringers as member states struggle to quantify “significant” piracy. In the United States, we have seen this in prosecution of commercial claims by the RIAA against music piracy. In an effort to publicize the issue and deter future piracy, the RIAA initiated lawsuits against individual infringers. While the lawsuits were effective at deterrence, it was by no means popular.

A second concern for individuals under Subsection (a) is the use of conspiracy laws to target P2P networks. Under this legal theory, even a legitimate user of a P2P network could face criminal liability if other users of that same network engaged in illegal file sharing. While large-scale infringers would be subject to criminal prosecution, such prosecution may also envelope small-scale or “insignificant” infringers, contrary to the intentions of the drafters.

Fake Wine: Notes of Ripe Fruit, Peppercorns and…Radioactive Carbon Dioxide

April 19, 2010 Leave a comment

On March 21, scientists presented research at the 239th National Meeting of the American Chemical Society that will help wine collectors and auction houses determine whether that $4,700 bottle is an 1870 Chateau Laffite or Two Buck Chuck in a VERY expensive bottle.

Graham Jones, Ph.D., with the University of Adelaide in Adelaide, Australia led a group of researchers in developing a test to determine the vintage of a bottle of wine by examining the level of radioactive carbon dioxide contained within the wine.

Atmospheric atomic testing in the 1940s through 1963 increased the levels of carbon-14 (C-14) isotopes in the atmosphere. Grapes on the vine then absorbed the increased amount of C-14 naturally and the isotope remained with the grapes as the grapes were processed into wine. Today, by applying Dr. Jones’ research scientists are able to identify a wine’s vintage by testing the ratio of C-14 present in the bottle.
Dr. Jones’ publication is timely given a recent counterfeit wine claim filed in U.S. District Court, New York. In late March, attorneys for William Koch filed a lawsuit in the U.S. District Court, New York claiming that auction house Christie’s International “engaged in a pattern of racketeering activity” along with a German citizen named Meinhard Gorke. Mr. Gorke, who goes by the self-adorned sobriquet Hardy Rodenstock, is alleged to have colluded with J. Michael Broadbent of Christie’s to sell high-end fake wine. Suspicion fell on Mr. Gorke, as he became well known for several incredible discoveries of rare wines.

Unfortunately in Mr. Koch’s case, Dr. Jones’ test is only effective for wines produced after the commencement of atmospheric atomic testing and thus incapable of proving whether wine he purchased at auction through Christie’s International was in fact part of President Thomas Jefferson’s fabled collection. However, the test may be useful in cases where a wine made since the 1940s is placed in a much older bottle. Dr. Jones’ test will therefore make it much more difficult for counterfeiters to replicate older wines. Additionally, the test also provides litigators with an unbiased, scientifically tested evidentiary tool.

For coverage of the lawsuit by the Wall Street Journal, please follow this link: http://bit.ly/99DDDl

For further reading on the science behind Dr. Jones’ research, follow this link to the American Chemical Society: http://bit.ly/cbLC6v

For an in-depth look at fake-wine and the players in the William Koch case, please follow this link to a fantastic 2007 article by Patrick Redden Keefe of the New Yorker: http://bit.ly/bL2FJp

This post was written by Tom Walsh, of Walsh IP Law, Denver, Colorado

Fake and counterfeit goods promote unethical behaviour | Not Exactly Rocket Science | Discover Magazine

April 12, 2010 Leave a comment

Fake and counterfeit goods promote unethical behavior | Not Exactly Rocket Science | Discover Magazine.

Adorning yourself in fake goods, be it a replica Gucci handbag or knock-off Armani sunglasses, makes a statement. It says that you want to feel, or be seen as, wealthier than you actually are. It signals an aspiration towards a richer lifestyle. Of course, such products can’t actually change a person’s status, but a new study suggests that they can change people’s behavior, and for the worse.

Tiffany bites the dust as eBay prevails in 2nd Circuit

A couple of days ago, the Court of Appeals for the Second Circuit issued its decision in
Tiffany v. eBay, No. 08-3947-cv, slip op. (2d Cir. Apr. 1, 2010). The Court largely held for eBay and affirmed the District
Court’s 2008 ruling in eBay’s favor on the trademark infringement and dilution claims.

The Court of appeals did remand the case to the District Court for further consideration on the false advertising claim, so we will have to see what happens here. There is no way around the conclusion, however, that ebay has prevailed in this decision and that trademark owners will have a harder time with the online auction house from now on.

In the lower court, Tiffany alleged that the majority of “Tiffany” goods offered by vendors on eBay were in fact
counterfeit. Tiffany claimed that by using the TIFFANY mark in its advertising, by failing to take
more drastic measures to stop the sales of counterfeit Tiffany items, and by advertising in such a
way as to mislead consumers into believing that all Tiffany items sold on eBay were genuine, eBay
had engaged in direct and contributory trademark infringement and false advertising. The District
Court entered judgment against Tiffany on all claims.

I’m afraid I have to shake my head at this decision, one that continues the split globally as French courts and others outside the US continue to hold in favor of trademark owners against ebay.

There is a very good post on the 2nd Cir. opinion up on IPAlly, http://www.IPAlly.com, by noted trademark lawyer Ron Coleman. Don’t miss it.

IACC Files Submission to Office Of US IP Coordinator

March 26, 2010 Leave a comment

In late February, Victoria Espinel, the United States Intellectual Property Enforcement Coordinator, published a request in the Federal Register seeking comments regarding the development of a Federal Joint Strategies Pan. The idea is to improve the ability of the US Federal government to fight against piracy across the many agencies that may have juristiction.
The International AntiCounterfeiting Coaltion filed its response to the request yesterday. Among the statements made by the IACC is a request seeking improvements in the manner in which the Customs Service, known as the US Customs and Border Protection, imparts information to IP owners. The IACC submission said in part:

“At present, the single greatest policy priority for the IACC and its members concerns the availability of information regarding shipments of goods detained by US Customs and Border Protection (“CBP”) which are suspected of being counterfeit, or otherwise violating the rights of intellectual property owners in trademarks registered in the United States and recorded with CBP.

As the manufacturing capabilities of counterfeiters have increased in recent years, with the more widespread availability of tools which facilitate the replication of products and packaging, Customs’ ability to detect counterfeit goods has grown exponentially more difficult. Rights-holders have adopted a variety of technologies, both overt and covert, which are commonly used to aid in identifying illicit product or verifying the legitimacy of goods. The volume, and variety, of goods entering the domestic stream of commerce at US ports obviously makes it unfeasible for Customs personnel to receive the extensive training or level of familiarity necessary to verify the legitimacy of every trademark that comes before them. Traditionally, private sector rights-holders have been consulted by CBP, and have offered assistance in making such verifications. Regrettably, CBP has adopted a policy – citing the Trade Secrets Act – which has significantly reduced the ability of CBP to ask for, or for rights-holders to provide, such assistance.

By way of example, many legitimate manufacturers and rights-holders have adopted verification procedures which involve the marking of product containers and packaging with unique serial identification markings at the time of manufacture. Current CBP policy precludes the disclosure of such markings to a rights-holder either through the provision of samples or photographic evidence. In practice, CBP has provided redacted photographs or digital images of the goods; or when physical samples have been provided, Customs personnel have physically removing or obliterated the markings prior to providing the sample to the rights-holder. Unfortunately, absent those identifying codes, in many cases, the trademark owner has been unable to make a positive determination regarding the products’ authenticity. The implication of the Trade Secrets Act (and the potential for criminal prosecution for violations of that statute), has, according to reports from IACC member companies, resulted in Customs’ reluctance to share information which might allow rights-holders to provide the type of assistance necessary to verify whether a suspected shipment is, in fact, counterfeit. The clear result of this policy is an increased likelihood that greater volumes of counterfeit product will enter through the borders, posing greater threats to consumers, and greater economic harm to legitimate businesses.

Information is arguably the most powerful weapon available to law enforcement and rights-holders in addressing the problem of counterfeiting. IACC members continue to report however that current policies in place are hindering their ability to identify individuals involved in the trafficking of counterfeit goods. Rights-holders noted that they frequently encounter cases of fraud when conducting follow-up investigations, subsequent to their receipt of Customs Seizure Notices from the Office of Fines, Penalties, and Forfeiture. In some cases, the individual named as the importer of record has been the victim of identity theft (and is in no way connected to the importation); while in other cases, a fictitious name has been provided by the importer to a customs broker, and in turn, to CBP.

Customs and Border Protection has the authority to regulate customs brokers, and to conduct audits of customs brokers’ records. Even a relatively minor step such as a due diligence requirement similar to that set forth in other areas of federal law (e.g., the Bank Secrecy Act, 31 USC 5318), or a requirement that customs brokers require an importer to provide two valid forms of government identification (and copies of corporate papers, in the case of a business), would help to deter such fraud. The ability to accurately identify and locate importers could also be useful in the enforcement of fines assessed against importers for violations (whether related to the importation of counterfeit products or other provisions of the Customs laws).

The PRO-IP Act was grounded in the idea that improving IP enforcement required improving the communication and coordination among all of those tasked with the job. That idea applies equally within the government, in the private sector, and between the two. To that end, the IACC supports a comprehensive review of these and other Executive Branch policies to ensure that open communication and cooperation between rights-holders and government personnel tasked with enforcement is not unduly burdened.”

More information can be found out about the IACC at http://www.iacc.org.