Archive

Posts Tagged ‘counterfeiting’

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.

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

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.

eBay team helps put counterfeit gang away

The leader of a UK-based gang who made millions selling counterfeit luxury golf kit and other knock-off goods through auction site eBay has been jailed for four years.

Gary Bellchambers and six others ran what is reckoned to be the biggest ever such scam between June 2003 and March 2008. Their fraud was eventually rumbled by a trading standards team at Havering Council, who were put on the trail of the fraudsters by pensioner Christine Manz.

The council team worked with eBay to identify 96,000 bogus transactions including golf clubs, clothing and forged Qantas business class lounge pass cards. The crooks supplied cheap knock-off imitations in place of the promised premium quality kit from US manufacturer Callaway Golf.

Bellchambers, 45, of Rainham, who admitted masterminding the scheme, pleaded guilty to fraud along with co-conspirators Keith Thomas, 49, from Rainham, and Chris Moughton, 56, from Blackpool. Four other suspects in the case were found guilty in a trial last December.

Roy Cottee, 65, and his wife Kay, of Rainham, Essex; Helen Wilson, 28, of Hertford, and Sharron Williams, 48, of West Wickham, Kent joined their three accomplices in the dock for a sentencing hearing at Snaresbrook Crown Court in London on Thursday.

Ringleader Bellchambers was jailed for four years and three months, with a recommendation to spend at least half that time behind bars. Thomas, the scam’s second in command, was sentenced to 16 months in jail, with an order to serve half in custody.

Roy and Kay Cottee were also convicted of conspiracy to distribute Qantas business class lounge cards. Roy Cottee was jailed for 12 months while his wife was handed down a 300 hour community service order.

The other three members of the conspiracy received a combination of suspended sentence and community service orders.

In a statement, eBay UK welcomed the sentences and explained the modus operandi of the crooks. “Bellchambers and his gang of felons used an international network of criminals to open and maintain eBay accounts using a variety of false documentation, bank, credit card and contact details.

“The case which secured today’s convictions was supported by eBay’s Fraud Investigation Team and reinforces eBay’s ongoing commitment to fighting counterfeits.”

eBay’s Fraud Investigation Team worked with Havering Trading Standards for over three years to make sure Bellchambers and his accomplices were brought to justice. Investigators supplied information from suspect eBay and PayPal accounts to their Trading Standards counterparts as well as testifying in court.

Last year eBay trained 1,666 coppers in the UK, and in the last two years has assisted officers in over 9,000 case investigations, resulting in the arrest of 200 suspected criminals.

Tons of bad USB sticks out there – Like much in life, you get what you pay for!

February 15, 2010 Leave a comment

Lots of quality branded USB sticks are made in China these days. Nothing particularly wrong with that, except some factories like to rebrand rejects and they end up in the US and on Ebay. Often they will demand a better price by claiming they hold 16 or 32 GB when, in fact, they only old one.

Simply selling you bad chips at a discount isn’t enough for greedy con artists who can reap greater profits lying about how large the capacity is. They go the extra step of hacking the chips so they report a higher memory capacity than they really have. You plug it into the computer and Renewal By Andersen Windows reports that it holds the amount of data printed on the outside of the stick. A “16GB” drive will often hold only 2GB. You might think that you’d quickly notice once you try to add more than 2GB to the stick. But the hackers are cleverer than that. They need you to be happy with the flash drive long enough to get their positive eBay feedback or cash your cheque. What happens is that the files appear to go on just fine. But what is actually happening is that the older files are written over by the new ones while the file and folder names stay there, making it appear as if all is OK. You won’t find out until much later on.

Rich folks spending the big bucks on counterfeit wine

February 10, 2010 Leave a comment

Check out this story from Bloomberg today. Even the rich and famous are getting stung by counterfeiting – and in a big way!

Feb. 8 (Bloomberg) — I think of the past 10 years as the counterfeit-wine decade.

While the number of fakes began exploding in the mid-1990s, the problem was only widely acknowledged a few years ago and promises to heat up even more in 2010, partly thanks to billionaire collector William I. Koch.

In the past 3 1/2 years, Koch, founder and president of Florida-based Oxbow Group, has sued auction houses, collectors, a retailer and a wine importing company, saying all of them sold wines to him that turned out to be fakes.

“The sun is shining here,” he said by phone from his Palm Beach home, where he keeps his 40,000-bottle cellar. “But my lawsuits are grinding out at a slow pace.”

All have yet to come to trial. Some allegations of auction- house fraud and negligent misrepresentation were dismissed because the sale catalogs contain broad disclaimers that the wine is auctioned “as is” and Koch didn’t inspect the bottles before the sales, according to court documents. Other claims of his remain to be decided. No court has yet judged any of the wines fake.

The collector said he has rejected offers from several defendants to return his money — he wants to force auction houses to change the way they do business, obtain punitive damages, and even see a couple of people go to jail.

“I’m gearing up to file more in 2010,” said the 69-year- old, sounding charged up at the prospect. Koch’s litigious history includes lawsuits against his brothers over a 20-year period.

Thomas Jefferson’s Wine

His wine-based suits started in 2006, when he filed a complaint on Aug. 31 against German wine dealer and former pop music manager Hardy Rodenstock, who sold wines he claimed had once belonged to Thomas Jefferson. Koch says the “Jefferson bottles” he purchased from retailers supplied by Rodenstock are counterfeits.

Koch’s initial lawsuit was dismissed as the judge ruled the court lacked jurisdiction to try it. Koch refiled two amended complaints in 2008. The wines were authenticated, Rodenstock said in letters to Koch that were attached to the refiled suit.

In 2007, Koch sued Internet entrepreneur and wine collector Eric Greenberg and Scarsdale, New York-based Zachys Wine Auctions. Koch claims 19 wines he purchased — 11 of them consigned by Greenberg — were or might be fakes, and that Greenberg knew his wines weren’t genuine.

Charity Wine Tasting

Anthony Coles, Greenberg’s attorney, said in an e-mail that the allegations in Koch’s lawsuit are false and that Koch had declined the offer of a full refund and a charity wine-tasting to benefit children.

In March 2008, Koch sued the Chicago Wine Co. and Chicago- based Julienne Importing Co. and a month later went after New York auction house Acker Merrall & Condit, accusing all of them of selling him fakes.

Acker auction director John Kapon and Devin Warner, president of Chicago Wine Co. said in phone calls they couldn’t comment on the cases. James Ricker, owner of Julienne Importing Co., didn’t respond to a phone message asking for comment. Jeff Zacharia, president of Zachys, didn’t respond to a phone call or e-mail seeking comment.

“It’s a bigger story than an actual problem,” Kapon said.

Last September, Koch filed suit against Los Angeles-based collector Rudy Kurniawan, claiming he was the consignor of five counterfeits Koch bought at Acker. Kurniawan hasn’t denied the claim in any court papers and didn’t return phone calls seeking comment.

Experts Search

Altogether, Koch’s complaints include more than 40 bottles for which he paid almost $1 million. He estimates he’s spent about $5 million in legal fees and on gathering evidence. Two wine experts he hired turned up several hundred suspect bottles in his own collection, he said. That works out to about 1 percent of Koch’s 40,000 bottles.

“Every wine I’ve bought at a charity auction is fake, I think,” he said, chuckling. “I haven’t decided what to do about that.”

Coordinating all this is Koch’s representative Brad Goldstein, who says he’s contacted other collectors, asking them to work with Koch. “I can think of four CEOs whose cellars are inundated with fakes,” Goldstein said. “But we’ve been told they don’t want to get involved.”

It’s easy to see why. Prominent people have reasons to maintain their privacy. As a consequence, wine industry insiders can only guess at how big the problem is.

“Counterfeits have become more sophisticated in the past decade,” said Jamie Ritchie, Sotheby’s senior vice president of wine, North America. “Distribution is broader. In the 1990s we saw mostly Bordeaux. Now it’s Burgundy, too.”

Suspect Burgundies

At an April 2008 Acker sale, 22 lots of Domaine Ponsot Burgundies consigned by Kurniawan were pulled when Laurent Ponsot questioned their authenticity. Ever since, Ponsot has been sleuthing to find the ultimate source of these wines.

Russell H. Frye, who settled his own wine-fraud lawsuit against a California retailer out of court in 2008, said he sees new fake-wine players at every level.

“Some auction houses are less willing to offer questionable bottles due in part to the threat of criminal prosecution and civil litigation,” Frye said in an e-mail. Two years ago Frye started Web site wineauthentication.com as a place where wine lovers could report and discuss counterfeits.

Another effect of Koch’s lawsuits, said Marc Lazar, president of St.-Louis-based Cellar Advisors LLC, “is that vendors are now incredibly accommodating about reimbursement if a collector thinks a bottle he’s purchased is fake. The word counterfeit is radioactive.”

But what happens to bottles clients have returned? “That’s ultimately Koch’s point,” Lazar said. “Unscrupulous merchants just sell to someone else.”

Gray Market

Lazar said he sees fewer counterfeits at high profile retailers and auction houses, but that they flourish on the so- called gray market, where brokers with little or no stock buy and sell wines held by others.

These days everyone in the fine-wine business has at least one fake-wine story.